Renting out an investment property is a great way to earn reliable extra income — but what if the property you’re renting out is just a patch of asphalt? In crowded cities like New York, Chicago and San Francisco, parking spots are a precious resource, and city drivers pay top dollar to rent spots by the week, month or year.
According to parking space rental platform SpotHero, the average listed price of a spot in New York City is $400 per month. In San Francisco, it’s $295 per month. And in Jersey City, just across the river from Manhattan, it’s $300 per month.
If you’re a property owner who just happens to have an extra spot — maybe you’ve got space in your driveway or your apartment came with a parking spot that you don’t need — renting out a parking space can be a low-maintenance way to earn a steady second income. You can potentially earn up to several thousand dollars a year, depending on where you live and what kind of spot you have available.
But there are some things to consider before offering your space up to the highest bidder. Should you list the spot through a third-party service or try to go it alone? And how much can you reasonably charge for parking?
Airbnb for parking spots
If you’ve got an unused parking spot but aren’t sure how to find a tenant, there are a number websites matching empty parking spots with willing renters, similar to Airbnb. CurbFlip allows you to link your Facebook account to list your parking space, and Spacer lets you list the spot through their platform in “less than 10 minutes.” There’s also SpotHero and ParkingCupid.
Most of these platforms follow a similar business model: They facilitate the process of listing and advertising your open spot and manage the payments. In return, they take a percentage of what you make from renting the spot.
SpotHero, for example, takes a 15% commission on monthly parking rentals, plus an additional $0.99 per every monthly recurring transaction. Spacer also takes 15% of the rent, and CurbFlip charges 16%, plus an additional fee if you use PayPal to process payments.
Considering the commission fees, some might be tempted to rent out their space on their own, by listing it on a free board like Craigslist or Facebook, or even with good old-fashioned paper flyers around the neighborhood.
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How one owner did it
Brooklyn resident Mickaël Savafi is one of these people. He said when he had a spot to rent out in his building’s garage, he decided to rent it out by himself.
“I live in an apartment building and the apartment came with a parking spot in the garage. As I didn't have a car, I decided to rent the spot out,” Savafi said. “I was limited to people of my building, as they're the only ones allowed to access the parking garage. I posted an ad on our BuildingLink (the intranet for our neighbors) for our parking spot.”
When deciding how much to charge for the spot, Savafi said he checked the price at the parking garage next door to his building. He “found out they offered their services for $300 per month,” and then offered his spot for $50 less than that, “to be more competitive.”
But for property owners who don’t have a garage right next door to compare prices with, how do you decide how much to charge for a parking spot?
How much can you make renting out a parking space?
The biggest factor in deciding how much to charge is location. If you go through a third-party platform to rent out your spot, they’ll probably tell you how much your spot should go for based on its location, size and specifics. But if you’re listing a spot on your own, do some market research.
Check out how much similar spots in your city are listed for online — a parking space that rents for $350 a month in Brooklyn might only go for $90 a month in cities where parking is less scarce, like Atlanta or Houston. It also depends on where in your city you are. Spots will rent for more right in the heart of downtown than they will in a suburb.
The type of spot you have will also determine how much you can charge for it. According to Spacer, renting out an empty driveway might net around $200 a month, but an indoor spot in a garage could go for around $300 a month. Renters might also pay more for things like lighting, security, an electric charging station and CCTV cameras.
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How to rent out a parking spot responsibly
If you’re ready to rent out a parking space, make sure you’re being responsible. If you’re a renter and have parking that came with your rental unit, check with your landlord to make sure renting out the spot isn’t a violation of your lease.
If you choose to list your parking space through a third-party platform, carefully read the terms and conditions so you know what you’re signing up for. Be clear on exactly how much of the rent you’ll hand over in commission, and what protections and perks the service offers you.
If you’re not using a third-party platform and you’re striking out on your own, you’ll have to draw up your own contract with the renter. Be sure to set the parameters carefully, including what day the rental term starts and ends, what day of the month you want the payments and any other terms. If you’re nervous about this step, it’s never a bad idea to consult a lawyer for help before you agree to let a stranger have regular use of your property.
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Image: Micheal Morczak