Is it worth to buy locker and parking for condo purchases?

[jackiechandc]

Hi everyone,
This is my first post as I`m a total newbie in the real estate game. I`ve recently bought a condo unit in Toronto for a long term investment as I would like to rent it out eventually. I`m probably going to get a locker for the unit ($3500), but not really sure about the parking ($35000). The unit is right in the middle of downtown, so I figure parking would not be necessary.
The question is whether it is worth paying for a parking spot or lockers for condos for long term investments. I`m just trying to figure out whether it is a good ROI for those additions. Any comments or advice would be more then welcomed . Take care.
Wei
1st Time Investor in Toronto

 

[selias]

This has been my experience with an "area in transition" in downtown Calgary. Great, trendy building but not a great neighborhood.
I found that the rental prospects narrowed a bit as young females would prefer not "find" street parking at night and walk to their apartment, men didn`t want to leave thier nice cars on the street and it was an issue overall for quite a few potential renters. Although the parking spaces were not to be rented (as management stated) It is very easy to rent to your tenants (at an extra fee if you wish) or another suite in the building for extra cash flow.
Take a look at your exit plan as well. Do you think the cost now would= a quick sale later?

 

[Sarnia]

QUOTE (jackiechandc @ Jul 9 2008, 10:42 AM) Hi everyone,
This is my first post as I`m a total newbie in the real estate game. I`ve recently bought a condo unit in Toronto for a long term investment as I would like to rent it out eventually. I`m probably going to get a locker for the unit ($3500), but not really sure about the parking ($35000). The unit is right in the middle of downtown, so I figure parking would not be necessary.
The question is whether it is worth paying for a parking spot or lockers for condos for long term investments. I`m just trying to figure out whether it is a good ROI for those additions. Any comments or advice would be more then welcomed . Take care.
Wei
1st Time Investor in Toronto

I agree, if I was a tenant and had a vehicle, I would want to park it in a safe place and not look for parking all the time. Also, I don`t know what parking there is in Toronto, but here in Calgary it is almost all metered or limited to 1 or 2 hours. Not fun when you are living there and have to find a spot for a car.

 

[NeilUttamsingh]

Jackie,

Having a parking spot, especially in the downtown core of Toronto is a good idea.

Don mentions often that with condo units, it is a smart idea to have a parking spot, as this helps with the resale of the unit...

You mentioned that this is going to be a long term hold.

Also, available parking spots in the downtown Toronto core are becoming more scarce as time goes on.

Brad J. Lamb made a statement about 1.5 years ago that by 2010, there would be very few parking lots in existence south of Bloor.

So this means that parking is something that people need, and it will be in demand.

You can also rent your unit out to a tennant, and rent your parking spot out at an additional cost.

Just my thoughts.

Regards,
Neil.

 

[jackiechandc]

Hi guys,
Thank you all for your responses. It`s a tough decision right now. The unit that I bought with partners is the Murano condominums on Bay Street just north of College. It is just a stones throw from the subway line and just north from the Toronto Police Headquaters so is generally a safe and easy to access building. That is why I was thinking of not getting the parking spot. $35000 is a lot of money and I don`t know if it`s worth such an expense. I rather use that and put it down on another condo downtown.
I`m thinking that maybe downtown Toronto will be more like Manhattan where most people just take the public transit or cab around. Plus with the cost of gas going higher and higher, the trend would be for people to take public transit instead. I think that later on, I can only sell the parking space to another person that owns a unit in the building so that will limit the prices in the long run as well. Any thoughts on my views?? Thanks!
Wei
PS. This is a great site. I look forward to learning from you all

 

[selias]

True, people take transit and walk downtown to work but they also travel out of town on weekends, go out for dinner and visit friends in the evening as well. I know with my downtown condo (lacking an underground stall) it has been more of a challenge to rent it (don`t get me wrong I do a great job!) and we tried buying a stall from ANYONE at a later time and there is nothing to be had. In my opinion the cash seems like a lot now but 35 Grand isn`t a bad price.
In the end it is what you are comfortable with and what fits your systems and exit strategies.

 

[terri]

hi,

a friend of mine just sold her condo in liberty village, it went $20,000 oer asking, was listed at what it was worth, and didn`t have parking. Parking wasn`t even an option for her when she bought it from the builder. I`m seeing that a lot lately in the downtown area, that parking is restricted to the larger units and small units don`t even have the option to have parking. If that trend continues then people will jsut get used to the fact that it`s not that unusual to not have parking. Lot of condo owners in downtown TO don`t have cars, or rent zipcars when they need to get out of town on the weekend. Yes having a parking a parking space would help and would improve resale value, but it`s downtown Toronto, it`s not like you are not going to find a tenant simply because you don`t have parking. Most of my tenants in downtown toronto ride their bikes. I would say that you are correct in assuming that the majority of prospective tenants looking to live in that area will not require or have a car.

on the other hand.....fins out how much you could rent the parking space for and see if that makes sense as an investment.

hope this helps,

T.

 

[jackiechandc]

Thanks again guys for the responses. It`s a really tough decision right now, as this is my first real estate investment property. My investment stragety right now is to concentrate in the downtown core especially along the subway line. My thinking is more and more people are moving downtown so they don`t have to commute and thus get rid of their cars, especially with the sky high gas prices. Does anyone know what the going rate is for parking units in the downtown core that people rent their parking space out for? I heard from some people that most commerical parking spaces charge around $200 - $300 per month for parking in the downtown core. I have no idea what a condo owner would charge for a private lot, as I believe the condo rules are that you can only rent your space to someone living in the condo. Thanks again for all the advice.
Wei

 

[Thomas Beyer]

QUOTE (jackiechandc @ Jul 9 2008, 10:42 AM) Hi everyone,
This is my first post as I`m a total newbie in the real estate game. I`ve recently bought a condo unit in Toronto for a long term investment as I would like to rent it out eventually. I`m probably going to get a locker for the unit ($3500), but not really sure about the parking ($35000). The unit is right in the middle of downtown, so I figure parking would not be necessary.
The question is whether it is worth paying for a parking spot or lockers for condos for long term investments. I`m just trying to figure out whether it is a good ROI for those additions. Any comments or advice would be more then welcomed . Take care.
Wei
1st Time Investor in Toronto
what is the rent on this parking spot ? say $300/month ? so $3600/year .. this is over 10% of price .. so yes, it may make sense !

if it is only $100/month, i.e. $1200/year it is 3.4% yield .. maybe not so valuable !

In general, parking is still expected even in downtown today and would positively impact your unit value .. so a unit without parking might be worth $50,000 less than one with parking .. depends on area and demand .. hence hard to say "yes or no" !!

if demand changes in 6 years .. you can always sell your parking spot separately .. so all things being equal I`d say "YES" .. get a unit with a parking spot !!

 

[Nir]

Wei,

Where I live, a condo close to Bloor and Yonge in Toronto, you can only charge $100 a month for a parking space for some reason . Find out how much you can rent it for in your building and I recommend NOT purchasing it if you can not charge more than $150 (and I suspect you can`t). The reason is $35K is just too expensive for a $1,800 annual income which is approximately 5% yield. I also agree with your other reasons not to purchase it.. just use the money to buy another property.

Regards,
Neil

 

[AndrewMacDonald]

QUOTE (investmart @ Jul 10 2008, 05:43 AM) Wei,

Where I live, a condo close to Bloor and Yonge in Toronto, you can only charge $100 a month for a parking space for some reason . Find out how much you can rent it for in your building and I recommend NOT purchasing it if you can not charge more than $150 (and I suspect you can`t). The reason is $35K is just too expensive for a $1,800 annual income which is approximately 5% yield. I also agree with your other reasons not to purchase it.. just use the money to buy another property.

Regards,
Neil

Spots in my building at Church and Adelaide in downtown Toronto rent for $150 per month. Some condo boards will not let you rent to anyone who lives outside of the building, but there is plenty of demand within most buildings since there are more units than parking spaces. Hope that helps.

 

[Merriora]

QUOTE (jackiechandc @ Jul 9 2008, 09:42 AM) Hi everyone,
This is my first post as I`m a total newbie in the real estate game. I`ve recently bought a condo unit in Toronto for a long term investment as I would like to rent it out eventually. I`m probably going to get a locker for the unit ($3500), but not really sure about the parking ($35000).


Depending on the size of the locker, I would think this would be a good investment. The first condo we purchased in Downtown Vancouver didn`t come with parking or storage and as a result we paid $100 for parking and another $100 for storage. The parking still may not justify the price, but I know that it was harder to sell our condo even during the red hot market approx. 4 years ago. On MLS, our condo looked like a great price as we had to price it significantly below similar condo`s with parking but once they found out that parking wasn`t included, it did cause many concerns.

I think the main question is...How many condo`s per parking stall or storage...if they are extremely limited, then it may be a good deal, but if the developer is just trying to make extra money, then you may be able to rent at reduced rates in the future.

NOTE: My prices were from 4 years ago, so I have no idea how much that same rental spot would be today.

My 2 cents

 

[jackiechandc]

Hi everyone,
Thanks again for all the great comments. I`m going to try to find out what the going rate is for parking in the area and make my decision after that. Definitely will get the locker. Basically I agree that if you don`t get it now, you won`t be able to get it later. Will update again once I get some info. Take care.
Wei

 

[Dejavu]

QUOTE (jackiechandc @ Jul 10 2008, 10:45 PM) Hi everyone,
Thanks again for all the great comments. I`m going to try to find out what the going rate is for parking in the area and make my decision after that. Definitely will get the locker. Basically I agree that if you don`t get it now, you won`t be able to get it later. Will update again once I get some info. Take care.
Wei

Hi Wei,

You may have already tried the MLS for parking rentals....it will give you a pretty good idea quickly - just select the lowest price for rentals in that area and it`ll include the listed parking spots in the search results.

Looks like we will be neighbours, I purchased a unit at Burano about a year ago. Unfortunatelly, parking was not even an option for us - no parking unless it was a two-bedroom or larger.

Are you in the north or south tower of Murano?

Good luck with your venture!

 

[jackiechandc]

Hi Dejavu,
Hey we are going to be neighbours! I`m in the north tower, so will be in the first phase. We lucked out as we bought the unit recently from my agent`s client who needed to sell before possession next year. The parking that is available is from another unit owner who wants to sell it for the same price as the builder, so that is an option. I tried the MLS for parking rentals, but only came up with unit rentals itself. Maybe they are just not available? Take care.
Wei

 

[terri]

hi,

just another thought for resale, of all my friends that own condo apts in the downtown toronto core area, ie, bay to church, south of bloor, not one of them actually owns a car. I think people looking to live in that area, generally choose that area because of it`s proximity to the subway. I have a car and I try and avoid driving anywhere near Yonge St, south of bloor at all because of traffic.

Yes it is a general rule that having a parking space adds to the value of your condo and will help with resale at the other end, but do your due diligence on this particular area, because I`m inclined to say that in this area it may not make a difference in your ability to rent it out, nor will it bring you an extra $35,000 when you go to sell.

Check the condo sales in the immeditate area and compare prices of and days on market of units that are similar with each other that have and don`t have parking and see if the spread is more than $35,000.

If it comes down to buying 1 with or 2 without, I would say go for 2 without.

 

[jackiechandc]

Hi guys,
Thanks again for all the great comments. I just did some searches and found that the best place to look for parking ads were found in the local craigslist and kijiji ads. The average monthly parking amount people in condos in the Bay and College area were asking for was anywhere from $100/month to a max of about $175/month. Based on these figures, the $35000 asking price does not make financial sense. Parking spots would need to be more in line with $15000 to $20000 max to make any sense of buying for the area. I think I will pass on the parking for my unit and use the money I saved to buy another condo unit Thank you to everyone for helping with all your advice on this topic. Take care and look forward to getting more help in the future!
Wei