If you’re on the condo hunt in Toronto, you may be wondering whether it makes sense to purchase a parking spot along with your unit. The answer could depend on a lot more than whether you own a car. The first thing to be aware of is, many developers are building fewer and fewer of these spaces. So if you have the option of buying one, consider yourself lucky!
Of course, if you’ll be living in your downtown unit and driving is your preferred mode of transportation, the decision may be a straightforward one. If not, you’ll want to carefully weigh the potential financial benefits and drawbacks of purchasing a spot.
Here’s what you should know if you’re deciding whether it’s worthwhile to obtain parking along with your condo…
What’s the demand like?
It’s no secret that a growing number of city dwellers are choosing active, sustainable lifestyles. For many, this includes walking, biking, or taking public transit to work. I’ve seen it first hand—some of the buyers I’ve worked with recently haven’t owned cars (or wanted to). At the same time, the fact that condo developers are building fewer spots has led to situations where buyers who want to purchase them don’t have the option of doing so.
Location is a key factor in whether or not a parking spot is a good investment. Here’s why. Recent data shows that Toronto’s job market is strong. There are 10.1 million square feet of office space slated for construction in the city, and much of it will be located downtown. While many of the employees who fill these spaces won’t have vehicles, a large number of them will—and they’ll need places to park.
Put simply, if you’re planning to buy a condo in the city’s core, you’ll likely have the opportunity to make a profit renting out your spot to professionals who drive. The same may be true if you’ll be close to a sizeable business park or an area where there are many office buildings.
Will you be allowed to rent it out?
When it comes to renting out a parking spot, demand is one thing. The rules may be quite another. While many Toronto buyers believe they’ll own their parking space in the same way that they own their condo, that’s not necessarily the case.
Before you opt for a spot, it’s important to know whether you’ll own it outright. In the building you’re considering, are these spaces considered common elements (meaning they’re shared by residents), exclusive-use common elements (meaning they’re available to specific tenants), or do they come with their own separate titles? The answer will help determine whether you can rent out or sell your space. Be aware that some developments also have specific rules about whether you can rent your spot to someone who lives outside of your building.
It is important to review your status certificate carefully. This document will lay out the specifics regarding ownership of your parking spot. For example, the parking space could be one half of a stacked parking space in which case you own 50% of the physical space on title and on the status certificate. It will also contain many other key pieces of information related to your unit, so make sure your lawyer takes a close look at it, too
Does it make financial sense?
In 2017, Urbanation found that parking values were rising faster than condo prices. While the condo market frequently shifts (and it certainly has in the last couple of years), this finding highlights the incredible investment potential that these spaces can have!
Whether or not a parking spot will increase your unit’s resale value will depend on a few factors. One of the biggest is your target buyer. If you’ll be living in an upscale building—or one that’s located in an area where a lot of motorists live, such as the suburbs—that little strip of concrete could be very valuable.
If you’re an investor, you may decide to either rent out your parking spot separately or charge more in rent based on its inclusion. Once again, it comes down to your neighbourhood. What’s the going rate for a parking spot in your area? By asking around, you can get a better idea of what you could charge—which will help you determine your prospective income from your property.
Of course, there are also costs associated with owning a spot. When you’re crunching the numbers, look not only at how much it will cost you to buy a space, but what kind of taxes and monthly maintenance fees you’ll pay. Knowing how much income the spot is likely to bring in versus how much you’ll be paying for it monthly will help you determine whether it’s a good investment.
Ready to buy a condo? I can answer all of your questions about the process—and help you find the perfect property. Call or text me at 416-500-5360, or send me an email at email@example.com and ask away!