EP. 1211 IS IT WORTH PAYING A MORTGAGE FOR A GARAGE 💸

Unlock the mystery behind the real value of garage parking when it comes to property investment—does it truly warrant the extra outlay, or might it even turn into a profit-spinning feature? Billy Bob and I share our contrasting experiences and insights on this topic, with me revealing that garages haven't always been pivotal in my real estate ventures. As we navigate through the evolving landscape of car ownership, with ridesharing and autonomous vehicles shaking up the scene, we contemplate the future demand for personal parking spaces. The convenience and versatility of owning a garage are also on the agenda, discussing how some savvy owners are transforming this often overlooked asset into a source of income through storage solutions or by cleverly renting them out.

Steer into the next part of the conversation where we break down the specifics of renting out garages and parking spots as standalone investments—an often overlooked cash flow opportunity in the real estate market. I'll walk you through the potential rental rates, which can swing from $50 to $100 a week, and why certain areas, such as those near major transport services, can become hotspots for high demand. We also dissect the strategic decision of opting for apartments without parking facilities, a move that can potentially lead to higher rental yields. Throughout the episode, Billy Bob and I aim to equip property owners and investors with the knowledge to fully leverage their real estate assets and possibly boost their bottom line.

Transcript

Speaker 1: 0:00

Bit of a heated topic this morning the garage Is it worth borrowing the money buying the garage with the unit? What's it going to cost you? We're going to talk all things garages and parking this morning and talk about if they make money. Stay tuned, I'm the ringleader, so make it up. Happy Easter, Billy Bob.

Speaker 2: 0:40

Did the Easter Bunny treat you well?

Speaker 1: 0:43

Yes, yes, I went to the Easter show last night and it was busy Flat out. I actually had to talk to a couple of farmers that were there and they did say the first week was quiet and they did say the second week was busy and they said the first week was quiet because it's the first year where it's been out of sync. It's the weirdest thing. The Easter show is out of sync with school holidays, like it sort of doesn't make sense.

Speaker 2: 1:15

Yeah, two weeks to go to school holidays. I don't know.

Speaker 1: 1:21

It's weird. I don't know what happened this year, but I think some kids are still at school even next couple of days.

Speaker 2: 1:27

Yeah.

Speaker 1: 1:28

And then the show's finishing today.

Speaker 2: 1:31

Poor fella, poor kid. Anyway, I hope everyone had a good Easter. Yeah, what'd you do? I've been in Newcastle. I'm still my way back now, oh nice.

Speaker 1: 1:43

Yeah, solid, solid on my way back now. Oh, nice, yeah, solid, solid. Um, now talking about garages, guys and girls, this is one that I think it's pretty hard dialogue to find out there. So if you're if you're buying an investment property, if you're buying your first home, if you're just buying a house or an apartment, the relevance to the garage do you? It's? You know, I know that some people just desperately have to or must have the garage, but sometimes it's a decision of yes or no and we wanted to actually explore that decision, what it costs. Do they make money? And you know what, when you're tapping that money onto your mortgage for 25 years, you better hope that you wanted a garage yeah, because, like when you're, when you're going through your property purchase, there's, I guess, trade-offs you can make.

Speaker 2: 2:30

Parking for a lot of people is not one of them. It's so important, but when you look at the price point, what it actually costs to have parking and what that repayment looks like over the lifetime of your property, it's a lot of cash isn't interesting.

Speaker 1: 2:46

I've got to say, just in um out of properties that I've purchased over the years, 30 years of, of, um, of of buying of properties and selling, um, I would say one out of, I would say 10% of them had a garage or 20% of them had a garage, so 10, 20%. So, for me, the relevance of a garage as an investor and, by the way, we're going to talk about its region, this changes regionally as well. But, you know, for the Northern Beaches, the northern beaches, for me, with a garage, not really an important thing is an investment. You, you, billy Bob come back to me.

Speaker 2: 3:34

Is parking important for you?

Speaker 1: 3:38

definitely, I think it's. I think in the northern beaches, particularly when you're in areas like DY, which are hard, you can go out to that street and just find nothing at all and spend five or ten minutes, I think. Yeah, definitely, you know what? This is probably a rolling question as well, where I think the weight on a garage or a car space is potentially going to be less because of automation with cars and with Uber. As a matter of fact, I actually think it could be cheaper to Uber your life away rather than buy a car, hence donated garage.

Speaker 2: 4:22

It is getting that way and the government's obviously making big pushes to try and you know, get people onto public transport, make the systems better. So we're selling a property and I this one resonates with me in dy at the moment. It's a one bedroom apartment, 500 meters from the beach and 500 meters from the beeline bus stop. And I look at someone who would live there. Why would they need a car? If they're commuting to the city? They can do it on the bus and they're from the Beeline bus stop. And I look at someone who would live there. Why would they need a car? If they're commuting to the city? They can do it on the bus and they're going to do it anyway, because it's cheaper, faster, easier. And then why would they need a car on the weekend when they've got the beach down the road, all their local shops in walking distance, it's just perfect.

Speaker 1: 5:01

Or you've got these ride-share programs with cars. Now, where there's in busy areas, they've got these. Go get cars, or whatever the companies are called um where they can actually just crew. You know, there's a car sitting down the road, they can just jump in keys, are there?

Speaker 2: 5:15

bang, bang, boom yeah, even uber share yeah, even cheaper.

Speaker 1: 5:21

Even cheaper. Now, what about you have you bought? You bought with um parking or no parking?

Speaker 2: 5:27

I bought with parking. It did have a garage, not so much a um, a huge wish item. You know it wasn't exactly on my wish list, but I was lucky to have it. Um, I do think there's value in a garage, particularly particularly if you can monetize it. So, so if you can turn that that you might not even use on a regular basis, but you can turn that into storage or you can give it to a friend or a family member that can use it, there is value there. And what I really really like is parking that you can basically turn from one car space into two. I think that's the biggest value add that I look for in a property. So the way, the way you can do that is find a garage that you can park in front of and it doesn't interrupt anyone else, doesn't doesn't block anyone else, or find a car space that you can potentially nudge two cars into does happen.

Speaker 1: 6:23

I've noticed on there's a couple of blocks, even some new ones. More so old, small ones, but they're even some new ones. There's those opportunities. Billy, what are you paying for a garage in the northern beaches, for example?

Speaker 2: 6:34

about a hundred thousand, about ten percent on your property between okay.

Speaker 1: 6:39

So and one thing I want people to stress on is this is the difference between no parking to a garage.

Speaker 1: 6:47

So you know it's worth a million bucks, say 10 percent um, and this does change in regions.

Speaker 1: 6:55

So in the cbd um, the value of that parking is also going to be higher because the density to park in the street is harder than northern beaches, whereas if you, if you moved into different parts of sydney where there's a higher concentration of houses and just a few unit blocks, to different parts of Sydney where there's a higher concentration of houses and just a few unit blocks, those areas are a bit more tolerant to no parking in your unit block because there's so much available on the street. So the value sort of comes, comes back a bit um. So that's a big number, billy. People are putting a hundred grand onto their mortgage from the difference of no parking to a garage in DY and I think when you look at paying your mortgage back over time, people are going to be in the pipe for even more than that, because you've got interest payable over those 25 years on that $100,000, that extra $100,000 that you did the parking. Does parking go up as much as the unit value?

Speaker 2: 7:58

I would. I would stick a limb out to say that it's all relative to what you put in, is what you get out there. There is obviously going to be buyers that will you know. Dismiss your property if you come to reset point of reselling. Um, however, you've got to remember you are the you know. Dismiss your property if you come to reset point of reselling. Um, however, you've got to remember you or the you know you. You saw the opportunity to get in with no parking in the first place. So does it go up as much as everything else? Absolutely, will it hurt your sale price if you don't have parking? Absolutely, but you've made a saving on your purchase in the first place? Um, do we see properties with no parking make money? Yes, we do.

Speaker 1: 8:35

They still go up so I guess you're buying it for 10% less and then when you're selling it, you're selling it for 10% less. If you're buying with none, what's the value between a zero parking to car space? It's not going to be 10% because you've got a garage. When you're paying 10% more, what's a car space?

Speaker 2: 8:57

I think it's probably somewhere half in between. But guys, I really do find buyers will dig their feet in, they'll stick their heels into the ground or they'll overpay if these parking requirements are important to them and it matches up in a property, so basic car space. I think it's somewhere halfway in between, probably five percent and carport carport similar. I think car space Carport very similar.

Speaker 1: 9:31

Probably a little bit more, probably a bit like under-building parking. I guess if you get your car out of the rain you're not going to be able to wash it as much hail, whatever that's going to be. Now, before we go, I do want to talk about storage. I think storage has changed the game. The necessity for garage was so much, I believe, stronger because you had no other alternatives. But in the last 10 or 20 years you've got places like ken arts, higher where you can.

Speaker 1: 9:57

If you don't have that garage, you can throw stuff in that storage unit. Um, and I'm we're also seeing in the last 10 years storage options we that you can actually buy. So these things are like. We've got one in the back of chrome, 130 grand. It's a. It's one meter longer and one meter wider than a conventional garage, um, so you can actually separate yourself away from the garage, aka storage. So if you're a tradie, like an electrician, you've always needed to have that garage. You can go. You know what? I'm going to use that storage unit and I'm just going to take it.

Speaker 2: 10:33

You know, without, without parking possibly that's a really good example. You know, there you can actually save your money on your, on your property, and then put it somewhere else could be closer to your business. It could be, uh, you know, more practical, absolutely um, now what about?

Speaker 1: 10:51

what about rents are? Lisa wants to know about how to have tenants will feel about no garage and garage and no garage and no parking yeah, there's definitely a premium on rent and, believe it or not, we do see people.

Speaker 2: 11:05

People rent their property separate to their garages. I know it's, you know, not possible to necessarily sell your garage off or sell your car space off, separate to your property, but you can rent them separately.

Speaker 1: 11:18

What do you rent it? What are you into garage for any unit, blocking DIY day.

Speaker 2: 11:23

Why 50-100 bucks a week?

Speaker 1: 11:27

Pretty solid.

Speaker 2: 11:28

On the size. I've seen people rent that their garages around. You know those transports sort of. You know drop and drop and ride areas, manly, ferry, the b lines um, you know bus stops.

Speaker 1: 11:41

Manly's a bit popular one though man is a real popular one because you got yeah, that's right, people that live in the burbs. Outside of that, they'll hire that parking in the center of um manly to hop on that ferry five days a week, four days a week. Whatever it is, there you go. There is all things garages, rentals, sales, investment wise, even a bit of storage in that. Hopefully, this show has helped some people out there yeah oh, we've got another.

Speaker 2: 12:09

We've got another comment yeah, buying an apartment with no parking makes a great buy, for investors will still rent beautifully, I totally agree. Yeah, I think you see sometimes a better rental yield because your purchase price is so much more attractive happy a start, love you, see you.

Speaker 1: 12:28

Bye see, thanks guys, see you.