ZA
A self-storage unit is a private, secure space within a self-storage facility where individuals, businesses, or organisations can rent and store their belongings, goods, or possessions. Self-storage units come in various sizes and are designed to accommodate a wide range of items, from household belongings to business inventory and equipment.
Our main focus will be the sectional title storage unit opportunity. But we will also look at:
Shipping container storage yards
Converting buildings to storage units
Garage based storage units
From an investment perspective this business can offer a similar breakeven point compared to residential property and is cheaper to get into with less drama but storage units don't appreciate as much as residential. It is used by some entrepreneurs and small businesses as an introduction to the property industry.
This is a interesting industry that despite being a bit of a niche business locally with one large REIT internationally it has its own trade journals, search engines, influencers, there are specialised services for websites and marketing for storage unit operators.
Sectional Title Storage Units
When we look at buy-to-let property investment property we often seek a 1% monthly return or minimum 10% annual return, but property - especially in Cape Town has become too expensive for most investors, while rates and taxes and laws favouring tenants have become stricter. There another way to earn a 10% annual return with a lesser investment (but not too small), with much less effort (maintenance) and drama (evicting people).
I will look at R60 000 to R100 000 units and also some lots and rollups. I am looking at this stricly as a place to invest excess profits and not to use loans to purchase. And then generate a 1% monthly cashflow from that investment. I will also look at an experimental co-op model that uses shares rather than sectional title to fund and build storage units.
Business Model
Many people who invest in property use the 1% rule.
Calculating the 1% rule is simple. Just multiply the purchase price of the property by 1%. Even easier, move the comma in the purchase price to the left two spaces. The result should be the minimum you charge in monthly rent. So R100 000 x 0.01 = R1000. So if you paid R100k for a storage unit you want a minimum R1000 monthly return or if you paid R60k for a smaller one then you want at least R600 a month. Preferbly after levies (in some sectional title storage there are small levies like R200 - R300 a month).
Entry-level property investment
In a video aimed at property investors a property influencer recommended purchasing a R400 000 apartment and renting it out to a permanently employed person or students. Remember these influencers are aimed at the man in the street. He speaks of buying a R400 000 and renting it out for R6000 a month (he recommends a multi-let of R2x R3000 per month). He includes wifi and water of R300 (R150x2). Now this was what was taught at seminars 20 years ago.
This is not a realistic endevour in Cape Town, the places where you get R400 000 properties is mostly either lower income or very rundown. The one has a high rate of non payment the other expensive. It is very expensive and time-consuming to evict non payers from residential property.
If the above scenario gives you nightmares then storage units is something you should look at. 1% monthly is usually achievable. People can't squat in it
Passive, low maintenance
Another property investment similar to a storage unit is a garage some housing complexes and apartments have seperately owned garages such as this:
HJ Properties
Remax
It's always a good idea to both check out your competitors terms and conditions especially regarding non-payment, their FAQ's and to keep up to date on blogs in the industry for ideas.
Self-storage
