November 2016

Parking spaces

Sell ​​or rent: what to do with coveted parking spaces? | Advice from cooperatives and condominiums | Habitat review

It wasn’t that long ago that it was big news when a Manhattan condo developer started selling parking spaces for $ 1 million each.

While most buildings can only dream of generating this type of income, everyone knows that in crowded New York City, private parking spaces are a coveted commodity. Condos and cooperatives that are lucky enough to have a parking lot or garage face a thorny question: is it better to sell or rent parking spaces?

Advice to Condominiums on Fieldstone Square in the Bronx have decided to sell their spaces, starting in 2010, in order to raise a lump sum of money, says Michael dailey, Chairman of the Board of Directors. The board of directors approached the unit owners who were leasing sites and informed them of the option to purchase. Most did, says Dailey. The building raised around $ 300,000, which helped pay for masonry and roof repairs, a canopy, and renovations to dated hallways.

In addition to this work, the condominium needed to increase its reserve fund due to regulations instituted by the Federal Housing Authority in the wake of the financial crisis, Dailey said.

“At the end of 2011, we borrowed $ 350,000 and instituted an appraisal to repay it,” says Dailey, noting that neither the sales of parking spaces nor the loan were on their own sufficient to cover the work and increase the fund. Reserve.

“We are a middle class building,” says Dailey. “If we were just relying on an increase in assessment or maintenance, we would have to wait a long time before raising enough funds to complete projects.

Technically, parking spaces do not change hands. Instead, the condominium association sells what is called an “easement” for the place, which is an exclusive right to use property that belongs to someone else (in this case, the co-ownership).

Dailey believes that allowing residents to purchase their seats enhanced the building’s overall appeal. “It becomes an asset,” he says. “You can pass it on with the sale of your apartment. Parking is a premium, and I think (having) an apartment that also has a parking space with it is a very attractive thing for people looking to sell their units.

Dawn Dickstein, president of MD Squared Real Estate Group, a management company, suffered the other side of the coin. She lives in a 450-unit Upper West Side co-op where some of the 50 outdoor parking spaces were sold to shareholders as part of the initial conversion. Some places are still owned and rented by the sponsor, and the remaining 13 places are owned and rented by the cooperative society.

“We considered selling them for a while,” Dickstein says of the co-op’s 13 locations, which rent for $ 350 per month. “Now they’re probably worth around $ 60,000 or $ 75,000, but are you going (can you sell) all of them?” And if your building has a budget of $ 7 million, is it worth it? “

In general, Dickstein says she leans toward leasing parking spaces, in part because the co-op or condominium retains control of the real estate.

“Let’s say you decide you want or need to do something else with the space, like you need to move the garbage collection,” she says. “You can’t do this if you don’t own the space anymore. “

Dickstein points out that there is another consideration: the sale of an asset produces a one-time benefit; but if the council retains ownership of a parking space and rents it out, the revenues will flow in forever. What is better? It’s time for your board to do the numbers.

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