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5 Things to Consider When Buying an Existing Self-Storage Facility

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Self-storage facilities are a great investment. They are relatively low-risk, but you do need to think about several important points before making a purchase.

Self-Storage facilities are a great option for those who are looking to invest in real estate with the potential for high returns. But, as with any investment, there are a few things you should consider before buying an existing facility.

1. Location

When considering the purchase of an existing self-storage facility, one of the most important factors to consider is location. The self-storage industry is highly competitive, and facilities that are located in prime areas – near population centers, highways, and other key transportation routes – tend to be more successful than those that are not. If you’re looking at a self-storage facility that’s located in a less than ideal spot, it may be harder to attract and retain customers, which could impact your bottom line.

2. Condition of the Facility

Another important factor to consider when purchasing an existing self-storage facility is the condition of the property. Take a close look at the condition of the building and the inventory of units. A facility that needs repairs or renovations will not only require additional investment but may also be less desirable to potential tenants.

3. Financials

In addition to considering a self-storage facility’s location and condition, you’ll want to review its financial records to ensure that it’s profitable and can support your investment. Ask for copies of tax returns for both the facility itself, as well as any other facilities owned by the owner. This will help you get an idea of how profitable this particular storage unit is over time. You should also make sure that there is at least one year worth of financial data available so you have a full picture of what’s happening with the business over time.

4. The Competition

When you’re considering the purchase of an existing self-storage facility, it’s also important to take a look at the competition. If there are already several storage facilities in the area, it may be more difficult to attract and retain customers. However, if there are few storage options in the area, you may have a better chance of success.

5. The Owner’s Motivation

When you’re considering the purchase of an existing self-storage facility, it’s important to ask about the owner’s motivation for selling. In some cases, owners may be willing to negotiate on price if they’re motivated to sell quickly. If an owner is not motivated to sell, they may be less negotiable on price, which could impact your bottom line.

6. The Rent

It’s also important to consider the rent that you’ll be paying for the self-storage facility. If the rent is too high, it could eat into your profits and make it harder to turn a profit on the business. On the other hand, if the rent is too low, you may not be able to pay off your initial investment within a reasonable amount of time. Work with an experienced real estate agent who can help you negotiate terms that will work for both parties when purchasing an existing self-storage facility.

7. The Tenants

When you’re considering the purchase of an existing self-storage facility, it’s also important to ask about the current tenants. If the facility is mostly vacant, it may be more difficult to attract and retain customers. However, if the facility is full or nearly full, it may be easier to keep tenants happy and encourage them to renew their leases. This can help you ensure that your business stays profitable over time.

8. The Loan

Before purchasing an existing self-storage facility, it’s important to have a plan in place for financing the purchase. Depending on the size of the facility and other factors, you may need to secure a commercial loan or line of credit. You can get help from a lender who specializes in financing this type of investment property. Be sure to work with an experienced real estate agent who has experience securing loans. Moreover, he/she should have experience for similar properties. Ask about any special considerations that may be needed when purchasing a self-storage unit.

Conclusion

When considering the purchase of an existing self-storage facility, there are many factors that you’ll need to take into account. These include location, condition of the property, financials, competition, owner motivation, rent, tenants, and the loan. By doing your research and working with an experienced real estate agent, you can find the right self-storage facility to meet your investment goals.​

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