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Fresh Crop of Start-Ups Helps City Dwellers Make Extra Money by Renting Out Their Garages and Other Parking Spots
Adam Zilberbaum and Nick Miller co-founders of Parking Panda, plan to expand their driveway-sharing service to other big cities soon.
Mr. Miller co-founded Parking Panda Corp., a three-person company that helps city dwellers make money by renting their garage, driveway or other property to people looking for parking spots. Many people can fit another car, or even two, into their drive, he says, especially if they can tuck their own car into the garage.
Aspiring parking landlords, typically located in neighborhoods where parking is costly or hard to find, can list their space on the company's website, along with price and availability. Then, they can use social media, such as Facebook and Twitter, to advertise their parking real estate.
The 24-year-old Mr. Miller says his website lists 2,500 spaces available in private driveways and garages and in commercial parking facilities in Baltimore and Washington, the two cities where it currently operates. The company makes money by taking a cut of the rent.
His and a handful of other parking start-ups are an offshoot of house-sharing services such as AirBNB, and car-sharing services like Zipcar, which claims to be the world's largest car-sharing service.
The suit for Parking Panda's mascot sits on chairs at its headquarters.
How to cash in on your parking space:
Step 1 Check what nearby garages and parking lots charge for event parking to come up with a competitive rate.
Step 2 Post your parking space or driveway online at least three weeks before any local event.
Step 3 Upload photos that show your parking space from different angles. In your description, be sure to note if it is well lit or near a public restroom.
Step 4 Use social media to put the word out.
Such "sharing" businesses are spreading rapidly, in part because they are so easy to replicate, and have attracted some high-profile investors, says Andrew Zacharakis, a professor of entrepreneurship at Babson College in Wellesley, Mass. Last year, Wheelz Inc., a year-old car-sharing service that operates on three California college campuses, landed an initial $2 million investment from a group of angel investors that includes several Facebook executives. It plans to expand to a fourth college campus later this week.
The new parking entrepreneurs hope to develop a niche in what the National Parking Association, a Washington-based trade group, estimates is an $18 billion-a-year U.S. parking market. Their services generally take cuts of 15% to 20% of each rental.
"It's partly a land-grab situation," says Ulrich Quay, managing director of BMW i Ventures LLC, a new venture fund from BMW AG BMW.XE -3.75% that recently invested an undisclosed amount in U.K.-based ParkatmyHouse Ltd. The six-year-old driveway-sharing service is expected to debut in the U.S. next month.
Studies show that drivers in the U.S. spend an average of eight minutes cruising for city parking, mainly so they can find a space free or at the lowest price possible within the shortest distance of their destination, according to Donald Shoup, a professor of urban planning at the University of California, Los Angeles. He estimates that hunting for parking is responsible for about 30% of traffic congestion.
Overall, there are more than 40,000 paid parking facilities in the U.S., but they aren't necessarily convenient or affordable for everyone.
Last year, Katie Ott, tired of circling the blocks around Chicago's Wrigley Field in search of parking for Chicago Cubs games, decided to search ParkWhiz.com. She found one private driveway space open for as long as nine hours at a price of $35.
Ms. Ott, an enrollment-benefits manager for an insurance company, entered her credit-card number online, and was charged the fee upfront.
On game day, she says, she simply left her silver Toyota Camry hybrid at the designated address, before joining friends at a restaurant.
As more players enter the field, however, competition may make it harder for the new parking services to succeed. "You have to do millions of these transactions to make it worth your while," says Prof. Zacharakis, adding that it would be difficult to discourage consumers from listing their parking spaces on multiple services.
Jeremy Smith, co-founder of SpotHero Inc., says driveway owners sometimes forget they have rented out their spaces, leaving renters without room to park, while others overestimate just how many vehicles they can accommodate. The company provides a phone number renters can call in such cases to find a last-minute alternative, or arrange for a refund.
Because the new operations are based on a "peer to peer" business model, "issues can arise that are out of your control," says the 25-year-old Mr. Smith, who launched SpotHero in July 2011 as a driveway-sharing service for the Chicago market, but has since shifted its focus. It now lists mostly commercial parking spaces.
Since the Web-based businesses essentially manage the rental of driveways and other private parking spots, the owners don't have to wait around at home for renters to arrive. Payments are automatically deposited into their bank accounts.
Homeowners could face liability if for example, a driver's car is stolen while parked on their driveway, or if a driver hits a pedestrian while entering or exiting the rental space. Homeowners insurance policies generally "don't cover business dealings," says Rebecca Ross, a partner at Troutman Sanders LLP.
Mr. Miller, along with co-founder Adam Zilberbaum, launched Parking Panda from a start-up incubator that provided $25,000 in seed money. He says the company recently raised $250,000 from a group of angel investors and it expects to close soon on another $250,000 round of angel funding. He says the business plans to expand to Philadelphia, Boston, Chicago and San Francisco.
"We don't use our driveway very much. We might as well make a couple of bucks," says Mondiu Ladejobi, a 35-year-old information-technology professional in Baltimore, who recently started to rent out half of his driveway for about $8 to Ravens and Orioles fans seeking parking for games at nearby stadiums. He and his wife, he says, normally keep their cars in their garage.