Income from garage, etc

[PhiloFarnsworth]

What is the proper way to value income that is derived from a portion of the property and contributes to a portion of the value? An example that I have seen would be an urban rowhouse that has a 3 car detached garage and the owner rents 2 out for supplemental income. If the dwelling is an income property this is, of course part of the income approach. But if the property would otherwise not be a typical rental should I acount for the value of the garage rentals beyond their value on the sales grid? Another example would be the potential income derived from an accessory unit.

 

[Kevin Mc]

Fairly typical in NYC.....

for folks to rent garages and driveways with income properties. I will note it on the report but typically will not include it in the comparison approach or the 216. Unlike an apartment, there is no solid evidence from which to derive a market rent for a garage space other than common knowledge(typically $100-125 a month). Additionally it will skewer your GRM and across the board monthly rentals if your comparables don't have similar garage rentals.

 

[Ralph Baldwin]

This is typical in my urban market areas where off street parking is limited. Generally, the adjustment for having the garage (but not for income purposes) can be large in comparison to a suburban property with a garage. However, I agree with Kevin's comment. I mention it in the report but place no value consideration for the income potential.

 

[George W Dodd]

It depends. In my market there is an area similar to Ralph's. Check and see if you can find sales of Garages even if they are dated. Once you can reasonably determine the GRM then you can compare the value from the income approach to the contributory value of just a garage and make the approriate adjustment.

 

[Jim Onderisin]

I wouldn't capitalize garage income. In some urban Chicago areas, the value garages add to property value exceeds what they would add in suburban areas precisely because the market places a large premium on garage auto storage. The ability to rent the garage is factored into the price paid for the property, including the garage. I reflect the contribution to market value in the sales comparison analysis.