Most people are often attracted to the prospect of owning a real estate property due to the business’s consistent returns and lucrative nature. Real-estate investments can be categorized into different types, from rental properties and self-storage businesses to commercial buildings and raw land.
Over the years, self-storage units have gained popularity among investors, thanks to the ease of management, low investment, and operating cost, to mention a few. We have rounded up ten reasons you should invest in a self-storage business.
1. Lower Initial Investment
A self-storage unit is generally cheaper to set up and run than the other types of rental investments. Once you have built your storage facility and equipped it with all the necessary amenities, from security elements and proper lighting to climate control features, you are ready to welcome your first tenants. With rental properties and business apartments, you must invest in several amenities, landscaping aspects, and expensive furnishing to make the place attractive and competitive.
2. The Lease Period Automatically Renews After 30 Days
Since the lease period is shorter than other real estate investments, you can quickly evict undesirable tenants by issuing them a 30-day notice. The other benefit is that raising or lowering rates is easier depending on the current demand and supply. This level of flexibility gives you a competitive advantage, allowing you to save time and money in the long run.
3. The Turnaround Time for the Next Customer is a Matter of Minutes
Once a self-storage unit is vacated, it takes only a few minutes to clean the space and prepare it for the next client. This is quite convenient compared to business premises that need deep cleaning, painting, and repairs. The cost of getting a self-storage unit ready for a new tenant is also considerably low.
4. The High Depreciation Cost Can Help Reduce Taxable Net Income
A self-storage unit has a high depreciation cost since the interior partitions can easily be removed or modified to get different size units. Luckily, you can use this depreciation as a non-cash deduction to reduce your taxable net income. This makes this business very practical and ideal for people with multiple investments.
5. You Have the Option to Lock Out Tenants Within 5-6 Days
Unlike other real estate investments with complicated laws and regulations, self-storage businesses give you more control over how you can run your business. If the tenants fail to pay within a week, you have the legal right to lock them out. With other investments like business apartments, office spaces, and rentals, it takes weeks and even months to legally evict non-compliant tenants.
6. You Can Recoup Loses After 57 Days
If the tenant fails to make payments even after serving them with the required notice and instructions, most state statutes allow the self-storage business owner to sell the tenant’s goods. Once 57 days have elapsed from the notice date, you can sell the items without legal assistance. Ideally, this is one of the legal ways you can recoup losses and create storage space for other clients.
7. Fewer Personnel is Required to Run the Facility
Besides the security personnel who have to be around the premises 24/7, you may need one or two more employees to manage and oversee the entire facility. This is relatively cheaper compared to running a rental property or business apartment. You can further minimize the operating cost by investing in low-maintenance structures such as paved driveways or automating the on-loading and off-loading operations.
8. Income Flow is Much More Predictable
As an investor, you always want a predictable income source that can help you cover your operating costs, service debts, and even pay your bills. With self-storage units, the large number of storage units means you have several tenants. This eliminates the common problem of tenants moving out in numbers and impacting your cash flow.
9. It’s Easier to Increase Rental Prices
A 10% increase in an apartment’s rental fee could be anything not less than $100, which can force some tenants to move out. However, a similar rate hike would be pretty insignificant with a self-storage unit, probably $3 to $10. Still, you’ll have accomplished the goal of catching up with the market, but since you are charging several people and not a few individuals, the cost per head is less.
10. Self-Storage Rental Services are Always on Demand
Businesses and individuals need self-storage rental services all year-round, regardless of the economic situation. Many individuals are down-sizing their homes, and several businesses are often looking for extra storage space for their inventory. This makes a self-storage business a great investment option for many people. And like any other business, self-storage units have peak periods with high demand. An example is the winter season when many people want to store their outdoor equipment in a safe and secure place.
The Bottom Line
With the benefits listed above, it’s apparent that a self-storage business is an ideal investment option for many. However, you first want to research and evaluate your investment needs before making a business move.
