How profitable is self storage guide - e-architect (2024)

How profitable is self storage, Should you invest guide, Wearable store profit advice, Truck moving services option

post updated 16 February 2024

Self Storage is a lucrative business; here’s how much profit self storage owners make.

Considering the staggering growth rate of self storage facilities in many countries, it’s okay to wonder how profitable the industry is. Profit-driven self storage owners employ several mediums that can boost their earnings, including self storage software and marketing.

Self storage software is necessary for efficient facility management and can help owners gain insights into their customers and property, while self storage marketing is vital to driving customers to your self storage business.

Considering the amount invested in these ventures, is running a self storage facility still profitable in 2023 and beyond? This article aims to tackle this query and outline possible factors influencing profitability in the self storage industry.

18 January 2023

How Profitable Is Self Storage? (Is It Worth Investing in?)

How much money do self storage facilities make every year?

Annually, a self storage facility may earn between $350,000 and $800,000. However, this amount depends on several variables, such as:

  • the size and location of the facility,
  • the financing used to purchase the property, and
  • the facility’s intended purpose.

Hence, do your research to identify a self storage investment in a high-demand region to increase your profits. Competitive pricing is another way to boost your self storage earnings by attracting more customers to your business.

Additionally, you may provide extra services, like selling ancillary goods like boxes, tape, and other supplies. Offering truck moving services is another excellent way to increase your self storage business income.

How to Set Your Self Storage Units’ Price

Setting the unit price of your storage facility is the key to making a profit and maintaining a profitable self storage business.

The optimal price can be determined in two ways:

  1. Fees determined by market forces.

Conducting market research is a simple and quick method to discern the right price to charge for self storage services. That way, you can price your services competitively, which is a low-effort strategy that can pay off big. Online self storage marketplaces and directories like SpareFoot are a great starting point to unearth data on self storage prices in your locality.

  1. Pricing based on targets.

The term “target-based pricing” refers to a pricing method focused on achieving a specific objective. This strategy will require more effort, but it’ll be worthwhile in the long run. If you’re serious about making a profit, you should aim to maximise your profit margin rather than trying to match the prices of your rivals.

The average profit margin for a self storage company is 41%. QT Business Solutions estimates operational costs amount to about $3 per square foot of space.

There are a few variables to consider when deciding how much to charge per storage unit.

You’ll need specifics like:

  • the total square footage of the building,
  • unit sizes, and
  • the total number of units.

With this knowledge, you could increase your revenue to meet the profit goal you’ve set for yourself.

Net Operating Income (NOI) of Self Storage Units

Another critical factor self storage investors may consider is the NOI (net operating income). Property owners often consider this metric to gauge how profitable their investments are. You may derive the net operating income by deducting operating costs from total sales for the period.

NOI = Total sales in a period – Operating costs

While reporting financial results to investors, the five publicly traded US self storage REITs (real estate investment trusts) frequently highlight the NOI.

For context, the largest real estate investment trust (REIT), Public Storage, reported over $1.75 billion in same-store NOI (a like-for-like financial comparison of facilities active for at least a year) in 2020. Revenue from existing stores was expected to increase by 9.4%–11.9 % in 2021, according to Public Storage.

Another self storage REIT, Extra Space Storage, achieved roughly $770 million in same-store NOI in 2020. The firm anticipated a rise in NOI of 13.5%–15.5% in 2021 from 2020.

Increasing net operating income requires focusing on more than just sales growth for your company. Property taxes, snow removal, and debt servicing are three expenditures that might reduce your facility’s profitability.

Conclusion

Overall, the self storage industry is a profitable one if done right. In fact, the self storage business will continue to flourish for the foreseeable future because people need more space for their belongings, and businesses continually seek means of storing their surplus goods. While there are costs associated with setting up a stable venture in this niche, investors may utilise reliable self storage software and marketing campaigns to increase their profits while managing risk – see storeganise.com.

Frequently Asked Questions

Is there money to be made in storage?

If done right, definitely.

Self storage is a profitable business venture because there’s a huge demand for storage space. Reports estimate self storage facilities may earn between $350,000 and $800,000 in a year.

Is storage space in demand?

We’ll say yes, and for valid reasons.

As the world’s population continues to rise, more and more households will need space to store their growing quantities of belongings. This penchant, alongside other favourable factors, bodes well for the expansion of the storage sector.

Is self storage a good investment?

In our opinion, yes, if done correctly.

Since the price of land is generally lower for self storage facilities, and there’s less need for expensive landscaping or full-time maintenance personnel, the facilities have a relatively low point at which they begin to generate a profit.

Comments on this How Profitable is Self Storage? — Should You Invest in 2023? article are welcome.

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How profitable is self storage guide - e-architect (2024)

FAQs

What is the average profit margin for self-storage? ›

The average profit margin for a self storage company is 41%. QT Business Solutions estimates operational costs amount to about $3 per square foot of space. There are a few variables to consider when deciding how much to charge per storage unit.

What is the ROI on self-storage business? ›

In 2001-2023 the average return on self-storage was 20.87%, and in 2006-2021 it was 18.76%. With numbers like this, you can see why new self-storage (and rehabs of legacy properties) are gaining the attention of investors. Many will select self-storage as an investment because it can be an inflation hedge.

How much money can I make from storage? ›

Commercial Storage ROI

“As an example, if it costs $600 per m2 to build a unit, and you had a 9m2 unit. That's $5400 to build. If you received $75 per month for that unit, you could be seeing almost 15% ROI per annum,” says Shane. “At that rate, you'll recoup the cost of your investment in around 6 years.”

Are storage sites profitable? ›

Self storage units can be a profitable business venture if managed effectively. However, success and profitability depend on various factors such as location, market demand, competition, operational efficiency, and management expertise. Here are some key considerations: Location: Choosing the right location is crucial.

Is self storage a passive income? ›

Yes, self storage businesses generate passive income. This business has low risks and performs well even during economic downturns.

Is self storage a good business model? ›

Is Owning a Self Storage Business Profitable? (Quick Answer) In short: yes, owning a self storage business is profitable if done right. The annual income from owning storage units can range from $365,000 to $800,000.

Does self storage do well in a recession? ›

The best way to finance a self storage investment during a recession is to look for a loan product that offers flexible terms and low operating costs. Self storage investments are generally considered to be recession-resistant due to their multiple tenants, low operating costs, and flexible rental terms.

Is self storage still a good investment? ›

Self storage facilities have relatively low overhead costs, as they do not require significant maintenance or tenant improvements like other types of property investments. This can result in high profit margins for investors, especially when compared to residential or commercial properties.

How do you make money flipping storage units? ›

  1. Find an auction. Storage auctions, also known as lien sales, occur at self-storage facilities. ...
  2. Register for the auction. Self-storage unit auctions are open to the public. ...
  3. Bid on a unit. Once you've found an auction you're interested in, you can prepare to bid on a unit. ...
  4. Clean out the unit. ...
  5. Sell your finds.

Is paying for storage worth it? ›

Over the long term, the cumulative cost of a storage unit can surpass the value of the items inside. But, in the short term, people can use storage units when renovating, relocating, or downsizing. Businesses can do the same to store excess office furniture, files, and office supplies.

What is a money storage facility? ›

A money storage facility, often known as a vault, is where individuals, companies, and even governments keep their most valuable assets under lock, guarded day and night. Security is the centerpiece of these establishments.

What is the average return on investment for storage units? ›

The Self-Storage Industry has a Strong ROI

Over a recent nine-year span, self-storage facility owners across the United States saw an annual return on their investments of almost 17%.

What is a good profit margin? ›

An NYU report on U.S. margins revealed the average net profit margin is 7.71% across different industries. But that doesn't mean your ideal profit margin will align with this number. As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin.

How does storage business work? ›

Here's how the self-storage business works: the storage property owner (you) charges customers to use the space for storing their belongings. These storage spaces are available for rent every month and come in different sizes according to the customers' needs.

What is a good profit margin for a store? ›

As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin. But a one-size-fits-all approach isn't the best way to set goals for your business profitability. First, some companies are inherently high-margin or low-margin ventures.

What is the margin for public storage? ›

Public Storage net profit margin as of March 31, 2024 is 45.62%.

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