An Insider’s Guide to Self Storage Investments

According to the Pew Research Center, 22% of people in the U.S. moved due to the COVID-19 pandemic. So with roughly 1-in-5 American adults on the move, the need for self-storage units are sky-high.

Yet even before the pandemic, self-storage investments were a good bet. If you’ve never looked at these businesses, there are several reasons that you should take a gander.

Among the reasons to invest include great ROIs, availability, room for growth, and ease of maintenance.

In the following article, we’ll take a look at the many benefits of investing in self-storage.

Self Storage Investments’ ROI Growth

Starting a self-storage business on the high-end can cost millions of dollars in some parts of the country. That’s the bad news.

But that high start-up cost isn’t everywhere, and you may find an available business for as little as a few $100,000.

The good news is that data shows that self-storage businesses only need about 40% to 45% capacity to maintain the breakeven point.

The even better news is that investment experts see 90% capacity across the country. That trends are much higher than the traditional return on investment of 11%.

The business does have ongoing costs and needs a little hands-on maintenance, i.e., marketing, security, administration, and customer service.

Available Financing

There are several ways to procure capital for an investment into a self-storage business, but one of the most used is SBA 504 loans. These loans require as little as 10% borrower contribution and max out at $5 million.

Another benefit of these Small Business Administration loans is that the interest rates are well below market rates.

Another avenue is to join an investment group, pool your money, and attempt a syndication deal. This is a great option for an investor who sees self-storage as a good business opportunity but wants to minimize their day-to-day operation involvement.

Expansion opportunities

Depending on your level of interest, there are many opportunities to expand your self-storage business beyond just the garage-doored spaces.

Locks, slipcovers, tape, boxes, bubble wrap, and physical moving personnel are all some of the services you can expand your self-storage business into.

To see this in action, take a stroll around your local U-Haul store. They’ve made a franchise out of moving and storage, and there are lots of ideas that you could expand in there.

Obviously, you’ll need to take more of an active hand if you chose to explore these expansion options, including manager and employee training and a certain level of human resource management.

But people crave convenience and having everything they need to outfit their storage unit on the premises is sure to sell with your prospective renters.

Ease of Maintenance

Expanding your business notwithstanding, there are comparably few maintenance expenses. You’ll need your basic cleaning and administration, and there are also security and advertising costs.

You can educate yourself in the self storage business relatively easily with websites devoted to supplying the documentation you’ll need to give to customers.

You can either hire a part-time employee to manage some of this work, or you can invest in technology to help ease these tasks. Self-service kiosks are one such technological helper.

Not a Turnkey

Self-storage investments are usually not workfree. There are a few turnkey operation in the self-storage business sector. Yet, your hands-on involvement shouldn’t outweigh the potential for a great return on investment.

Are you ready to pursue an investment in self-storage? Contact us today with any questions or for more information.

The Self-Storage Private Money Summit Live From Dallas, Tx

This is your opportunity to see cutting-edge syndication strategies that are creating a killing for a “select group” of commercial real estate investors and self-storage professionals.

August 5th to 7th 2021