Looking for a side hustle or accessible business idea that could generate a good amount of passive income? Getting into the parking lot sector could be just what you need!
Of course, knowing how to buy a parking lot is just as important as actually purchasing the space and advertising it to drivers.
Today, let’s break down how to purchase a parking lot and the many factors involved with getting into this business.
Are Parking Lots Good Investments?
They can be! In fact, purchasing even one parking lot could be a profitable side hustle, allowing you to make money through only a minimum of effort and saving you enough time so you can focus on your primary business, education, or something else.
Parking lots can charge by the hour (or by the month) for individual spaces or rent out spaces to businesses, apartment buildings, and other organizations with yearly contracts. Any of these parking facilities can be highly profitable, with some projections estimating that the average annual earnings from a parking lot business total around $73,000.
If that doesn’t sound like a lot, rest assured; that’s just one parking facility. Furthermore, once your parking lot business is up and running, you’ll be able to devote your time to other business ventures and income streams. In this way, a parking lot investment could be a stellar way to generate passive income.
Remember, as a parking lot owner, you aren’t limited to purchasing only one parking lot investment. With the earnings from one successful purchase, you can then purchase several successive parking lots, each of which will eventually funnel cash directly into your bank account.
Bottom line: Investing in a parking lot business could be a very wise idea, indeed.
How to Find a Parking Lot to Buy
Drive around, of course!
Truth be told, your local metro area probably has plenty of parking lots that are defunct or whose owners are looking to sell them. Take a trip through the most trafficked areas of your city and keep an eye out for outdoor parking lots and indoor parking garages with for-sale signs posted.
If you notice any “for sale” signs, stop by and see if you could get in touch with the owner of the parking lot. Then you can open up negotiations and see how much a given lot costs.
Alternatively, don’t forget to look online. Certain sales pages and websites might list local real estate for sale, including parking lots. This can be a handy way to find new parking lots to purchase once you purchase your initial lot and get some experience – by that point, you might be looking to expand your portfolio.
Key Considerations for a Successful Parking Lot Business
Say that you found the perfect parking facility and are chomping at the bit to get started developing it and selling space for money. Hold up!
There are a few key considerations you need to think about before signing on the dotted line. These considerations in factors can impact whether one parking lot or another is right for you.
Location
Your parking lot’s location will heavily impact its purchase price and profit margins. For example, a parking lot in a prime downtown spot could be quite profitable since you’ll have people using the spaces 24/7. But you also need more money to purchase it.
In contrast, a parking lot that’s outside town on a lonely road might be cheap, but don’t expect to make a bundle all that quickly!
Parking Lot Type
The type of parking lot you purchase will affect its dimensions, its initial price, and what’s involved with running that specific location.
Some common types of parking lots include:
- Traditional parking lots, which are usually outdoors and, therefore, have minimal overhead protection. These are easier to construct, maintain, and fill, but at the cost of lower profit margins
- Parking garages, which offer more space and much higher profit margins, at the cost of being more expensive to purchase. They also require more management and, if you have to construct them, will cost even more than you think
Space Availability
When choosing what parking lot to purchase, don’t forget to factor space availability into your decision.
Larger lots will have more parking spaces and, therefore, have the potential to be more profitable. But they also generally cost more to purchase. Furthermore, you’ll need to hire more staff to oversee the parking lot and handle ongoing maintenance concerns.
Costs of Buying a Parking Lot
Buying a parking lot could cost you anywhere from tens of thousands of dollars to hundreds of thousands of dollars or even more, depending on its location and size.
For example, an outdoor parking lot on the corner of the street with a dozen parking spaces probably won’t be worth more than $50,000 or so at most, and that’s pushing it.
On the other hand, an indoor parking lot at the bottom of one of the most popular business towers in the city could be several million dollars by itself.
Inquire about the cost of a parking lot before committing yourself to a purchase. The cost of the parking lot can impact whether you qualify for a good business loan and whether you’ll make enough money to see a sizable return on your investment in a year or so.
It might also be wise to open a business bank account for your parking services. This way, you can pay for parking lot attendants, parking space renovations, a construction permit, and lease payments all from a separate account. It’ll help you keep track of your startup costs and ensure that your parking lot businesses (as you get more of them) stay separate from your personal finances on your entrepreneurial journey.
Don’t Forget Ongoing Costs!
The initial cost of purchasing your parking facility isn’t all you’ll need to account for. Maintaining a parking lot also costs time and money, particularly if you employ a lot of staff.
What happens when a car bumps into another or dents a support column? Or what happens when you need to hire another security guard for driver safety? You may need to install security cameras, valet services, or an automated payment system (particularly for street parking or a parking garage business) to retain customers.
These long-term costs can eat into your bottom line if you don’t predict and project them now. By projecting your ongoing parking lot maintenance costs, you’ll also know how much money to charge for parkers.
Deciding on Parking Lot Monetization
For your parking lot business to make money, you’ll need to charge for the available spaces. There are a few different routes you can take when it comes to parking lot monetization:
Affordable Parking
You can target the affordable parking lot target audience. This target market includes people who need to park for an hour or two and only want to spend a couple of bucks doing so. Generally, this monetization strategy typically works for parking lots that are located in dense metro areas, like downtown in your local city.
Many drivers would be willing to forfeit features like an electronic gate if it meant finding easily accessible parking.
Long-term parking
You can also choose to target the long-term parking lot audience.
For example, if you have a parking lot near a popular business center or building, you can rent out most or all of the parking spaces to a few local businesses. That way, the businesses can guarantee close parking for their employees, and you get to guarantee yourself consistent passive income.
These are more common in high-demand areas, like spaces next to small businesses. On the plus side, this market’s new customers also want valet parking, security systems to discourage thieves, and other elements that you can charge higher prices for
Don’t forget that you can also charge different rates for different spaces. Covered parking spaces are of higher value than uncovered spaces, for example.
Build a business projection with your parking lot business. That way, you can determine the most profitable monetization method based on your location, likely parking audience, and other factors.
Filling Your Parking Lot
Of course, buying a parking lot is just the start of your new business. Owning a parking lot means filling the available spaces with vehicles and paying customers!
While you could try to market with traditional methods, you can also jumpstart your parking lot business with a marketplace like Neighbor. By listing your parking lot on Neighbor, you can fill parking lot vacancies and reach a broader audience of potential parkers quickly.
