One of the most commonly overlooked forms of investment just happens to be one of the most profitable right now. It seems crazy to some that a piece of tarmac at an airport can deliver such high returns, but to any serious open-minded investor this makes perfect sense and can prove a shrewd low-cost investment. Here I will detail some of the reasons why you as an investor should start taking car parking spaces as a serious opportunity to create wealth.
Airport parking in the UK is worth around £9.5 billion per year (gross rental income) so it’s no surprise to see many investors wanting a piece of the action.
The bulk of car parking space deals are situated at airports so naturally there is always a strong demand for usage. Consider how many people go on holiday every year- 2017 statistics from NATS, the UK’s leading provider of air traffic control services, reported over 770,000 flights that summer alone, which is the highest number in its history. Airports have to expand just to meet this growing demand and this means major extensions to parking bays, or even building whole new ones. The concept of high demand and low supply which drives up property prices applies to all forms of property and car parking spaces are no different. Demand is outstripping supply and as such, increases in prices and returns are inevitable.
How does it work?
It works much the same as most forms of property investment. Simply put, you put your money into a car parking space on a hands-off lease meaning you buy this and essentially forget about it. The seller will usually, but not always, offer a buyback option in which you can sell your space back to them or continue letting it out.
You will receive a Title Deed upon purchase which confirms your ownership. Your minimum income can be written into the contract so that the freeholders are obliged to pay you a certain amount of rent. Your income can be paid monthly, quarterly or yearly and is not subject to VAT.
How much do I need?
One of the most attractive aspects of this type of investment is the relatively low entry cost. You would typically need around £20,000 minimum to buy a car parking space, although this can be higher depending on which airport you are buying in. Airport parking works as a perfect option for those looking to make their first investment or those with a low cash deposit looking to make good rental returns.
Diversify your portfolio
Investments such as this can flesh out an investor’s portfolio, and what I mean by that is to minimise the risks involved with only purchasing one type of property. If one type of property i.e. student lets takes a hit and you only own this type of property, you are in a position where you have no alternatives available for a good cash flow. It’s important to not put all your eggs in one basket so to speak and because car parking spaces are comparatively low cost, they are a sound option to avoid the volatility that the markets can sometimes be.
No repair or maintenance issues
One of the most common headaches involved with Buy-To-Let residential property is potential tenant damage which can prove costly to the landlord. Fire damage, water damage and general repair and maintenance are all issues which investors can do without. With parking spaces, all of that is highly unlikely to happen which provides peace of mind and leaves many buyers safe in the knowledge that they’ve bought a hassle-free investment.
Know you you’re dealing with
This applies to any investor when they’re looking to invest in any property, but it’s vitally important to do your due diligence when investing in a car parking space. If you’re working with an agent and they inform you of a car parking space deal, make sure you find out about the people behind this deal. Get them to send over all the relevant information on them so you can see if they’re a reputable and established company with a proven track record. Brochures, RICS and sales agreements are the sorts of things you want to have a look at. If everything looks good, that’s when you will want to proceed.
This all makes for a safe, low level low risk investment that is perfect to either start or diversify your property portfolio. The usual cautionary tales do apply but the figures only show consistent air travel growth which is set to continue in the future. It’s an investment avenue that largely goes under the radar but with such a massive disparity between supply and demand, any investor looking for great returns should definitely take a closer look at car parking spaces. It can make for a solid investment with a constant increase in demand.
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