Detached Garage With 2nd Floor Studio

[Kevin Keller]

I'm not finding any comps with 2nd houses, guest houses, or finished 2nd floor detached garages. I have found some nice garages with nice attached workshops.

I am using an adjustment similar to that use on the GLA of the main home. It seems to fall in reasonably. Owner finished his garage, then built this garage/studio for around 50K. I'm only finding about 30 for it using the method described above. Comps are falling in place naturally using this methodology.

I know there will be a lot of explaining to do in order to pass muster.

Any advice will be greatly appreciated.

Thanks.

 

[Craig in Oregon]

Kevin,

What's it used for?

Anything else like it in the neighborhood, even if not a listing or sale? I've had lenders be reasonably satisfied if another house or two in the area has a pool, real nice shop, motorhome garage, etc, even if there were no comps with these extra added amenities.

Craig

 

[Kevin Keller]

The second floor of the oversized garage is a studio for a seamstress. It is finish like normal residential GLA, has a 200 amp fues box and a 1/2 bathroom. It could easily be used as an apartment.

I've used five sales and one pending. Three sales have converted attached garages to GLA and new detached garages. I still had to adjust up from them for the finished second floor. I adjusted similarly to the same adjustment for the GLA in the house. It is defendable and reasonable absent any other market information. I hope it passes muster.

Any thoughts?

Thanks,

Kevin

 

[DANIEL LEWIS]

CAN YOU FIND ANYTHING THAT HAS AN IN LAW SUITE? OTHERWISE YOUR BEST BET IS TO MAKE YOUR ADJUSTMENTS AND EXPLAIN THEM SO THE UNDERWRITER UNDERSTANDS, JUST MAKE SURE YOU ARE OK WITH YOUR ESTIMATE OF VALUE. I TRY TO SUPPORT WITH ANY KIND OF EXTRA LIVING AREA ( IN LAW SUITE, APARTMENT, WHATEVER YOU CAN FIND). I GO AS FAR AS I COMFORTABLY CAN GO TO SUPPORT MY ESTIMATE.

 

[Craig in Oregon]

One could call it a bonus room, hobby room, rec room, etc. and adjust based on depreciated contributory value rather than the square footage adjustment used for the main dwelling.

These finished attic type spaces almost always cost much less than main dwellings, even with electricity and plumbing, just because the foundation, walls and roof are already there, thanks to the garage.

So if you had a space like it over your garage, what would it be worth to you?

If the underwriter asks for more support, ask them what it would be worth to them
and the answer will probably not be "nothing".

Craig

 

[Dave Fitch]

Not to age myself, but they call it a Fonzie Apartment from the TV show of years ago "Happy Days". There is even a website for this style of housing at www.garageapartments.com They even have plans for numerous garage apartments, articles, etc. They also refer to them as "Granny units", but I don't know why Granny would relish going up and down stairs all the time, maybe they have one with an elevator in it! Is this a great World Wide Web, or what!!! :lol:

 

[Richard Carlsen]

If it is not rented out, I never call it an apartment or studio.

Anything that has living quarters that is not occupied by renters at the time of the data visit, be it over a garage, pole building, in a separate building or whatever, is referred to as "Guest Quarters". Most of the time that is the only legal use and since it is legal, that's what I call it. What do I use for value? I did a little study on these which we normally find on waterfront houses where owners can put up the free-loading downstate relatives in the summertime. Basically, a converted 24 by 24 garage with bedroom, bath, kitchenette and open room brings about $6000 to $10,000 extra on a average quality lake. There normally is many more dollars than that into it of course but not everybody wants a place where people can stay for extended periods of time.

I generally give the lower end of this range in the grid as guest quarters and leave it at that. I can almost guarantee you that if you call it an apartment or studio, you will get a question from the UW. Call it a Guest Quarters and explain that they are not unusual in the market and they will usually not make a fuss. And we normally do not have a comp with similar guest quarters to include in the grid.

 

[Kevin Keller]

Thanks for all of your replys. The 2nd floor of the garage is used as a seamstess studio for the wife. It cost 52k to construct and I estimated that the contributory value was somewhere around 30K. It has plumbing and a 200 amp breaker box, which I felt added greater contribution to the utility of the property than a bonus room. I was able to find several comps containing anything from detached garages to detached garages with nice workshops, but no apts, mother-in-laws, guest houses, etc. Many of these nice detached buildings indicated a 10k to 15k value contribution, leaving the adjustment for the studio (guest quarters) to be around 20k.

Although I couldn't bracket the value, I was able to make a reasonable estimate based on all of the comps containing various qualities of detached structures. I felt that the contributory value to be higher than that of a typical bonus room because of its higher utility to the property. Comps seemed to support it.

To top it off, the subject's 2-car garage was converted to GLA. So, I included comps with converted garages that had new detached garages, but none with 2nd floor. I studied the heck out of this thing. Here's hoping that I did good.

This one was quite a duesy. I made a lot of comments similar to what I have stated here. Here's crossing my fingers that I've covered my butt good enough with comments.

As far as the value. I feel confident that I am within a reasonable range of what the property would sell for.

Thanks again for all of you suggestions. Now you all can nail me to the wall!

 

[adamparish]

Thanks for mentioning GarageApartments.com on ths forum!!! I'm the founder and owner of GarageApartments.com. To help with appraisals, I can tell you that our average price to rent a garage apartment is around $725/month.

Let me know if you have any additional garage apartment questions.

All the best,

Adam Parish
Founder
GarageApartments.com
Rent from a community.
http://www.garageapartments.com

 

[Mike Garrett RAA]

I would call it "a bonus room" and not include it in my GLA but list on a blank line on the grid. Would rely heavily on the cost to support an adjustment if I had no comps with this feature. Incidently, I have done several properties with this feature but none recently.