Image via Mr.TinDC/Flickr CC
Supply and demand. It comes in many forms, as you are probably well aware of if you’re on this site. Let’s say you have just moved to a new city, and are securing rent on an apartment. There’s no garage, but you need somewhere to park.
Or maybe it’s time to take a road trip on Interesting Investments. Although we’ve discussed hotels in the past, we’re taking a camper to stay in. It’s not the greatest investment as far money is concerned, but it’s fun, so you roll with it. But when you get to your destination, the RV campsite is full. There’s a parking lot nearby, but no stalls are configured where you can park with a camper.
You’re late for your flight. You speed down the highway, and get to the airport with just enough time to make it through security. Except it’s going to take you a half hour to find a parking space. If these three examples didn’t clue you in, we’re going to talk about a slightly different piece of real estate today — one that you don’t have to clean, is highly desired in many cases, and, if you invest early enough, could net a tidy profit.
A House or Parking Spot
The actual parking spot itself could, the New York Times reports, cost as much as a car, such as $37,000 for a parking space in Houston. Or, in London, it could be a very expensive house, at about million dollars. You did not read that wrong — a parking space sold for a £700,000, or about a $1 million USD, near the buyer’s £10 million home. That buyer, however, is not likely making any money on the parking spot investment.
Not-So-Free Parking
We’re looking to invest, so a parking spot in an upscale neighborhood may not be the best bet. However, each of the three examples outlined at the start do come with investment opportunities.
While some parking spaces are leased for only about $100 USD each month, others, depending on the city and demand for parking, can net more. According to the New York Times article, a spot in a parking garage in Park Slope, Brooklyn, costs $600 a month to rent, with a net profit of about $310 after taxes and fees. The initial investment was $45,000. Even better, the owners sold the space for $285,000. Prices went up, the owner said, and the number of parking spots was always less than the number of residential units that needed them.
Renting out a spot long-term isn’t the only option. From a few days to a few weeks, you can even buy parking spaces at airports in the UK. Meanwhile, SpotHero lets you find a spot to park for even just a few hours.
Should You Invest?
It doesn’t take someone with a Masters in Business to know a good deal when it pops up, but the problem with investing in parking is twofold. We already touched on supply and demand, but timing is a huge factor here, as well. You will want to get parking spaces just as expansion in the area is starting, if your intention is to eventually sell the space. Otherwise, the only way you will earn a profit is to rent the space out for long enough that you surpass your initial investment. If you plan poorly, you could be stuck with a parking space for an area that stops development, and no one needs a place to park. In short, if you can get a parking space for a good price and expect to see the area undergo development and growth, you should. Otherwise, look to other investments.
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