Investing in
storage units can be a great business idea for those looking to make a steady
income. With the growing need for storage solutions across the country, investing
in storage units could be a great way to make a passive income stream. However,
there are pros and cons to consider before investing, and understanding the
details of this type of investment is essential. This article will help you
gain insight into the advantages and disadvantages of investing in storage
units, so you can make an informed decision and determine if this is the right
investment for you.
Investing in
storage units is similar to purchasing rental properties. You will buy or lease
a storage unit (or multiple units) and then rent them out to people who need
storage. You can charge a monthly rate, or you can charge per item stored. You
will also likely be responsible for managing the units, including repairs,
cleaning, and finding new tenants when existing tenants move out. There are
many variations within the storage unit investment industry. Some investors
focus on storing high-value items such as boats and cars, while others focus on
storing household and business items. You can also focus on storing specialized
items such as artwork and antiques. To determine the best type of storage unit
investment for you, you’ll want to carefully consider the benefits and
drawbacks of each type of investment.
Investing in
storage units provides a steady stream of income. You will likely be able to
fill the units with inventory from estate sales, store closing sales, and
auctions. This will help ensure the units are consistently full and rented by
tenants. Unlike real estate investing that requires a significant upfront cost
and a large amount of upfront cash, investing in storage units does not require
a large initial investment. Many storage units are available for less than $10,000,
and the average unit is less than $10,000 a year to lease. You may also be able
to find deals on used storage units. Storage units tend to be risk-free
investments. If you find a good deal on a lease and the storage unit is clean
and in good condition, it is unlikely that the lease will terminate early. You
can likely renew the lease when it expires and continue to earn a steady income
from the unit.
Storage units
are often a cash flow negative business. When you purchase or lease a storage
unit, you must be able to cover the monthly payment with current cash flow.
You’ll also want to factor any repair costs into your budget. If you purchase
used storage units at auction or from owner financing, you may have to spend
thousands of dollars in repairs and clean-up costs. Newer storage units can be
expensive, costing $10,000 or more per unit. Investing in storage units may not
be the best option for those looking for a passive income stream. Unlike real
estate, which is often completely hands-off once it’s purchased, managing your
storage units requires time and effort. You will need to be available and be
willing to get your hands dirty managing the units. You may also have to spend
time finding new tenants when existing tenants move out.
As with any
business venture, before you invest in storage units you will want to carefully
consider the pros and cons. You should also do thorough research to learn as
much as you can about the industry and find a niche that will work well for
you. Here are a few tips for conducting thorough research before investing in
storage units: You’ll want to research the demand for storage units in your
area. You can use data from the Census Bureau and Google Trends to determine if
there is high demand in your area. You’ll also want to find out how much people
are currently paying for storage. You can do this by asking around and speaking
with current storage unit tenants. You can also look for online data about
current storage unit rental rates. You’ll also want to research storage unit
costs. You’ll want to know what it costs to purchase a storage unit and what it
costs to lease or purchase a storage unit. You’ll also want to carefully
consider the competition in your area and how you plan to stand out among the
rest. What type of storage unit will you focus on? There are many different
types of storage units to choose from.
Investing in
storage units is a great investment for anyone who likes hands-on work and
enjoys being involved in the day-to-day management of their business. You will
likely need to be available to work with tenants, clean units, and perform
occasional repairs. You should also be willing to accept a moderate amount of
risk and be willing to put in the time and effort required to be successful in
the industry. If you’re looking for an investment that requires little hands-on
work and has low risk, then investing in storage units may not be the best
choice for you. If you are willing to put in the time and effort required and
are willing to accept a moderate amount of risk, then investing in storage
units could be a great investment for you.
Before you buy
or lease storage units, you’ll want to be sure that the units are located in a
strategic area. You’ll want to make sure there is high demand for storage units
in your area. You can use data from the Census Bureau and Google Trends to
determine if there is high demand in your area. You’ll also want to find out
how much people are currently paying for storage. You can do this by asking
around and speaking with current storage unit tenants. You can also look for
online data about current rental rates. You’ll want to make sure the units are
priced competitively. You can do this by comparing the price of the units with
other units in the area.
You’ll want to
choose a location for your storage units that has high visibility and consistent
foot traffic. Ideally, you’ll want your units to be located on a busy street
where people are likely to walk or drive by and see the units. You should also
be sure that the area is safe and that the units are easy to access. When
picking a location for the storage units, you’ll want to consider things like
crime rates, traffic patterns, walkability, competition, and nearby amenities.
You’ll want to find out what the laws are in your area related to storage unit
placement. You may need to get a zoning permit and/or get approval from the
city.
Once you
purchase or lease the storage units, you’ll want to make sure that they are
kept clean and are secure. You may want to hire a third-party company to clean
the units and provide regular maintenance. You’ll also want to make sure that
the units are secure and that the doors lock properly. You should also be sure
that the units are priced competitively and that you have a good rental rate.
You can do this by comparing your rental rate with other local storage units
and reviewing third-party websites where people can leave reviews. You may also
want to consider offering a variety of rental plans, such as short-term and
long-term rentals. You can also offer different fee structures, such as
pay-as-you-go or a flat rate. You may also want to offer perks such as free
moving trucks on moving day or free cardboard boxes.
The average
return on investment (ROI) for investing in storage units is around 10%. That
is the average annual return on investment and does not account for any upfront
costs. You can expect the return to vary based on several factors, including
the type of storage units you choose to invest in, the upfront costs, and the cost
of leasing or buying units. If you are able to find a good deal on used storage
units, you can expect a higher ROI than if you pay full-price for new units.
The same is true for leasing vs. buying units. If you decide to buy the units,
you will likely make a lower annual ROI than if you lease the units.