Real Estate Investment: Garages & Parking Spaces

An Underrated Asset for Investors

Are you considering a real estate investment but hesitant about the high costs and risks typically associated with buying an apartment? Then it’s worth taking a closer look at garages and parking spaces. These small-scale investments offer surprising potential and present an attractive alternative to traditional property markets. In this article, you'll learn why garages and parking spaces can be a smart investment, what kind of returns you can expect, and how they differ from apartment investments.

Why Invest in Garages & Parking Spaces?

Garages and parking spaces are often overlooked in the real estate world. While most investors think of apartments or houses, these smaller assets come with some compelling advantages:

• Lower Purchase Costs:
  Compared to an apartment, garages and parking spaces are significantly more affordable. Entry is possible with just a few thousand euros.

• Minimal Management Effort:
  Apartment ownership involves tenant management, utility billing, and regular maintenance. In contrast, garages and parking spaces are low-maintenance and incur few ongoing expenses.

• Reduced Risk:
  Even when the market fluctuates, the demand for parking—especially in densely populated cities—remains consistently high.

Return Potential of Garages & Parking Spaces

In terms of return, garages and parking spaces can be surprisingly profitable. While you might not achieve the same margins as with apartment rentals, the proportional return often makes up for it. In many urban areas, garage investments can yield returns between 4% and 8%.
For comparison, apartments in major cities often generate 2% to 4%, sometimes less, especially when acquisition costs are high.

In cities where parking is scarce, demand-driven pricing can lead to strong returns. For instance, in a city like Munich, a single parking space can rent for €50 to €200 per month. Over a year, this results in steady income—particularly attractive when weighed against relatively low purchase prices.

What Affects Returns?

As with any real estate investment, returns on garages and parking spaces depend on several factors:

• Location:
  As always in real estate: location, location, location. In urban centers, especially where space is limited, demand drives up rental prices.

• Purchase Price:
  The lower the acquisition cost, the faster you recover your investment through rental income.

• Condition & Features:
  Covered or secure garages are generally more valuable than open parking spots. Amenities like electric charging stations can also boost value.

What About Garages and Parking Spaces When It Comes to Property Tax?

Garages don’t always have to be included in your declaration. If parking spaces in garages or underground garages are located close to the living area and are legally connected to it, up to 50 m² of that space can be left out. Only the area exceeding 50 m² must be reported as usable space. If the total area is smaller than 50 m², you can simply enter 0 m².

If the garage isn’t linked to the living area — for example, because it’s used for business or professional purposes — the entire area counts as usable space. Carports and outdoor parking spaces generally aren’t subject to property tax and don’t need to be declared.

And if you rent out your garage, you can easily pass the property tax on to your tenants through the service charge statement.

Price Comparison: Parking Spaces vs. Apartments

One of the most notable differences between parking investments and apartment purchases is the price.
While a small apartment in a major city can cost several hundred thousand euros, parking spaces typically range from €5,000 to €30,000, depending on location and type. Even in top locations, prices rarely exceed €50,000, making them a budget-friendly alternative.

It’s not just the purchase price that's lower. Ongoing costs are minimal too. Typically, you don’t need to allocate funds for major repairs or pay into maintenance reserves. Occasional repainting or minor fixes are usually sufficient. Administrative costs are also low since there's no need for detailed utility billing or tenant services.

In contrast, apartment ownership entails significantly more expenses: property management fees, maintenance, cleaning, and additional service charges. Apartments are also more exposed to market volatility—prices can drop sharply in economic downturns, whereas the need for parking remains relatively stable.

Flexibility & Resale Value

Another advantage of garages and parking spaces is flexibility. These assets are relatively easy to resell when needed. The market is less regulated than residential real estate, and demand—especially in urban areas—is consistently strong.

Sales cycles are shorter too. While selling an apartment can take months (or longer), garages and parking spaces often change hands within weeks.

Is Buying a Garage a Smart Investment?

If you're looking for a real estate investment with manageable risks, low costs, and solid returns, garages and parking spaces might be the right fit. They're not only more affordable than apartments, but also come with less administrative hassle and can generate stable income in city environments. While the returns may not match those of large-scale property projects, parking investments are appealing due to their simplicity and reliability.

So why not think outside the box—and consider garages and parking spaces as part of your investment strategy?

Financing a Garage or Parking Space Purchase

Financing the purchase of a garage or parking space differs from traditional real estate loans for apartments or houses. Not all banks offer specific financing products for such "small-scale real estate" investments, as these typically fall below the thresholds of standard mortgage lending.

Because garages usually cost between €5,000 and €30,000 (and rarely more than €50,000), banks often deem these amounts too small for conventional property financing.

In many cases, consumer loans may be a more practical option. These loans can cover smaller amounts but often come with higher interest rates than traditional mortgages. Alternatively, you could finance the purchase through existing home equity or by using personal savings. If you already own a property with unused loan capacity, it may be possible to include a garage or parking space in that financing.

Another attractive option is purchasing a bundle of garages or parking spaces. Banks may be more willing to finance larger transactions, which they see as more lucrative. Bundled purchases can also spread your investment risk and provide multiple income streams. In such cases, commercial financing might make sense, especially if you're aiming to scale your investment and achieve higher overall returns.