Renting out residential garages

Defensivea

Hi All,

Happy New Year - I hope you had an enjoyable festive break!

I have an opportunity to buy 2x garages that are adjacent to my garage + on the edge of my current property boundary.

I am torn whether to proceed or not.
The garages are £15k in total, which seems reasonable for a large city, urban area.

However, I assumed that conveyancing fees would be much lower than an equivalent house purchase. They are not!
I am also liable for the other parties fees (housing association), which would equate to 2x £2k conveyancing costs...

Garage rental is desirable in the area.
I would likely rent one out at £80/month to not exceed the taxable limit of £1k. Renting the other is an option but would be taxable.

Obviously this is not just a financial decision as we would benefit from having the garages at the end of our property, which creates other opportunities.

What would you do?!
ROI for renting both including tax would be 11.5% per annum but that reduces to 9% when including the conveyancing fees.
That assumes no maintenance etc...

Thanks in advance!

MeteredOut

What else would you be doing with the money if you don't go ahead with the purchase?

If you don't need access to it, and would otherwise have it in a savings account at 5%, then 9-11% yield sounds good. I suppose the garages could also be an appreciating asset, but obviously come with risks.

Who would be responsible for maintenance for the one you rent out, and if you. have you estimated what the annual upkeep costs would be? eg, paint (if wooden), render repairs (if concrete), roof repairs.

What about insurance if the renter drives their car into it, damages the doors, loses the keys? Would you have separate insurance, could you include in on your home insurance (doubtful without an additional premium)?

lincroft1710

£15K seems cheap for 2 garages, but obviously depends on their construction - corrugated asbestos cement roof can prove very costly.