Should You Buy A Parking Spot In Your Condo Building
Thursday Jul 02nd, 2020Share
At a glance, it looks like a simple yes or no question: Should you invest in a parking spot in your condo?
- Do you have a car? yes.
- Don’t have a car? no.
Unfortunately, the answer is much more complicated, especially when you factor in the pros and cons, the potential cash flow that comes with owning a parking spot, and the underlying costs. Whether you want a parking space for your own car or are looking to monetize your investment by renting out the spot to someone else, investors take a keen interest in parking spaces that may be independently bought or as a part of the condo unit, for somewhere between $10K and $150K depending on the building. However, if you get lucky, the price of a potential condo may include the parking spot as well.
However, before you make the investment, you should ask yourself an important question first. Do you really need a car if you live downtown, especially when you have a walking access to transit, not to mention Uber and Lyft. Plenty of buildings also have reasonably priced car shares close by, some even including bike lockers as well. Think of all the food and grocery delivery apps that bring you everything you need right to your doorstep. However, even if you don’t own a car or aren’t even thinking of owning one in the near future, there are some pros and cons of owning a parking spot that will help you reach an informed decision.
It can add to the value of your unit
Adding a parking spot to the offer can boost the cost of your unit by as much as 5-10% – and even more in areas where parking is limited. As developers are being squeezed into smaller and smaller development site, most condo buildings have fewer spots than units, and increasing user demand has turned these patches of concrete into hot commodities.
You Can Rent It Out
Don’t own a car? The biggest misconception is that properties with parking spaces should only be considered by buyers who own and drive a car. But as it turns out, owning a parking space in Toronto can be very lucrative. You can always rent out the space to a fellow tenant or someone who lives or works in your area. Not to mention, If your condo is an investment property, you can rent it out to your own tenant separately and make more bucks on the side.
However, parking space bylaws vary from building to building and it’s good to check with your condo board whether they are on board with renting out. Furthermore, many buildings also have the restriction that the parking space can only be rented to another resident in the building and not to an outsider, although buildings in premier downtown locations do allow renting spaces to non-residents. It is important to clarify the rules set out by the condo board to know of any restrictions beforehand. Also, you need to check whether the parking space is deeded to you, or is it deeded as a separate property. You can only sell the parking space as a separate entity if it is deeded to you.
You Recoup Your Money When You Sell
A parking space in a Toronto condo building can cost you somewhere between $30-$70K. Most people wouldn’t considering adding this substantial sum to the already sky-high price of a condo, especially if they can rent a spot from someone else for a mere $150 a month or more. However, parking spots are hard to come by in downtown Toronto and who minds paying this additional sum when you can get it back down the road (with some profit). Since developers are not building enough parking spots today to meet the demand of tomorrow, expect a see a major upsurge in parking spot prices soon.
However, while buying a parking spot seems like a good decision, here are a few reasons why you might not want to make this decision:
It Comes With Its Own Maintenance Fee
Most people don’t know that even after paying an extra $30-$70K for a parking spot with their unit, they are not finished paying for it! As with your condo unit, there are monthly maintenance fee involved. Typically, this fee comes around to $50-$60/month on a parking spot downtown but recently I’ve seen as high as $150/month in more premier facilities. This might come as a shock to people who are considering purchasing a parking spot.
It Doesn’t Always Make Economic Sense To Buy A Parking Spot
As I have just mentioned, expect to pay an additional $150/month in maintenance fees, on top of the purchase price which can be in the $30-$70K range. With a 20% down payment, the monthly cost of owning such a spot is around $300. When you can rent a parking spot for $150 a month, it doesn’t make economic sense to purchase a parking spot with your condo, especially if your finances are already stretched thin