Samurai Fief: The Power of the Parking Lot

commercial real estate, parking lot, downtown

As a Samurai Investor, your goal is to find a fief, or a money producing asset, and then pay others to manage the fief for you.  While many investors go a more complicated route such as real-estate or franchise investing, there’s a more for simpler option out there.  It’s a far simpler operation with a very good ROI. (return on investment) and it’s called the parking lot.

Let’s look at the numbers real quick.  Say you find yourself with the opportunity to purchase a dilapidated party store near a bustling downtown.  The asking price of the store is currently $100,000.    The store and parking lot are located a few about a mile away from a nice shopping and entertainment district.  So you decide that rather than restore the party store, you’re going to demolish it, and put up a parking lot.

According to Hometown Demolition,  the average cost to demolish a building is around $30,000.  Although in reality, costs may be quite lower as many cities will offer incentives for investors to tear down unusable property.  But for our example, We’ll say that it will cost you $30,000 to demolish party store.

parking lot

The Initial Investment

Dilapidated Party Store:  $100,000

Demolition costs: $30,000

Repaving of the site: $5,000

Total Initial Investment:  $135,000

So you’ve demolished the store and repaved the site.  You now have space for 20 cars on your new empty lot.  So you decide to offer monthly parking spots for roughly $150 per month per car.  These spots are available exclusively for people working  Monday – Friday in the downtown district.  You have them sign an official lease stating that they may park there during the weekends, but that the spots will only be available on a “first come, first serve basis.”  And the rate of parking will rise on the weekends to $20 a day per spot.

Monthly Revenue

20 Monthly Renters X 200 per month

=  $4,000 per month.

Weekend rates $20 per day X 20 spots = $400 per day X 2 Days = $800 X 4 weekends a month

= $3,200

Spots filled after Hours: $20 per spot X 20 Spots = $400 day x 30 days

= $12,000

Total Monthly Revenue:  $15,600

Total Yearly Revenue:  $187,200 *

(Assuming your parking lot is full 365 days per year. )

Expenses

Parking lot employees 4

Hourly Wage: $10 x 40 per week = $400 x 4 weeks =$1,600 X 4 Employees = $6,400 Per month x 12 = $76,800.

$187,000 – $76,800 = $110,400

Total Revenue: $110,400 per year before property Tax.

Total Profit after 10 years:  $1,104,000

As we can see from the math, owning a parking lot can be an extremely profitable venture.   A Samurai will pay off his initial investment in roughly two years time, and can enjoy the profits for years to come.  A Samurai can become a millionaire in less than 10 years, simply by owning a piece of empty pavement and doing absolutely no work.  Although it would be highly recommended that the Samurai then purchase a rental property to add in another Fief into their crest.

 Exercise

For an exercise, find a parking lot in your area or town, and complete the same math as listed to above.  Find out how many spots they have,  how much they charge monthly, and figure out their monthly profit.  Then find out if they offer weekend parking at a premium, or if there are any other special rates for weekend parking.  Then once you come up with a basic guesstimate of their monthly profit, multiply that by $12.  Then you will have an idea how much the lot owning Samurai is making off the parking spot.

Also, if you live in a small town or a city that owns the majority of the parking spots, do the same exercise again.  Figure out how many parking meters there are in a given area, and then figure out the hourly rate, and multiply that by a estimation of how many people park there daily, and for how long.   That will give you a rough estimate of how much your city or town is earning of people parking there.  And you will be a wiser investor for it, as it will give you insight into how money flows in your particular town.

16 thoughts on “Samurai Fief: The Power of the Parking Lot

  1. Hi,

    Very interesting article, I’d never considered that it could potentially be that easy to set up your own parking lot. The profits look very healthy and based in your figures the overheads aren’t that high when compared with other potential businesses. Is it possible for costs to run out of hand when doing demolitions?

    1. One of the best ways to control costs is to work with the city your buying property in.  For example, large cities like Chicago and LA most likely have funds available to help with demolition costs.  But one thing they might not cover is hazardous waste removal.  Things like lead pipes and asbestos may be your responsibility to remove.  That could definitely increase your demolition costs.

  2. Wow this is a concept that I had never thought about before and is a real eye opener, after initial investment there are little fees that would ordinarily be associated with businesses like buying stock etc. 

    Where do you suggest are the best places to be looking for things like this? where does one start to look? 

    1. I would recommend finding a city with a Blight Removal system in place.  For example, Detroit Michigan has an actual Blight Removal department in the city Government.  You want a city with Blight Removal teams because that means there is government funding available for demo costs.

      Next you want to start reaching out to agents that world with commercial Real Estate.  Chances are some family has currently inherited the depressed property and wants it gone as quickly as possible before they have to start paying taxes on it.  

      Now you’re getting good deals on both ends.  Free money from the city, adn a Good deal from the owners.

      That’s my recommendation.

  3. Hi Jamie,

    this investment looks promicing. I think that almost any place that has normal flow of cars – is worth of trying this. Small or big cities – cars are everywhere these days… and it has become a problem to find a place to park. Of course, I agree that it is best to complete the math you mentioned. I have a friend that is crazy about cars, he has some collection of old cars, I’ll show him this article to see what he thinks and maybe he could even trying something. There is a nice place across his building, that could be used for this business.

    Thanks for the info,

    Susan 

    1. Susan, 

      If your buddy really wants to get a leg up, he should consider putting in an electric charging station.  He could be the first in his city or town to offer that.  He might even be able to get government funding to help with installation costs.  As the Auto world changes I belive electric cars will eventually be the mainstream future within the next 10 years. 

  4. Wow, Jamie, what an eye-opening read! I can’t say I’ve ever really thought about parking lots…except when I have to pay to use one. And considering most of the time, as I’m paying to park, I’m thinking, “Gosh, that’s a lot of money to park my car!” one would *think* I would have put two-and-two together and realized what a great investment opportunity a parking lot could be. But I didn’t, so I’m very glad you did! Beyond this awesome article, I will admit I love the whole concept of your site. We all want to be financial warriors, but, as you note, traditional education does nothing to train us for that role. I bow to your practical financial insights presented in a unique and intriguing format. Keep up the great work!

  5. Before I started in online marketing (although I did quite a bit of it in a different way then also) I was a realtor and a real estate investor.  Computing the return on investment for myself and for my investor clients was something I did on a regular basis, and I think you did an absolutely wonderful job breaking this down in very easy-to-understand terms for anyone reading it, even people who are new to these ideas.  We did a lot of potential storage units, which are very similar, with no real employees (they used kiosk) except contractors to plow and clean the units when a “tenant” would move their things out.  We did a lot of apartment buildings, which were much more complicated and not nearly as passive as a parking lot or a storage unit.  Great job!

    1. Babise, thanks for the suggestion about the storage units.  Those would definitely fall under the Samurai category.  

      If your interested in online marketing, i would recommend you check out my Pirates Guide to Dropshipping. It’s a quick read into the world of Drop Shipping.  I recommend anyone interested in online marketing learn the basics of Dropshipping as a concept.  

  6. Hello,

    After all the “costs” very well explained in your article, I really consider “Parking” a very good investment to consider. 

    If the place or city has shopping centers or work offices is a good to start the investigation. 

    The Parking has very clear costs to estimate, can hardly make a wrong calculation of investment and future profitability. 100% support this type of investment.

    Greetings. Claudio

    1. Thanks Claudio.

      Historically Samurai’s were always given a physical asset, or a fief.  This fief was always based a human need like farm land or water rights.  While the modern economy has gotten those types of assets, the wisdom of a fief still applies.  

      In a world where stocks, cryptocurrency, and buybacks are the new normal, one can’t underestimate the value of a physical asset.  That is why a Parking Lot is an excellent investment for a Samurai.  Be sure to read up on the other Warrior Classes and let me know which one applies to you. 

  7. What an interesting investment and money making tactic. I never thought that the parking industry could be so profitable. I’m really interested in investing in something like to potentially make a large profit.

    1. The real trick is making sure you leverage other people’s money. The main reason this strategy was so successful in Detroit was because there was free money available to help purchase blighted properties. So the real trick here is looking for opportunities in new ways. Realizing that anytime you do anything, there is some program or someone out there willing to help. Because it will benefit them as well. So always keep your eyes peeled for new opportunities.

  8. I recently just came into some money because my great-grandfather has passed and left his entire estate to me. I want to be smart with the money and invest it into something that will continue to make myself and my family money in the long run. I want to be able to support my family even when I won’t be here. This is a great option.

    1. Sounds like your a Samurai at heart. The Samurai investor will always want a physical asset that will continue to pay for generations to come. Having a low cost asset like a parking lot will be a valuable addition to your family’s wealth over time.

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