10-Step Guide on How to Buy a Parking Lot & Scale It in 2024

Do not index

Are you tired of the struggles that come with finding a parking spot downtown? Imagine having your own spot waiting for you every day without the hassle of endless hunting. This blog features various benefits associated with investing in a parking lot to build a steady and profitable source of significant passive income with long-term investment stability.

Are you looking to shift your parking operation into top gear? Let's explore Parqour's solution, one of the leading parking management systems that offers a valuable tool to help you increase your investment stability with long-term passive income.

5 Major Reasons to Buy a Parking Lot

1. A Shrinking Supply Of Parking

The number of parking facilities across the country needs to grow. Research based on census data gathered from 2008 to 2017 indicates a 7% decrease in parking facilities. But why the decline? In light of a growing population, cities are becoming more compact, necessitating the repurposing of land to accommodate the expanding populace.

Parking spaces, often the least valuable zoning in downtown central business districts (CBDs), are the first to be substituted with higher-use alternatives. Real estate owners in prime locations benefit from transforming such land, as parking is usually the least valuable land in a CBD.

2. A Growing Demand

As the population continues to expand, so does the need for parking. The transportation habits and demographic mix of the country's residents influence the demand for parking. With the establishment of new households, millennials require parking spaces for their vehicles. There are more than 275 million vehicles on the road, with roughly 17 million vehicle sales annually projected through 2025.

The need for parking is inelastic. Despite fluctuations in gas prices, it remains constant. As vehicles have become necessary in our daily lives, the demand for parking services will continue to rise.

3. Stable, Recurring Income

For parking asset owners, there are two options: operate the facility themselves or lease it to a third-party operator. The recommended approach is to sign favorable long-term leases ranging from 5 to 10 years with reputable third-party operators. These leases, often found in NN or NNN investments like Walgreens, CVS, and Dollar General, typically include base rent along with annual increases tied to the consumer price index (CPI) to hedge against inflation.

These extended leases ensure that parking investments yield consistent, recurring income for many years. Revenue predictability over the following decade guarantees owners secure and reliable cash flow.

4. Recession Resistance

Parking offers a reliable and recession-resistant income stream due to the diversified demand for parking facilities across different sectors of the economy. Parking facilities are frequently located in downtown CBDs, serving several businesses, including:

Sports venues

Municipal buildings

Offices

Restaurants

Entertainment spots

Consequently, operators are often willing to commit to long-term leases for parking operations.

5. Covered Land Play

Investing in parking facilities can be likened to a covered land play. Parking lots are often repurposed into higher-end developments such as high-rise condos or office buildings in urban settings. This strategy of covered land play mitigates downside risks by generating positive cash flow in the present while paving the way for substantial returns through future redevelopment opportunities.

Since parking is usually the least valuable zoning in a central business district, these assets and their air rights become prime candidates for redevelopment in a future real estate boom. When developers contemplate their options during a development upturn, they first turn to parking facility owners.

How Profitable Is a Parking Lot?

Profit margins in parking lot businesses can vary based on location and business strategies.

Key Factors Influencing Profit Margins

Location: Urban areas tend to generate higher profits compared to rural regions.

Demand: Higher demand leads to increased revenue potential.

Competition: Pricing strategies based on nearby competition.

Management Efficiency: Operational effectiveness impacting profit margins.

Revenue Sources

Hourly Rates: Charging per hour for parking services.

Monthly Leases: Long-term agreements with businesses or individuals.

Event Parking: Charging premium rates for special events.

Additional Services: Car washes or valet services are offered for extra revenue.

Typical Expenses

Maintenance: Costs related to upkeep of the parking lot

Security: Expenses for ensuring the safety of vehicles.

Insurance: Coverage for potential liabilities and damages.

Taxes: Local tax obligations impacting profitability.

Factors Affecting Profitability

Location: Urban areas have higher demand and revenue potential.

Local Demand: Catering to the needs of the target audience.

Competition: Strategy based on nearby parking options.

Management Efficiency: Operational effectiveness in managing expenses.

Routes for Monetization

Affordable Parking: Targeting customers looking for budget-friendly options.

Long-term Parking: Renting out spaces to businesses for consistent income.

Filling Your Parking Lot: Marketing strategies to attract paying customers.

Profitability Factors

Understanding parking lot profitability involves considering various elements, from revenue sources to expenses and factors influencing profit margins. By navigating these aspects strategically, parking lot businesses can:

Optimize their profitability potential

Attract a steady stream of customers

Smart Car Parking System

Office Parking Management

Parking Lot Management

Condo Visitor Parking Management

How to Find a Parking Lot to Buy

Finding the right location is crucial for success when buying a parking lot. To start your search, drive around your local metro area to spot defunct or for-sale parking lots. Keep an eye out for outdoor parking lots and indoor parking garages with for-sale signs posted. Certain sales pages and websites list local real estate for sale, including parking lots. Websites and apps are popular platforms to search for parking lots for sale. These include:

Zillow

LoopNet

CREXi Networking

Finding Your Lot

Local real estate agents, commercial brokers, and other investors are also essential. They may have insider information about available properties or upcoming opportunities.

When searching for a parking lot to purchase, consider zoning laws, traffic patterns, and nearby businesses. Zoning laws will determine if the lot can be used for parking and if there are any restrictions. Traffic patterns will indicate the potential flow of customers, while nearby businesses can attract potential customers to your parking lot.

Key Considerations

Location

Your parking lot’s location will heavily impact its purchase price and profit margins. A parking lot in a prime downtown spot could be profitable since people will use the spaces 24/7.

You also need more money to purchase it. In contrast, a parking lot that’s outside town on a lonely road might be cheap, but don’t expect to make a bundle all that quickly!

Parking Lot Type

The type of parking lot you purchase will affect its dimensions, initial price, and what’s involved with running that specific location. Traditional parking lots, usually outdoors and with minimal overhead protection, are easier to construct, maintain, and fill but at lower profit margins.

Parking garages offer more space and much higher profit margins at the cost of being more expensive to purchase. They also require more management and will cost even more than you think if you have to construct them.

Space Availability

When choosing a parking lot to purchase, remember to consider space availability. Larger lots will have more parking spaces and, therefore, the potential to be more profitable.

They also generally cost more to purchase. You’ll need to hire more staff to oversee the parking lot and handle ongoing maintenance concerns.

Parkour: Your Parking Platform

Parqour is a software platform that simplifies parking operations and improves the customer experience. It offers:

Real-time data

Automated plate recognition

Contactless payments

We operate in more than 22 countries, 300+ parking areas, and have detected over 100M+ vehicles. Parqour offers a comprehensive end-to-end management platform to:

Increase revenue

Reduce operational cost

Enhance transparency

Unified Parking Solution

Say goodbye to piecing together different vendors and integrations. There is no need to spend huge capital on bulky hardware. Control all operations from one platform. Contactless parking and online payment methods make the parking experience more manageable for your customers.

The result :

Higher utilization and lower operating costs

99.6% license plate recognition rate

Online QR payment & 3rd party APIs (integrated with Parkmobile, SpotHero, Honk, PayByPhone)

Data analytics (real-time occupancy, revenue, utilization, parking trends)

Validation and permit management (free flow access for approved drivers)

24/7 remote control system

Hardware with zero upfront costs

Zoning and violation detection (control POD, VIP, and nested zones)

Book a free demo to learn how Parqour can shift your parking operation into top gear!

10-Step Guide on How to Buy a Parking Lot

1. Planning Your Business

When starting a parking lot business, the first step is to plan out all the details. This includes:

Choosing a name for your business

Understanding the costs involved in the startup and ongoing operations

Identifying your target market

Determining the pricing strategy.

2. Forming A Legal Entity

Forming a legal entity is crucial for establishing a solid foundation for your parking lot business and protecting your assets from business liabilities. Consider creating your company as an LLC to ensure the necessary legal protection.

3. Registering For Taxes

Before you can open your parking lot business, you must register for various state and federal taxes. This process involves applying for an EIN, which is free and straightforward. Proper tax registration ensures your business complies with all legal requirements.

4. Opening A Business Bank Account & Credit Card

Separating your personal and business finances is crucial for protecting your assets. Opening a dedicated business bank account and credit card:

It helps maintain this separation

Simplifies accounting and tax filing

Improves your business's financial management

5. Setting Up Business Accounting

Maintaining accurate financial records is essential for understanding your business's performance. Track all expenses and income to:

Ensure a clear understanding of your business's financial health

Facilitate annual tax filing

6. Obtaining Necessary Permits And Licenses

To legally operate a parking lot business, you must acquire all the necessary permits and licenses. Please obtain these permits to avoid fines or even the shutdown of your business. Make sure to research and comply with all state and local licensing requirements.

7. Getting Business Insurance

Adequate insurance coverage is crucial for operating your business safely and lawfully. Consider obtaining General Liability Insurance and Workers' Compensation Insurance to safeguard your business's financial well-being in case of any covered loss.

8. Defining Your Brand

Your business's brand is crucial for standing out from competitors and shaping how the public perceives your company. Develop a strong brand identity to differentiate your parking lot business and attract more customers.

9. Creating Your Business Website

Establishing an online presence is essential for promoting your parking lot business and reaching a broader customer base. A business website helps potential customers find and learn more about your services, increasing your business's visibility and credibility.

10. Setting Up Your Business Phone System

Creating a separate phone line for your business is essential for maintaining a professional image and keeping your personal and business communications separate. A dedicated business phone system also helps:

Automate business operations

Improve customer accessibility

Parking Problems

High School Parking Lot

Commercial Parking Lot

How to Deal with Apartment Parking Issues

Condominium Parking Control

Parking Management System

Parking Lot Security

University Parking Solutions

Metropolis Parking

Parking Spot Painting Ideas

Parking Management Company

How to Buy a Parking Lot

Senior Parking Spot

Painted Parking Spots

Automated Parking System

Automated Parking

Parking Lot Cameras

Parking Lot for Rent

Parking Management Software

7 Ways to Increase Your Parking Lot Revenue

1. Invest in Parking Management Software

Parking management software is a valuable resource for any parking manager. It provides parking operators with a wealth of information about their facility and its operations, including:

Real-time monitoring

Analysis of all parking activities

The system uses sensors or cameras to monitor your parking spaces, helping optimize car park occupancy to maximize revenue and reduce customer time spent looking for a spot. Operators can tailor their parking facilities according to their needs and preferences using advanced vehicle parking management systems.

Financial Insights

The system also provides an overview of all transactions, allowing you to track revenues and expenses efficiently. These systems can be integrated with other systems, such as accounting software or ticketing systems, providing more information about what's happening in your facility at any time.

2. Implement a Dynamic Pricing Model

A dynamic pricing model adjusts parking rates in real-time based on demand, time of day, and special events, maximizing revenue potential.

The benefits include increased profitability during peak times and enhanced customer satisfaction, as rates can be more competitive when demand is lower.

3. Use the Available Space Efficiently

Efficient use of space is crucial in maximizing the number of parking spots available within a lot or garage, directly impacting revenue potential. Properly drawn lines ensure that each vehicle has enough space to park comfortably.

Best practices include:

Using brighter, more durable paint for clearer markings

Considering angled parking to increase the number of spaces

Regularly evaluating the layout for possible reconfigurations that could increase capacity

4. Create an Enjoyable Customer Experience

Complicated or frustrating processes can deter customers from returning, directly affecting revenue. By incorporating Parqour's management software, parking lots can offer multiple payment options, making transactions:

Quicker

More convenient.

Adopting an open-market approach allows customers to choose from various service providers within a single platform, facilitating a more competitive and user-friendly environment.

5. Increase Your Team’s Operational Efficiency

A streamlined operation can significantly enhance the speed and quality of service, directly boosting revenue. Parqour offers many solutions to improve operational efficiency, such as advanced software that facilitates quicker ticket processing and real-time data analytics for managing parking spaces more effectively.

These tools help:

Reduce operational bottlenecks

Improve employee performance

Ensure a smooth parking experience for customers.

6. Generate Data to Better Understand Customers

Collecting data on customer behaviors, preferences, and unmet needs allows operators to tailor services that boos:

Parking revenue

Customer satisfaction

Parqour offers a powerful solution that captures and analyzes parking data to foster more informed decision-making and strategic adjustments. This technology enables parking lot operators to understand better traffic patterns, peak times, and customer preferences.

7. Introduce Ancillary Services

Ancillary services such as electric vehicle (EV) charging stations, car washes, and secure long-term storage can significantly enhance revenue and enrich the customer experience. Incorporating EV charging stations meets the growing demand from electric vehicle owners and positions your parking facility as a forward-thinking, environmentally friendly option.

Essential Software and Tools to Supercharge Your Parking Lot Business

Leveraging technology in managing a parking lot is crucial for:

Ensuring smooth operations

Enhancing customer experience

Optimizing revenue streams

Technology integration enables parking lot owners and operators to efficiently manage bookings, payments, and customer interactions. Numerous software solutions can assist in the following:

Managing parking spaces

Collecting payments

Generating financial reports

Digital Payment Systems

Industry-specific software like Parqour, Parkable, Wayleadr, or Premium Parking can help:

Manage lot capacity

Streamline payment collection

Facilitate financial tracking.

Technology allows for the implementation of cashless, automated payment systems, which enhance customer convenience and reduce the hassle associated with handling physical cash. These systems improve transaction speed and enhance security by minimizing the risk of theft or loss associated with cash transactions.

Lot Security and Safety

Technology tools can monitor parking lots in real-time, ensuring safety and security for both vehicles and customers. Surveillance cameras and sensors can be employed to:

Monitor lot occupancy

Identify potential security threats

Deter criminal activities

These tools offer customers peace of mind, assuring them of the safety of their vehicles while parked.

Tech-Driven Advantages

Leveraging technology in parking lot management is vital for ensuring operational efficiency, enhancing customer experience, and optimizing revenue streams. Software solutions, cashless payment systems, and monitoring tools are essential components of a modern parking management system that can streamline operations and boost profitability.

10 Cheaper Ways to Start Investing in Parking Lots

Investing in parking lots doesn’t always require a significant upfront investment. You can start with smaller, less expensive parking lots. Leasing a parking lot can be a lower-cost alternative to purchasing. Target distressed properties that can be renovated:

Buy an Existing Parking Lot

Buy a Parking Garage

Develop a Parking Lot in a Key Area

Contribute as an Investor to Another Business

Invest in a Parking REIT

Get a Partner

Buy Stock in a Publicly Traded Company

Create an Electronic Vehicle Charging Lot

Buy and Flip Poorly Maintained Lots

Buy Parking Lots to Redevelop in a Covered Land Play

Parking Garage Management

Parking Technology

Parking Access Control Systems

Parking Lot Monitoring System

Parking Access and Revenue Control System

Simplify Your Parking Operations and Improve Your Customer Experience with Parqour －Book A Free Demo Today

Parqour is a cutting-edge software platform transforming the parking industry by simplifying parking operations and enhancing the overall customer experience. This innovative platform offers a wide range of features and benefits that are designed to:

Streamline parking operations

Increase revenue

Reduce operational costs

Improve transparency

With Parqour, you can say goodbye to using multiple vendors and integrations to manage your parking facility. The platform offers a comprehensive end-to-end management solution that allows you to control all operations from a single platform.

Smart Parking

Real-time data, automated plate recognition, and contactless payment options are just a few of the key features that Parqour offers. With a license plate recognition rate of 99.6%, the platform ensures accurate and efficient identification of vehicles entering and exiting your parking facility.

Parqour supports online QR payments and integrates with popular third-party parking apps such as:

Parkmobile

SpotHero

Honk

PayByPhone, making paying for parking easier

Data-Driven Insights

Parqour provides valuable data analytics that offers insights into real-time occupancy, revenue, utilization, and parking trends. This allows you to make informed decisions to optimize your parking facility's performance. Parqour also simplifies validation and permit management, offering free-flow access for approved drivers and ensuring seamless operations for all users.

One of Parqour's standout features is its hardware, which has zero upfront costs. This eliminates the need for significant capital investment in bulky hardware. The platform also offers zoning and violation detection capabilities, enabling you to control various parking zones effectively.

Future of Parking

Ultimately, Parqour is revolutionizing parking system designs by offering a comprehensive, user-friendly platform that benefits parking operators and customers. Are you ready to shift your parking operation into top gear?

Book a free demo today to learn more about how Parqour can transform your parking facility.