People are losing their homes in record numbers to foreclosure or reluctantly negotiating a short sale agreement with a lender, and relocating individuals and families are at an all-time high.
Many of these unfortunates have yet to find a suitable permanent residence, and while searching for a new home or apartment need a place to store their goods. Storage warehouses can be expensive, but self storage units offer a less costly and more convenient way to solve the problem.
Other sources of business for a Self Storage unit company, besides people relocating within the same town or city, are people in the process of relocating to and from other cities and towns for various reasons.
For example, people coming to town to look for employment, or people relocating due to a transfer or planning to retire, often need a temporary place to store their property. Many of these people have not yet found a suitable place to live, and have to store their furniture, and belongings somewhere in the meanwhile.
Although there is no guarantee that any investment is truly recession proof, nor free of competition, and ANY real estate investment should be approached with caution in these precarious times, Self Storage units can be profitable.
Self Storage units are often used by small businesses as well for storing excess or temporarily unneeded inventory, such as office furniture, equipment and bulky file storage boxes that would crowd a small shop or office. Storage of these kinds of business related items can often be over the long term.
Some storage units can be climate controlled for the temporary storage of perishable items. Since some larger items such as boats and recreational vehicles may be too large for indoor storage, they can be safely stored within the facility which normally is fenced and gated, well lighted at night, and equipped with high security technology.
Expenditures include a permit or permits, allowing the owner to operate a storage facility, liability insurance premiums, on site resident manager salaries and utility costs. Maintenance and repair of facilities, such as malfunctioning roll-up doors, etc.,) are generally minimal.
Income is generated primarily by rental storage fees, but storage facilities have the flexibility to include multiple profit centers such as:
- Sale of high security locks –customers lock up and have sole access to their storage units, so high security locks generally sell very well.
- Boxes of various sizes, including wardrobe carriers and related moving supplies such as tape, twine, and packing materials
- Pack and ship centers for customer convenience
- Insurance sales
- Truck rental
In the event of a storage unit renter abandoning property, the storage facility owner may, in accordance with prevailing state laws regarding such matters, take claim to the property and offer the stored materials for auction.
Self Storage units offer the investor a high return relative to investment, which can be equal or higher than mobile home parks or multi-family apartments due to a number of factors, including low maintenance costs, and infrequent expenditures for ongoing improvements.
Additionally, initial investment in a Self Storage unit facility can be ¼ to 1/3 the cost of other real estate investments.
