Options for investment decisions are aplenty, particularly in real estate which, even during the pandemic, has been promising. Few real estate investments have the immediate promise of return on investment as self-storage units.
In the following article, we’ll be discussing why these are among the safest investments, provided you go in with your eyes open. Here are the factors you simply must consider.
1. What You Will Charge in Rent
Your first step when investing in a storage facility is to do a feasibility study of the area. Call around and check with other storage facilities to see what they charge. Plan a visit to see what type of security they offer for that price.
If you’re buying an existing facility, do a deep dive into the books to see if perhaps a rate increase is necessary to improve profits. When building from scratch, make sure you can do so while keeping market rates competitive.
2. How You Will Generate Occupancy
Another consideration for self-storage investment is occupancy rates. For existing facilities, this should be easy to track. Just look over the past three years of data to see what percentage has stayed rented out.
From there, start setting goals that will get you as close to 100 percent occupancy as possible. You’ll need to do some online and offline marketing to maximize results, so be sure to account for that in your pricing.
3. Your Competitive Advantage Against Competing Facilities
Making investment decisions should also be based on the nature of the business you’re starting. In every business, you need a competitive advantage and self-storage is no exception.
What is it you can offer your potential customers that other facilities in the area aren’t? Better pricing, state-of-the-art security, climate control? These factors are very important for figuring out the marketing side we discussed in No. 2.
One of the most important investing decisions when it comes to any form of real estate is location. Self-storage units are a business, yes, but they are also a real estate-based investment. Never forget that.
People want easy access when choosing a storage facility. They also want something that is visible and protected by natural geography. Keep these two factors in mind before opening your wallet.
5. Cash Flow vs Additional Investments Needed
One last factor to consider on how to make investment decisions, particularly regarding self-storage and other real estate, is this: additional investments. Cash flow normally isn’t a problem if you’re buying an existing business.
However, you may be forced to do security and technological upgrades, change branding, start an online advertising campaign. There are a number of factors to consider that will increase your financial obligation before you are able to get the business into the black.
Look ahead as well as behind. Past issues can and often do lead to future expenses.
Self-Storage Can Be One of Your Best Investment Decisions
Self-storage units could be some of the best investment decisions you ever make. First, however, you need to put in the time and research it takes to set the investment up for success.
Remember, you’re not only investing in real estate but also a business. To make it profitable, you’ll have to respect both aspects of it. Self-storage valuator software can help with that!