Why Investing In A Self Storage Facility Is A Smart Investment
If you’re thinking about a smart way to invest your money, you may want to invest in Self Storage. Technology is advancing every day, and some types of services and products are becoming obsolete or difficult to market. However, storage units are necessities for many people regardless of technological advancements.
Since society thrives on commerce, consumers constantly acquire more belongings. When they run out of space in their homes or apartments, Self Storage offers them an affordable and attractive solution. People often put seasonal decorations, clothing, sporting equipment, old paperwork and keepsakes in storage. Businesses may also use storage facilities to keep surplus office furniture and old files.
Although Australia does not have the same kind of market for self storage as the United States (YET!!!), doesn’t mean that we won’t see the same level of demand in the coming years. We have found an info graphic detailing the sheer size of the US self storage industry, if the Australian self storage industry was even half the size it would be generating 13 Billion AUD in revenue each year.
Source: Assured Self Storage
Storage is a necessity for consumers and businesses
To understand part of why a storage facility is a good investment for you, it’s important to understand the benefits for customers. You’re offering them a secure place to keep their items on a long-term basis. Storage facilities usually have cameras, locked gates and entry codes that are only accessible to paying customers.
The peace of mind is especially valuable to people who need to store their possessions while they plan a move, go overseas temporarily for work or leave the city to attend college.
Using Self Storage for a working space is a new trend today. People set up second offices or crafting spaces in their storage units. In some cases, they bring furniture, a billiards table or other items to turn their space into a personal oasis away from home. These alternative uses are also great topics for marketing. If you build temperature-controlled storage units, you can offer safe places for electronics, expensive artwork and other items that are susceptible to temperature or moisture damage.
There is limited competition
Apartment living is a growing trend in Australia, and apartment residents comprise a major portion of Self Storage customers. According to an Urbis study, about 13 percent of the nation’s population lived in apartments in 2017.
However, nearly 30 percent of storage facility users were apartment residents. Since paid storage is still a growing trend in Australia, you have the potential to become a reputable leader in an area where there are few competitors.
Although living space is scarcer in large urban areas, even people in smaller cities have space predicaments after they accumulate too many belongings. If you build a secure storage facility and take extra steps to connect with the community, you may increase your customer base faster than your competitors increase theirs.
Maintenance costs are lower for most storage facilities
If you offer temperature-controlled storage, you must inspect and maintain air circulation devices, heaters and air conditioners. However, the electrical wiring, surveillance system and electronic locking system are the top maintenance expenses to consider. In comparison with other businesses that have bathrooms, kitchen facilities, complex light fixtures and a daily stream of customers, you won’t have nearly as many maintenance issues.
You can enjoy a predictable cash flow
When you invest in Self Storage, your cash flow may be more reliable than it would be with some other types of small businesses. While you may eventually encounter some non-paying customers, most people care enough about their belongings to keep up with payments.
You can also offer a small discount for people who sign up for automatic monthly withdrawal of payments or for customers who pay a refundable deposit.
While many businesses are financially affected by the rise and fall of fuel and transportation prices, storage facilities do not have to worry about the changing costs of shipping or merchandising.
You can limit your liabilities
You’re probably thinking about the potential liabilities associated with stolen or damaged goods if you’re considering investing in Self Storage. It helps to have a disclosure statement that tells customers the risks of moisture or temperature damage and improper storage techniques in units that do not have temperature control.
You can limit some of your liabilities by having customers sign waivers that relieve you of certain liabilities in accordance with the law. However, you can reduce your burglary risks by installing enough cameras that you can see the front side of every storage unit.
If you have a gated facility with plenty of light and cameras, it’s unlikely that thieves will risk getting caught on camera at your facility. Many facilities also have cameras that are positioned to capture images of vehicle license plates and drivers as they approach the keypad station to enter or leave.
You can earn an attractive profit
As it is with all businesses, it will take time to become profitable with a storage facility. There are initial investments such as buying land and contracting a building project or buying an existing building. Marketing your business to the community takes time and money. If you aim for about 90 percent occupancy, your profits can be attractive.
However, the cost of doing business varies from one location to another. Imagine that you earn an average of $5,000 per month on member payments at 90 percent occupancy for a small facility in an ideal location.
Your monthly operational costs are $1,500. You don’t have time to manage the facility, and you decide to hire a professional storage management company for $500 per month. In this example, you still bring in a profit of $3,000 per month once you reach your long-term occupancy goal.
Are you ready to invest in Self Storage?
The first step is doing market research. When you find a target location, develop a good business plan. Research construction costs and optimal locations for your storage business. Compare the costs to the option of buying an existing building and converting it. If you need help with any of these steps, our experienced team can assist you.
We offer professional management services specifically for storage companies. Also, we can build and develop the facility if you know where you want to start your business. Please contact us to learn more.