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Want to get into property investing with just a few thousand pounds?
If the answer is yes, a great idea is to try investing in garages that you can then rent out for storage or car parking. This can give you an extra income, and doesn’t require a huge investment at the outset. A great idea all round, we’d say!
If you have (or can raise) a relatively small amount of money to invest – but not enough to buy a flat or house – it’s a great idea to consider investing in garages. Garage units are a great, low-hassle way of investing in property. They’re also very low maintenance, with no boilers, leaks or noise issues – so can be far less hassle than renting out a house or flat, especially if you’re new to the residential property game.
Here are a few things you need to be aware of if you’re considering investing in garages in the future…
You can get garage units for as little as £3,000, depending on where you live. In more expensive areas (namely, London) they are likely to cost a lot more – but will of course reflect this in the amount that people are willing to pay to rent them out. With this often very cost-effective initial investment, you can easily mark the beginning of your property portfolio.
There are a few different ways that you could make investing in garages work for you, once you’ve made your initial purchase. Here are just three of them:
If you want to rent out a room in your house, you may need somewhere safe and secure to store the contents of that room. Buying a garage in which you can store these items might make a cost-effective and sensible alternative to commercial storage, which can often be very expensive.
You may be able to find a garage that is out of town, where the demand is low and the price is relatively cheap. If you can buy this garage and fill it with items both from your first garage and your spare room, you can then rent out both of these spaces. This is likely to be a great way to bring in extra cash in the long-term.
This is the obvious one and requires patience as the return comes in over a few years. It’s basically buy-to-let, but with a garage rather than a home.
This is likely to be particularly valuable if you live near a train station, from which people commute into a city. Equally, if you own a garage in a city itself, it’s likely to be in incredibly high demand from those looking to store their vehicle safely and ensure that it’s off the road – either just overnight, or if they’re away.
Of course, the amount your garage costs to buy will depend entirely on the area – as will the rent that you can realistically charge. Average income from renting out a garage space can top £1,000 per year, and those renting out their garages in London could earn up to £200 per month.
As mentioned above, a garage can offer a good alternative to a commercial storage company. The personal service that you can offer as the owner of the garage is likely to make you a great option for those looking to save money whilst storing their possessions safely.
You absolutely must, without exception, know your market. If you don’t you will lose money. This applies to the vast majority of investment ideas, so is hugely important. Indeed, before investing in anything it’s always worth reading through investment advice websites and seeking independent financial advice from a financial advisor.
Start by researching garage prices in your area, and working out how much others are paying to rent out their garages (if they already are). You need to think about need, too. Is there a lack of accessible parking in your town? Can your garage solve this problem? If the answer is yes, investing in garages is likely to be a good route to go down.
You’ll need to spend six weeks or so researching your patch, at a minimum. During this time you’ll have to study your target area (whether it’s local, or somewhere else that you feel has potential) in detail. Either way, make sure you know it well before you make any decisions.
There are lots of options to look at when you’re thinking about investing in garages, but make sure you start by doing the following:
Reading Local newspapers & property newspapers – You’ll need to read these in detail every week in order to get a general idea of what the numbers are for the different districts in your target area. It will help you zero in on the areas where there is sufficient demand to sustain what you are looking to do.
Seeing for yourself – Go and see the garages that are available and find out how much is being asked for them – both to rent and to buy. Drive around the streets so that you’re familiar with the area, especially if it’s not somewhere you’re already familiar with. Become well-versed in where there is unsatisfied demand, what the condition of the garages tends to be, and how that affects the prices.
Speak to local letting and estate agents – Visit them and find out where there is a demand for parking facilities. They are likely to be in the know about the areas where residents don’t have parking facilities, but would be prepared to pay for them.
Visit local property forums or residential sales websites – Do several searches online to find out what garages are for sale or rent and what the asking prices are, what competition you face from other people doing the same thing, and if there are commercial organisations offering a similar solution (for example parking or car storage).
Subscribe to newsletters – Sign up for every relevant newsletter going. The chances are that many of these are put together by people who are very commercially minded and have set their prices as high as the market will stand. They still serve as another indicator of what the going rates are.
Speak to the council – Contact your local council and find out what garages they have that you might be able to buy or rent. There may be redundant space in fields or undeveloped land that you could consider investing in for parking space.
After six weeks you will begin to understand:
Doing all of the above will also allow you to begin to understand what might look like a bargain at first but is, in fact, a disaster. For example, the council may be about to build over that garage soon and a compulsory purchase order could follow. Alternatively, there may be lots of new garages due for construction nearby that will dilute the demand. Make sure you know about all of this before you invest!
Give yourself an enormous pat on the back, because you’ve just saved yourself a huge amount of frustration and hassle, not to mention a lot of money. You now understand what you are looking for, so you can expand your geographic horizons and see if the profit margin can be found elsewhere. It’s very likely that it can!
Once you’ve discovered what the market rates for buying and renting garages are, go to your council and find out what future developments are planned – transport, housing, amenities and anything else that might bring about a change in demand (for better or worse).
If you’re ahead of the game and happen to know that a new railway station is being planned for an area, you’ll also be aware that soon there are likely to be commuters who will want to park near that station – whilst not paying exorbitant station parking fees.
By buying a garage in that area you’re ready for that increase in demand, and will benefit in the long-term from increased rental and sale rates of garages in the area.
The price of garages in your area will vary enormously. In London, they can go for up to £300,000 each. Outside of London (and even on the very outskirts of the city) they can just go for a few grand.
It’s possible to get a mortgage for an expensive garage in a key location if you’re already financially stable and you have a cast-iron credit record, but it might be difficult.
According to Melanie Bien of Savills Private Finance, “Mainstream lenders would say ‘no’. However a private bank might do it for the right person – say a high net worth type buying in prime central London.”
If you’re looking at a seriously expensive garage get in touch with the Money Magpie mortgage comparison service, powered by London & Country.
For a normal, low-priced garage you could get away with a low-cost loan. Make sure you do your calculations first, though. The loan rate needs to be genuinely low to make it worthwhile renting it out. It’s important to remember that you still need to be able to make a profit on the rental once you have paid the loan each month.
Advertising a garage is very simple and generally cheaper than advertising a flat or house for rent.
For a start, you can put it on one of the car-parking websites for free. Here are some of the places that you should consider if you want to rent out your garage for money.
Put ads in your local paper. This will cost, but it could be worth it.
Alternatively, see if you can take out ad space in any local newsletters or put a notice on bulletin boards within the local community. You might find these in your local newsagents, supermarkets, libraries, or lots of other places.
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.