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When looking to invest your money, you need to explore all avenues. In the field of investment in parking, we have not yet discussed the purchase of a parking space in a concession. We are going to take the example of the number 1 parking lot concessionaire but also present you the feedback of small owners.
Why buy in long lease or emphyteutic lease
An emphyteutic lease is a long-term rental contract ranging from 18 to 99 years. Most of the time it is the city councils that propose this type of lease to facilitate the management of large real estate complexes by creating a company. Note that the term “long lease” is now more and more used to talk about this type of investment. The company must maintain the property for the duration of the lease. The principle for the purchasers is to invest in one or more shares of this management company. In most cases, each share corresponds to a real estate lot (parking lot, garage or box) which becomes almost the property of the buyer for a limited period of time.
The advantages of emphyteutic lease parking
- Reduced notary fees… you deal directly with the company that rehabilitates the parking lot !
- The geographical location of the parking in the city center.
- The purchase price is lower, since the property is at your disposal for a limited period of time.
- The price negotiation is much easier than for a classic purchase.
- The acquisition is very fast, it is a transfer of share at the notary.
The disadvantages of emphyteutic lease parking
- The availability of the place is limited in time.
- At the deadline, you lose all the capital invested.
- We do not always know the company that operates the parking.
- The charges are higher than for a traditional parking.
- Large parking lots can have several investors competing against each other.
- Impossible to divide a space to put several tenants.
- You pay a property tax for this property in 80% of the cases.
💡 Did you know that : for the tax authorities, you are the owner of the site and therefore liable for the property tax.
Risks related to the emphyteutic lease
The members of the club hesitate a lot before launching out in the purchase of a carpark or a garage bound to an emphyteutic lease, on the principle you invest in shares of a company which does not generate any profit. You are free to use or to make a profit on this property; without forgetting that at the end of the lease contract you no longer have any right of ownership and that your initial investment is lost. Officially, you are not the owner of the parking lot but simply have the right to use the space.
A member shares his feedback with you :
The first bad surprise came from the amount of the charges, the agency had presented a doubtful document, finally the real value is higher of 44% compared to the amount envisaged… The charges are higher than for a traditional parking. Second bad news : the property tax, contrary to the effects of announcements of the agency we are legally owner of garage therefore liable for this tax. The last problems came from the notary’s office, one of the former owners had left a slate on the payment of the charges. When signing the deed of ownership, the real estate agency had simply indicated that everything was in order… but the reality was slightly different !
Profitability obtained with long lease parking
The major players in parking
Parking emphyteutic leasing works with large real estate complexes, the investment to buy and maintain this mass of spaces is very substantial. This is why you find all the biggest parking company.
The CEO of a large company explains that the average turnover of a parking complex is about $2.2 million in the capital and $640,000 in the provinces. “The first five years we lose money, the next five years we break even and then we make a profit that often finances ongoing projects. A parking complex is a big cash machine that generates a lot of money. Thanks to the large volume of spaces that are concentrated in a small area with a geolocation in the heart of the city centers.
Investing in a parking lot in leasehold allows you to take part in this beautiful adventure but you have to be careful because the profits of the big groups are not always those of the small shareholders… These big players keep the revenues of the parking lots for themselves and do not sell to individuals. In most cases, it is the city councils that set up companies to manage parking lots and offer long leases.
The rental profitability of emphyteutic lease parking
The most important factor before investing in a parking lot is the location, which is a strong point for parking lot builders: in general they have the best location available in the heart of the city. The gross rental return will necessarily be very attractive. If you do not want to lose money, pay attention to the charges which can reach high levels in a parking lot guarded day and night…
Some club members have agreed to share their parking and garage leasing figures with you. The investment strategy of buying long leased parking spaces and reselling them does not work in this case. does not work in this case. Indeed, the more time passes, the more the value of the parking lot decreases. The reason for this is the end date of the lease which inevitably disturbs potential buyers.
|Number of locations||Purchase||Rent||Gross profitability||Long lease duration||Sale price||Transfer||Member’s name|
|2 parkings||24 500 €||70 €/mois||7,83 %/an||53 years||Exchange with this member|
|2 parkings||18 000 €||80 €/mois||10,66 %/an||30 years||17 000 €||6 years later||Exchange with this member|
|2 parkings||19 000 €||100 €/mois||12,63 %/an||20 years||16 000 €||5 years later||Exchange with this member|
|1 garage||4 908 €||43 €/mois||10,51 %/an||42 years||Exchange with this member|
|1 garage||5 200 €||45 €/mois||10,38 %/an||45 years||Exchange with this member|
How to buy a place in a long lease concession
If you wish to invest in a parking space in a long lease concession, you must: contact directly the concessionaires who build large parking lots or the city councils who supervise the projects and are aware of the parking players in their city. To summarize, the important points to check when buying a parking space are
- The remaining term of the concession,
- Check that there is no delegation to a management company,
- The sale price in relation to the market value,
- The amount of the monthly charges,
- The amount of the property tax.
Want to invest ? Use our free pre-purchase comparison chart !
⚠️ Beware of scams 📢
An important information comes from one of our readers, victim of a seller of parking space in amodiation abroad. As the income from this type of investment is often higher than 10% and sometimes even up to 18%, there is an explosion in the offer of leased airport parking spaces in major European cities. This market development attracts its share of ill-intentioned profiteers who do not hesitate to sell dreams and swindle their clients.
Airport parking lots on long lease
This is the type of property that comes up in the scams of the moment. A pseudo advisor in wealth management (a real advisor must have a state diploma and not a paper certificate) approaches people to invest. Another time, it’s an advertisement on the internet or a mailing that praises the merits of investing in parking lots…
Unlike a physical parking lot that you can visit before buying, there is an additional risk when buying a paper parking lot abroad. Several large groups offer this type of investment which is profitable, you just need to have all the guarantees before investing.
Many scammers pose as agents of large corporations. Be careful before signing a long lease and making an initial payment. Take the time to verify the identity of the seller and all the information, in 95% of the cases the scam is completed by an identity theft.
Our reader invests in 3 airport garages in Austria and Portugal. The first two months go well with the collection of the announced income, except that the third payment never arrives… It seems that the individuals who carried out the fraud were pretending to be a recognized company. The pseudo company that defrauded our reader is a real company that proposed the resale of parking spaces as a representative, except that everything was fake. You have to be careful because the name of a company changes quickly. Other swindlers proceed differently to extort money, they are no longer agents but direct people working in a large parking actor, sometimes even the director registered at the commercial court… in reality this person exists but is in no way in charge of selling parking lots, worse still does not have the same head as the swindler unmasked.
Our members have also noticed a strong increase in advertisements promoting their investments on social networks. Not all of them are scams, but you have to be vigilant. It is important to know that some phone numbers are rented on foreign platforms, where it is easy to display a false identity. The company then asks for payment to be made to two separate banks, supposedly linked to each country where the parking lots are located. In the case of our reader, he paid to Austria Bank in Vienna and Novo Bank in Lisbon. There are several other techniques for unmasking scams, which our lawyers present to you on the club’s forum.
A dry loss of 60 000 € without counting the legal fees
Our reader lost 60,000 € and filed a complaint, the facts are true since the company Kaufman & Broad does not sell these products. Always check the identity of your contacts, especially when they claim to be representatives of a large group. A quick phone call to the head office of the large structure can validate an identity or a project, to avoid any disappointment.
This sad experience should remind us to be vigilant and to always take the time to check every information without trusting people too much. The club team is sometimes demanding by asking you a lot of questions on the forum. The goal of the club is to help you to understand the risks and scams beforehand. It’s a pity that this reader didn’t join our club before investing, I’m sure that a member or our lawyer would have noticed the flaw. Join our club to exchange on the forum and find the traps to not lose money!
How to avoid scams
Better late than never! On Tuesday, June 16th, the Financial Markets Authority (AMF) finally recognized the scam that we had reported several months earlier. The authority recommends not to follow up on the solicitations of people inciting them to invest in the parking spaces of European airports in particular (Portugal, Spain, Italy, Germany, etc…)
The rule is to be very careful before contracting with an agent. Take the time to check all the information given by the seller and contact the company that has appointed the sales representative. The precautionary principle is simple: if the seller is embarrassed by a question or has something to hide, beware and move on to the next investment project!
Be aware that a wealth management consultant or a sponsored advertisement can hide scams. We meet many wealth management advisors; ask them if they are qualified to do this job. Be careful, we are not talking about a diploma style training on the internet but a real diploma. Some schools offer accelerated training to become a wealth manager, how can you be credible by spending 6 months in university course while the real diploma is done in long training.
Exchanging and sharing information remains the best way to avoid traps. As in every sector, the swindlers know how to adapt quickly and perfect their techniques. Our forum is precisely dedicated to the prevention of these risks, do not hesitate : react on the forum of the club.
You are a victim of a parking scam at the airport or elsewhere
The first thing to do is to file a complaint with the appropriate authorities. Then we recommend you to join our club to exchange on the forum with other scammed people and thus constitute a group to reduce the legal fees. We have created a dedicated space on the platform to help victims.
Our conclusion on the emphyteutic lease
If your goal is to generate income with a downtown location at an attractive price. This type of product, not very well known, sometimes hides good deals. The hyper city center brings very reliable tenants, most of the time merchants who work in the pedestrian streets. However, you should read the purchase contract carefully before you decide to buy.
The bad experience with the real estate agency has allowed our members to learn a lot. Always ask the seller for dated and signed documents, and above all take the time to check everything. From the identity of the sellers to the papers presented, without forgetting to contact the syndic to confirm the statement of charges and the future work to come. Now these two members put things into perspective, there are still 40 years to make the investment profitable! Today, with more than 5 years of hindsight on this investment, they affirm that this type of investment is interesting, provided that you find a parking lot in the city center or in the center of town to have a filling rate of 100%.
This type of investment allows you to diversify your real estate assets without taking too much risk. It is nevertheless necessary to find the right location at the right price so that the duration of the emphyteutic lease allows to earn money to largely reimburse the loss of the initial investment.
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