I have the opportunity to purchase 17 Storage units for $25,000, with a monthly income of $685, What pros and cons do you see with this type of investment?
Do you have any experience with storage units?
Do you have someone who can manage these for you?
There are many pros and cons to every investment.
If this is your first investment into storage units, even though its only $25k. You still need to make sure you know what you're doing. And if you dont then bring someone into the deal who knows that they're doing.
Hi Benn, storage units have been a great investment for me and my business partner. We started in residential real estate and still own over 50 units but have ventured into self storage last year when we purchased an existing facility with 77 units in south east Nebraska to learn the business. Now we are developing and purchasing more facilities.
It's so much easier dealing with turn over than in residential, just sweep out the unit and re-rent. It's also easier to deal with delinquent tenants. While it's not a totally passive investment, neither is residential since there is always something somewhere that needs to be fixed. With self storage you mostly get calls if someone wants to move in or move out since there is really nothing that needs to be fixed regularly.
While you provided limited information, those numbers look attractive. You should investigate other self storage in the area to see their rates, occupancy levels, etc. and how they compare with this facility. Managing 17 units should be very simple, especially if you live fairly close.
Good luck and let me know if you have any other questions I can help you with!
The numbers look great for sure. If you extrapolate, that would be like buying a 100k house and getting 2,800/mo in rent. I'd take that all day long.
Here are some other questions:
1) Is the 685/mo the actual rent or the potential rent (i.e. if every single unit is rented).
2) Is there room for expansion at the current site?
3) What kind of expenses are there? Utilities? Taxes? Insurance?
4) The same as others have asked - who is going to manage these things for move in and move out? Do you have the flexibility in your job to meet with these people during the day? Or at least take their calls and schedule a meeting for nights and weekends?
5) Any rehab needed?
6) What does the competition look like there locally?
Still, the numbers do look good - especially if you get a commercial loan and only have to come out of pocket 7,500.....
There is very little drawback in owning storage. Like one of the previous people said, sweep, clean, rerent. Great business to get into. I’m sure there is some additional costs involved. Utilities for example. Are you managing yourself? My family owns 1,000 units and they have an on-site Manager. I realize 17 units is much smaller but if your planning on managing yourself and your not 100% occupied, there is some nucance to owning this type of business.
Looks like there are quite a lot of things that you'll need to consider since this is your very first venture into self storage. Honestly speaking, if it was me, I'd jump at the opportunity. To many, it might seem like managing those 17 units might be a walk in the park, but do take note that you will have to put some effort into making sure that those storage units are going to be rented out, and will keep being rented out. Even if the person selling you those units proclaims that they have long term renters already moved into these storage units, they may not stay forever. If these guys move out, can you afford the loss in income or even be able to find new renters on your own? Think carefully!
I realize that I'm replying from almost a year ago, but as Michael recently replied, this crossed my "inbox"...
So, how'd it work out for you? Did you move forward?
Please let me know if I can be of any help.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing