As a Brooksville rental property investor, you might be searching for other approaches to expand your business and diversify your income streams. One alternative that has gained prominence lately is the self-storage facility. Yet, would it be advisable for you to begin a storage rental business? To determine if the industry is a solid match for you, you should learn more about what it takes to get started owning a self-storage business.
Over the last decade, storage rental facilities have blossomed throughout the United States. Nowadays, self-storage facilities number somewhere around 50,000. To put that number in context, that is generally equivalent to the quantity of McDonald’s, Subway, and Starbucks locations in the U.S. combined. Self-storage rental businesses come in various sizes but are focused on a particular service: exchanging a monthly rental payment for space to store the renter’s important belongings. From storing art and appliances to boats and RVs, individuals and businesses alike depend on self-storage units to keep things they need or aren’t prepared to abandon.
Apparently, storage rental is a lucrative business, with profit margins averaging around 11 percent. And it could be a great choice for anyone who can manage to get into the business. Yet, there are several other things to remember in addition to finances. For instance, you’ll need to calculate the total cost of starting a self-storage business; choose whether you should build your own facility or purchase an existing structure; what sort of operating expenses there will be; and how you will market and staff your business. After working through some of these significant considerations, you can more quickly find out if going into the storage rental business is suitable for your specific case.
If you currently have land or own a building you could convert into storage space, you may be in a great situation to begin a storage rental business. One of the most significant obstacles of self-storage businesses is the cost of the facility itself. It’s necessary to conduct some research and determine how much it will cost to secure a location, building and complete the required construction.
While you may assume that constructing a brand-new facility is the most expensive choice, you may be completely mistaken about that. Usually, transforming an old property can be just as expensive, contingent upon the area, procurement expenses, and workers’ availability to accomplish the project. Perhaps, you may find the idea of buying a foreclosed storage facility more appealing. But don’t forget that even existing or turn-key facilities may need updates, renovations, or repairs, along with basic operational costs.
This is why regardless of which way you pick, you’ll need proper funding to start a storage rental business. Probably the main questions you need to ask is: where will the money for your new business come from?
Obviously, if you are a rental property investor, the goal is to diversify, not put the entirety of your investment eggs into one basket. If selling off your other assets isn’t the solution, could you qualify for a loan (either to purchase or to build a facility). You may also consider going into business with one or more partners or finding an investor willing to help you finance an acquisition or development deal.
Regardless of how you intend to gain the funds for your storage rental business, keep in mind to include operational costs in your calculations. You’ll need to possess at least six months of operational expenses covered, which implies you’ll need to know what those costs will be and how you’ll handle your storage facility. From doing it yourself to employing a third-party management company, there are several other ways. No matter what, you’ll need to decide whether you not only can afford the hefty upfront price tag but also the time and effort it will require to get your storage rental business up and running.
Are you looking for new ways to expand your investment portfolio? Give Real Property Management Connection a call. We work with investors like you to improve rental property margins, increase profitability, and connect you with great off-market deals. Contact us online or call 352-428-2316 to speak with a Brooksville property manager today.
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