Car parks, a worthy investment?

Hi Sweet,

I know nothing about carparking as property. But one thing jumped out at me when reading your post. You say you are looking at paying 7.5% interest on something that will give you 6% yield, cannot have value added and presumably is going to be dependent on capital growth to make it look at more attractive. Can’t see the attraction or am I missing something?[blink]

jebro

A waste of time and money
At the end of each property cycle car parking becames a popular investment. What is the point of purchasing something that you loose money on and will not provide any capital growth.

Nigel Kibel

http://www.propertyknowhow.com.au
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I know of a man who finally received his 600K (after he paid his lump sum tax thingy) super payout about 6 years ago.

He had a good lump of Telstra shares which he and his wife lived off the fully franked dividends. Anyway….(I’m getting there)….

Against all financial advice, he went to his Bank of 40 years, and they extended to him a loan of 1.6 MM to buy a carpark situated on about 1.5 acres over two levels for 2.2 MM, all on one green title. The concrete infrastructure was worth a bit, the dirt was worth most of it.

Ever since, he has been going to his “place of work”, being the guy sitting in that little booth where you hand him the correct change or he doesn’t let your car out. He has some long term bays leased out to corporate suits and some casual bays.

He listens to the footy on the radio and has a small TV set there to keep him company. The newspaper is thoroughly read from cover to cover.

Personally, I think he does it mainly for the human interaction when the people come through. He regularly patrols the carpark and knows most of the regular people by name. He’s very proud of the fact that in his time, no vehicles have been stolen or even tampered with on his watch.

At about 6:30pm he packs up, pulls down the steel shutters and heads home to his wife.

The carpark is cashflow positive with his 1.6 MM loan, and he refuses to pay someone to do his “job”, as he believes they won’t care and treat his “customers” properly.

At a function a couple of weeks ago, he was saying (no idea if it’s actually true) the bank valued his property last month at 4.2 MM. The concrete is still worth the same, but the dirt has gone up just a tad.

So over the past 6 years, with an appreciation of 2 MM, he’s literally been paid $ 913 per day, every day for the past 6 years. Not bad for shuffling around and saying hello and goodbye to commuters.

Not sure if those financial advisers have been paid as well every day (including holidays and weekends)….The little man in the booth is probably on more than his high faluting customers.

Knowing him, I always say hello to carpark operators nowadays….’cos you never quite know who just you are really talking to. [happy3]

Owning the dirt underneath is the key….

Well said Terry……

Just remember Sweet, property isn’t the only method of investing. To have such enthusiasm is great, but if the numbers don’t match up, you may be better to put your cash in a term deposit until the day they do.

All the best,

Mark.

Soudns good Jimmy.

Can i ask you how many you own yourself ?

invest007 wrote:

I own 5 car parks in total, very happy with the returns plus the buy back scheme is a bonus. If your looking for an investment with zero risk.. this is the way to go

Hi Invest

How does the buy back system work? Is there a set price, or is it just at the original price?

Thanks Invest.

I suppose if you could rely of the guarantee, then it would be like a savings account. You coould also leverage a bit (low LVRs), but how tight is a guarantee?

A cheap form of property with a high rental return (alot above interest rates/currently). Ok so they don’t appreicate in value (but you have CF+) but do they depreciate (seeing as we are in financial crisis times)??

I just looked on findacarpark.com.au and I have looked on the sydney maps…

110 sussex street is for sale at $90,000. and under the rent section of the website the same place (110 sussex st) is for rent at $433.35/month which equates to 5200 per year.

This means the return is ~5.8% which is lower than interest rates (currently?). Note this is the first one i looked at, so it might be low?

But is this how it works really… buy the parking space (with borrowed money), collect rent, pay mortgage but still have some rent left over so CF+… don’t worry about capital growth or captial decline cause you have instant CF+??????

Chris