Purchasing a parking spot in the condo garage below your unit might seem like a straightforward opportunity, but what are the other details to understand?
Have you considered the costs associated with parking underneath your condominium, its resale value, parking on the street instead, or renting out a space you’ve purchased, but don’t intend to use?
These are some of the questions condobuyers should keep in mind when they’re looking at purchasing parking along with their unit.
Buying into the condo garage
Most buildings will offer you the option of purchasing a parking space as you’re purchasing your unit. There are usually fewer parking spaces built than units built, meaning that parking in your garage could eventually become scarce and subject to increased demand (read: increased value).
Parking in your building usually comes with extra costs like taxes and monthly maintenance fees, all impacting your cost of living and budget.
Check the status certificate given to all prospective condobuyers, it’ll explain the parking inclusion and whether you will in fact own the deed to the parking space.
All buildings will have their own bylaws that define the ownership and rental of parking spaces. The legal description of the parking space (and whether it’s considered an asset or not) will determine if the space can be bought and sold independent of the residential unit.
If you’re considering purchasing a parking space to rent out, find out if the condo board allows parking rentals in the first place. There may be security reasons that prohibit owners from renting their parking spaces.
On average, Toronto condo parking spaces cost anywhere between $150 and $250 per month to rent from an owner. To purchase one outright, you can expect prices anywhere between $25,000 and $50,000.
The location of the parking garage and its demand will determine its market value. A parking spot in one coveted Yorkville condo building once sold for $100,000. Alternatively, parking spots in Roncesvalles have gone for $50,000 and those in the Junction have seen $38,000 values.
A parking spot could be a good investment in a high-demand area as parking prices rise along with the market. Financial Post has even said that parking values are rising faster than condo prices.
If you do have a vehicle, there are a few ways you can get around purchasing a parking space outright, such as parking on the street.
Another obvious alternative is to rent a parking space from an owner. If you do choose to rent a parking spot from someone else in your building at $150 per month, you’re looking at just under $2,000 for the year.
In order to justify the $30,000 price tag with practical use, you’d have to use your parking space for 15 years at $150 per month, or, rent it out for that price or higher, just to keep things in perspective.
Buying a parking space could, in theory, pay for itself if you don’t intend to use it.
Discounts on parking spaces?
If you get into a pre-construction condo, there are sometimes discounts available on parking spaces for early birds. Do your research ahead of time to see if your pre-con unit is offering up parking at a reduced rate, making the resale potential even more profitable.
Decide if you’d like to take on the added cost and responsibility associated with a condo parking space – would you like to organize the rental, pay the maintenance fees, and eventually sell it? Or would you rather the reduced expense and administrative labour?
We’ll leave you with a quote from the Toronto Star (May 8th, 2008) that will be of interest to investors:
If you're looking to buy a condominium as an investment, or are concerned about resale value, make sure you get that parking spot.
Lack of parking was the number one reason cited by 71 per cent of Toronto area buyers for not buying a particular condo, according to a TD Bank Financial Group poll released yesterday.