HI, just looking at a carpark in Sydney, around $50000, rented at $40 per week seems like a good deal, any advise on car parks?
Thanks DamienHi Damien,
A few points –
Given ‘property’ is generally purchased for either growth or rent returns I am not sure that this is a good deal.
Rent return is pretty lousy. Using your figures of $40/week and $50K to buy return is only 4%.
Growth on carparks is limited as far as I can tell due to the limited market for them.
Finance will be a problem as banks will have an aversion to a carpark as suitable security.
Don’t mistake cheap for a good investment.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958That sounds like an absolutely terrible investment, unless of course you think it will appreciate enough to warrant the investment. But it sounds like it’s already got the next 10 years capital growth factored in. You could do a lot better with your money, but probably not much worse.
Thanks guys, a couple of “ifs”?
If I get it for $43k, and
if I get the rent up to $50 ??
That pushes gross yield up to 6% and looking around sydney most other places are $60k plus, I’m new at this so I don’t see why its such a bad investment (presuming I get 70% finance).Thanks again for your help, Damien
Thanks guys, a couple of “ifs”?
If I get it for $43k, and
if I get the rent up to $50 ??
That pushes gross yield up to 6% and looking around Sydney most other places are $60k plus, I’m new at this so I don’t see why its such a bad investment (presuming I get 70% finance).Although saying that the 10k I have sitting in the bank already gets 6% interest!!! [blush2]
Thanks again for your help, Damien
Hi Damien,
I’ve spoken to a few retired gentlemen who have invested in carparks.
It’s probably out of your budget, but they buy the land and have it just demarcated up into slots…no concrete high rise parks.
Sometimes they just sit in their booths and trade the stockmarket whilst collecting fares during the day. The fees are just piddling, but they are simply landbanking. They reckon it gets them out of the house (more likely the wife has kicked their retired butts out).
So, next time you see an old guy in the booth, you could be looking at a squillionaire.
What you are looking at has no land component and so I can’t see much growth in the future. Could be wrong, but…
4 or even your optimistic 6% gross yield looks pretty average.
Next….
Cheers,
Darryl Moore
“No point having a cake if you can’t eat it.”
Hi Damien,
Exploring your follow up post further.
I still think that 6% on a carpark space is insufficient in investment terms given the commercial/business nature of the loan.
I would prefer something more standard in a residential property line as the banks will recognise a higher percentage in terms of security.
While this may not sound a big deal at the moment – it can be when you start out. One of the key points is maximising your leverage and this is where commercial/business lends (particularly carparks) fail.
Bear in mind as a cornerstone of your investment portfolio it (the carpark) will fail income and security tests for further investments into the future.
I am curious as to the reason that this ‘carpark’ has attracted your attention.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Whenever the property market is coming to the end of a growth cycle guess what comes on offer you guest it carparks. The same thing happened in 1990. The price was about the same. This would be a lously investment. If it was returning 10% it might be ok just, but you are going to loose money on an investment that will have no capital growth in real terms you are loosing money. I wouldd not touch it with a ten foot pole.
Nigel Kibel
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hi dpharris75
I am in the middle of the coin in the air at the moment as my tennant wants to buy my car space on oxford street it has rises 35% in the time Ive had it and is a 6% return I have 14 tennants wanting car parks in this block he has offered and not sure if the market has stopped.
The reurn is not high but nothing is in cbd sydney but the return is there if in the right place.
If its in the kings cross william street area then 50 is cheap mine is 75khere to help
Hi Damien
I made enquiries re the recently advertised Harris st car parks & fees to consider are:
Council rates – $500
Parking Levy – $880
Strata costs – $506These spaces were $59,000 & $61,000 plus gst unless gst exempt.
The net income excluding gst is $1776 so close to the $40 mentioned.
Sparky
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