Starting a self-storage business or purchasing an additional property is a big investment and important decision that requires careful consideration. When many people consider starting or acquiring a self-storage business, they often first think of the risks associated with it.
However, one of the least popular (but also one of the best investments with the highest returns) is self-storage facilities and warehouses. Believe it or not, self-storage facilities and warehouses are incredibly popular among businesses and various industries.
The Start of Self-Storage Facilities
Self-storage facilities got their start in Texas in the mid 1960s. During this time, the storage and warehouse industry faced troubling financial times with costs of warehouses and properties on the rise.
In an effort to offset some of the rising costs, property and business owners rented out storage and warehouse space. The idea took off, and quickly spread across the United States, Canada and Europe.
In fact, according to the Self-Storage Association, there are now more than 60,000 self-storage facilities worldwide today.
Reasons Why Self-Storage and Warehouse Facilities Are Helpful
Here are some top reasons why self-storage and warehouse facilities are helpful, and why they are worth the investment.
1. Self-storage facilities are a great investment. Although it might not seem it, self-storage facilities and warehouses are actually a great investment. According to the National Association of Real Estate Investment Trusts (NAREIT), self-storage and warehouse facilities almost always yield a positive return.
In fact, in 2008 self-storage market was the only market sector that showed a positive return of 5 percent during one of the worst economical recessions in modern United States history.
Why? The explanation for this is simple: Regardless of how well or poorly the economy performs, there is almost always an individual or business looking to rent storage space for moving or relocation purposes, storing machinery or vehicles or even important documents.
2. Recurring source of revenue. Another reason why self-storage facilities and warehouses are a great investment is that they provide a reliable and recurring source of revenue. Most self-storage facilities and warehouses bill customers on a monthly basis, which provides property owners with monthly recurring income.
Furthermore, businesses with proven, established recurring revenue have a higher resale value compared to businesses without a solid stream of cash flow.
3. Low operation and maintenance costs. Unlike a home or office, self-storage facilities and warehouses require very little maintenance. If a tenant decides to leave, few repairs are needed—if any. Unlike a home, apartment or office, when a tenant leaves, it is up to the property owner or “land lord” to clean, make repairs, provide ongoing landscaping and maintenance, and so on.
Therefore, self-storage facilities and warehouses are relatively inexpensive to operate and may only require one or two employees. According to the Self-Storage Association, operating costs can be as low as 25 percent.
4. Self-storage facilities serve a wide market. Newer self-storage facilities and warehouses are designed and constructed to serve a wide market, from businesses, contractors to consumers. They are a safe and reliable, and many offer features such as loading docks, climate-controlled units, packing and moving supplies and even security guards.
As a result, many self-storage facilities and warehouses are incredibly convenient, and can be found throughout a variety of residential neighborhoods and urban areas.
5. Affordable and convenient. In addition to the numerous investment and financial benefits of purchasing a self-storage facility or warehouse, they are also extremely affordable and convenient. Even if you as the property owner have some space available, it can easily be rented out to a business for a monthly fee, which turns the cost of up keeping the facility into an income-generating source.
All in all, self-storage facilities and warehouses may not be the most exciting business to own or the best purchase to make, but they have proven to be wise real estate investments. They are growing in popularity as many businesses and industries are realizing how inexpensive, affordable, and convenient that are to maintain and take advantage of.