Author Topic: 4-unit property - renting storage to non-tenants  (Read 1563 times)

Tumbler

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4-unit property - renting storage to non-tenants
« on: August 21, 2017, 02:45:56 PM »
I have a 4-unit property with two workshop/storage spaces that are unused now that I'm finished with the rehab. The property is located in a downtown area where it's not uncommon to rent storage space to non-tenants. I'm currently looking into any potential zoning/land use issues. I have a few questions that I'm hoping the community might be able to help out with:

1) Would this additional income ever be factored in to the value if/when I sell the property?

2) Would the income from these storage spaces make it difficult for a future buyer to obtain a traditional mortgage (i.e. require a commercial loan)?

Any help or insight would be much appreciated!

Capt j-rod

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Re: 4-unit property - renting storage to non-tenants
« Reply #1 on: August 21, 2017, 03:28:12 PM »
I would call an insurance agent to see how this affects the rates. A "shop" is much more likely to cause a fire. If it is storage then it is no big deal. I don't know that I would get the inspectors involved. Sometimes better to beg for forgiveness than ask permission. I don't see how a mortgage would change for the next buyer. I provide storage for my triplex. I have four storage units... If you want to add it to the apartment, great. If not I rent it out separately. It's not a huge return, $50/ month per unit. There are times it feels like more hassle than asset when chasing down rent. It did however maximize the income for the property. It cost me about $10,000 to add the storage and it makes $400/ month when occupied. It all adds up at the end of the year I guess. FYI there is no electricity available to the storage units.

Tumbler

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Re: 4-unit property - renting storage to non-tenants
« Reply #2 on: August 21, 2017, 04:14:38 PM »
Thanks Capt j-rod. Is your storage secured or access limited aside from a lock on the unit?

Capt j-rod

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Re: 4-unit property - renting storage to non-tenants
« Reply #3 on: August 21, 2017, 06:26:50 PM »
detached 4 unit modular metal building. The city would have required fire walls had there been electricity or gas. Again, it does make money, but sometimes it is a lot of bullshit to get your $50 bill. Also check your state laws for storage units and how they want the contents handled after non payment. Auctions are sometimes required. I've been fortunate to keep three units occupied by the tenants in the apartments. I had the fourth one rented, but I ended up keeping it last time for my maintenance junk for the property... Mower, snowblower, ladder, wheel barrow, etc... It allows me to ride my bike to the rental and do most maintenance. I ended up making more money this way than renting it. It mostly makes my apartments a better value proposition and raises the rent $50. The tenants like them. I would never go into the mini storage business though.

Bikeguy

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Re: 4-unit property - renting storage to non-tenants
« Reply #4 on: August 23, 2017, 10:52:20 AM »
... It allows me to ride my bike to the rental and do most maintenance

Love this.

SBuck

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Re: 4-unit property - renting storage to non-tenants
« Reply #5 on: August 23, 2017, 01:47:37 PM »
I have a 4-unit property with two workshop/storage spaces that are unused now that I'm finished with the rehab. The property is located in a downtown area where it's not uncommon to rent storage space to non-tenants. I'm currently looking into any potential zoning/land use issues. I have a few questions that I'm hoping the community might be able to help out with:

1) Would this additional income ever be factored in to the value if/when I sell the property?

2) Would the income from these storage spaces make it difficult for a future buyer to obtain a traditional mortgage (i.e. require a commercial loan)?

Any help or insight would be much appreciated!

If you plan to sell it or have any future concerns, I would highly recommend updating the Certificate of Occupancy. Too little is known to know whether this is a 4-unit or mixed use property, however a CO, would address this.

Cwadda

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Re: 4-unit property - renting storage to non-tenants
« Reply #6 on: August 24, 2017, 02:10:57 PM »
I also have a 4 family property with 4 separate storage spaces. It comes with the corresponding unit for tenants living there. I'm not sure if this will change, it'd require getting some better lighting before renting it out.