Invest in Self Storage – A Stable Option in an Economic Downturn

With the sudden collapse of the residential real estate market in recent months, many people have chosen to invest in self storage facilities. These facilities offer several advantages over investments in residential or other commercial real estate opportunities. These advantages include low monthly maintenance costs, high profit potential, and the general ease of ownership. Unlike other commercial interests, storage facilities require no costly inventory and necessitate a minimal work force. This allows for an investor to sink more money in advertizing, thus further increasing the profit margin. For all these reasons and more there has been a huge increase in mini storage investment in recent months.

At times like these, to invest self storage could be a profitable investment for almost anyone.

When an investor considers purchasing a property often the most important aspect he or she considers is the basic monthly cost associated with the operations of that business. Unlike other commercial businesses, self storage has minimal monthly financial demands. There is no inventory to tie up much needed capital. Other businesses that require an inventory of goods generally dedicates almost thirty percent of revenues to purchase and store the necessary goods. There is also only a minimal commitment to labor – most self storage business only require two or three full time employees. Compare this to other businesses that require dozens of employees forcing labor costs to near forty percent of revenue.

Since there is no inventory to tie up capital and a relatively low commitment to labor, to invest in self storage requires an unusually low amount of recurring monthly costs. Because of these low monthly costs, a huge profit margin can be expected almost immediately after purchase. A profit margin is the gross profit minus all maintenance costs, labor costs, inventory costs, and other non-controllable costs such as rent or mortgage payments. A profit margin can also be termed as a net profit or the bottom line take home money at the end of the month. When investing in potential business opportunities, an investor will strongly consider the ability to secure a large profit margin. The larger the margin, the more money can be earned off of the property. When these considerations are taken into account, investments in self storage facilities are often believed to be some of the most profitable opportunities around.

Often a secondary or tracery consideration when discussing real estate or business investments is the ease of management of said property or business. Any business opportunity has management issues. These management issues are not necessarily directly related to profit margin. For example, just because a restaurant may be hard to run does not mean that it will not be profitable. However, it does mean that creating a profit will be harder and more stressful. Due to the reasons, already mentioned, related to inventory and labor, a self storage facility is extremely low stress. This lack of stress translates into an ease of management that is not felt in other business opportunities. Therefore, while not a primary concern, the ease of running the business contributes to the popularity of this particular investment.

An increase in the amount of people who invest in self storage units as increased because of three things: relatively low monthly maintenance costs, high profit potential, and the general ease of ownership.