Insights to Getting Started in the Mini Storage Business
In the last 5 years, the cost of owning a home has increased by 50% – 70%, home rental and apartment rental prices have increased as much as 30% and commercial properties are leasing for 15% – 20% higher. The rising cost of living is causing people to downsize and move into smaller, more affordable spaces. This is creating a need for more storage space for their personal belongings, tools, and business supplies. Self-storage units are being utilized as they are a far more cost effective solution than renting a larger home, apartment or retail space. In fact the demand for storage has increased 65% in the last 5 years and is expected to grow another 15% by the year 2020.
Selecting Proper Location
Finding the right demographic for a place to set up your Mini Storage Business is important in order to keep your revenue stream flowing smoothly. Search for locations where there are apartment complexes and new home developments going up, cities near colleges are also great locations for storage businesses. Studies show that a 3 to 5 mile radius is a good indication of the location of your target market in the city or suburbs, in a rural area the target market can be as much as a 15 to 20 mile radius depending on population and the location. Up to 80% are people moving or clearing out extra space in their home or office and 15% to 20% are those needing temporary storage while looking for a home or going off to college or traveling.
Research your competition. Call around and find out how many storage facilities in the area have lots of empty units to rent or if they are at their full capacity. You can gather information on how many Storage Facilities are in the area you are looking at by visiting the Self-Storage Association, your local Small Business Administration office or your local Chamber of Commerce. You can also have a Feasibility Study conducted while looking for property to save time and help you determine if there is a demand for storage in the area you are scouting.
Decide whether you want to build from the ground up or if you want to convert an existing building into storage units. You may want to consider buying a warehouse building or a factory that is already zoned for that area and convert it into rental units. This can prove to be less costly than building from the ground up, but also limits the number of units you will be able to offer. If building from the ground up you will want to look for vacant lots that offer ample space for multiple buildings and easy parking solutions for people to load and unload their belongings.
You will need to obtain prior zoning approval and hire a licensed contractor familiar with the area to help you submit building plans. Zoning is often the biggest hurdle, it’s important to find land on which you can actually build. The ideal property will be affordable, properly zoned, flat, and highly visible from the road. These qualities are important to a successful storage business venture.
Develop a business plan to decide whether or not the Storage Project makes sense. You will need to determine all of the startup costs involved and the percentages you will have to pay back to investors over an allotted amount of time. Consider the amount of units you will need to build and the percentage of occupancy you will need to hold at any given time in order to be profitable. As a landowner or savvy investor you should consider obtaining a Feasibility Study as part of your business plan.
The main goals of a Feasibility Study are to determine whether a particular project makes sense or not. A Feasibility Study can make the difference between success and failure. The amount of square footage, what types and sizes of buildings you should erect, and a myriad of other considerations that go into developing a successful project. Self-storage complexes need to be properly planned with future expansion in mind. Without a thorough Feasibility Study, costly “surprises” and construction challenges can end up becoming ventures with little or no success.
A typical Feasibility Study will include a detailed analysis of your competition, consumer demand analysis, rental occupancy projections, a recommended unit mix, profit projections, analysis of current demographics, characteristics of a successful location, a management plan and day-today operations overview, analysis of the location of your land, security considerations, building construction suggestions, visibility factors, traffic count, accessibility, an assessment of effectiveness of Yellow Page advertising, any climate control issues, pricing research and strategy.
Site Plan Based on Area Need
You will need to develop a Site Plan based on the specific area’s demand. If you are near a lake or the ocean you may want to consider offering boat and storage units. If you are near a national park or the mountains you may want to include RV and/or Boat storage units. Offering rental units of various sizes will help to attract the largest audience. Carefully consider the building layout and unit mix with future expansion in mind. There are many considerations surrounding the development of a plot of land such as zoning, drainage, easements, signage restrictions and accessibility. Furthermore, property values and development costs become, in most cases, the major part of your investment. Proper site planning is a major component of the success of your project.
We offer a Site Planning Service to help you design your facility in order to get the best usage out of your space and layout for your particular piece of property. The site plan includes items such as building sizes, unit layouts, entrance location, setbacks, isles, approaches, outdoor parking, water retention, and step-downs to accommodate property slopes. The site plan is developed with your input along with the assistance of a design professional that is regularly involved in mini storage projects. The designer’s expertise in developing the site plan will help to ensure successful construction for your project.
To learn more please call us at (800) 486-8415.
Sample 3 Acre Site Plan
Construction Costs and Time
The cost of building a mini storage building is very cost effective when you get a prefabricated mini storage building kit. The ease of construction and labeled components save time and save on construction costs. These storage building kits are extremely durable and very low maintenance. Our low overhead costs ensure that our customers receive the highest quality product at the lowest possible price. Mini Storage Outlet’s top-of-the-line buildings are priced as much as 40 percent below comparable products.
Our level of service begins in the packaging of the materials. Each bundle is labeled as to which building # it goes, in a multi building project as well as each component has a piece mark which is identified in detail erection drawings as to where it should be placed. A step by step erection guide is also supplied to help guide the erector to easy part identification and the procedures which should be followed. A typical crew can erect one of our mini storage building kits in as little as four days. Learn More >
Visit Our Mini Storage Gallery to see examples of recent projects completed.
Once the demand has been established, the driving forces behind your storage business services will be the overall capital and your ROI. In order to make the best Return on your Investment you will need to make smart financial decisions throughout the purchase of your land through the building construction process and the day-to-day operations management.
A financial statement should be developed in or to establish the capital gain, profits and losses. This will also help you determine your ROI. A monthly and annual report of cash flow needs to be established. This report should include rents calculated as realistic rental amounts. (As a guideline, a successful storage business will maintain a 90% or higher occupancy rate.) Include any additional sources of income including truck or equipment rental, boxes, tape and supplies etc., use the average for annual amounts. The report will include operating expenses on a monthly and annual basis including vacancy, collections and loss, insurance, security costs, management salaries, taxes, advertising costs and other operating expenses.
An overall development cost report should be produced in order to determine the amount owed on your initial investment. This will be calculated into the rental rates by square foot in order to pay off investors and/or loans in a timely manner and retain the most income on your investment. This report should include the original cost of land and it’s closing costs, construction costs, permits and fees, survey costs and land testing fees, any legal expenses or filings, builders liability insurance during the construction, initial furnishings and office setup expenses including computers etc., any interest or lease carry overs. The development costs should be paid off in a timely manner and the expenses should be spread out among the number of years the loans were promised to be paid off to the investors or the bank on the original loans.
To learn more please call us at (800) 486-8415.