Should I buy the 3rd car park?
by Charles Tan
If we are buying a new place with two car parks and there are available car parks for sale, should we buy one more? These days, all condos should come with 2 car parks. Read here: Condos should NOT come with just one car park. A lady wrote in to ask about this. She had just bought a new apartment in Penang. It came with two car parks and she was offered the opportunity to buy one more for RM35,000. Her reason for buying? Her son would most probably be driving to college next year. In other words, that third car park would be for her son’s use.
I wrote her an answer as below:
Start of reply
I think emotionally you believe another car park is needed so that your son can also park his car within the condo. Let me tell you the financial aspect. If you rent a car park instead of buying. Typical rental per month is RM80 if not higher, depending on the condo. If it is RM80,then it’s RM960 per year. This is a total loss every year.
Assuming, you take out RM35,000 from your FD to pay for this car park. This RM35,000 FD would give you about RM1,400 per year. This is about RM117 per month. If the car car rental does not change at all and remain RM80 forever, you lose RM37 per month or RM1.23 per day. I would definitely choose to lose RM1.23 per day for the following:
1) Safety (instead of parking far away and walking when I come back at midnight etc.) – For your son, might be weekly….
2) Convenience (Rain / park faraway etc.) – Nearly daily….
3) It’s impossible for car park rental to stay at RM80 forever…. (In KL, the car park rental is typically Rm160 per month) – proven in KL.
4) You can afford it. (For those who couldn’t and needed to borrow money from relatives etc, I think better not buy lah)
5) In future, three car parks would be advantage if u want to sell your place.
End-of-Reply.
One important point I missed. This is in Penang. Car parks are definitely a premium today and in the future. Actually, there are lots of other reasons why more car parks would always be better. Seriously, if we can afford it today, better buy today because we may not be able to afford it in the future. RM35,000 per one car park slot? It may not stay this way forever. Happy buying and enjoying the 3rd car park.
>> This guest article comes courtesy of my friend, Charles, the founder of kopiandproperty.com. He is popular for sharing his thought on property investment mostly based on his own 13 years experience as well as from all the readings and conversations with property gurus in the industry. (Source)
Selling additional carpark to the buyers is the cash cow for the developers.
Let say a standard car park is around 80 sqft, for a rm35,000 carpark, it is about RM440/sqft without the need of interior fitting, wiring, ceramic floor, plumbing, painting and window panel.
For the developers definitely a big bonus!!
@Jason
We don’t need to know how much developer earn from the car pack..What we need to know is the extra car park convenient for us.Those with big family like staying with parents and have working children definitely need this extra car pack.Even if you have extra car pack,you can rent it out to other tenants when the whole block is fully occupied.By then you can raise the rent fees as demand will outstrip supply.
in HK, car park is 200k
@Jason
In my opinion, it is two sides of the same coin.
People always bitch about developer being greedy for selling additional carparks at RM35k. Assuming that the condo/apartment’s developer already provided 2 carparks for purchased unit, what right do you have to demand for another one for free?
It is simple, if you don’t like the price, don’t buy. Please don’t be a judgmental bitch. Trading is between two parties that are willing to buy and sell. Just because others can afford to buy one, it doesn’t mean you MUST own one too.
The most important question is, Would you have done the same if you are the developer. Are you willing to give out 3 carparks and not selling additional carparks at RM35k ?
@limpeh
i like your comment!
@Steve
In Hong Kong, starting pay for police constable is RM10,000.
@limpeh
There’s no need to give free, no one is asking for free. But RM10k would be something reasonable. Or, developer can auction the lots to unit owners.
I want sell cp to developer, can? I park my BMW at roadside.
No one request the developers to provide 3 rd car park.
I only highlighted the additional carpark purchase is a fat cash cow for developers.
Jason, u r right, I support u…
@Jason
you think the developer can build the entire floor with car parks? what about driveways? ramps? staircase? fire requirements? the efficiency ratio for car parks is only about 60% if youre good developer and engaged good architects. If you don’t know don’t assume stupidly, in today’s market actual cost to build car parks is about 28 to 35k at min for elevated and basement can go from 45 to 60k per bay. check around and talk to industry players, building car park is not as profitable as you think! if you cant afford dont buy and if you can and need i’ll say 35k is fair price for penang island.
another thing to think, have you seen many developer building many extra car parks for sale? if your argument were to take into considerations most developer will build alot of extra car parks for sale as is “BIG FAT BONUS”! but sadly my friend is not cash cow as you think, otherwise we will not have car park shortage in all condominium in penang!