The Promise of Mini Warehouses

Mini warehouses are a great way to establish an income stream while preserving the ability of commercial or industrial land to realize its full value potential, or for surrounding development to "catch up".

With minimal cash, an investor can build valuable equity as well as realize substantial cash flow.

Is this a viable way to build a portfolio? Many investors believe it is.

Market Performance

In 2011, according to U.S. News & World Report, self-storage was the prime real estate investment trust segment, with a whopping 35.2 percent total return. At the same time, the stock market took a real hit, and other real estate varied from flat to slow as investment options. 

But what about the state of that investment as the economy improves and other real estate recovers? According to all the statistics, it's still good. Analysts note that Americans still "love our stuff". So, during good times or bad, many people will have a need to store some stuff.

Storage REITs, over the last 20 years or so, have outperformed other REITS, with an average 17 percent return.

Individual Investments

There is no shortage of climate-controlled secure personal storage facilities in the Twin Cities, but there is no real indication that the market is saturated at this point, or that downturn in storage needs investment opportunity is on the horizon. The self-storage industry thrives on constant change, and that is not like to change anytime soon.

For the individual investor, self-storage units and mini warehouse developments also make sense as "land holders". Generally the initial cash investment will be lower than for a strip mall or small industrial or warehouse facility, and in a class different in important ways from office buildings and apartment complexes. The income potential is high, and overhead and utility costs are usually low or extremely reasonable. The land will continue to appreciate while you accrue income from the storage facility. At some point in the future, you might want to reevaluate the "highest and best use" of the land. 

Locating your investment opportunity may involve some legwork, but there are a number of real estate brokers who specialize in the growing field of self-storage facilities in Minnesota, the Dakotas and throughout the upper Midwest.

Recession Proof?

Self-storage facilities proved to be "resilient" during the recession, according to most authorities, and continue to provide reasonable income to owners in Anoka County and elsewhere, as well as posting the lowest rate of default of all real estate types. Today, financing for self-storage facilities and expansions is once again greeted favorably by many lenders, although down payments and terms are comparable to other investment lending.

The ability to generate cash flow quickly is one of the primary reasons for the popularity of self-storage units as investments.

There are a variety of brands associated with self-storage; many of them are well-known and have national reach. That name recognition and affiliation can be of benefit, but even a facility with strictly local focus can be a viable investment.

Trachte, a Wisconsin based firm that caters to the storage industry with a line of steel self-storage systems, offers a wealth of information for anyone interested in looking at self-storage as an investment opportunity, whether buying or expanding an existing facility, building new, or converting older commercial and warehouse space to new use. The company also offers a variety of investment calculators as well as free seminars.

When considering investment options, take advantage of all the resources you can muster. Self-storage units and mini warehouses are options that can make a surprising amount of sense for many investors' portfolios.