Why Building and Running a Self Storage Facility is a Good Investment
Let’s face it. You have thought about numerous business ideas, but lenders are afraid of loaning you the initial capital. Many financiers want to work with enterprises that have proven concepts and performance records. This article will highlight the reasons why building a self storage facility is a great investment strategy.
92% of Self Storage Enterprises are Successful
Although every startup business is susceptible to failure, self storage investments have a high probability of succeeding. Precisely, 92% of startups succeed. Consequently, many financiers loan self storage entrepreneurs the initial capital to construct the structures with a down payment that could be as low as 10%.
Capital-intensive businesses, such as restaurants, generate profit margin ranging between 3% and 5%. On the contrary, self storage units earn up to 11% return on investment per year. Therefore, building a self storage facility allows entrepreneurs to recover the initial investment faster than other business sectors.
Low Capital Requirement
Real estate businesses, such as building houses for sale, require millions of dollars to construct the structure and market the property to prospective buyers. Thus, accumulating the necessary capital can take many years. Lenders are also wary of financing real estate projects due to high volatility in the property development industry. However, market projections indicate that the self storage market will grow by over 5% per annum up to 2023. Among the major clients driving growth in the industry include aged Australians moving into assisted care institutions, divorcees moving out of family homes to rental property, downsizing families, and students returning from college.
Self Storage Facilities Require Economical Maintenance
Well-constructed self storage units require fewer maintenance services compared to residential units. Many constructors use steel shelves that are durable and only require occasional repainting and cleaning to improve their appearance. Therefore, investors retain a large percentage of profits generated from the investment.
Requires Minimal Experience and Training
Investors venturing into businesses sectors such as hotel and infrastructure development require advanced industry experience. Alternatively, the entrepreneurs should hire experts to advise them. Individual investors own over 75% of the self storage businesses since managers require little experience to successfully operate warehouse enterprises.
Converts Shuttered Retail Structures Into Income-Generating Sources
Retail businesses in shopping malls located in some areas have been running out of business in the recent past. Fortunately, the spaces provide suitable room for building a self storage facility. The storage units require an accessible place, even if the location has a limited flow of retail customers.
Many clients seeking storage units often retain space for more than three years. Subsequently, building a self storage facility is an excellent investment since you are assured of a long-term and stable income stream.