financing a garage

[wil33562]

Sorry if this seems to personal. But how do most of you finance your garages?

I've lived in my house for about two years so I don't have much equity in it yet. It appraises for about 160k and I owe about 153k. I'm getting estimates for a 28x30 garage in the backyard. This includes about 160' of a poured driveway. The estimated that I have been getting are around $30k for the shop and drive.

I figured I could get a construction or personal loan for the garage, have it built, and then refinance both my house and garage together as one package at a good interest rate.

I have been calling local credit unions and banks for the past two days. I haven't filled out an application at any of them. Basically, they have all said that they can only do a second mortgage for a garage and that I would need to have atleast 15% equity for the total amount of the garage and house before they could even think about a loan. So that would mean that if I wanted a $30k loan for the garage the house would have to appraise for atleast $220k for them to even consider a loan.

The other option is to get a personal loan, but the problem there is the most any of the banks that I have called will only go $15k max even with collateral.

So, I'm trying to figure out my best option. Is there another type of loan out there or some other bank to try? Do I just save up my money over the next several years and pay cash? Or do I just sale my house, and buy one down the street that already has a shop.....the banks seem willing to go this route!?!?

Thanks,
-k

 

[tdkkart]

The issue here is that you can drop 30K into the new shop, but the appraised value of the property will only go up a fraction of that amount, especially if the house already has an attached garage. Secondary garages are only worth extra to a select group of people, and they're worth even less to banks because the appraised value doesn't go up much at all.
So, you're gonna have a hard time getting a bank loan for the whole project, unless you can convince them that the value of the property will go up the same amount, which is doubtful.

Is 30k the cost of the comleted finished project?? Or is it just a shell??
I'd price a bare shell, see if you can finance that, and then do the fancy stuff piecemeal as you have the cash.

You don't have alot of choices. The best one would be to simply save up the cash till you can do it without financing, but that rarely works for most people. Be very careful about creative financing options, you don't want to get yourself in trouble down the road.

 

[OldCarGuy]

This you may not want to hear. But the best advice I can give you is not to go ahead with plans to build a garage. You are already top heavy in debt with your house. And take from someone with experience that has owned homes with large garages. A detached garage does not add very much value to a home.

It would be a far better for you to hold off on your dream, and save up the money. Then build the garage in steps as your money allows you to. Plus when you're building, put in as much sweat equity as you can. Remember building a garage isn't exactly rocket science. And it's tax free money you save in your pocket...

One of the main reasons our country is in trouble today is because so many are not willing to hold off on purchases and want everything now. Then over extend themselves to get it. And pay enough in interest that they could own half again more in a lifetime only if they had been more frugal...

 

[RacerX]

We've been in our house a while, built up nice equity and then refinanced and pulled some money from the equity (60K) to build my new garage mahal. 2 Story 30' x 30' with 12' ceiling downstairs for a lift and open upstairs for game room / what have you.

I had the shell built, insulated and sheet rocked myself.
Looking forward to getting it finished. Almost done.

 

[nadogail]

I would advise you to reconsider the project. Apparantly you now have more time than money. You have enough debt already.

Consider baby steps, like paying cash for help and materials for the drive and the slab. Then, depending on what your climate is, you might erect the garage a planned step at a time. For example, when the slab goes in any underground conduits can be stubbed in.
Your next step, if you are in the tropics, might be a roof to keep the rain off (this might look like a carport). After the roof, then wall panels and a door.

If you dig out your own driveway and slab, you will get "garage time" in and will have truly earned your "Sweat Equity".

You will also be able to gather items at lower prices. These include; Free Light Fixtures and Cabinets from Craigs List, low cost materials from Habitat's Re-Store, etc.,

And, Importantly "Bragging Rights" You built this, as opposed to "bought it and am now trying to pay it off".

 

[Bevis]

Then build the garage in steps as your money allows you to....

This is the way I went. When I started, I had a quite a bit of money set aside. When that fund ran dry, I worked OT, and special details to get more funds for my barn aka cabin.

 

[ddawg16]

That is more or less how I did mine as well....I did use some of my home equity for the first part...demo and foundation....and the rest I have paid for as I go along...but then again, I'm doing all the work.

I had some extra expenses that were not in the orignal plans....big tree removal....$850....survey...$800....and now that I somewhat know what I'm doing...I could have saved about $5k on the foundation.....but that is how we learn.

 

[tdkkart]

This includes about 160' of a poured driveway.

Missed this the first time, 160 feet of poured driveway??
This is going to be a LARGE portion of the total bill. Even if it's only 10' wide I can see it being $6000+.

Do you NEED 160' of concrete driveway?? Is it required by your local codes folks?? If the garage HAS to be done now, I'd wait on the driveway until later.
A poured drive is something you can do yourself piece-meal, as you can afford it, if you really think you need it.

 

[35mastr]

If you like the home down the street and it meets your criteria and has the shop of your dreams. Go for it.

 

[rickairmedic]

Wil let me offer this advice take any extra money you have and send it to yor mortgage company make sure you mark the checks ( for principal only ) . This will pay off your Mortgage quickly . I picked up my current house 6 years ago and got a 30 year note on it if I keep paying the way I have been I will own the house free and clear in 5 years . Thats 11 years to pay off a 30 year Mortgage . I dont have any credit cards my vehicles are paid for cash . When the house is paid for then I will start saving for the garage addition I want and possibly a second floor addition on the house but the house will be mine free and clear at that point . I agree with OCG most of the problems this country is currently facing come from the ( I gotta have it now credit rush) . I have had an issue most of my adult life with the fact if I dont have the caash I dont need it that bad and so far it is working .

Rick

 

[ed_v]

Sorry to say, I have to agree with the others. Start saving like the rest of us have.

Ed

 

[GSSFC]

Credit *****, makes things too easy, cash only like everyone else has suggested. I usually buy used stuff to save money. Let someone else take the big depreciation hit on vehicles and such.

Another option is to build small and expand as you have the money and need to do so.

Tim

 

[ket-tek]

This includes about 160' of a poured driveway.

I would knock that driveway off the list first. Did they give you an itemized quote showing what just this part cost?
Because in my area a concrete drive that long would be well over 15k..

It seems that alot of guys here can afford to build these garages because they do as much of the work as possible by themselves.

If you are acting GC, do most of the work yourself and sub the few things you can't do then you might save up to 50% or so.. The builder will get his big chunk of your $30000 for just making a bunch of phone calls to subs and going to the county to get permits for you. (a garage is a pretty basic addition to a home, and most guys with the spare time can GC it with the help of the web and all the free county resources.)

I figured I could get a construction or personal loan for the garage, have it built, and then refinance both my house and garage together as one package at a good interest rate.

Pay close attention to the details of doing that. You will likely be tacking on additional closing costs again for a refinance and sometimes fee's for terminating the original contract early, appraisal fee's, and once you get to that point the interest rates may not be good anymore at that time.

Example:

$153000 mortgage
$8000 closing
$500 appraisal
$30000 garage

$191500 total refinance and that's if they don't charge a penalty fee which could be another few thousand. So the garage would have to add more value than you paid for it, and it is likely that it may only add 10k or so being detached, expescially if you already have an attached one.

And a construction loan is still a mortgage/equity loan on the house, it just pays out in increments during the build instead of a big check at the end.

 

[700jfm]

I worked and saved, worked and saved, worked and saved some more. I waited until the kids were out of college and the house was payed off. Now it's my turn cash all the way. I didn't like having a first mortgage I wouldn't even think of having a second, don't do that.

 

[ddrewyor]

Some people do not mind having the debt and finance everything. Personally, I hate owing anyone anything. When we built our house I told the wife that if she let me build the second garage vs. having the contractor do the upstairs, I would finish the upstairs any way she liked. I had the slab, foundation and the framing done. I have slowly done everything else myself over the past 5 years. That was after doing the upstairs for a year. By waiting you will find good deals on items and using cash means only paying once for things. You do not want to be a slave to debt. It's your choice, but I would save until I had enough to get her weather tight and then do the other items one at a time. The 160' driveway seems excessive, but then again I just drive across my property from the access road to the garage. My driveway and apron are in our financial plan for Summer of 2011. Remember, make a plan and stick to it - those who fail to plan, plan to fail! Whichever way you go, pick the size you think you will need and then 1.5x it. Take care

Dave
________
Extreme q vaporizer

 

[Shocker]

Well Wil, I think you are getting some great advice here. If you had more equity in the house, then you could do what I did, which was borrow 15k against my home to get the majority of it done.

I paid 16k for a 24x32x10. Stick built, 6" concrete floor, arch. comp roof, T-1-11 and basic electrical.

I saved up for the asphalt pad that was done a couple months ago along with the rest gravel. Saved up for the GarageDeck floor (comes Friday I hope!)

Next is insulation, a bit more electrical (220v), and the install of the heater over the summer.

The best appraisers around here say that I can expect about 50 cents per dollar on the shop build. Not too bad considering.

With the possibility of losing more $$$ in devaluation, you could find yourself in a big hole very fast.

 

[KCarGuy]

I sold a 1960 Corvette to finance my Garage, then took vacation and did 1/2 of the labor myself to help lower the cost.
I had to remove the old garage later, which I did myself. and when it came time to bust up the old pad and remove that, our streets were being redone at the time, I paid the guys $75 cash and they finished busting it up, and hauling it away.
Timing can be everything sometimes.
Right now, with the economy as it is, building material is low, business is slow...you should be able to get good pricing, but, make sure that it is good quality also.

 

[wil33562]

Thanks for all of the advice guys.

Yes, the 160' driveway will need to eventually go in and it does take up about $9k of the total cost.

I think I'm just going to start paying $100 or more per month toward the principal and save some cash on the side toward the garage over the next 3-4 years. By that time, I should have atleast 20% or more equity in the house, plus I should have quite of bit of cash saved up for the project. Hopefully, enough where I won't even consider a loan an option when I start the garage.

Once again, thanks for all of the advice.

 

[mad57]

Thanks for all of the advice guys.

Yes, the 160' driveway will need to eventually go in and it does take up about $9k of the total cost.

I think I'm just going to start paying $100 or more per month toward the principal and save some cash on the side toward the garage over the next 3-4 years. By that time, I should have atleast 20% or more equity in the house, plus I should have quite of bit of cash saved up for the project. Hopefully, enough where I won't even consider a loan an option when I start the garage.

Once again, thanks for all of the advice.

ok im gonna say go for the build... how old are you? i waited and waited im now 38.. if i didnt pull the trigger i never would have built ..so what i owe on the garage i hope to build a couple of cars a year (easy resto stuff) and flip them and hammer down the payments, as long as you can afford the payment when its done go for it!! forget the drive way , finance the pole building as a shell, search craigslist for cheap masons every body needs work these days youll get a great deal. get that done and slowly work on putting the pieces together. search cl like a mad man and buy when you can afford. life is way to short!!!!! i repeat life is way too short. just my 2 cents good luck with ur decision,mike.

 

[Dragster Racer]

Thanks for all of the advice guys.

Yes, the 160' driveway will need to eventually go in and it does take up about $9k of the total cost.

I think I'm just going to start paying $100 or more per month toward the principal and save some cash on the side toward the garage over the next 3-4 years. By that time, I should have atleast 20% or more equity in the house, plus I should have quite of bit of cash saved up for the project. Hopefully, enough where I won't even consider a loan an option when I start the garage.

Once again, thanks for all of the advice.

I'm going to join you on a good call here. The funny thing is, it was only a bit over a year ago when this topic came up, and quite a few said go for it to the poster. I think we have learned a lot as a society. You will be ahead of the game getting the mortgage paid down and saving some cash for the build. If you had half of the cash needed, and then started the build, that would be great. Do as much of the build as you feel comfortable with, and save some $.

 

[sberry]

I build it all myself, only way to afford it. I have one a while back where I have 65K into it and the underwriter says its worth 180. Shop same way, maybe 125 or less into but would have been up wards of 300 if I hire it done or didn't salvage a lot of the furnishings.

 

[IDASHO]

I built mine entirely myself, and paid cash for materials.

Being employed at a building supply outfit helps, decent break in materials really cheap equipment rentals.

Still..... by the time Im finished.... I will have spent 40k on this 24x30

 

[twostory]

My wife & I built our garage, 26x44, two story. I paid cash for all the material and took a year to build it. Not what most americans would do, but I have 2,200 sq ft and it is all paid for.

The only thing I hire out was the slab pour. I did the footers and stem walls, but I do not have skills & team to pour a big slab correctly.

I do not know you exact situation, but I suggest you either build it yourself, or just have the structure framed and you finish it off. If you just hire a turn key contractor, you will probably be in debt more than you would like.