NYC Parking Spot Pricier Than Median Home
A: I couldn't resist. For anyone that wonders how the hell Manhattan real estate continues to just churn out dollar signs, just take a look at the latest market price for 1 parking spot; yes, just one! Nothing surprises me anymore in this incredible city.
Out of 5 parking spots that are being put up for sale in the basement of 246 West 17th street, a new condo development set to be completed next January, would be buyers are jumping onto waiting lists in the HOPES of paying only $225,000 to secure a spot!
Gotta love it. Or hate it. To put that into perspective, the NAR's latest data report puts the median price of a home in the US at $223,700! So, a Manhattan parking spot is now more expensive than half of the homes sold in the US last month!
According to CNN Money's article this morning:
Manhattan real estate agent Tom Postilio said there is a waiting list of seven or eight people hoping to pay $225,000 for one of five private parking spaces that has been approved in the basement of 246 West 17th Street...The trend of buying parking spots for individual investments and renting them out seems a bit far off to me given the numbers, but then again, in this city real estate is the key to building wealth. To me, here is how the numbers break down if one would put down 20% to finance a parking spot investment:...The developer of that building is seeking permission to add another four spots, and Postilio said the addition spots are likely to cost even more than the current price, although he could not give an exact price.
"Supply and demand being what it is, there's probably going to be an increase," he told CNNMoney.com.
The paper says that property appraiser Miller Samuel estimates that the average parking space in the expensive neighborhoods of Manhattan now costs $165,019, or $1,100 per square foot. That compares to an average apartment price of $1,107 per square foot
PARKING SPOT PRICE ---> $225,000
DOWN PAYMENT ---> $45,000
LOAN AMOUNT ---> $180,000
INTEREST RATE --> 6.65% (non-jumbo loan gets slightly better rate)
---------------------------------------------
Monthly Payment ---> 1,155.54 ($450 in interest is T/D)**
Going Rate For Spot Rental ---> $450 (or so)
**Update at 3:44PM - For investment interest, only the interest against the income produced is deductible. So, if you get $450/mth rental income, only that amount of interest is tax deductible for investment income producing property.
At this stage of the game, the investment side of buying a parking spot doesn't quite add up to me. However, if the price of a spot increases to say $300,000 in 5 years time, then of course the investor will make out pretty well, even with the negative cash flow. To be honest, I am not that educated on the state of the Manhattan parking spot market, nor am I in a position to forecast any future trends in this market. However, I will certainly buy into the argument that parking spaces for sale are very hard to come by and demand for parking is very high! Not a bad fundamental start to possibly a new trend.
Quick Tip - By the way, a GREAT site to search for local garages for buyers who need a space is NYCGarages.com. Type in neighborhood, narrow it down, and all the local garages and their #'s pop up on the map so you can sit at home and do your pricing and availability check!
Your thoughts? Is a NYC garage spot worth $225,000?
Comments (9)
Its still a good investment rather than throwing away 450-500 a month on renting a parking spot. Even if you sell it for $250,000 in 5 years its a good investment. As you said there is way too much demand for parking and every garage I went to when Iwas looking was either booked or had only 1 space left which quickly was taken.
Posted by Pete | July 12, 2007 10:29 AM
How are you calculating the tax deduction on the mortgage interest? I wouldnt think it would be deductible unless you plan to make your car your primary residence.
Posted by Drtomaso | July 12, 2007 11:30 AM
I love it. I see other blogs bashing this idea and the people who would buy them but you're exactly right. "Renting" a parking space is just sending money down the drain. I like the idea, it's creative.
Posted by havensofmanhattan | July 12, 2007 12:23 PM
Hmm, I need to re-verify this with accountant. I think my number is off though so let me research and check and then I will edit/update and explain.
I believe interest is deductible on II (investment interest) against rental income produced. So in this case it would be $450 or half that is tax deductible. Even if its not primary. Primary residence and second home I know is tax deductible up to 1.1M I believe on sched A against income reported.
Ill check Dr and post an update.
Posted by Noah | July 12, 2007 12:24 PM
If there isn't a significant tax break, this looks like a losing deal compared to renting a spot. Over 5 years, you would pay 2.5x more in interest to rent the money than to rent the land- and I am not even considering transaction costs and principal payment.
That and appreciation is not nearly as assured as compared to residential real estate. Congestion tax could put a serious dent in the demand for parking, for example.
Now if you get a spot as part of your home purchase, its a different story.
Posted by drtomaso | July 12, 2007 1:50 PM
Everyone is looking at this the wrong way.
Today in this financial world assets are king.
There is to much money in the world and very few places to park it.
Stock market up 200 points as I speak.
Real estate prices continuing to rise in NYC.
Money is flowing to assets that is perceived to be safe.
There is a disconect ocurring btw. the few who have most of the money, and the many who has very little money and defaulting on their home loans.
Posted by peter | July 12, 2007 3:04 PM
No question that NYC parking and Manhattan parking is tough to find - but you can find it if you know where to look. There are a bunch of hidden gems scattered about the City, even near some very popular parts of town. Most people are too lazy to put in the 10 minutes time that will save them from a $115 NYC parking ticket.
Posted by Erik Feder - The Parking Expert | July 16, 2007 12:22 PM
Dear All,
This comment is just to let you know that NYCGarages.com (written about in the article) has been re-branded as http://www.BestParking.com. The new website supports free Manhattan parking reservations at over 20% of facilities, as well as a mobile phone service available at http://mobile.bestparking.com
Regards,
Benjamin Sann
Posted by Benjamin Sann | August 19, 2007 2:21 AM
If anyone is thinking of moving to Tampa, FL, I have parking spaces available in the garage of the South building of the Madison at SoHo Condos in Hyde Park. I rent them for $50 each per month, or will sell them for $6,000 each. Most of the previous owners in my complex did not have the foresight that I did, so if you buy a condo from one of them, it will probably only come with 1 space, and you'll want a second. Also, these spaces can be rented out for positive cash flow, and are priced low enough to still see some real appreciation in the future.
Posted by Brian Wade | October 1, 2007 9:56 AM