Investing in carparks?

[summadayze]

Hey guys, what's your thoughts on investing in carparks? The yields are better than residential property and just say you bought 5 it's still way cheaper than your typical commercial building. Olly also briefly mentions in the latest 'day the bubble bursts' book that carparks are a good investment in troubled times. Does anyone know the pros and cons? Also how much would the banks lend against these because i read somewhere on this site that they don't accept the parks as security for the loan?

[powerbroker50]

At the end of any cycle car parks become popular. They do not tend to increase in value. Unless the returns are really high why would you bother.

[spurner]

There was a (small) discussion recently about carparks.

Basically cashflow might not be as good as it seems, and financing can be an issue.

I'm yet to hear of anyone who has made good money in carparks. Except for the developers of course

[Glenn]

I have a digger moving onto a site next week to demolish a bit of my building to create a few more carparks.
The alternative was to pay the council something like $25000 a park.
When I consider that we are lucky to earn $1000 a year for a park it is a no win situation in small town NZ.

[Wezz]

I have 25 car parks and each year the rental on them increases. Each place is different of course but if you're not sure if car parking is a good thing to get into, just have a chat to 'Wilson's Car Parking'. Why would such a large company focus the way they do on car parking? They've identified (a long time ago) that car parking is a premium product which spin off great returns if you get the location right. And the bonus is for people like us, if we're lucky to get onto land in the right area that you can rent out as car parking, you end up with a land bank. And we all know what happens to them over time. I have no problem with having some in my portfolio. Cheers - Pete.

[spurner]

Hi Pete

Is this a freehold piece of land you own, and leased to a carpark operator? If so, I agree you're on to a winner! This is the way to do it, big capital growth in the land over time.

I think summadayze was thinking more about buying a few carparks in a carpark building. IMO there are too many ticket clippers involved doing things this way, and the scale isn't big enough to make it worthwhile.

Cheers,

I have 25 car parks and each year the rental on them increases. Each place is different of course but if you're not sure if car parking is a good thing to get into, just have a chat to 'Wilson's Car Parking'. Why would such a large company focus the way they do on car parking? They've identified (a long time ago) that car parking is a premium product which spin off great returns if you get the location right. And the bonus is for people like us, if we're lucky to get onto land in the right area that you can rent out as car parking, you end up with a land bank. And we all know what happens to them over time. I have no problem with having some in my portfolio. Cheers - Pete.

[Wezz]

Hi Spurner - Yes it's a freehold piece of land that I own, and I run it via monthly charges to regular car park renters via Automatic Payment. Nice and simple. Cheers - Pete.

[Julian]

Recently I got talking to a guy who (with a partner) did a big development in Auckland. I know the development because I nearly bought a retail shop in it. This developer told me they sold off all the secondary stuff and kept the blue-chip part for themselves. I was curious, as this ground floor retail shop was (I thought) the blue chip part of the development - there were offices above. He agreed the shops were good buying, but said the truly blue-chip part to the whole development was the car-parks beneath the ground. In Auckland CBD they have a cap rate of around 5%. They have close to zero maintenance. Demand always exceeds supply. Rental increases are practically guaranteed.

I learned something important that day. Now you have too.

Julian