Although remodeling a garage into an Accessory Dwelling Unit (ADU) might seem expensive at first, there are various ways that it can truly be a profitable investment. How can a garage conversion be profitable?
There are various ways that garage conversions can be profitable.
How Can Garage Conversion be Profitable?
One simple example of how a garage conversion can be profitable during a situation where the house is to be sold is if a property owner spends less on the job compared to how much they increase the selling price of the house.
For example, if a homeowner spends $20,000 on a garage conversion, but sells their home for $60,000 more than original price would have been if the conversion hadn’t taken place, then the homeowner would make $40,000 profit as a result of getting the project done.
Another way a garage conversion can be profitable is if it is rented out for a monthly rent price. In this case, if the property owner finances the payment and pays less monthly for the monthly financing price compared to the price of rent received from a renter, the difference in money would be profit. For example, if a property owner finances the job for $450 a month, and rents the unit out for $1000 a month, the property owner will make the difference in profit every month, which would be $550 profit per month in this case. After the financing is paid off, the monthly payment of $1000 in rent can be counted as full profit.
Another case that a conversion could be profitable during a situation where it’s to be rented out is if the project is paid off in full up front. In this case, a certain amount of months of renting out the unit would pay off the cost of the project. Then the payments of rent for the months thereafter can be considered profit. In this case, if a homeowner spends $24,000 on a conversion, and rents the unit out at a price of $1000 a month for two years, the $24,000 cost will be covered in two years and then the income from months of rent thereafter can be considered as profit.
This is not investment advice. None of the information provided on this article should be taken as investment advice.