Are you thinking of starting a self-storage business?August 28, 2020
Investing in self-storage has proven to be a robust decision over the past decade. Self-storage offers entrepreneurs, developers, real estate owners and investors the opportunity to diversify their investments with relative safety and confidence.
Self-storage facilities initially started in the USA around the 1960s and arrived in the UK in the early 1980s. Today there are more than 4,200 facilities found across Europe and this equates to approximately 100 million sq. ft of rentable space*.
Below are 6 reasons why you should invest in self-storage.
This is essential to a successful investment strategy. Some of the unique benefits of the industry that illustrate why it is a good diversification solution include: rental rate adjustment frequency, diverse renter base and relative resistance to recession.
Return on investment
In developing markets, self-storage operators are typically producing double digit annual returns. Due to its robust stabilisation characteristic, good returns nearly always continue over the life of the investment.
Realising your gains
A large majority of investors come into self-storage with their ‘exit’ in mind. A successful exit strategy could go like this: over a medium term, invest in a series of self-storage facilities, build, and run professionally. Build a brand and stabilise the rental space in a reasonable period.
Growth (of your self-storage investment)
The initial investment grows as your self-storage facility starts filling up rapidly and the need to expand is on the horizon. Your next building acquisition will typically be funded from the cash flow of your existing self-storage business.
Utilise unused space
Self-storage sizes can range from 10 sq. ft to 1000 sq. ft. Utilising unused space (internal or external) within a facility by building self-storage can help make money.
Low staff requirement
On average a self-storage facility requires only 1 to 3 staff members to sell space and operate. This reduces personnel costs but with technological advancement, you could also fully automate your site.