Parking Spaces As Real Estate Investments
Author: Paula Cherrist
One of the more unusual but sometimes profitable real estate investments is buying parking spaces. In every large city, including Chicago, there is always a need for parking and demand outpaces supply. Even with public transportation readily available in large cities, the high gas prices and the growing trend of green living and conservation, Americans still love their automobiles. Parking spaces are always going to be needed, and there are investors who are banking on it.
In Chicago, Mayor Daley is proposing lowering the number of unpaid parking tickets from three to two before you get booted. Right now it costs $60 to get a booted car back, along with paying all tickets owed. A booted car will be towed after 24 hours, so you could have an additional towing fee of about $150 plus storage costs. It could add up to several hundred dollars in a few days. Records show that there were almost 59,000 autos booted in Chicago last year (2007), so there obviously is a need for parking that isn’t being met.
So how much does a deeded parking space cost? It depends on where you are located. In New York, it’s possible to pay more than $175,000 for a prime parking spot. In Chicago, deeded parking spaces run anywhere from $20,000 to $65,000 or more in some of the trendy new construction high-rises or downtown locations. High profile developments like the Chicago Spire listed here http://www.bestchicagocondos.com/pre-construction-condos/chicago-spire.html usually allow for parking for all of its future residents for a fee in addition to the condo price. Some buyers will opt for a second space if one is available and others may decide not to purchase one at all. In many smaller Chicago real estate developments, no parking is offered with the condos.
According to Parkingsearch, the value of parking spaces has increased by quite a bit over the past few years. Their research finds that in Chicago the average parking space sold for $28,000. By 2006 that increased to $30,000 and last year in 2007 it was about $33,000. With a fixed rate loan of 6 percent there is definitely a profit to be made. It may be a bit if a challenge to find a bank to loan you the money, but it is certainly doable. You monthly payment should be in the range of $200 and the going rate for renting a parking space in prime spots can be as much as $300 to $500.
You need to keep in mind that you’ll have a few fees associated with owning a parking space. It isn’t all profit. While you won’t have much upkeep on the spot, you will probably have to pay a maintenance fee to the building or condo association. A deed must be obtained, liability insurance is a good idea and yearly taxes must be paid.
When looking for a good parking space investment, factors such as the garage being heated, secure entrances and what level or floor the spot is located on if it is a multi-level garage all come into play. Also whether or not there is an elevator can increase the value. You should also do your research and see how well the units in the building have sold. Buying a parking space in a building that is only half sold or rented won’t be a good investment.
Some real estate agents may be able to help you find available parking spaces and many developers are turning to auction houses to liquidate condo inventory, including parking spaces at a deep discount. Around 27 spaces at Millennium Center were auctioned off this past spring, and 10 of those were sold absolute. The suggested opening bid for those spaces was $10,000 to $12,000 and they had been priced at $49,000 to $65,000 each.
Parking spaces as investments may have never occurred to you, but the next time you get a parking ticket or find your car booted, it may sound like a fantastic idea.
About the Author
Paula Cherrist writes articles about Chicago new homes, Chicago real estate and home trends for Best Chicago Condos.