My house property stretches road to road (quite thin) and at the back is my garage of around 85m2. The idea is that I use the garage to produce something to sell to make holiday cash. But haven't really done much - so it's a bit of a waste. The idea that I do what I do currently (very little) - but add in a few hours cleaning a week is fairly appealing.
Have been toying with the idea of turning most of the space into 2 self catering apartments. Would still like a small spot for some tools - drill press, wood lathe, table saw and band saw - even if it's a case of wheeling them out to use them - and a place to store my m/bike. So around 35m2 x 2 and 15m2 for the workshop would probably do.
My problem is trying to get my head around the number:
Ball parking the set up costs:
New roof, ceiling and internal walls, doors ect R100K
Electrics, plumbing, kitchens, bathrooms R100K
Beds, linen, sofa beds, towels R50K
So roughly R250K costs - lets call it R300K to be safer
@ R500 per night per unit and rented every weekend x 2 nights = R100K per year less some costs (extra elec/rates/other) say R90K. I do realise that they will not be occupied every weekend/ but I also will get business guys in during the week.
So it will take over 3 years to pay back the capital - plus the opportunity cost lost had the R300K been sitting in the stock market. Lets call it 4 years. Of course, I would get some back when it comes to selling the house.
Does not look very appealing.
These would be small one bed units with a sleep couch in the lounge
Might be better with 3 x studio units @ R400 p/night. Realistically, I live in a small town that does not get much holiday trade - but I would expect a fair amount of my customers to be business people.
I do not want to make breakfast every day - so self catering is a must. Not that keen on the long tern rental game - having a non paying tenant would make me loose it.
Just looking for outside opinions and thoughts. Maybe I am just looking at this wrong. Maybe I should be looking at a better case scenario - like 50% occupancy, paid of in under 2 years.