I'm in Chicago and my girlfriend owns a condo in Bucktown. Recently saw someone selling a deeded parking spot because they dont use it. I had a thought to start buying parking spaces at condo buildings. In our previous building people would sell them all the time.
Generally around here the spots go from around $15k-25k, and you mostly can't find a spot to rent for under $200-250 a month, $150 if you got REALLY LUCKY. That's a great ROI especially if you can get into it on the low end, and no maintenance, etc. Anyone have any experience in this?
@Steve Franco , you make a few critical errors in your calculations. The most glaring o which is "no maintenance". Somebody has to pay for upkeep, repaving, fixing water leaks, etc. Further, as an owner of one spot in a parking garage, you will pay for your share of insurance, taxes, payroll, etc., just like any other real estate investment.
The great ROI you state is as if you have no expenses and your gross and net rent is therefor the same. If you purchase a parking spot for say $20,000, your tax bill on it may be anywhere from $400 - $600 annually. your share of insurance is probably about $35 per year, another $250 into a maintenance/repair fund. So, assuming no major one time charges (in a garage in Phoenix I owned a couple of spot in owners were billed a one time emergency repair fee o $6450 per spot), Your $2400 yearly rent becomes $1600 after expenses. Add in 5% vacancy and your down to a $1500 net (still not pad on a $20,000 investment, but 7.5% ROI is just average. Plus, you can forget the magnifying effects of a low interest mortgage, as any mortgage you could obtain will be at double digits.
Makes sense. But if im buyin up spots where we own, will i be paying more in HOA’s? From what I can tell our dues are based on size of unit/number of bedrooms. Also is separate insurance needed for an area that is already insured as common area?
Also I have the capital to buy it outright so there would be no mortgage to worry about
@Steve Franco , I have a number of clients that implement this strategy, mainly due to the low acquisition cost. However, keep in mind that standard title co rate card closing costs of a 30k parking spot in Illinois are basically the same as a $200k condo, so they’re more expensive to buy/sell.
Very good to know Chris! Yeah the low acquisition cost is obviously the big initial attraction. For the current moment im looking for straight cash flow (cash on cash percentages considered but not weighted as heavily for me right now). I’ve just started as a broker and about to leave my full time job to do sales as a broker and investments on my own, so any regular cash flow i can have coming in right now will be helpful. Im considering seeing if I cant get into a few a bit cheaper from someone who is selling 2-3 of them if i buy them all at once.
Still new to all of this so I appreciate all advice!
Another thing to consider is the accessibility of the spot and location.
For example, an outdoor spot in the West Loop close to restaurants/bars can make a more than what you had projected ($150-250). I have experience with Chicago parking apps and have been able to make anywhere from 400-800 per month. Of course the apps take their cut but it makes your life a whole lot easier.
To give you a more concrete numbers:
August revenue was $712 with 60 reservations (gross sales: $970)
February revenue was $421 with 52 reservations (gross sales: $566)
Above, I started in February where I did not adjust my hourly rates optimally for the area. Number of reservations were similar (Feb has few less days). I would say that the area can consistently hit $500+.
Without the expense of maintaining your portion of a garage, you're left with more margin. Tax, insurance, paving, paint, snow removal and etc shouldn't give you huge emergency repair fees.
I am in the parking sector, and simply put, as long as there is a deficit in parking in the area it should be a no brainer!
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