Why Self Storage Facilities are a Good Investment
Building a Storage Facility could be a great option for you as a potential business owner who is interested in getting into the self storage business. Previously, it might have been more cost effective to purchase a storage facility that was already built, however with the rise in competition prices have sky rocketed and building your own storage facility is a very valid and less expensive route to go down. Keep in mind that when you buy a storage facility that is already built, you are not buying the building on its own, you are also buying the income steam. This means that the cost for you to purchase an already established business will come at a much higher price than building a storage facility of your own.
Building a Storage Facility
You will find that the overall cost of purchasing the necessary materials, buying the land, applying for the approvals, physically building the site, and going through the lease up phase is now less than it would be if you purchased a facility on sale that is already built. While building a fully functioning storage facility will likely mean that you will go long period of time without any income coming in, but thinking about the value that you will create by building your own will be worth it when all is said and done. The return on investment to yourself and your bank account will end up being much greater in the end than purchasing a building that is already established. Think about the long game!
The cash flow will come when your building is complete, but keep in mind the return you will receive from building everything ground up will mean more money in your pocket in the long run. In addition to building your own self storage, you will want to do research on the feasibility your sub market has within the region you are thinking about setting up your business. If the demand for your sub market self storage facility is not available in the area you are thinking about building on, than you will find yourself between a rock and a hard place when your competition begins to interfere too much with your business.
If you are concerned about building your own facility due to lack of experience, you should also make sure to learn the basics before getting started. There are countless educational programs, courses, and books online that will be able to dissect this process for you. Gain more confidence in building your own facility through the resources and support available to you! Making the decision to build your own is a good investment, however you do need to think about investing some time and money into yourself to make sure you know what you are doing before you begin this endeavour.
Another way to increase the profitability of your business and add a second revenue stream is to provide truck rental services for your potential customers. Often times you will find other storage facilities that have partnered with bigger, more well known truck rental companies. However, they do come at a very high cost to the customer. But, if you have the capital to start your own truck rental service, you could become a consumer’s choice for not only providing affordable storage, but also giving an option for a “package deal” if they use your truck rental services as well.
Something to keep in mind when your facility is up and running is to have strict deadlines and policies for your storage tenants. Taking a note from up and running businesses, you will find that although they might claim to be almost 100% occupied, that in reality they might have a percentage of tenants that are not paying their for the storage unit on time, or have gone months with lapses in payment to the business. The promise of having a tenant storing their items at your facility and hoping that they will one day begin paying again, is not better than terminating the contract with the non-paying tenant and moving onto finding another paying tenant for that unit. Adhering to your own deadlines is critical in maintaining the integrity of your cash-flow as well as economic occupancy of your future self storage business.