With an annual income of $39.5 billion in 2020, the self-storage industry is one of the best investment areas. You’ll diversify your investment and create an additional source of income. As a wise investor, you’re now wondering what you need to start.
The goal is to see the amount of capital you’ll need and the periodic incomes you’ll earn. With these figures, you’ll calculate how long it’ll take to recoup back your money. Also, you’ll see whether it makes sense to borrow money to invest in the self-storage industry.
Keep reading to discover the cost of self-storage.
Cost of Building a Self-Storage From the Ground
The first investment option you’ll consider is building the self-storage units yourself from the ground. It’ll cost you $25-$40 per square foot to build a single-story self-storage unit. That means to construct 20 medium-sized units (10 x10 ft.), you’ll spend $50,000 -$80,000.
For multi-story units, you’ll spend $42-$70 per square foot. Note that these figures are non-inclusive site improvement costs. Also, you’ll need to factor in the cost of the land, which depends on the location. On average, you need $500,000-$750,000 to build a modern self-storage facility.
Cost of Buying an Existing Self-Storage
The price of a self-storage facility is determined by the revenues it generates. As a new investor, you may make the mistake of thinking the value is based on a number of units or the space it occupies. It is necessary you seek resources that’ll guide you on the right way to purchase a self-storage unit.
You’ll need $1million-$10 million to purchase an existing self-storage unit. You must review the location of this facility and the projected income. The idea is to determine the years it’ll take to recoup your initial investment.
Cost of Self-Storage REITs
Not all investors have the capital or the time to build or purchase a self-storage. If you fall in this group, look for other alternative ways to invest in this industry. The idea is to buy shares in a self-storage REIT.
You’ll become one of the owners of a given facility and delegate the management work to the experts. With as little as $50,000, you can explore this investment option. You’ll receive periodic dividends from this investment.
The fantastic thing about this self-storage investment option is that it’s completely hands-free. You don’t partake in any management or running of the units. It provides a fantastic way of generating a passive income.
Investing in Self-Storage Industry Simplified
It may be challenging to decide which self-storage investment option is best for you out of the three. Find experienced experts who’ll educate you more on these options. The goal is to access excellent tools and resources that’ll guide your investment decisions.
Also, you’ll learn how you can maximize your returns from self-storage units. The objective is to earn enough money that justifies the capital you invest. The other thing is to mitigate risks that may lead to low revenues or losses.
Contact us today for comprehensive guidance on self-storage investing.