Car park investments are becoming very popular in many places in the world, as an alternative investment. Investors purchase a block of property in a car park – called “car park spaces.” The investor then leases the space out to a tenant for a specified period of time. The tenant is almost always a property management company of some kind.
A Property management company is almost all the time the tenant. The property management company turns around and sub-leases the car parking space to customers on an annual basis.
The investment works because parking space in certain areas in the UK is very limited. People are willing to pay large sums of money for monthly parking. Spaces can be purchased by investors for as little as £25,000 for a six-year lease.
Car Parks Investing Advantages.
- it’s a low-risk proposition if the demand for parking is high. 8-9% ROI annually.
- As long as there are customers willing to park their vehicles in a garage, or some other commercial parking space, there will be returns on the investment.
- Can be very tax-friendly depended on the country.
Car Parks Investing Disadvantages.
- One of the disadvantages of car parks is that they are not uniform in their fees, expenses, and terms and conditions. It’s essentially an unregulated investment.
- Investors need to do their due diligence prior to investing in them too. For example, a car park in Dubai may advertise to UK residents, and if you choose to invest, you have no way of knowing whether the car park actually exists unless you’re willing to visit Dubai and check it out for yourself.
- The key to making these investments profitable is to buy into an area where demand is high. So if the demand drops your investment drops.
- Finally, these investments are not very liquid, which may make them unattractive to many investors. You sign a multi-year lease in most deals, meaning that, even if you do make 9 percent annually, you have to be willing to hold onto the car park investment regardless of what happens during that time.