Just like any other business, the profits from a storage facility business are in the hands of the owner. However, unlike any other real-estate ventures, owning some self-storage units and facilities in any city can help you turn a profit. Moreover, most of the best self-storage companies has moved from being residential tools and has entered the commercial space. The following article will discuss some of the advantages of owning a storage facility to help you understand the market better.
Relatively Less Initial Capital
Most real estate ventures require large investments making them inaccessible to the common mass. However, you can easily own storage units, or in other cities for a very small amount. Moreover, if you are planning on taking a loan, down payments start at as low as 25% of conventional business loans. Thus, if you are new to real estate, buying a facility of cheap self-storage units is an easy way to start.
Growing Demand Due to Versatility
Self-storage units are a secure and inexpensive alternative to renting larger spaces. It allows people to take decisions at their convenience without worrying about the safety of their valuables. Moreover, these are also multi-purpose units that can benefit everyone. Some common uses of self-storage units include:-
- Business Storage – It is difficult for small businesses to invest in huge offices. Hence, they often need extra space to store their supplies or inventory. Storage units are secure and cheaper, offering them flexibility.
- Residential Secure Storage – Several people travel frequently and need secure spaces to store their possessions. Self-storage facilities are of great help in these cases. Or, you might want to store valued items like art and collectibles in a safe place. Obviously, your friend’s garage or your bedroom locker are not safe from robberies or accidents. Hence, a self-storage unit is the best alternative.
You do not need previous experience to start owning and operating facilities of storage units. One could easily hire caretakers and contract-based cleaning staff to maintain the self-storage units. However, if you want a professional certificate, the Self-Storage Association (SSA) offers online certifications in self-storage management. You can also try to find online training and certificates to increase your credibility.
Ease of Introduction of Additional Revenue Streams
The current market scenario has made it important for people to have passive income sources or multiple income streams. When you open a facility of self-storage units, you open the possibility of multiple income streams. These are specific to the self-storage industry and include – selling packaging materials and supplies, offering moving truck rentals, and much more. You could also offer insurance plans and schemes to your tenants which can help you yield money. It will also take the burden off your tenant’s shoulders as it offers additional security.
Safe Investment with Low Risks
Every business involves risks but you will have the odds by your side in the self-storage industry. Statistics suggest that over 50% of businesses run into losses and fail in their first year. Also, over 90% (92% to be exact) of self-storage facility businesses succeed. Thus, most banks easily give out financial loans to help kickstart self-storage businesses. If you need some more figures for comparison – a restaurant turns a 3-5% profit margin on average, whereas mini warehouses reap about 11%.
Low Occupancy can also Generate Profits
The Self-Storage Association (SSA) states that a facility of self-storage units makes a profit even at 60-70% of the occupancy capacity. Statistics suggest that the average occupancy rate for self-storage units is close to 90% and might cross it within 2-3 years. Thus, you can easily generate profit with the right management and maintenance.
Self-storage facilities are generally profitable, but the lack of proper facilities can sour the deal for renters. We suggest you keep up maintenance and hire professionals for a better deal. A key point to remember is that picking a poor location can simply lower your profits. Moreover, fluctuations in the occupancy and rental rates can be difficult to track and lead to losses. Remember that some key points and features can help your facility of self-storage unitstransform into a profitable venture.