Thread: Investing in Storage Units

Your quick math to get to 120K is good, but keep in mind that you will need a salaried person at the site, plus taxes, mortgage costs etc...net result is you should be able to more then break even slightly, while the land sits.

The payoff is in the resale/redevelopment - your not going to live off the returns, but you can make more then any blue chip with a heafty dividend, and you can borrow alot more of the money then a margin without the risk. Of course, you need to come up with the 20% down and you have the credit to get a bank to back you. It's a competitive environment, and the big developer's have the edge. It's easy for Mom and Pop to get their clocks cleaned if you get into a price war - the developers can afford to lose money for a little while - then they will buy you out...it's fun if your not Mom and Pop.

Originally Posted by Gilligan

People with money make more money! Commercial developments do require more money down, about 20%. Also construction loans are a little different than commercial mortgages. The most expensive part of new construction is usually the land because you want a good location. In my area storage complexes run about $10 a square foot. Thats $3.50 for the concrete slab and $6.50 for the metal building.

Originally Posted by Griffin

Your quick math to get to 120K is good, but keep in mind that you will need a salaried person at the site, plus taxes, mortgage costs etc...net result is you should be able to more then break even slightly, while the land sits.

The payoff is in the resale/redevelopment - your not going to live off the returns, but you can make more then any blue chip with a heafty dividend, and you can borrow alot more of the money then a margin without the risk. Of course, you need to come up with the 20% down and you have the credit to get a bank to back you. It's a competitive environment, and the big developer's have the edge. It's easy for Mom and Pop to get their clocks cleaned if you get into a price war - the developers can afford to lose money for a little while - then they will buy you out...it's fun if your not Mom and Pop.

Griffin,
I agree that with all the cost associated with starting a new storage complex it would not be feasible to live off the cash flow starting out. In about 9 years I will have enough commercial mortgages paid off to be able to live off the cash flow. As I have said in another thread, my goal is to have 6k a month positive cash flow. I know inflation will keep rising, but so will rents. Not all storage complexes have on site managers, I use a management company that charges me 5%.

In larger cities the competition can be fierce, a few years ago the largest US storage company bought a smaller company for about $3 billion. So being bought out is not such a bad deal. There is a Mom and Pop storage operation about 45 miles from mine and they have expanded to over 700 units. They seem to be living off the cash flow pretty well.

I would not recommend the storage business to first time investors. BTW, you don’t have to be a landlord to be an investor, just owning your own home is the best investment. For someone interested in RE, I would suggest reading books that Pyriel and other members have mentioned written by: Sheets, DeRoos, Kiyosaki, DeCima & others (I usually buy mine off of ebay). Then start off with a single family house to rent out. After one gets a few rentals under his/her control then they could expand to bigger investments. I recently read an article by Kiyosaki where he says that he does not purchase apartment complexes under 100 units, he and his wife now have over 1,000 units. While most commercial loans require 20% down, there are creative ways to finance the down payment including second mortgage, pulling equity out of RE already owned, owner financing, bartering, etc.

What it boils down to is that everyone needs a place to live, including the homeless who seek a bridge or other shelter. Someone has to provide places to live, the RE market is thousands of years old and I don’t see it going away.

JMHO, Gilligan

Originally Posted by Show-me

How about PODS.

Show-Me,
Home Depot is getting into the PODS. They have a 8 X 20 storage container for rent for $59 per month.

Stocking up on self storage

Downsizing homes and booming businesses buoy demand for storage space, making it a winning investment.

By MARY ANN MILBOURN
The Orange County Register

As their circumstances change – marriage, divorce, downsizing, starting new businesses – they don't get rid of what they have, but turn to self storage for their overflow.

(She forgot to add "foreclosure")

http://www.ocregister.com/ocregister...le_2058713.php