17 Apr 2023
There are many considerations when deciding to invest in constructing a self-storage facility. Historically, there were zoning restrictions that prohibited growth in specific prime locations. However, with changing regulations and unprecedented growth in the industry causing at or near 100% capacity for many facilities, some owners are choosing construction for continued growth. Here are five things to consider when planning a construction project for your facility.
Site Selection. Find the right location with the proper market. Consider sourcing multiple options to ensure a suitable selection and opportunity. Also, study visibility; can people see the business and know that it is a viable option? Is it easy to access from the main roads? Is it close to a densely populated area?
Feasibility study. Understanding your potential market and cash flow opportunity is critical in a construction project. Here you are trying to verify that the selected location is correct and determine the storage and product mix amount. What is the market's current rental and occupancy rates? Look at other facilities in the area and research their policies and products. Using an independent third party that is emotionally unattached to the project is recommended.
Financing. The changing economy offers new opportunities in self-storage financing. Banks, like Live Oak, can provide financing for construction. Lenders will be looking for items such as a description of spending/use of proceeds, a current profit/loss statement and balance sheet dated within 90-days, and the past three years' business tax returns if the business is already in operation.
Construction Team. Determine the team for your construction project, including a contractor, site planning engineer, building supplier, architect and project manager (likely you). Build a team of people you trust to bring your project to completion. Use a team that knows the self-storage industry.
Management. The expectations of a self-storage manager are high. Acting as a facility manager, marketer and customer service manager are lofty goals for anyone. Decide if you will be an owner-operator or hire a third-party management company. Each option has benefits.
To learn more visit https://www.liveoakbank.com/self-storage/
Anna Taylor joined Live Oak Bank in 2013.
She was a dedicated Credit Officer for over a year before joining the Self-Storage team as a Loan Officer. With a background in credit and financial analysis, Anna is committed to helping clients navigate the loan application process. A graduate of the University of North Carolina at Chapel Hill, Anna earned a degree in Advertising and also completed the Minor in Entrepreneurship Program.
