Is buying a garage a good investment, even with a loan?
Everyone talks about buying a garage like the shop of the year. In the capital, garages can be bought for 1.4 million, which, if released, could yield up to 7-8 percent yields, according to an analysis by Pintel Mortgage Bank. But what are the risks to the business, and what if we were to borrow from it? See wadesigns.org for a summary
However, the main advantage of buying garage space for investment is that it can be rented at a much higher rate than a home for a commodity. The usual rent of a garage in Bel-Buda is 28-38 thousand, in the downtown of Pest 25-35 thousand, in the outer districts of Pest and Buda 15-25 thousand dollars. In downtown areas, eye-catching owners can often rent out their garage space by night or weekend, while during the day, for example between 9 am and 6 pm. The two rentals can thus be much higher, though, this solution involves more measures. According to Pintel Mortgage Bank’s calculations, after-sales of garages and rentals currently yield 7-8 per cent after tax.
Why Buy a Garage for Better Investment?
One of the factors is the increasing expansion of paid parking zones in Budapest, even in the outer districts. In addition, the M4 subway was accelerated: the XI. District Council that a parking fee will be charged in Őrmező, near the South Buda terminus of metro line 4.
The other metro terminals can be expected to appreciate garages and parking spaces, for similar reasons: a few weeks ago, the extension of the toll zone at the X., then XIV. district municipality.
“Buying garages for investment purposes is also advantageous because they can usually be rented out longer (without a summer break) than homes, and have little to do with them, and are almost not depreciated,” adds Valdo Davis. According to him, mainly garages that are close to the city center or subway stops, which have pay parking and hard parking spaces, or covered, heated garages, preferably in new / innovative condominiums, are easy to rent.
In terms of prices, the Pintel Garage Value Map, based on Pintel Mortgage Bank’s recent transactional database of all types of garages and parking lots at the National Tax and Customs Administration, found District I to be the most expensive, with $ 2.9 million average price of garages sold in. This is followed by Part II. district 2.5 million, VII. and XII. district 2.3 million, and VI. district with an average price of 2.2 million. The cheapest was the XVIII. garage was available in the district, where the average price of parking spaces sold in the last two years was 0.8 million dollars. “The garage market in the capital is very concentrated,” remarks Valdo Davis. As he says, nearly two-thirds of the traffic was in districts XIII, XI, XIV and III in 2012 and 2013. Among the county seats in this period Debrecen and Szeged had the most garage sales – the average price was 1.6 million dollars. “At the highest prices, for an average of 1.7 million dollars, parking spaces sold in Miskolc,” says a senior analyst at Pintel Mortgage Bank.
Even worth a loan?
The mortgage repayment of a $ 2 million mortgage loan with a 10-year maturity is around $ 22-25 thousand. So you can even manage the revenue from renting a garage. However, a personal loan with a shorter maturity and a higher interest rate can be applied for at a much more expensive rate of $ 2 million over a five-year term with a repayment installment of $ 50,000.
If you want to invest in a garage but need a large amount of credit then you should definitely consider mortgages, but be sure that most banks will not accept the garage you want to buy as collateral. Be sure to include another property.
If you only need a small percentage of the purchase price, a personal loan can be a good idea as the interest rate is high, but the initial cost is much lower than these schemes, so the total cost of the loan is easier to manage. Especially if we find a tenant for the garage right away.