Thinking about investing in self-storage, but facing a limited budget? Considering opening a self-storage facility, but hoping to develop a better sense of local demand before deciding how many storage units to offer? Many people with similar needs are choosing to build self-storage facilities in phases, meaning they start with one or two mini storage buildings and then add more buildings and units to the property later on.
Why Building in Phases Can Be Beneficial
There are several key benefits that can come with building your mini storage business in phases. Here are just a few.
Faster income generation
It takes time to purchase, design and erect mini storage buildings. However, building in phases helps you start generating rental income without having to wait for the entire facility to reach completion. Collecting rent for the storage units you erect first can then help you come up with the money for additional mini storage buildings for the complex, allowing you to maintain steady income throughout the process.
Building in phases also helps you avoid blowing a limited budget on mortgage or operational costs before your facility establishes high occupancy rates. Think of these costs in terms of square footage. The more square footage and storage units your facility has, the more it will cost you in mortgage and operational costs. Thus, it may make financial sense to build your facility step-by-step, rather than pay per square foot for storage units that do not yet have occupants.
Better knowledge of your market
Building and opening your self-storage facility in phases also gives you time to really get to know your market. Is there high demand for traditional self-storage in your area? Are there a lot of consumers in the region who might need RV, boat or vehicle storage, or temperature-controlled storage? Is your community poised for population growth in the coming years? These are the questions you want to ask yourself before deciding how many storage units, and what type of storage units, to introduce in a particular area.
Should you choose to build your mini storage facility in phases, you’ll want to have a solid site plan in place before doing so.
Why Having a Site Plan Matters
Nationally, self-storage facility owners have more than 90% of their storage units occupied at any given time. However, it can take some time to build up clientele and make consumers aware of your new storage business. Creating a site plan prior to building helps you figure out how to maximize the space you have and design your facility to allow for the most efficient usage.