Real Estate for Self-Storage
Lots of real estate investors don't take interest in the self-storage business, but over the last few years some investors have started calculating and they've noticed that the numbers were looking pretty good. Self-storage could be a hidden beauty, one of the best types of real estate investment.
An investment in a mini-storage will be better in the long run. The self-storage market is booming and keeps on growing. When looking at the figures from the past and comparing them to today, you will notice that more people are discovering self-storage and that people are using it repeatedly.
Another thing that makes the market grow, is that you don't need someone there to make it useful like it does in an office or a hotel or homes. The market grows at the pace that our emotional attachment to stuff grows. And we all know that we accumulate lots of stuff over the years. This all results in a growing demand for storage space. The rents of self-storage have gone up over the years, because the total demand exceeds the population growth and the supply.
Self-storage properties that are selected carefully are a great way to get the maximum out of a real estate investment income. When a self-storage investment wants to be successful it needs an experts view in commercial real estate, rezoning and zoning regulations, valuation of the property and self-storage marketing and development. This in combination with a deep analysis of the market. Even if you are buying a self-storage property that is already there, you will still need to do proper market research. A property is only as valuable as its market.
Four reasons that the cash-flow on self-storage real estate is higher:
The cap rate is the return you get out of your investment every year. And with a mini-storage facility these returns are much higher than in other real estate properties.
Zoning for self-storage has become more difficult almost everywhere. This is because the real estate taxes are modest and there are no sales taxes Of course they are not very glamorous either. If you own a mini-storage facility somewhere, the zoning board will not be enthusiastic about new self-storage buildings in the neighborhood.
Operating costs are kept to a minimum. Other types of real estate consume about seventy percent of their operating costs for labor and energy costs. With a mini-storage this energy costs and labor are really low, thus the stability of income is improved.
The capital demands for a mini-storage are extremely small, in relative and absolute terms. You won't have any capital costs to refurnish or redecorate. All you need is a few cleaning supplies every few months and that's it.
To conclude: a mini-storage facility may not look as fancy as a new hotel or apartment, it will surely mean a more steady stream of income and lots of money saved.