How profitable for a car park rental?

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How profitable for a car park rental?

Buying parking spaces to rent them can bring you money. Indeed, the return, also known as net profitability, is the main and most important criterion that must be taken into account when embarking on an investment of this type.

Boost returns by playing on the purchase price

The purchase price of a car park varies mainly depending on its location. For example, in Paris , you can find a place with a price of less than 20 000 € at the north of the 19th arrondissement or south of the 12th. By cons, for a place in upscale neighborhoods, especially in the historic center of Paris as the Ile Saint-Louis or Le Marais, places known to be stingy in terms of parking space, the ticket to these places can even reach 50 000 €. Otherwise, in terms of the cost of parking, there has been a sharp increase recently. Indeed, it went from € 3.60 to € 4 in the districts of the centers and € 1.20 to € 2.40 in the periphery. In addition to this, an extra hour has been added on the parking slots. So, try and invest in this area to have a good business. Investing in the rental of car parks is like starting business creation procedures. You have capital, you have the objective of creating a turnover by recovering rents, you have expenses to pay and you have a profit to win.

The profitability of a parking lot for rent in practice

The benefit of the rental investment of your car park is calculable by adding the totality of the rents received and by subtracting the expenses as well as all the outflows of money. The result, that is the difference, will be what you will have earned in this activity. For the calculation of the net profitability in renting car parks, you have to relate the profit made to the purchase cost of the car park. Here is an example to help you better understand the concept.

You have acquired a car park for a sum of approximately 10 000 € and you rent it then for 60 € the monthly rent. Expenses, including the costs of trustees and maintenance are 40 € and the property tax is 80 €. To determine the rental profitability of your car park, you must make the following calculation:

  • Rental income amounts to € 60 x 12, which equals € 720
  • The gross profitability of your car park is equal to 720 € / 10,000 € x 100, which amounts to 7.2%
  • Annual expenditure is 120 € in total
  • The profit is therefore 600 €, the difference between rental income and annual expenses
  • And the net yield of the car park is 6%, ie € 600 / € 10,000 x 100.

It's quite simple to calculate! The calculation of the net rate of return of your car park allows you to make an evaluation of the relevance of your rental investment. Note that the net rental profitability of this type of investment is the second criterion to be taken into account after its implementation, in your investment decisions. Expenditures including property tax and trustee fees reduce your profit and they are obligations to pay. A cheaper parking space, but with a fairly high property tax and high monthly charges, can put you at a disadvantage.

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