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Tuesday, September 25, 2007

Garage Town

Sorry it's been a while without any posts.. I was in San Francisco on business.

The other day, one of my co-workers was in my office talking about a new property development in Mesa, Arizona that she came across - Garage Town. It's a development consisting entirely of garages. Unlike a rental storage space, at Garage Town, you actually buy and own the garage, just like you would buy a home. The community is gated, you have 24/7 access. The garages can include cable, A/C, internet and just about everything a home has. They have a community clubhouse that has showers, bathrooms, and a mini-kitchen. (So while legally, you probably couldn't live there, in reality, you could stay for a couple days without being too inconvenienced.) My co-worker also said the garages vary in size from a standard one car unit, to huge two story spaces capable of sheltering an RV. Their website claims it is "the perfect starter real estate investment!" You get all the benefits of REI, including tax deductions,depreciation, and the ability to do a 1031 exchange.

The drawback? Here in Arizona, the smallest unit starts at $80,000. Prices vary across the country, but this seems pretty expensive for a garage - my Rental #1 in Tulsa cost as much. As for a real estate investment, I have my doubts. For a true investment, you'd need to rent this out. I'm not sure there are that many people who need to rent a garage. Further, I would think this would be pretty susceptible to economic downturns. Everyone needs a place to live, but when money gets tight, I think the extra garage payment would be one of the first things to go. Still, it's an interesting concept and I would like to know if any investor actually makes money renting one of these out. I have a feeling the investors who will make the most money are the builders who sell the units for the first time.

2 comments:

Cameron said...

I have met the guys who develop these, and they are wildly successful. The average garage sells for $150k, and they sell out in a matter of days. No shortage of demand among the target cleintle - they're probably not making payments on them.

jeni said...

I think that Garage Town sounds like a GREAT idea...I would love for my husband to get all his 'projects' out of the garage so we could park our cars in the garage (imagine that!) and since our HOA doesn't allow us to park our Boat and Trailer along the side of our house, I would much rather put the rental money towards some equity!!

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