People living and working in Chicago’s downtown urban core neighborhoods often ask the question “should I buy a Chicago garage parking space?” Here we provide you with some thoughtful advice which will help you move forward in the right direction.
There Are Basically Three Reasons You Might Want To Buy A Chicago Garage Parking Space:
For an investment to lease, just to park in your condo building or as a place to park when commuting to the city. Let’s take a look at the best advice in each case.
1. Buy a Chicago parking space investment
We asked Chuck Gullett to share his personal experience and advice for those who want to buy a Chicago parking space investment.
After owning, leasing and divesting 15 single family homes, I was ready for a low maintenance, low cost type of investment property. While looking at investment condos to purchase, I stumbled onto the idea of buying parking spaces to lease. I noticed that parking spaces maintained value and rentability, even during the recession when the rest of the real estate market was hurting.
I though to myself, ‘Is there anything more low maintenance then renting out a chunk of concrete with a couple of yellow stripes painted on it?’
This idea was starting to sound good. I continued to research the feasibility of purchasing single parking spaces and learned a couple of key things:
You can’t get a mortgage on a Chicago parking spaces unless they are included in the purchase of other real property like a condominium. The Chicago parking space investment needs to be with cash or you could use a home equity line of credit or a personal loan.
Building rules may prevent you from either purchasing a space without owning a condo in the building or may restrict you to leasing only to residents in the building. A savvy real estate broker in your local area will know which buildings are open to investing and which locations will rent out the best.
As with any investment property, the key is buying right.
Open air parking vs covered parking vs garage parking. They will all have different price points and rentability. With our Chicago winter weather, the heated garage is king and commands a premium price, but also premium rent.
People will often sell their spaces to free up cash for other purchases.
My best advice is to get searches set up in the locations you like, research the current rental pricing and demand and be ready to make offers on new listings that hit the market. Many will be overpriced at first, but prices will soften if the spaces sit on the market and are not rented. If they won’t sell now, you can always come back to them later.
Considerations for your Chicago parking space investment:
Ease of access as well as ingress / egress. Pull you car into the space and check the turning radius. Easy or a struggle? The space will have lower value if it is difficult to park. In multiple level decks, closest to the ground floor is generally best.
Size of the space. Is it suitable for an SUV or just a Smart car? Bigger is better. However, you can also purchase motorcycle parking spaces at a low price that rent well.
Access to the lot / garage. A secure entry with fob or remote entry is more marketable.
Is the space ADA Accessible Parking? These rarely come up for sale, but could be a good niche.
Are there drain pipes, pillars or other obstructions in the space? These spaces are much less desirable and could be a liability if a tenant damages the building with their automobile.
The future of automobile technology.
Electric cars will be first. Is the parking space equipped with a charging station? If so, you will have Tesla owners ready to rent today! Is it feasible to retro fit a charging station if needed in the future? Has the building considered electric cars yet?
Self driving cars will be next. Check your cellular signal in the garage. I’m speculating that self-driving cars will need to communicate, so if the concrete/ steel structure blocks out you cell signal, it could be a future issue.”
Thanks Chuck! Now let’s look at the other two reasons people might want to buy a Chicago garage parking space…
2. As a place to park in my condo building
When you buy a condo in Chicago often it comes with an option to purchase a garage or outdoor parking place. The parking garage spot or outdoor space is often “deeded”. This means it is not a part of the deed to your condo but rather a separate deeded property.
Among other things, this means the spot can be sold independently of the condo. When you buy it you must pay taxes and building assessments on the unit.
In addition, beware that the condo building bylaws may prohibit the spot from being sold to a buyer who doesn’t own a condo in the building. And some bylaws say the spot must be owned and used by someone in the building.
When there is deeded garage parking available for sale along with a condo, we almost always advise our clients to buy it. Even if you don’t have a car at the time it’s the best option. Because later when you go to sell your condo it’s always an advantage to offer garage parking. After all this is Chicago! If you don’t use the spot yourself you can normally find someone in the building to rent it.
3. As a place to park your own vehicle when commuting to the city
According to the U.S. Census Bureau about a half million people drive into Chicago every day. If you’re one of them, then you’re quite familiar with the various parking options.
But for those who are less familiar, here’s a recap of five parking options in Chicago:
- Find street parking – this gets old REAL fast. But if you’re going to do it, use the ParkChicago app. You can pay for parking with your phone and extend your time remotely.
- Buy monthly parking at a traditional and convenient parking garage like Millennium Garages. When we checked today the price for unlimited day parking was $170 per month.
- Buy monthly parking on a surface lot for about $150 / month. This option means dealing with snow and rain.
- Use an app like SpotHero. Today it showed monthly rates from $120 for surface parking up to $375 for premier garage parking.
- Or like Chuck, convert your parking problem into an investment in your future and buy a Chicago garage parking space. Prices for garage spots in Downtown Chicago and in neighborhoods like the South Loop, River North and West Loop range from $20,000 to $50,000.
If you expect to be in that job for 5-7 years then it really makes sense to buy a Chicago garage space. It might just pay for itself. And should you take a different job later, you can sell it or keep it and rent it out as an investment.
Making your Chicago parking life a little better!
Whether you want to make a Chicago parking space investment or just have a nice warm garage parking spot to make your life easy, we hope this latest “Ask A Chicago Real Estate Expert” article makes your Chicago parking life better.
Get started making your real estate goals a reality, contact us!