What I wish I knew before I bought my first parking lot

I bought my first parking lot in 2017. It was a flat, ugly piece of asphalt with 42 spaces, half a block from a courthouse. The seller wanted out, the price felt fair, and I figured parking was the simplest real estate you could own. Walls do not leak. Tenants do not call you at midnight. People pay, they park, they leave.

Most of that turned out to be true. The rest of it, I had to learn the slow way.

The first year was quieter than I expected

I assumed I would flip a switch and revenue would land in my account. What actually happened is the lot kept doing what it had always done. The same daily commuters paid the same monthly rate. The same evening crowd ignored the lot entirely because there was no signage and no easy way to pay after the attendant left at six.

I made about 38 thousand dollars that first year. The previous owner had told me to expect 60. He was not lying. He was just describing what the lot could do, not what it was doing.

The cheap fixes mattered more than the expensive ones

I spent the second year on small things.

• A better sign at the curb, lit at night, with the price visible from the street.

• A QR code on every space so people could pay from their phone after hours.

• Two cameras pointed at the entrance so I could stop arguing with people who claimed they paid.

• Sealcoating and fresh striping, which sounds cosmetic but actually let me fit four more spaces.

None of that was glamorous. All of it paid back in under a year. Revenue moved to about 71 thousand, and most of the lift came from the evenings I had been giving away.

Monthly parkers are comfort, daily parkers are growth

I used to chase monthly contracts because they felt safe. A signed agreement, a steady deposit, no surprises. Then I ran the math on the spaces I had locked up for monthlies during a busy Friday night and realized I was renting a 25 dollar space for 8.

I did not get rid of monthlies. I capped them. About 40 percent of the lot stays monthly. The rest floats. That single change added more revenue than the cameras, the signage, and the striping combined.

Insurance, taxes, and the boring stuff

The expense side of a lot is small but easy to ignore. Mine looks roughly like this:

• Property tax, the largest line by far.

• Liability insurance, which moves around but is rarely the surprise.

• Lighting and a small amount of electricity for the kiosk.

• Maintenance, which is mostly sweeping, sealcoating every few years, and the occasional pothole.

If you walk into a deal expecting your operating margin to be 70 percent, you will be disappointed. Mine sits around 58 percent in a normal year. That is still healthier than almost any other real estate I have looked at, but it is not free money.

The thing nobody tells you

The hardest part of owning a lot is not the lot. It is figuring out what the lot is actually worth, because there is no Zillow for parking. Comparable sales are rare, brokers will quote you a cap rate that varies by 200 basis points depending on their mood, and the income statement you inherit from a seller is almost always undercounted.

If I had to do it again I would spend my first 90 days doing nothing but counting cars, watching the block at night, and figuring out what the lot could do at full effort. Then I would back into a price from there. The market price and the right price are not the same number.

Would I buy another one

Yes. I am closing on a second this fall. Smaller, harder to find, two blocks off a hospital. The reason is simple. I now know what to look at and what to ignore, and the operating playbook is not complicated once you have run it once.

If you are thinking about it, do the work before you sign. Stand on the corner for a week. Count the cars. Watch where people walk after they park. That hour of staring at the asphalt is worth more than any spreadsheet you will build later.