No experienced investor is a stranger to real estate. When looking at long-term profit, it’s one of the best sectors to put your money into. But your investments can’t get far without enough startup expenses. If you’re trying to get into the real estate game, but can’t afford rental homes or fixer-uppers, there’s another way for you to gain some monetary value:
Shipping container storage facilities.
You can make this a smart and savvy real estate investment without spending an arm and a leg to get started. Depending on your land size, initial costs, and the number of units you plan on storing, your financial gains will multiply quite rapidly. Let’s take a look at some comparisons to measure and maximize your projected revenue.
Why Shipping Containers?
First, it’s important to understand the value of shipping containers in particular. Unlike regular storage facilities, they don’t cost a lot of money to maintain. Why? Because shipping containers are already metal boxes to hold and protect items inside. There’s no need to make a large investment building concrete foundations to house multiple storage units.
Shipping containers have been designed to be completely waterproof and air-sealed. They are ultra secure, meaning that there’s no possible chance of a break-in or damage. They can be locked and easily transported due to their shape. You can also rent them out as individual storage units to customers who are looking for a water, air, and dust-free space at a fraction of the cost of regular storage units. Since a variety of different types are available, you can also appeal to a wide customer base.
Design, shape, and convenience aren’t the only reasons to invest in shipping container storage as your main real estate venture. Following affordability and self-sustainability, alternative investors also look forward to:
•High returns from being in such an underrated market
•Both fixed and non-fixed rates can earn you anywhere from a 10% to a 20% ROI depending on leasing agreements
•Demand is ever-increasing as international markets look for faster loading and unloading times per shipment
•Monthly revenue is guaranteed
•Lower shipping costs for frequent shippers
•Annual percentage payouts for those who rent often
Overall, there are many advantages to a shipping container investment that the general investor market does not often think about.
Comparing The Numbers
To really solidify an understanding of the difference between a container storage facility investment and a common real estate investment, it should be broken down into the sheer numbers. The total investment and monthly revenue of different types of projects show an average payout rate depending on your out of pocket money.
Storage Units Vs. Residential Real Estate
Most real estate investors are in the game for homes or commercial buildings. Looking at a residential property in particular, it is certainly something that will always be around; however, it might be more trouble than it’s worth. Too often, property managers complain about issues with the heat, gas, water, air, plumbing, electricity, and more. Plus, if a tenant chooses to vacate, then you’ve just lost an income and can no longer rely on your investment.
While shipping container storage unit investments can have their fair share of possibilities and considerations, there is a much bigger chance of you making a reliable source of revenue.
When it comes down to it, you can have up to ten times the amount of units in a storage facility than you would in a residential housing building or an apartment complex. Tenants might come and go in your 5 rental homes, but your 50+ storage customers won’t leave you with as big of a hit if they do decide to move on. Plus, those who rent out storage units typically do so for the long-term, meaning that they are more trustworthy clients than home renters.
While it’s possible for both residential and storage unit investing to end up with similar revenue, the rates of income are not the same. 5 rental homes may cost an upwards of a $500,000 investment to start, with monthly revenue of $5,000. On the other hand, storage unit investments may only be $350,000 to start, and a $5,000 revenue already gives you more bang for your buck.
Storage Units Vs. Commercial Real Estate
In some ways, a shipping storage unit investment is very much a commercial real estate investment. A business is anybody who owns property and sells a good or service. By making this investment, you are typically looking to purchase both the property and the individual storage units.
A typical commercial investment, such as an apartment building, for example, give you about a 5% ROI, or sometimes lower. This all depends on the type of property and your starting investments. Apartment buildings still deal with tenants, so this might also be an issue comparable to residential real estate investments.
Looking at the national average medians in the USA, there’s a significant difference between CAP rates of rental homes vs. storage facilities. For example, a $200,000 home in the United States – which is close to the average cost – would net an average monthly revenue of $1,000 per month, after utilities and taxes are paid for. Depending on how many of these rentals you own and manage, you’re looking at a CAP rate around 6%.
Owning a shipping container storage land with about 50 storage units would give you a CAP rate of 15%. This is because the median rental price per storage unit comes in at $100 – $150 per month. This means you are earning over $5,000 each month, giving you a CAP that more than doubles that of a residential real estate revenue.
And of course, the more containers you have for rent, the higher your returns on your initial investment will be! Plus, you can see increased growth in your revenue as long as you continue putting your money back into the land and shipping containers.
Numbers don’t lie, and when it comes to financing options for your shipping container storage facility, you may have more options available to you.
With the more typical types of real estate investments, you’re looking at bank loans and individual financers with an interest rate anywhere from 10% – 20%. And at the most, you’ll get 75% of the appraised purchase cost. Of course, leasing your land can help you avoid such a large financial burden up front. But if you’re already a landowner, you are ahead of the game and can more easily land some returns on your investment.
Whether or not you need to finance your land, one thing for certain is that you don’t need to worry about your shipping containers at all. These mobile shipping units can be 100% financed from direct partners or shipping centers all across the globe. Talk about a return on your investments – it’s practically free up front!
Maintenance and Operation Considerations
With advantages against traditional real estate investments already apparent, let’s compare operation and maintenance requirements. Knowing cost differences is important, but there are other factors at play too. The biggest perks of running this kind of real estate investment are apparent in the extra features that the shipping units themselves have to offer:
•Shipping containers can be easily added, removed, or shifted around empty land more easily than built-in storage units
•There is almost no investment fee, with 100% financing available
•When it comes to maintenance, no electrical or heating components are necessary
•Even without maintenance, shipping containers can last 20 to 30 years
•Transportation is key with shipping containers, meaning that they are built to be air-tight and water-tight to endure any kind of climate
•Shipping containers are much easier to sell to clients or other investors for negotiable prices
It’s important to take advantage of this untapped market as well. Although the convenience and demand of shipping containers is no secret, the earnings and growth potential of owning a storage facility for them is still largely unknown.
Things To Consider When Making Your First Storage Facility Investment
The requirements needed to keep your shipping container storage facility alive and well are not as intensive as they would be if you owned a large piece of commercial property, such as an apartment building. With a commercial unit, you’ll need a whole team of staff. Lenders, maintenance workers, HVAC installers, accountants, contractors, and more.
Your investment can turn out to be a simpler plan with not as many employment requirements. Any storage facility needs at least a single employee, to keep things open and orderly during working hours and ensuring that the customer’s needs are met. You will also need to invest in power to run your office building, so that you can comfortably conduct business with customers and access the Internet to keep files on record.
Some storage facilities have gated entrances and exits, meaning that only customers with a code or a special key can access the property. Depending on the nature of your shipping containers, and how often they need to be accessible by renters, you might want to consider installing a kiosk with a keycard or code needed for entry and exit. Assess your budget for startup costs and decide what you can afford up front.
Know Your Product
It takes more than just money to become a shipping container storage yard investor. Understanding which shipping containers are more desirable than others can help increase your revenue by attracting customers with your range of options. There are different containers based on price, durability, and maintenance requirements.
Open Top Containers
A convenient container that allows for complete access of items from the top down, rather than having to pull everything out from the side. This is a good option for crane-based transportation, and its associated costs are fairly cheap. If height cargo is a specialty in your area, it might serve you well to own these units on your property.
The standard container is one you will want to have most frequently available on your storage facility. They come in a variety of different sizes, mostly between 10 and 40 feet. It is highly recommended to purchase them new over used, although of course a used container will offer more affordability. New containers are more durable, and cost more up front, but have better returns in the end.
Tunnel containers are somewhat of a hot commodity among frequent shippers. They are similar to a dry container, but they can open from both ends. That makes it a lot easier to unload goods, and it makes the altogether transportation process a lot faster.
Depending on the types of containers you purchase, you have the potential to increase your ROI and continue growing your assets until you’ve made it one of the most successful investments of your career.
The Bottom Line
If you have always wanted to invest in real estate, or perhaps you are an experienced real estate investor looking for something new, it’s important to recognize the potential of investing in a shipping container storage facility, as it’s still a relatively unknown market to take advantage of. You can reap all the benefits of a typical real estate investment without having to worry about additional concern such as hiring a large staff or fronting big repair costs up front.
Of course, you can always grow your business in a multitude of ways. Investing in different types of containers can give you a wider variety of clients, and keeping up to date on your storage tech can make you appeal to high-end customers. With 100% financing options available from worldwide solutions like shipped.com, you can easily gain your first shipment of containers with no money up front. With low investment costs and high returns, shipping container storage facilities are a great real estate opportunity to invest in.
Get in touch with a local storage container supplier or sales manager to learn more about this untapped real estate investment opportunity.