Self-storage businesses have become very popular over the years. People use self-storage services to store valuable items that they cannot keep at home, which has made starting a self-storage business a lucrative venture.
But how much does it cost to start a self-storage business? On average, starting a self-storage business costs about $2 million, with a minimum startup cost of $1.4 million and a maximum of $2.4 million, depending on several factors, including location, type of self-storage, and other features. Building a self-storage facility costs $25 to $70 per square foot, and the annual income of a self-storage business can vary from $365,000 to $800,000.
Read on to find out the costs involved in starting a self-storage business. You might also enjoy reading: Is Self Storage a Good Business: Weighing the Pros and Cons.
1- Property and Land Acquisition Costs
The first and most significant cost involved in starting a self-storage business is property purchase. The price will depend on the location, amenities, as well as the size of the property. The cost of the property can vary depending on the location and size. Generally, properties in well-populated areas cost more than those in rural areas.
Typically, you will need to find a location that is accessible and in a high-traffic area. The typical cost of acquiring an average-sized self-storage facility ranges from $500,000 to $2 million, depending on the location.
Moreover, you need to purchase a property that is ideally located and large enough to accommodate the storage units.
2- Construction Costs
You may opt to buy land with already established buildings, or you can build from the ground up. The construction costs will make up a significant portion of your expenses after acquiring land.
If you decide to purchase a property, you will need to construct the storage units and install proper security features. The cost of construction and security features can vary depending on the size of the property and the level of security you want.
Generally, the cost of constructing a self-storage facility ranges from $25 to $70 per square foot, depending on the facility’s amenities and use.
You may need to hire professional contractors to help you with the construction, which will incur additional costs.
3- Equipment Costs
Once you have acquired your location and spent on the construction, you will need to equip your facility to offer optimum service. Facility equipment includes elevators, security systems, climate-controlled units, and lighting, and all make up the cost of equipment.
Your equipment cost could range from $10,000 to $500,000, depending on the equipment you need to install.
4- Operational Costs
Starting your self-storage business includes some ongoing costs to ensure it runs smoothly. The operational costs include insurance costs, utilities, software, and marketing.
- Insurance costs can range from $8,000 to $20,000 annually, depending on the region.
- Utilities can cost $5,000 to $10,000, depending on your region’s cost.
- Marketing and software fees typically fall between $2,000 to $15,000 annually.
5- Staffing Costs
You will need to hire staff to manage your self-storage business. In general, the number of staff you need will depend on the size of your business and the level of customer demand. And also, the cost of staffing can vary depending on the number of employees and their salaries.
Staffing includes your management and administrative personnel. The average salary of a self-storage facility manager is $35,000 to $88,924 per year, while administrative personnel average $30,000 to $55,000 annually.
6- Insurance
As with any business, insurance is a must. You will need to obtain insurance for your self-storage business to protect your property and customers’ valuables.
The cost of insurance can vary depending on the level of coverage you need and the policy you purchase.
7- Cost of Marketing
Once your self-storage business is up and running, you will need to market your services to attract customers.
You can market your services through various means, such as advertising on social media, search engines, a website, or local newspapers. The cost of marketing can vary depending on the type of advertising you choose.
What to read next:
- 7 Creative Ways to Create Wealth with Real Estate Investment.
- 8 of The US Most Popular Cities For Self Storage.
- 11 Best States for Self-Storage Investment.
- Top 9 Best Real Estate Investing Books For Beginners.
Wrapping Up
Starting a self-storage business requires a considerable amount of investment. The cost can vary depending on the size of the property, level of security, staffing, and marketing expenses.
However, owning a self-storage business can be a good investment. With proper management and marketing, you can recover your investment and start turning a profit.
When creating a budget for your self-storage business, start with the initial investment costs and work toward an operating budget for the first few years. Be realistic about your expenses and ensure you are prepared to cover them.