Does anyone have any information or advice regarding investing in Commercial Storage?
Am looking at a single title, long term leased storage unit in Melb CBD with a net return of over 7.5% pa.
Any hidden surprises in this type of investment?
Thanks in advance. [worried]
I can’t say that I’ve looked into this sort of investment, my first question would be “Why are you investing”? One of my main concerns with this sort of investing is the lack of capital growth, sure you get 7.5% net return, but are you also going to get capital growth?
Wouldn’t it be better to find a property that can return you 6% return on rent, but also grow (assuming property doubles in value every 10 years or so).
Obviously its your investment strategy, so I guess if it fits in with what you’re trying to achieve go for it.
D.
Hi mrehrnholm
Someone on this site had some for sale in camberfield have a look around the treads for the last 3 weeks about &75000.00 if I remember rightly.
Celeste
Hi,
I bought a storage/ office unit in Campbellfield about 16 months ago. It is 2 story with a carspot storage in front.
The average price was $38k. They have gone up to about $40k.
Upside is I did’nt have to pay rent for the time I used it, secure property, easy access etc
Down side is I hav’nt been able to use the equity in the unit to buy another place and to sell it now real estate agents want $1,000.It has only increased a bit because their was a whole heap on the market at the same time when they were first offered for sale. I guess they may increase in value faster now that most are sold.
They are all the same size and are renting for between $60- $90 per week.Regards
FrankI think storage as an investment is a waste of time, just my 2cents worth.
I recently went to a seminar on a new storage development in our area, basically they were offering a yield of about 7%, guaranteed for the first year, with an option to then either take over management or use the on-site manager. They also claimed that they had a major bank that would take security over the storage unit.
Do any of the brokers have any experience lending against storage units?
I was impressed with the design of the facility, and I do think that storage is a viable investment due to the growing population, with smaller yards, etc, and capital growth is definetly possible, but there isn’t much information to compare.
As a form of diversification I don’t really have a problem with them, as you can get into a storage unit for well under $100k,
But, obviously the major risk is occupancy & capital growth if the market becomes over supplied by other storage developments.
Hi Trajik
I don’t have any experience with lending for these, but heard of LVRs around 60% and commercial rates.
I am not very impressed with these sorts of investments because of the lower LVRs, higher rates, difficulty in selling and possibly high management fees.
If you borrowed to invest in one, you would probably only break even and be hoping for capital growth. So you have to factor in the opportunity cost – you could be investing elsewhere and your borrowing capacity would also be adversely affect too.
Terryw
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Good points there Terry, and I guess as with developments, the money is made in the development itself
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