Hello
Has anyone had experience with storage sheds? Has it been successful?
Are they any pitfalls?and, where did you find out about them?
thanks so much
RL
Why spend your money on something that will have zero capital growth and not even great returns.
Whenever you invest it is important that you look at overall returns and also capital growth. Generally Storage sheds will be considered a commercial property which means you either pay cash (not a good use of your money) or you will find you can only borrow 60 to 70%Nigel Kibel | Property Know How
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hah what do you mean it will have zero capital growth, When land value goes up in the area then the capital growth will also go up.
And the returns all depend on how good of a deal you get, it's just like buying any property.
RL storage sheds can be good if you buy right
Capital growth is based on supply and demand. If you have a storage shed it will only sell to an investor or someone who wants storage so the chances of strong capital growth are limited.
It is all about how hard you can make your money grow. I always find it funny that so may investors look at property which often supplies the worst cash flow and often little if any capital growth.
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It's all about buying right
If you have storage sheds in a up and coming area or in a area where there is a shortage and the demand is high then your going to make money,
If you also have the sheds in a prime location then developers will always target them as they may want the land for something else etc.Having built, managed and own Storage Sheds they are like any investment, some positive points and some on the down side.
Upside
They share finance risk with numerous tenants , well managed high occupancy preferred.
Tenants complaints reduced due to no services to repair.
Trade customers can stay for many years.
Minimal maintence costs.
Some states Capital Gains deferred due to classification as "a business". (check with CPA)
Downside
Recommend onsite manager (possible wages) Security issues, Markerting
Hope this helps,overall sound investment in my view.
I agree with Loosechange that they are a sound investment.
We have a small facility – 30 sheds and they are nicely cashflow positive.
They are a terrific ‘hands-off’ investment as we have ours in property management with the local Real Estate Agent
We have 90%+ occupancy, often 100%
Several of our tenants have paid a full 12 months in advance.
Having 30 tenants if a few are vacant it’s no issue.
Our facility has no on-site manager – has security fencing and every tenant has a gate key and then just a key to their shed…works great.
Marketing is easy: I built our little website: http://www.shearwaterstorage.com and we have an ad in the yellow pages. We could sponsor local sporting events if we wanted to raise our profile but given the level of occupancy we’d be turning people away.Only challenge/negative that I can see is most major banks will lend only 50% value as they’re a specialised commercial property.
We found ours by approaching the previous owner and saying if you ever want to sell……and they contacted us when they did decide to sell.
I’ve found people tend to hang on to them, especially the smaller ‘starter’ ones, as they are nice little earners.
Hope this also helps!Hi Tracey B – I had a look at your website and noticed that the sheds are for sale. Can you share some financials, from a general perspective, as I have dealt with a few storage companies before and am interested in converting a warehouse into a storage business. Thanks.
Sure thing.
Our weekly rental rates on the website and we are a shade under the others so are fully occupied most of the time. You’d need to check the market rates in your area.
Our gross annual income is $48K and net of almost $37K after the following expenses:
Advertising; Pest Control; Phone; Power; Rates; Water; Property Mgmt (@12.5% by local real estate agent, paying a premium here and potential to save); Land tax; Insurance (buildings only as clients are responsible for the insurance of their property)
Ours are on the market for offers over $450K, giving the buyer a minimum 8% NET.
Hope this helps!
Cheers, TraceyGenerally, I agree with most things that have been said here. I looked at storage sheds for positive passive cashflow but over the course of a few months found that the storage complexes that came on the market sold fairly quickly. My finance broker had also warned of some difficulties with obtaining finance as most banks don't like them. Depending on your circumstances, I think they are a good way to diversify a portfolio.
Brian
Price = Annual rent / Yield
For capital gains in commercial properties you would need to find a way to increase income and/or find a better use for the property
How does this investment perform in recessive periods?
Do customers treat it like discretionary spending and pull out have garage sales, or repack more tightly and downsize or close altogether ?
Cheers
thecrest
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