Parking space and storage auctions: less competition, higher yields

Most investors who come to court auctions have their sights set on flats. Parking spaces and storage rooms are the asset nobody mentions, but they have some very interesting features for the investor who knows how to look where others don't. Competition is dramatically lower, award prices are more predictable and the rental yields they generate, as a percentage of the purchase price, are among the highest in the Spanish property market.

But they aren't a risk-free asset. They have their own legal quirks, they have clear limits on liquidity and they need a different kind of prior analysis from a home. Here's everything you need to know before bidding on your first parking space or storage room at auction.

Why parking spaces and storage rooms at auction face less competition

The short answer is that most court auction investors are looking for a home to live in or for the residential letting model. Parking spaces and storage rooms fulfil neither of those functions, so the generalist investor systematically ignores them.

The more sophisticated investor also has reasons to ignore them: the ticket size is small (between €5,000 and €25,000 in most cases), which doesn't justify the analysis time of an investor who works with large sums. And managing a stock of 20 parking spaces spread across different cities is logistically complex for anyone without an efficient management system.

But for the individual investor who is starting out, or for anyone who wants to diversify with small tickets in high-yield assets that are simple to manage, parking spaces and storage rooms offer a way in that few property strategies can match.

The real yields from letting parking spaces and storage rooms

Parking spaces let at very variable prices depending on the city and the area. In Madrid, a space in a high-demand area (Salamanca, Chamberí, Centro) can let for between €150 and €300/month. In cheaper neighbourhoods (Carabanchel, Vallecas), between €60 and €120/month. In medium-sized cities (Zaragoza, Valladolid, Córdoba), between €50 and €100/month.

If you buy that same space at auction at a 30-40% discount on its market value, the numbers are:

• A parking space in Madrid (mid-range neighbourhood) with a market value of €18,000. Awarded at auction for €11,000-13,000. Rent: €100/month. Gross yield: 9.2% to 10.9%.
• A parking space in Zaragoza (central neighbourhood) with a market value of €10,000. Awarded for €6,000-7,500. Rent: €65/month. Gross yield: 10.4% to 13%.
• A storage room in Barcelona (Eixample area) with a market value of €25,000. Awarded for €14,000-18,000. Rent: €150/month. Gross yield: 10% to 12.8%.

Those yields are what make parking spaces and storage rooms at auction one of the most efficient assets in the Spanish property market, even though they go unnoticed in mainstream analyses.

How to find parking spaces and storage rooms on the BOE portal

The BOE Portal de Subastas (subastas.boe.es, the auction portal of the BOE, Spain's Official State Gazette) lets you filter by type of asset. For parking spaces and storage rooms, you have to select the corresponding subtype in the search: "Garaje", "Plaza de garaje" or "Trastero" (garage, parking space or storage room), depending on the court's classification (which isn't always consistent between different proceedings).

The results will show the active auctions of that type. Parking spaces often come up linked to auctions of flats (when the debtor has mortgaged both the flat and its parking space in the same deed) or on their own when the space has its own mortgage or is part of a garage community with a collective mortgage.

An important technical point: some parking spaces and storage rooms are anejos (annexes legally tied to a home) and can't be transferred separately under the rules of the owners' association. Checking whether the asset at auction can be transferred independently (it has its own cadastral reference and a separate registry entry) is the first step of the analysis, before any yield calculation.

Due diligence on a parking space auction: what to check

• Nota Simple from the Registro de la Propiedad (the Land Registry extract): Check that the parking space or storage room has a separate registry entry, that the owner is the debtor and that the charges shown are consistent with what is stated in the edicto (the auction notice).
• Occupancy situation: Unlike flats, parking spaces rarely have problems with people occupying them. But they may have been informally lent to someone or contain the owner's belongings, which complicates taking immediate possession. Visiting the site is always advisable.
• Physical condition: For parking spaces, the critical elements are: the electrical installation (an electric car charging point, if there is one, or room to install one is an increasingly valuable plus), accessibility (ceiling height for SUVs or vans) and the condition of the floor and walls (damp is common in underground car parks and reduces value).
• Rental demand in the area: A parking space is worth what someone is willing to pay to rent it. In residential areas with a shortage of parking and plenty of private vehicles, demand is high. In outlying areas with ample parking or low car ownership per inhabitant, demand may not be enough to keep the space let continuously.
• Garage community fee: In garage communities (especially shared car parks with maintenance fees), check how much the monthly community fee is. It can be €15 to €40/month and directly reduces the investment's margin.

Tax on letting parking spaces and storage rooms

Income from letting parking spaces and storage rooms is taxed under IRPF (Spanish personal income tax), or IS (Impuesto sobre Sociedades, corporation tax) if you operate as a company, as income from property. The key difference compared with letting a home: the reduction in net income that applies to letting a home does NOT apply to parking spaces and storage rooms. That reduction is exclusive to letting a property that is the tenant's main residence.

That means the net income from letting parking spaces is taxed at the taxpayer's full marginal rate, with no specific reduction. For an investor in the 30-40% marginal rate band, that noticeably reduces the net yield after tax. You need to build it into the calculation so you don't get any surprises in your tax return.

The deductible expenses are still the usual ones: the garage community fee, IBI (the local property tax), depreciation of the asset at 3% of the acquisition value (the part of the cadastral value assigned to the building), insurance and management costs, if any.

The most common mistakes when investing in parking spaces and storage rooms

• Buying a parking space that can't be transferred independently: The most common mistake and the one that causes the most problems. Always check for a separate registry entry before placing any bid.
• Underestimating IVA on newly built parking spaces: New parking spaces, or those sold by a developer, are subject to IVA (Spanish VAT, 21%) instead of the residential ITP (Impuesto sobre Transmisiones Patrimoniales, the property transfer tax, 6-10%). At a parking space auction, if the debtor was the developer and the space never had a complete first transfer, IVA may apply. Check the tax regime before calculating the total cost of acquisition.
• Ignoring the electric car trend: A parking space where a charger can be installed (enough power in the fuse box, technical space) is worth more than one without that possibility. Conversely, a space too small for the SUVs that dominate today's car fleet has more limited demand. Assess the dimensions with an eye to the future.
• Concentrating your whole investment in a single space: The low entry ticket of parking spaces invites diversification. Instead of one €15,000 space in a single location, five spaces of €3,000-4,000 each in different areas of a city generate the same total income with less risk of concentrated vacancy.

The investor profile for whom it makes most sense

Parking spaces and storage rooms at auction make particular sense for the investor starting out with little capital (they let you get in with €8,000-15,000 on your first real deal), for anyone who wants to generate positive net cash flow without the management complexity of a residential tenant (the tenant of a parking space calls far less often than the tenant of a flat), and for anyone who wants to diversify an existing portfolio of flats with high-yield, minimal-management assets.

Related resources: To understand the court auction process from scratch before your first bid, the complete guide to court auctions covers every step. For an analysis of investing in parking spaces as an asset on the open market (without an auction), the article on investing in garages and parking spaces has the market-specific analysis. For the inventory of active auctions by province, go to court auctions in Spain.