Hi All,
Does anyone have any experience with small Strata developments like carspaces and storage units. I have seen several for sale in the 10-50k bracket, yeilding about 7% with no or very little outgoings. My guess is that virtually no-one will want to finance these things, so they would be very capital intensive. However I do like the idea of zero vacancy and no tenant/management issues.
Regards
Pete
peter – i reckon the real money is one step back. ie developing the storage facility yrself and then selling the units off. to me 7 pct return of this kind is a retail investment although may be good in an overall portfoilio is not a great bread winner.
storage is the hot topic though and apparently we are way behind other western countries in terms of the supply of storage. more and more people are downsizing, moving, divorsing, living alone etc etc storage is on the way up but its gotta be better than 7 pct return.
Hi Aussie,
I definatley agree, I dont feel like a 7% return, nor do I feel like using heaps of cash to get a tiny return, but I also dont feel confident enough to develop a storage complex, but hey it might not be as hard as you might think…
I’ll have to think it through
in stevs second book one of the mappers bought a spare blcok of land and decided to put a dozen shipping containers on it and rent out the space as storage. this in a country town. returns are fantastic..many ways to skin a cat….
I knew a bloke that had some storage sheds and he had a lot of managemant issues.
he was a big bloke and needed to be to deal with all the deadbeats that store all their junk and dont like to pay for it.
I dont think the extra stress and work is worth the extra returns,it is not true passive income.
boobooHi Pete,
These can be very lucrative if done right. First you have to have the positive mentality that yes…someone will finance them (whether it be a bank, joint venture etc) For that type of money just be careful where you are buying. Check competition in the area you’re looking at etc.
Cheers
Soosh
When a problem is created the solution is created simultaneously
My personal experience is that there are many, and i mean many investors out there with less than $75,000.00 cash who buy these types of investments.
Not every body who purchases investments (property included) does so with debt. This is an area my company is proceeding in very strongly.
Regards Phil
I’ve seen a number of these strata storage units advertised. My reservations, based on the ones I saw, were:
– You’re restricted to one possible tenant (the storage operator) on a long-term lease leaving little possibility of improving rental returns. (Would want to take a very close look at the financial health of the operating company.)
– The yields advertised are slightly above current lending rates (7% return if you can redraw money against a current loan at 6.5% – woohoo money for nothing!) but when lending rates increase those yields aren’t going to be very attractive given prospects for capital gains:
– How can you expect any significant capital gains when the value of unit must be tied to the yield from income (being commercial property)? If demand for storage increases the storage operator can up their income, but the rent they pay to the investor is fixed for the long-term so the capital value of the unit doesn’t go up.Hi Smetham,
We are running two posts on the same topic on this subject (actually i have a post running on too many posts with similar questions…get my point now!!) ANYWAY
MHO The point here is i believe (no i know) that there is a bucket load of people who pay cash for these because their money is in the bank or an old super fund returning stuff all.
You must remember the investors today aged 18 – 35 are smarter than the old day investor, just read this forum. The good old italian green grocer or chicken farmer today is worth a motsa because they invested in crappy areas like Balmain where nobody else would go (fools).
These investments are cheap, easy to manage, low maintainence (no toilets,grass,windows,broken roof tiles etc) and easy to sell under 30m2. Show me the money honey.
Regards Phil … pay cash son and i’ll give you a discount[thumbsup2][thumbsup2]
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