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I've saved some money and now I'm thinking about two things to do with it:

  1. Buy a parking spot (~20.000) and rent it (~90 month)
  2. Put in a account that give me about (3% year)

but I can't decide because I'm afraid of other factors that I don't know about it (taxes, risks,...) .

What other things I have to evaluate to decide?

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  • ooops, I forgot to say I'm in Spain
    – user674887
    Aug 24, 2011 at 11:46
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    Where in the heck did you find a savings account with a 3% return?
    – JohnFx
    Aug 24, 2011 at 13:21
  • 2
    Rates are much higher in Europe. ING is offering 3.5% on a 1-yr CD Aug 24, 2011 at 13:24
  • 1
    Is now a bad time to mention that you can find savings accounts in Australia that offer 6-7% interest? ;) Aug 25, 2011 at 5:05
  • 1
    @Cularis - Cant be any worse than investing in USD atm.
    – user4127
    Aug 26, 2011 at 17:04

1 Answer 1

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From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year.

So, what are things to consider? Here's a few to start with.

  • Does location give the parking spot a potential for appreciation of rent or value as economic conditions change?
  • What is demand like? Will you be able to rent it consistently? My neighbor rents a garage to college faculty on a semester basis, and it is often difficult to get tenants in the summertime.
  • What are the carrying costs associated with the spot? Insurance, property tax, business district fees, etc.
  • What are your liquidity requirements? Conveying real property is more time consuming than liquidating savings. This relates to the location too: you can sell a spot in a business district or high-density neighborhood quickly.
  • Does anything about the location limit downside risk? e.g. stable generators of parking demand like a commuter train station, government office, large apartment, etc.

The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk.

To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield.

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    The OP also needs to decide who is responsible for calling a tow truck at one in the morning if someone steals the spot.
    – jprete
    Aug 24, 2011 at 17:06
  • +1, also don't forget lawsuits - if something happens on your property you can be a lawsuit target.
    – sharptooth
    Aug 25, 2011 at 7:38
  • How many spots are for sale now in that area? Is there a maintence fee for the spot? If not who is responsible for the condition of the lot and the spot?
    – user4127
    Aug 26, 2011 at 17:08

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