Why buy a storage unit?
Thanks to solid investment returns and resilience during economic downturns, interest in self-storage units has surged. People look to self-storage for various reasons, including during house moves, for business inventory storage, or simply for extra space.
Knowing why you're entering the market can help focus your search and ensure you're making a choice that aligns with your needs.
Why invest in a storage facility?
Investing in a storage facility taps into a unique sector of the real estate market; one known for its reliable returns even in challenging economic times. The self-storage industry caters to a wide range of needs, from individuals seeking temporary space during transitions, to businesses in need of inventory storage, to those simply looking for additional space.
This diversity in clientele contributes to the stable demand for self-storage, making it an attractive option for investors. Understanding your motivations for entering this market is crucial, as it helps tailor your approach to meet specific goals and ensures your investment aligns with your expectations for growth and profitability.
Starting your journey
Thinking of buying a storage unit or self-storage facility? You're taking your first step toward capitalising on the burgeoning self-storage market. But first, you need to get your ducks in a row.
Research is key
Don't be shy - dive into the self-storage market! Talk to brokers, property appraisers, and current storage unit owners. Understand the net operating income for potential purchases and conduct a cash flow analysis.
Expand your search
Don’t limit your search to just nearby locations. Broadening your horizon can unveil more opportunities, potentially in markets where demand outpaces supply.
Market viability
Ensure the market you're considering has long-term growth potential. Assess the competition, local development plans, and how your storage facility fits into the broader market dynamics.
Due diligence
Before making an offer, examine the property’s financial health, inspect the physical condition, and consider future development potential. Collect detailed business information, including financial statements and rental rates, and inspect the property for any potential issues.
- Financing your purchase – Understand your financing options. Whether through traditional lenders or the Small Business Administration, knowing how you'll finance the purchase is crucial before making an offer.
- Making an offer – This is where your research and preparation pay off. Make your offer stand out by highlighting your strengths as a buyer, demonstrating commitment, and working closely with your broker to navigate the competitive landscape.
- Closing the deal – Once your offer is accepted, there's still work to do. Finalise legal and financial details, complete any remaining inspections, and prepare for ownership.
Get to know the costs
Understanding the costs involved is crucial. Storage unit prices can vary widely based on size, location, and additional services offered. In the UK, monthly costs can range from £95 for a 50-square-foot unit to £380 for a 200-square-foot space. These costs can add up, especially if you're looking at long-term storage solutions.
Check out our article for a more detailed insight into monthly storage costs in the UK.
Legal considerations
When buying a self-storage facility in the UK, it's crucial to be mindful of several legal considerations to ensure compliance and protect your investment. These considerations span various aspects, from facility operations to customer contracts and insurance requirements.
Facility requirements
Your storage facility must meet specific standards to operate legally. This includes installing surveillance cameras at entry and exit points, ensuring the building is clean, dry, and watertight, and providing clear signage for fire, asbestos, and health and safety regulations. A well-defined perimeter and secure access for customers are also essential.
Contracts and legal guidelines
All contracts provided to customers must adhere to the standard terms and conditions set by the UK Self-Storage Association.
Important elements of a contract include a guarantee on the total price of items stored, evidence of customer ownership and responsibility for their items, and clear terms for agreement termination. Additionally, pricing, payment methods, and billing periods must be clearly defined.
Insurance requirements
Each storage facility must have adequate insurance coverage. This includes insurance against property damage from fires, floods, or other natural disasters, warehouse liability insurance in case of owner negligence, and a minimum of £2 million in public liability insurance coverage.
It's also mandatory for customers to insure the items they choose to store, with facilities providing clear insurance documentation to their customers.
For a more detailed insight, explore our guide to self storage insurance.
Lien rights and auctions
If a tenant defaults on rent, lien rights allow you to place a legal claim on their property, potentially leading to the sale of the property at a public auction to cover unpaid rent.
The laws governing lien rights—including the notice period before auctioning property and how public sales should be conducted—vary by location. Your lease agreements must detail your own lien and auction process, but ensure they comply with local and state standards.
Zoning laws
Proper zoning is essential for your self-storage facility, and navigating these laws can be complex. Zoning laws determine the permissible uses for your land and may require your facility to meet certain conditions to mitigate impacts on the community or environment. Understanding and complying with these laws is crucial for the legal operation of your facility.
It's vital to stay informed about these and other legal aspects as you move forward with purchasing a self-storage facility.
Consulting with legal and real estate professionals who specialise in self-storage can provide valuable insights and help you navigate the legal landscape effectively.
Types of storage solutions
Self-storage facilities offer various types of storage units, catering to the diverse needs of their clients. HOLD is one such provider. Whether you're looking for a small self-storage while you move home or need a large unit for business inventory, we have a solution.
Moreover, the rise in online storage auctions has opened up new avenues for finding storage units at competitive prices. From abandoned storage units to storage facilities looking to clear space, there's something for everyone.
Getting into the self storage business
For those considering the self-storage business as an investment, understanding the nuances of the self-storage industry is crucial. This includes familiarizing oneself with the operational aspects of running a self-storage facility, such as managing storage auctions and ensuring the security of the storage units.
Additionally, the self-storage sector's performance during economic fluctuations highlights its resilience and potential for steady returns.
Finding a storage unit auction
Online and in-person storage auctions have gained popularity as a way to purchase storage units filled with items left behind by previous renters. Upcoming storage unit auctions are often advertised by storage facilities, offering potential buyers the chance to bid on units.
A storage auction can be an exciting way to discover valuable items or acquire additional storage space for personal or business use. Check out this article for more info on storage unit auctions.
Choosing the right storage facility
When selecting a self-storage facility, it's important to consider factors such as location, security measures, size, and the variety of self-storage units available.
A well-maintained self-storage facility not only ensures the safety of stored items but can also provide peace of mind for renters.
If you're looking to invest in the self-storage sector, choose a facility that aligns with your business goals. Getting to grips with the market demand is key to success.
By focusing on these aspects, you gain a comprehensive understanding of the self-storage market—from the basics of self-storage facilities and units to the intricacies of the self-storage business and auctions.
Whether you're looking to rent a storage unit or invest in the industry, being well-informed will help you make confident decisions in the ever-expanding world of self-storage.
Final thoughts
Buying a storage unit is a significant decision that requires careful thought and planning. It's not just about finding a place to store items; it's about making a strategic investment or finding the right solution for your space needs.
By doing your research, understanding the market, and working with professionals, you can make a decision that meets your objectives and provides value for years to come.
For those interested in delving deeper into the self-storage market or seeking specific advice on purchasing a storage unit, feel free to reach out to our storage experts.
Choosing HOLD for your storage needs
Based on King's Cross, London, HOLD is self storage provider with a twist. Created with a smart, more deserving customer base in mind, we built HOLD to cater to all storage needs. From households to businesses, we put your needs first. Contact us today for a no-strings quote.
Frequently Asked Questions
What types of commercial storage units does HOLD offer?
Numerous kinds of commercial storage options are available, including self-storage units tailored for businesses, solutions for pallet storage, and office spaces equipped with storage areas. These cater to a diverse array of business requirements.
It's important to select the variety that most closely aligns with your unique needs.
What legal considerations should I be aware of when buying a storage unit in the UK?
Ensure the storage facility complies with UK health and safety regulations, has adequate insurance, meets zoning laws for self-storage use, and adheres to the Self Storage Association UK’s standard terms and conditions for contracts.
How can I finance the purchase of a storage facility?
Financing options include traditional bank loans, commercial mortgages, or leveraging investment partnerships. It’s advisable to consult with a financial advisor or broker specialising in self-storage to explore the best financing strategy for your situation.
What should I look for in a storage facility before purchasing?
Key considerations include location, demand and supply dynamics in the area, facility condition and compliance with legal requirements, potential for growth or expansion, and existing operational efficiencies or challenges.
How do I determine the value of a storage facility?
The value can be assessed based on its current income, occupancy rates, condition, location, and potential for future revenue growth. Engaging a property appraiser with experience in self-storage facilities can provide a detailed valuation.
Can I conduct storage unit auctions at my facility?
Yes, but you must adhere to UK laws regarding storage auctions, including providing proper notice to tenants, following a fair auction process, and ensuring compliance with any local regulations that may apply.