What is the Return on Investment for Mini-Storage Buildings
Many individuals consider purchasing a mini storage building as an investment asset. Pre-fabricated metal storage buildings are much more affordable than traditional construction options, which makes them appealing to investors. In addition this investment opportunity is something that is handed down to generations to come as it offers financial stability.
To calculate investment profits and set rental fees, investors first need to consider building costs. Mini storage buildings are typically purchased as a kit, materials only delivered. Estimated costs for the entire process are as follows:
- Materials: $7-$10 per square foot
- Erection: $3-$5 per square foot
- Concrete: $5 per square foot
Fencing, driveways, landscaping, electrical, security gates and anything not related to the building itself will accrue additional costs that are typically handled by the general contractor. If the building does not have any custom upgrades or extras, the cost can be estimated closer to the lower end of the square footage price range. The next step is to determine the layout of your mini storage building or complex. There are several different sizes and unit mix options available to suit your needs.
The next expense to consider is property maintenance. Over time buildings may need to be repaired from tenant damage or basic door adjustments. Factor these into your budget before setting rental rates. Also, don’t forget about operational costs. Will you manage the building or will you hire someone? It’s important to make these decisions before creating lease agreements.
Once you’ve estimated building and maintenance costs, you can calculate the Return on Investment (ROI) of your mini storage building.
Start by setting a competitive monthly rental fee for your unit for your area. As the building owner, you have the power to choose your rates. Take into consideration other nearby storage companies and their prices to stay competitive. Another factor that can influence price is geographic location. Do you live in a rural area? If so, storage space may be harder to find, which allows the owner to charge more due to supply and demand.
Storage unit rental fees typically range between $6 to $12 per square foot. Rental fees make mini storage units an attractive investment opportunity as one or two tenants can be all it takes to cover building costs. The ROI for storage buildings is much higher than traditional real estate as they don’t require as much maintenance or management.
