How Profitable Is a Self-Storage Facility?
Are you curious about the potential return on investment (ROI) of owning a storage facility? While you have lots of options if you’re interested in real estate investing, there are several reasons why storage facilities can be especially lucrative.
- They are low maintenance: Unlike an apartment building, storage units don’t need stylistic appeal — and you don’t have to fix plumbing issues late at night. Your customers are simply looking for a safe, reliable space for their items.
- They have few risks: High turnover isn’t an issue with self-storage facilities — there are always people who are moving, downsizing or otherwise in need of a storage unit. Unlike other forms of investment, self-storage is also less vulnerable to recessions. Fewer businesses may use self-storage during economic downturns, but more people may be moving and needing self-storage.
- They let you take advantage of cheaper land: You don’t need significant pedestrian traffic or an attractive location for a self-storage facility. You can even use irregularly sized and oddly shaped parcels of land, which may be less desirable and therefore available at a lower cost.
- Self-storage facilities have a low breakeven point: The costs of self-storage investment are lower than other types of properties thanks to cheaper land and less need for aesthetic considerations or staffing. For this reason, it can take less for you to break even and start profiting.
- They have a high profit margin: Investors in this market see an average profit margin of around 41%.
Is Investing in Self-Storage Profitable?
In a word, yes. Just how much annual income can storage facilities generate? Your profit will depend on several factors, including the size and location of the facility, whether you used a loan to acquire the property and how you’re using the facility to generate income.
A self-storage facility can earn an average of $350,000-800,000 a year. To improve your chances of maximizing your earnings, do your due diligence to find a self-storage investment in an area where demand is high. You can also price competitively. Consider offering additional services your customers may be interested in. For example, you might sell boxes, packing tape and other products.
How Investment Real Estate (IRE) Can Make a Difference
Investment Real Estate has been helping seasoned investors and those new to self-storage get solid returns on investment since 1998. Whether you’re interested in buying, selling or building, IRE has the resources you need. Contact us online to learn more.