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How to Value Urban Underground Parking Spot for Buy & Hold Property?
This is my first attempt at seeking out advice on the forum so please be kind! We have an opportunity to make an offer on a rapidly growing downtown small city condo which currently is not publicly listed (found it through a broker connection). Here are the facts:
- The property is 2BR/1.5BA and needs an interior overhaul including knocking down a wall to open up and rehab the kitchen, updating both bathrooms and installing new flooring throughout the two-story condo of approximately 1200 sf. The bones of the property are decent as it was built in the 80s so we do not anticipate any major electrical or plumbing issues.
- Our analysis (via the amazing BP analysis tools) indicates that we could pay $350k (which is quite reasonable in this market compared to new condos being built), invest $50k in the rehab and cashflow $400-$500 per month once rented. On the negative side, if we were to rehab and flip this property with the above numbers, we would break even after selling costs. New 2BR/2BA construction is coming to market at $500k+.
Here is our dilemma:
The property has a connected one-car garage and another off street parking spot which is extremely rare in this downtown location. Only new, high-end and expensive condos have the underground parking downtown. We think this may be a huge bonus in the future valuation given that it is very difficult in this old New England city to build garages unless doing so on new properties. Without the underground parking we probably would be tentative moving forward...but the parking is a factor.
We cannot find ANY good articles around the valuation of underground parking spots but my gut is that this is a truly a unique opportunity. How much could the underground, attached garage positively affect the future valuation and rental rates? We tend to be conservative buy and hold investors in higher end properties and try to analyze deals more from a cashflow perspective rather than betting on appreciation.
Thoughts?