While I could go on for days about Self Storage, here are just ten of my many beliefs about why Self Storage ownership is the only real estate investment you should ever make.
1. Self Storage is the only real estate investment that you can lock tenants out, generally within 5-6 days, if they do not pay.
You have this right in most states as long as you follow the state statutes for self storage.
If you do not have some background experience with apartment, office, shopping centers, and residential rentals you cannot appreciate this very, very important feature of self storage. With other real estate investments it sometimes takes weeks or months, even with the best of legal advice, to remove tenants.
2. Self Storage is the only real estate investment that by state statutes an owner can sell a tenant’s goods in most states if they don’t pay within 57 days.
The time frame is usually around 57 days from the due date of last payment if you follow most state statutes for Self Storage. This is mostly done without legal assistance.
3. Self Storage lease is for 30 days and automatically renewable for both owner and tenant.
Tenant leases with apartments, office buildings, and shopping centers are generally from 6 months to several years. What advantage does having the self storage lease for just 30 days and automatically renewable give to the self storage owner?
a. As the self storage facility approaches 80-85% in any given size you can raise the rent in just that size or unit and not have to wait until the end of a long lease. It means that you can raise rents more often if the demand is present.
b. If you have an undesirable tenant it is much easier and quicker to vacate this tenant by sending the tenant a 30 day notice to vacate the premise rather than fight the legal battles with a longer lease.
4. Self Storage unit space, when vacated, has a faster turnaround time (15-20 Minutes) for next customer.
a. Let me go through this ordeal for those of you who have not been in the apartment management or apartment ownership. To make ready an apartment for the next tenant there usually is carpet to shampoo, walls to paint, cleaning of refrigerators, stoves, closets, making repairs, etc. The problem with all of this is that it takes time, large labor and materials costs, and takes the unit off the rental market for a period of time. All of this is costly, very time consuming, and may take days and will require a very expensive maintenance crew. None of this with self storage.
b. Shopping center and office rental space is even more time consuming and costly to ready for the next tenant.
c. The self storage manager can turn around a self storage unit for the next rental generally within 15-20 minutes, which includes removal of left over items, cleaning and spraying.
5. A Self Storage investment has high depreciation.
For example: Interior partitions are depreciated over a shorter time frame because they are removable and can be changed to different size units.
This high depreciation investment could protect income from taxes on other investments.
6. Self Storage facility operating cost is low in comparison to other real estate investments.
Generally, depending on size, the operating cost is $3.00/sq ft which includes all operating expenses, including taxes, utilities and management fees. This is for an average size of 45,000-50,000 sq./ft. If the facility is smaller the sq/ft prices could range from $4.00 to $5.00 sq/ft.
7. Self Storage facilities require fewer personnel to operate the facility.
Generally two people, at the most, manage and operate a large self storage site. Smaller facilities may just have one (1) full time employee. Ask someone managing an apartment complex how many employees it takes to manage a similar size facility.
8. Self Storage Facilities’ large number of units eliminates the general problem of tenants moving out in large numbers.
If you have a 250-500 unit self storage facility and 10-20 units vacate the facility, your overall rent or sq/ft is hardly affected. In a similar size sq/ft apartment complex, shopping centers, or office buildings and several tenants move out you could have major vacancies.
9. Easier to increase rent with Self Storage facilities than other real estate investments.
If an apartment rent is $700/month or more and you want to increase the rent 10%, the increase is a major amount of money to the tenant. If you want to increase rental rates on self storage units by 10% your monthly rental increase on units might increase only $5-$10. In self storage we get these increases because usually the increase in dollar amount is not enough to cause the tenant to move out.
10. All individuals, companies, or businesses have a need for a Self Storage rental in a good economy or bad economy.
No other real estate investment has such a cross section of need from the population as does Self Storage. The use of Self Storage for individuals and businesses are endless.
Individuals use self storage for getting their homes ready to sell, remodeling their homes, temporary storage while moving from one house to another, downsize in living standards, moving parents to nursing homes, keeping things they don’t use every day, kids moving back home and the list goes on and on.
Businesses use self-storage for items that are only used occasionally or short term like Christmas decorations, documents and records, additional inventory, and specialty tools.
To learn more about investing in Self Storage, please contact me directly at 919-797-1281 or via e-mail email@example.com