When it comes to investing in real estate, we usually think about building apartments, office buildings, self-storage, or even shopping centers. However, there is another type of real estate investment that can bring in significant income: parking lots. A parking lot is an excellent investment if you are looking for a relatively low-cost investment option that can provide stable passive income.
So, can you make money from building a parking lot? You can make money from building a parking lot. With the number of cars on the road increasing each year, the need for safe and convenient parking is growing alongside it. While it may not be glamorous, building a parking lot can be a lucrative investment.
And the good news is that the revenue from parking lots and garages in the U.S. is expected to reach about 11,3 billion U.S. Dollars by 2024 (Source: Statista). In this blog post, I will explore the various ways you can make money from a parking lot and provide some tips for getting started.
Things You Should Consider Before Building a Parking Lot
When building a parking lot business, remember to consider the location. Here are a few things you should consider before building a parking lot:
1- Location
The first thing you need to consider before building a parking lot is the location. Potential locations for a parking lot could be near an airport, university, hospital, or busy downtown area.
You need to ensure that the area you choose is high in demand for parking and it’s accessible to drivers. You may require a larger area, so find a site that is affordable, and you won’t need to buy a large landmass in urban areas.
2- Parking Lot Management
Just like any other real estate property, proper management will ensure that you make money from your parking lot. One option would be to hire a parking lot management company.
Generally, a parking lot manager will take care of all the day-to-day tasks like providing security, maintenance, and enforcing the parking lot rules.
Keep in mind that hiring a management company could mean lesser income for you, or you might need to spend some money on their service, but it’s worth it in terms of stress and effort saved.
3- Parking Lot Design
Designing your parking lot is another essential factor that could affect your earnings. The design you choose will determine how many vehicles can park at your lot.
You need to ensure that the design is optimized for the available space so you maximize the number of cars parked in the area. The design will depend on the location, traffic, and land use, among other things.
4- Parking Lot Fees
The setting of parking fees can be a tricky balance. You need to set prices within the range of what your target market is willing and able to pay, but also enough to cover expenses and earn a profit.
In some locations, demand is so high that you could charge premium prices, but in other areas, prices may need to be lower to attract customers. I encourage you to take the time to research the ideal price range to set your parking lot fees.
5- Additional Income Sources
Apart from charging for parking, other services like car detailing services, tire changes, and fueling services can also be sources of revenue for your parking lot.
Offering convenience options to customers, such as payment apps and e-wallet integration together with traditional cash payment, can attract more customers.
The goal is to think of several sources of income, so you can diversify revenue streams beyond parking fees.
Ways You Can Make Money From a Parking Lot
One of the ways to lower your risk of investing in a parking lot business is by creating multiple income streams and mitigating risk.
Here are essential ways you can increase your revenue make from your parking lot business.
1- Revenue From Parking Fees
The most obvious way to make money from a parking lot is through parking fees. Depending on the location, the fees charged can have a significant impact on the overall profitability of the parking lot.
A good rule of thumb is to research the average cost of parking in the area and price your lot accordingly. It’s also essential to consider the competition and adjust accordingly. Generally, offering discounts for long-term stays, high-volume users, or off-peak hours can also help drum up more business.
2- Additional Services
Some parking lot operators choose to offer additional services to boost revenue. Car washes, maintenance and repair services, and even electric vehicle charging stations can all be added to a parking lot to increase profits.
Offering additional services can help diversify your revenue stream and can attract more customers to park with you. However, it is vital to ensure that offering additional services does not create conflict with zoning laws and other regulations.
3- Advertising
Advertising is another way to generate revenue from a parking lot. By partnering with local businesses or national advertisers, you can offer marketing space on your parking lot, which can include banners, posters, and even digital advertising displays.
Offering advertising space can be lucrative, but it’s essential to ensure that it does not compromise the user experience of your parking lot.
4- Property Development
For some, parking lots represent potential property development opportunities. By acquiring land and building a parking lot, as an investor, you can generate income through parking fees while awaiting the right moment to develop the property.
Property development in high-value or high-demand locations can deliver a significant return on investment when properly executed. This strategy, however, requires significant capital and carries many risks that need to be carefully evaluated.
5- Rideshare Partnerships
Rideshare services like Uber and Lyft are changing the transportation landscape. As a parking lot owner, you can partner with these services for access to dedicated drop-off and pick-up locations.
As a result, you can charge fees per ride, creating additional revenue streams. This is a relatively new strategy and may not be available in all locations.
At the same time, Uber and Lyft present a real threat to parking lot businesses because they allow people to leave their cars at home, according to ACE Parking, one of the leading parking companies in North America.
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- 8 of The US Most Popular Cities For Self Storage.
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- 5 Reasons Why Investing in Farmland Is a Smart Decision for Your Portfolio!
Wrapping Up
Building a parking lot can be a profitable investment if done correctly. Like any business, it is essential to conduct careful planning and research.
Parking fees are the most obvious revenue generator, but there are several additional ways to create a diversified revenue stream. Offering additional services, advertising, property development, and rideshare partnerships can all help make a parking lot a profitable investment.
Remember to consider critical aspects like location, management, design, fees, and additional income streams.