Garage Conversion Flop

garage-conversion

Although the concept of converting an unused garage into a livable dwelling is not a new idea, Gerry Brown signed the Wieckowski bill into law which actually promotes the idea http.  See http://bit.ly/2dSK7rc.  However if your conversion is not done right, not only can it be a disaster for your tenant, local laws can sting a homeowner financially.  In Los Angeles there are local housing laws like the Los Angles Rent Stabilization Ordinance that must be  followed in addition to state law.  One garage conversion I remember went so badly for the owner that they ended up paying over $14,000 to the tenant.  The situation was like this:  A new owner bought a property sight unseen in the city of Sylmar California.  The house was a 3 bedroom 2 bathroom with a detached garage in the back yard.  There were tenants living in the front house and the detached garaged which was converted into a 1 bedroom apartment.  The back tenant had a child who was getting very sick living in the back house because the ventilation was very poor in the bathroom.  Add that the front house tenant was also the previous owner who had been foreclosed and had not yet surrendered possession of the property to the new owner.  The previous owner was very upset about losing his house so he would let the 2 pit bull dogs living on the property roam the yard. Unfortunately for the back apartment tenant the dogs were unfriendly towards people so the dogs would intimidate and often try to hurt the back tenants. So now we have a back tenant who has a very sick child because of the ventilation problem and they couldn’t come and go as they pleased, essentially entrapped in the garage. Eventually I was able to negotiate with the owner to leave the front house (since he was living rent free from the resulting foreclosure) but the back tenant wouldn’t leave. As it turned out, she had hired an attorney who hired a professional licensed mold testing company who took samples throughout the garage and verified the existence of black mold spores. It wasn’t short after that the attorney wrote a letter to the owner stating that, under LARSO rules the owner MUST pay the tenant as much as $18,000 to relocate the family and even threatened with an additional $36,000 of health related damages suffered by the tenants child! Although the owners attorneys responded and disagreed with some of the claims, a settlement was quickly reached of over $14,000 in favor of the garage tenant. Although the previous owner had probably never foreseen the potential disaster that ensued, new home owners must be aware of how local laws can impact a planned garage conversion. Had the previous owner used sound building and construction practices, the ventilation issue would most likely not have been an issue and would not only have kept the family safe, but the new owner from having to pay a large settlement to move the tenants out.

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Housing Affordability Trends

Studio Apartment

California’s passing of SB1069 (link here: http://sd10.senate.ca.gov/news/2016-09-27-gov-brown-signs-wieckowskis-accessory-dwelling-units-bill-provide-more-affordable) took the old concept of renting out one’s garage/storage space and made it legal.  Although restrictions exist, the new law is one more sign that housing affordability is just as much a concern for Californians as housing availability.  Homeowners looking to reduce the cost of home ownership have always considered whether to rent out a room or make an illegal garage conversion.  With the law being put into effect it is likely to keep the residential fixer-upper contractors busy for a while.  There are 3 BIG advantages a garage conversion has over renting out a room in your main house.  My top three are:

PRIVACY – There is nothing more odd than sharing a space with a roommate in your home, if its your home and its been years since you have non0family roommates.  The occasional run in at the bathroom or refrigerator can be as meaningless or annoying as you make it out to be, but you have to prepare for it either way.  For some that will feel odd and even find yourself asking “why am I sharing this house with this person?  Oh yeah, that’s right – Because its the only way I can pay the mortgage and have enough money left over to have a life!”  The detached garage/storage space solution eliminates the social complexity of sharing space because everyone has their own space and well defined boundaries.

SCHEDULES NEVER CONFLICT – Come and go as you please in a detached garage/storage space situation but NOT so when you rent out a room.  If you have a renter that keeps off hours, to some extent so will you.  An owner really needs to focus on lifestyle questions in the renter interview process to better understand if a roommate will functionally “work out” or result in a toxic living environment.  Additionally, schedules can change.  A change in a persons job, profession, relationships, etc. can turn a once functional lifestyle arrangement into dysfunctional arrangement if both parties are not willing to make compromises.

PAYING YOUR FAIR SHARE – A detached garage/storage space arrangement makes it easier for the renter and the owner to determine what a fair rent is because the market can be compared much more easily for a converted garage.  Renting a room is almost impossible to find a comparable rent because no two houses are the same.  Additionally some owners do not want renters using in-home laundry facilities and would rather they go to the local laundromat to help keep utility usage down.  Splitting utility billing can also be tricky because renting a room (maybe 100 square feet) is not really renting a room but also the hallway, the living room, the family room, the kitchen, etc.  By going the converted garage/storage space route an owner and renter can agree more easily on what parts of the property will be included in the lease and which ones are not.

Thanks for reading!