There are already so many decisions to be made when buying a condo. Choices about location, look and financing have to be narrowed and made. One under-discussed decision is about whether to include a parking spot or storage locker in the sale.
Today, some buildings in Toronto have an option in the purchase agreement to buy a parking spot in the garage along with the unit. In larger buildings there are more units than parking spots, so room in the garage is parcelled out, and goes to those who purchase spots separately. The same goes for large storage lockers that are often built on a ground floor to provide unit-holders some more space for items.
Beware - a parking spot often comes with separate taxes
What are the costs of these extras? What are the questions a buyer needs to ask? How much can one make renting out a parking spot or a storage space? Is that common?
Jennifer Palacios is a sales representative with The Julie Kinnear Team at Keller Williams Neighbourhood Realty. She took some time recently to work through the details around parking spots. She's been in the business for ten years, so she's familiar with the issues and trends in the industry.
Parking lots can be included in sales, and re-sales, or not. Buyers need to think about their personal needs. If they need one, they should get it. If they find they don't need the spot, but they get it, they can always think about resale or renting,. Most buildings will have an option to buy. Usually there is a little bit of tax and some maintenance fees. But if it's deeded to you, you can sell it.
Remember that if you do purchase a parking spot, it may be deeded as a separate property from the condo unit and you may have to pay separate taxes on it. Palacios recommends you check your purchase agreement to see if this is the case.
Sometimes, in fact, those taxes are wrapped into a purchase agreement, and so, some buyers are not even aware they own that parking spot as a separate entity.
Palacios says it is also common that the owners of a parking spot will rent it out as a way of generating some monthly income.
Usually you can only rent it to other people in your building. That's for security reasons. But you can get that cash flow going. There may be a couple or family in your building that have two cars, or need a spot. You can make a little bit of money off that.
As a way of providing options Palacios recommends that unit-buyers acquire a parking spot when they first buy, even if they don't use it.
We still recommend that if you're going to buy an pre-build, get the parking with it, and the locker. It's harder to get after the building goes up. It might be something you can't get right away later. In a new build I think it's good to get the parking spot. Once the building goes up, they will be more expensive.
Lockers are the new must-have in Toronto
Lockers are a good investment as well. More so today than ever. Condo units are smaller than ever, necessitating a storage space. If you're looking for storage you're going to need a locker. For some the locker is more important than the parking spot.
Many twenty-somethings are walking, biking, taking the TTC, Uber and rent-by-the-hour cars. They'd rather buy a big data plan for their smartphone than pay auto insurance, and so fewer young people than ever even bother to get a driver's license. That is, more among the younger generation don't need a parking spot, but Palacios says they are prioritizing a storage space.
It is becoming much more common to not have a car, I have a couple of clients who don't care about parking, but have to have a locker. For some people that's more important now. For the last two clients I've had, the locker was the most important thing.
There are even buildings in the downtown core being built without a parking lot at all, so that is a longer term trend.
When it comes to listing a locker for rent, know the exact sizes.
They vary in size, and a lot of people will want to know the exact size. They need to know if they can fit their expensive bike in there.
When it comes to rates, renting a locker might bring in $50 a month, parking $150 a month. In terms of the initial sale price, a parking lot will go for around $30,000 in the case of a small condo downtown. An upscale $2 million Yorkville condo recently set a Canadian record when a parking lot sold for over $100,000. But that's way off the scale. According to Palacios locker will typically go for around $5,000 in buildings in the downtown core.
The further from the downtown core you go, say up Yonge the intersection of Eglinton, the price of lockers will drop. At Yonge and Eg, a popular neighbourhood for the younger set, they're selling for $3,000. Obviously the rental price goes down as well the further you get from the downtown core.
Having a parking lot and storage locker as part of a condo re-sale will benefit the seller. It's about having an option there that might not be available later. According to Palacios at least 80 per cent of purchasers go for the parking spot. She advises that if you're buying the condo as an investment, you should invest in the parking spot and the locker.
If tenants want parking, you can offer it. And so you can charge more rent. If the tenants don't need it, you can rent it out. The unit will cost a bit more, but your monthly cashflow will be higher.
For information about city parking policy, consult the JKT's extensive parking guide http://juliekinnear.com/toronto/parking.