Should You Invest In a Parking Space?

The article below from the Financial Post discusses the increasing value of parking spaces in the city. Although this article cites Toronto stats, the same holds true in Chicago.  A condo unit with parking spaceparking (at an additional cost) is more valuable than an identical unit without available deeded parking.  Additionally, the mortgage interest and property taxes are income tax deductible, so even if you don’t own a car, renting the spot can be an income stream.  The rental usually exceeds the PITA (principal, interest, property taxes and monthly assessments) on the deeded garage/parking spot.

Here is the full article:

The old saying goes buy real estate, they’re not making more of it. But what about parking? It might be just as scarce a resource.

The old saying goes buy real estate, they’re not making more of it. But what about parking? It might be just as scarce a resource.

Parking values are rising faster” than condo prices, says Shaun Hildebrand, senior vice-president at Urbanation, noting average condo prices are up about 50 per cent during the same period. “But you can’t just buy parking.”

James Ritchie, senior vice-president of sales and marketing with Tridel Corp.,which built its first condo in 1968 and currently has 5,400 high-rise suites under construction in the Greater Toronto Area, says part of the problem with trying to make money on a parking spot by renting, or even selling it, is that most condominium boards have restrictions.

“You can only buy or rent a parking unit if you are a dwelling unit owner,” said Ritchie, referring to his company’s projects. “It is essentially to prevent someone who is not a homeowner of the building to come into the common area to use the parking spot.”

He says the practice is now widespread and generally in place because “homeowners don’t want people coming through their lobby or garage” and is not aimed specifically at restricting the trade in parking spots.

Ritchie says condo fees and property taxes — both payable on parking — may also be having an impact on interest in parking demand which he says has been waning in downtown areas. In the suburbs, parking is still very much in demand for condo dwellers.

Alex Enchin, a founder of the site WhereiPark which matches empty parking spots with drivers, said there is a strong market in rental parking and the income should be able cover the carrying costs of buying a spot you might not use right away.

“We want to provide people with extra spots a tool to rent it out and generate extra income,” said Enchin. “People have been leaving tons of money on the table.”

While he concedes that some condo developments restrict who you can rent to, he’s found there is usually a market within a building, something generally allowed under condo guidelines, for unused parking. He estimates a parking spot in Toronto’s core can be rented in the secondary market for $125/month, of which his company takes a 20 per cent cut for managing the renting of it.

Enchin says parking is a bit of a Catch-22 because when people skip the spot because they can’t afford it, it tends to take them out of driving in the long run.

“I want that parking spot because your ability to resell your unit will narrow down what you can get from potential buyers. I’m biased because I’m a driver,” said Enchin. “But I can see how people see it as a lot of money for 60 square feet of concrete.”

Information provided by Chicago Realtor Karen Breen Elia.

MAKING A POSITIVE DIFFERENCE IN PEOPLE’S LIVES.

Karen Breen Elia & Louis M. Elia, REALTORS®, are brokers for homes, condos, and multi-unit properties on Chicago’s North Side.

ChicagoCityHomes, RE/MAX Exclusive Properties
2951 North Lincoln Avenue
Chicago IL 60657
Toll Free: (866) 404-3585 Fax: (773) 938-1467  Send An Email

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