Investing in Self-Storage Real Estate
Contributed by What Storage
13 September, 2018
Most of us are collectors, consumers and have a tendency of getting upgrades on our furniture and other stuff in our houses at least once a year or even more often for some of us; this means that we own a whole tone of stuff. All these stuff form part of our memories. This means disposing of them or even donating them becomes an issue to contend with. The spaces we live in are either apartments or townhouses which do not have that adequate space to hold all of this "junk". This is where self-storage facilities come in to help securely store this stuff.
Going with real estate investing patterns, the elf-storage property is one of the forgotten investments by many as they are not as glamorous as apartments or townhouses. An investor looking to get into an investment which holds its value well and is sure to recover quicker than other investment, they should set their eyes on self-storage real estate.
Types of Self-Storage Spaces.
Just like residential properties, self-storage facilities come in different varieties for different storage items.
Also referred to as outdoor bay, these are one–story storage facilities with roll-up doors which can be accessed by vehicles. They have minimal security with only a padlock securing the roll-up doors. Some may have an addition of CCTV cameras.
Climate controlled self-storage.
These have been designed to hold specific and special items sensitive to change in temperatures. An example of this is biological specimens, the controlled temperature is meant to keep away mold, moisture, and rodents. These can be accessed from the inside with an increased level of security. These are expensive on rent.
Special self-storage facilities.
These are designed to hold specific items ranging from art pieces, boats, cars, and documents.
Reasons for Owning a Self-Storage Space
Self-storage facilities are used in many instances which include:
- DE-cluttering or getting rid of office or houses hold items that take up unnecessary space.
- Moving to a new office or home could require bringing in furniture and other items in phases; one could store some of these in a storage unit then come to get them later.
- Re-modeling of an office or a home.
The contractor would require space to get work done and with this, they would require one to move some of the items into a storage unit. During this process, one would want to keep valuable furniture, paintings, cutlery and other items away from getting damaged by the paint and concrete.
Business or company storage.
Storage units could be used as a make-shift warehouse especially for online businesses which minimize cost by cutting down on office space.
People will take up self-storage facilities when they require space to secure their stuff when their apartments are getting renovated. These can be emergency renovations or scheduled.
Offices can be looking to downsize on their office equipment so as to create more space for say a new office. The stuff to be taken out could be stored in a self-storage facility. Apart from offices, individuals could also be looking to downsize on their household items, with no garage or arctic to store these stuff, a self-storage would come in handy. Investors are investing in self storage all over the world, just recently more space storage from the united Arab Emirates, so it's not just for the UK or US market.
Feasibility Study before Investing.
Those who have invested their money in these properties have confirmed that they require low operating cost and gave high returns but the catch is to analyze the factors below.
As an investor, you ought to consider the following aspects of their possible future clients.
- Their current housing plan. Is it apartments? Townhouses?
- Do they have children?
- Their occupation.
- Their amount of disposable income.
- What are their hobbies? Is it cycling? Fishing? Camping?
Who is the other competitor next door?
Look into what the other storage unit investor in your area has to offer. Look into the extras offered by your competitors. Some of these storage units are not just boxes with a secure lock. Statistics have shown that some of them come with an incentive such as; electricity, temperature control systems, wide units for holding larger items, CCTV surveillance among others.
Check the prices storage units are going for in that area, this would help you price your new property; not too high and not very low.
Examine how the other investors market their property, visit their websites, advertisements they place in different publications and also their pamphlets if they have some.
Consider changing the size of the units as per the clients' needs but also consider how large enough you should go and still remain profitable.
Leave room for future expansion of the facility.
The ability to expand could increase the profits once demand is on the high. Leave space enough to add extra units but at the same time not cramming them up.
Let's Look at What Drives this Market.
Existing and upcoming residential plans.
Most people do not own their own homes. If this is the case, then a huge chunk of the population are renters. Being a renter means that you will be moving from one state to another due to a different reason.
Different places will have houses with varying space and this means that these people will have to get an alternative space to store their stuff. This will definitely drive self-storage's market up.
Commercializing of businesses.
Small and medium-sized businesses have experienced a tremendous growth over the years. This means that they will require space that is affordable and secure to store their products rather than spend money they do not have to construct warehouses. They turn to self-storage facilities as they are cheap and have flexible leases.
University and college students.
During long holidays and summer breaks, most of these students move back home after their tenancy agreements end. Moving their stuff back home with them is hectic and expensive. This drives them to take up self-storage facilities.
When these service men and women get deployed too long oversee missions, they need space to store their stuff. This gets drives them to take up self-storage facilities to store their stuff for the time they will be away.
How to Invest.
Direct investment is appropriate for this type of property. This means investing directly in individual deals as a sole accredited investor. This gives you the chance to pick out a strong investor with a property that is adding and gaining value quickly.
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