invest in a parking space: market, insurance and rentability

sush40

Hi

Recently I found a parking space at an interesting price (10k) and I was thinking of buying it and renting it out for extra income (I would make about 70/month).
I've done some research and even if it's a good way to invest (low maintenance, no mortgage), I'm still not sure if it's worth it or not, and could it be risky?

First of all, how is the market doing in terms of parking spaces? does the price of a car park generally rise after a few years (if i wanted to sell it later) - I believe it would considering the space is located in Manchester, but i read parking spaces get cheaper and cheaper. Is this true?

Secondly, how does the insurance work? Again I have done some research and I always find the same advice: tell your home insurance company about it. I have never had one since I only rent a flat from a landlord and don't owe a property. Do I need to get one just for the parking space, and what kind of insurance it is? The space is located in a residential building, does the insurance of this building cover the parking as well?

Finally, how big could be the maintenance charges? Let's say the gate brakes and I have to fix it, will the rent I earn cover the cost of such a repair?

Thank you

AdrianC

sush40 wrote: »

Recently I found a parking space at an interesting price (10k) and I was thinking of buying it and renting it out for extra income (I would make about 70/month).

8.4% yield. Before voids, tax and before any expenses.

I've done some research and even if it's a good way to invest (low maintenance, no mortgage), I'm still not sure if it's worth it or not, and could it be risky?

And what will you be doing to ensure only your tenant parks there?

sush40

AdrianC wrote: »

8.4% yield. Before voids, tax and before any expenses.

And what will you be doing to ensure only your tenant parks there?

The car park is secured, so they would need a key to park there.
8.4% is good, and I'm nott too worried about taxes (aren't the first £1000 tax-free from next year?) but worried about the expenses. If I make less than £800 a year would that be enough to cover the insurance and other expenses?

Has anyone got any experience in renting out a parking space?

Bob_Bank_Spanker_2

sush40 wrote: »

The car park is secured, so they would need a key to park there.
8.4% is good, and I'm nott too worried about taxes (aren't the first £1000 tax-free from next year?) but worried about the expenses. If I make less than £800 a year would that be enough to cover the insurance and other expenses?

Has anyone got any experience in renting out a parking space?

The £1000 allowance is for savings interest. This is trading income, and would be fully taxable, so would knock 20/40/45% from your yield.

AdrianC

sush40 wrote: »

The car park is secured, so they would need a key to park there.

What's to stop somebody with access to the car park parking in that space?

...I'm nott too worried about taxes (aren't the first £1000 tax-free from next year?)

No, that's savings interest. This isn't interest. You will need to complete a self-assessment tax return, and you WILL pay income tax at your normal rate (25%, 40%?) on your profit.

sush40

Bob_Bank_Spanker wrote: »

The £1000 allowance is for savings interest. This is trading income, and would be fully taxable, so would knock 20/40/45% from your yield.

Thank you, I read the article below and thought it would be tax free from this year
http://www.moneysavingexpert.com/news/protect/2016/03/online-sellers-and-room-renters-given-1000-tax-breaks

tom9980

Moving forward would self drive cars/uber and shared automated cars be a big factor in the demand of car parking in inner cities. I suspect demand will drop off a huge amount if that comes to pass, so its a risk worth considering.

booksurr

Bob_Bank_Spanker wrote: »

The £1000 allowance is for savings interest.

AdrianC wrote: »

No, that's savings interest. This isn't interest.

you are both wrong

the £1,000 "micro entrepreneur" allowance is available to anyone (irrespective of their tax bracket/income) who has income derived from property letting and is simply a tax free allowance against the first £1,000 of rental income meaning those in receipt of less than that will pay no tax at all, and those in receipt of more than that will pay tax on the net amount.

it starts in 17/18 tax year

https://www.gov.uk/government/publications/income-tax-new-tax-allowance-for-property-and-trading-income/income-tax-new-tax-allowance-for-property-and-trading-income

notes:
1. it cannot be used if the rent a room allowance has been claimed (ie. it is not cumulative with RAR)
2. if a LL chooses to calculate their rental profit the "normal" way (ie. gross rental income - actual expenses) then this allowance is not available, as it can only be used where no expenses are deducted at all, ie: total income - allowance = taxable income

sush40

Thank you, so this rent won't be taxable from April if this is my only rental income?

Still, would the yield cover the maintenance costs if the rent is low?
What kind of insurance should I opt for?

booksurr

sush40 wrote: »

Thank you, so this rent won't be taxable from April if this is my only rental income?

correct, assuming the total income <£1,000

sush40 wrote: »

Still, would the yield cover the maintenance costs if the rent is low?

since we have no idea what the parking space comprises we have no idea what maintenance will be required
- marked space on an estate where you are/are not a leaseholder so are/ are not exposed to existing service charges?
- bit of land behind a gate where you do/do not have to pay for all associated maintenance yourself as the what: freeholder? leaseholder/sub tenant?

sush40 wrote: »

What kind of insurance should I opt for?

ask a broker, rather depends on where the property is located and what you want to cover. Public liability obviously being the start point

sheff6107

Am I right with the maths? £10,000 divided by £70 = 143 months = 12 years before you even break even?