Samurai Fief : How Owning a Parking lot makes you Rich!
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.
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.
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[…] a parking lot, in the right location, is one of the best real estate investments you can make. You’ll get to […]