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ARTICLE -
Self-Storage Facilities by
Robert Poe Self storage or
what is commonly known as mini storage can be a
good property and financial investment for a
long term owner. The investor has to look at a
self storage investment as a business AND a real
estate play. The property itself may be in an
appreciating area, and the business portion of
the storage facility may be a good cash flow
vehicle.
The self storage
business is a very management intensive
business. You can hear stories of an idyllic
life of leisure as a mini storage owner, but the
reality is there is upkeep and paperwork just
like any business. Competition has increased
over the years in many regions as more units
have been built so this is a factor to look at
if you are evaluating a property. A good
facility in a good traffic location though is
rarely empty in good and bad times.
A mini storage
facility has a number of advantages over other
forms of real estate investment. The properties
themselves are usually fairly simple
construction and maintenance, and the tenant mix
can be extremely varied which means your risk is
spread over several hundred units as opposed to
fewer units in a multifamily investment. In
addition, evictions for non payment are usually
more straightforward than if you are dealing
with someone’s home or apartment. Office
buildings can be devastated by a major tenant
moving out or contractions in the economy.
The downside is
that you are a commodity in the consumer’s eyes
and location and service are going to make the
difference. Pricing plays a role, and most mini
storage consumers are very adept at figuring out
the amenities of site. Security, and lots of it,
is a must have for a storage facility.
Additionally, you will need to invest in good
management software to track the comings and
goings of your tenant base. The key to a good
mini storage experience is management and
systemization of procedures and routines.
The self storage
industry is a tricky one to navigate and due to
this I would strongly recommend you find a good
commercial broker that knows the industry and
the ins and outs of financing a property. Banks
are willing to loan on a self storage property
but they will need a great deal of documentation
and items like a business plan. Our office has
dealt in this sector of the real estate market
so if you have questions please call us.
- Submitted by
Robert Poe, CCIM, Certified Real Estate
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