Self-storage facilities can earn an average of $361,000 to $798,800 gross per year with the states of Maryland, Arkansas and New York earning the highest number of sales. Recently, I was fortunate to meet a guy who owns a self-storage facility in Florida.
Typically, a self – storage facility still makes a profit at 60% to 70% of full occupancy. Currently, the industry average occupancy stands near 90%, according to Statista. Nevertheless, experts say it takes one to two years to reach 90% capacity. Many self – storage owners run family operations.
For many real estate investors, self – storage is an appealing asset class because it has large income potential with low overhead, fewer construction costs than other commercial real estate (CRE) sectors, and relatively low ongoing management. Cash flow with large income potential. Low construction and building costs.
In short Extra Space Storage : Best for five-star security. Public Storage : Best for most locations. CubeSmart : Best for the budget-conscious. U-Haul : Best for 24-hour access. Life Storage: Best for variety of climate-controlled storage unit types.
For a businessperson wanting to start up a new self – storage facility , they would have to have the financial clout (or investor support) to be able to finance the land purchase and the construction costs. Typical projects require financing of $2 to $3 million with 10 to 20% down payment.
Costs to Build Self Storage Costs for Single Story Self Storage Construction typically ranges between $25-$40 per square foot – not including land or site improvement costs. Multi-Story Self Storage Building Costs have more variables and can range from $42 per square foot to as much as $70 per square foot.
1. Self storage units are too expensive . Aside from how big the space you need to rent is, factors like the storage facility’s location and whether or not you choose extra features like climate control will affect your monthly rental cost. Hidden costs also need to be factored in (more on that below).
In many cases, owning a storage facility can be a profitable business venture. Extra space is a commodity many people will pay for. Also, it is a reliable recurring income should you attract enough business.
Self Storage is not a passive investment. While self storage is a great investment and has many positives, there is a common misperception that because self storage units do not have toilets, sinks, and other apartment fixtures that running a profitable self storage facility is easy.
Once you begin construction of the building , if you’re going to build single story units , you can expect to pay $25 to $40 per square foot you build . If you want a multi-story building , costs will be around $42 to $70 per square foot.
Divide your net operating income (NOI) by the cap rate to calculate your property value . This reflects your income stream, which is an important consideration in determining a sale price for your self – storage facility.
We ‘ll explain more about storage unit rules and regulations below, but here are some things you can ‘t stow away in a storage unit : Flammable or combustible items. Hazardous materials. Items that will attract pests. Items that are susceptible to mold or mildew. Anything living (e.g., plants, animals, people)
No, you can ‘t live in a storage unit Living in a self – storage unit is neither safe nor legal, but it does occur, for a variety of reasons. According to a SpareFoot survey of nonprofits that help the homeless, it’s unusual but not unheard of.
But in some cases, you can also haggle a price of a self-storage unit . SpareFoot has four tips for negotiating a self-storage rate: Shop around online first, find the best posted price , try for group discounts or referral bonuses, or lock in a lower rate by signing for a longer rental period.