Should You Convert Your Garage Into a Living Space?

With housing costs so high in so much of the country, it can be more realistic to buy a smaller property and invest in expanding its living space over time. One place to start: converting a garage into something other than a parking spot. But there are many pros and cons to consider before taking on such a project, including the impact on your home's resale value and the total price tag (which may be more than you bargained for). If you've been contemplating a conversion, here's what real estate, home design, and insurance professionals think you should know first.

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One of the more attractive points of converting a garage is that you already own the property. You don't have to shop around for a bigger home and come up with the money to buy it, upending your life. And that's not the only positive of this approach to adding square footage: "Garages are usually wide-open space and lend themselves very well to modern, open-floor-plan trends," said Teris Pantazes of Settle Rite, a presale home improvement company.

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Not everyone wants a converted garage — because some people need a garage, said residential real estate developer Bill Samuel of Blue Ladder Development, who is based in Chicago. "In my area, not having a garage can make it much more difficult to sell a house because of the colder climates," he said. "Buyers prefer to have a place to park their car out outside of the elements."

If you live in a warmer part of the country, where being able to park a car inside isn't an important factor, a garage conversion may look far more appealing. "Some buyers are more likely to want the additional living space rather than a garage," said Lauren McKinney of Judd Builders, a custom homebuilding and remodeling company in North Carolina. "You could increase the pool of potential buyers with the added square footage."

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No matter what you do, McKinney said, a garage conversion is liable to feel and look visually separate from the rest of the home. "Interior materials like trim and flooring probably won't match the other areas of the home unless it's a recently built home," she said.

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It won't be cheap if you go all in and remove the garage door in a conversion. "Removing a garage door is very expensive — about $5,000 or more for a blank wall and about $7,500 to add windows and doors," Pantazes said. "First you have to remove the hardware, close in the opening, likely install a new door or window in its place, and don't forget you'll have to finish the outside, which means matching siding or brick." It's often a struggle to make the exterior blend seamlessly with the rest of the home.

Rather than worry about matching the rest of the home, consider embracing the difference by doing a partial upgrade that simply makes it more usable — maybe as a gym or workshop. "The space can be considered flex space if it wasn't built with a livable space in mind," McKinney said.

Unless you're prepared to invest a lot of money in adding windows, a converted garage space can end up feeling dark — most garages don't have large windows or a lot of natural light, McKinney said.

Often when people think about expanding a home, it means saying goodbye to some yard or other valuable outdoor space, which can be a big deal on a smaller lot. But when you convert a garage, that's avoided, said Ashley Baskin, a member of the board of advisers for Home Life Digest.

On smaller residential property lots, there isn't always a place where a detached garage can be added if you or future buyers of your home want a garage, too. "Converting back a living area into a garage wastes materials and money," McKinney said.

While there are experts who believe converting a garage risks diminishing a home's resale potential, others say it can add value. Pantazes estimated that creating an additional bedroom increases a home's value by $15,000 to $35,000.

Depending where you live, you may need to install heating and air conditioning in the new living space, and that likely won't be cheap, McKinney said. "It can be more expensive than many homeowners expect."

Another potential bonus from a garage conversion: extra income. The space could host overnight guests, aging relatives, or even make money as an Airbnb rental. "In many cases, homeowners create an accessory dwelling unit to put up aging parents and give them some privacy, but after their parents pass away or move into an assisted living facility, they end up renting ... to generate income," said Brian Davis, a real estate investor and co-founder at SparkRental, which helps people replace their salary with passive rental income. The money might be enough to cover monthly mortgage payments. "It's a form of house hacking or creating income from your home to cover your housing expenses," Davis added.

Given all the costs associated with a conversion, from windows to heating, the bottom line is it won't be cheap. "Generally, a garage is not insulated, and the floor is only cement and oftentimes not even level. Just putting the foundation together to make your garage a sound structure for a bedroom can cost you as much as $50,000 to $75,000, depending on your location and the structure," said Annette Holmgren, real estate broker at Keller Williams NYC and owner of a home renovation company. "For a conversion like this, people should set aside $100,000 to $150,000. It's almost the same cost of adding an entire new floor to your home."

Avoiding all the bells and whistles in a garage conversion saves money. "A simple conversion can be affordable," Baskin said. "Insulating a space can be done at a low cost, and if this is the primary concern of the space, the conversion can be done quickly."

Don't just expect to do a conversion without it being noticed by all the agencies and authorities that will expect paperwork, paperwork, paperwork, before, during, and after construction. "If the conversion is not done legally, with all required building permits and local approvals, your insurer will most likely drop you from coverage," said Stacey Giulianti, chief legal officer for Florida Peninsula Insurance. "Adding illegal extensions or changes, especially when not done to code, is extremely dangerous and typically uninsurable [and] failure to notify your agent and insurance company is considered in many policies to be a breach of the contract."

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Any major change to the structure of your home or the way it is used, even just a portion of it, may result in a change to your taxes and the insurance "risk profile" for your property, which could mean either a higher premium or a rejection by underwriters. "Be sure to bring your agent into the conversation, as well as the contractor, before converting a garage into a living space," Giulianti said.