Investing in self storage unit facilities — is it a good idea or a bad move? There’s no doubt it’s perplexing because many people are unfamiliar of how these companies work. But, it’s not too complicated, when broken down into the basics. So, let’s take a look at some reasons to invest in self storage units and the biggest reasons to avoid them.
Cons of Owning a Self Storage Unit Facility
We’ll begin with the downsides of owning a storage unit facility as an investment property. Perhaps the most sensible reason to stay away from storage unit properties as a commercial property investment is these are complicated businesses to operate. Yes, the fundamentals aren’t too difficult but the day-to-day operations are key to turning a profit.
While lending is now available to investors looking to build or buy a self-storage facility, figuring out which is the best option requires careful scrutiny. If you’re looking to invest directly in ownership of a self-storage business, your choices are to build new or buy an existing facility. In today’s market, lending is readily available for either option, and each has pros and cons.
—Inside Self Storage.com
Another downside to investing in a storage unit business is identifying one that’s really worthwhile. (Okay, so this goes for just about any type of commercial property investment but it’s especially true in these instances.) Management is also key. If it’s not properly managed, it will not provide a good or any return on investment. Then, there’s location. As with any form of real estate, location is everything, it’s that simple.
Pros of Owning a Self Storage Unit Facility
Now, let’s take a look at what makes a self storage unit business a good investment. There are some important factors which must exist for it to produce a solid ROI. Here’s what to look for in a good self storage unit investment:
- Location. There’s just no getting away from the fact that location is the biggest factor in real estate — no matter the type. If it’s not in a good location, it will not perform like its incumbents in good locations.
- Condition. Of course, condition is another factor when it comes to commercial real estate. The good news is the fact that self storage facilities need little in the way of maintenance. But, if it’s in run-down condition, that does present an opportunity to fetch a good deal. (So long as the rehab price is right.)
- Past and future performance. Obviously, it’s very important to look carefully at its past performance. Additionally, you’ll need to learn what it’s expected to do going into the future.
- On-site management job performance. If the on-site management doesn’t do their job, this is a bad investment. While you might well be able to turn it around, there are other opportunities which don’t come with such a risk going in.
If you’d like to learn more about commercial real estate investment benefits, please contact us.