The success of your self storage shed business is hinged on a combination of thorough market research and favourable finance that considers both lending rates and terms.
As people increasingly move across state and national borders for work, study and family reasons there has been a growing demand for personal storage solutions in Australia.
With few substitutes for the services that self storage facilities offer, self storage sheds can pose an attractive investment or business opportunity.
The team at Green Finance Group have helped many self storage businesses nationwide to get a better finance deal, so whether you are looking to invest in an existing self storage facility or develop your own, we’ve got the experience, industry connections and negotiating know-how to help.
Funding of Self Storage Facilities
Banks view self-storage facilities as ‘specialised commercial property’ due to their limited usage outside of self storage services.
Whilst a general purpose warehouse could be used by any number of different businesses, a storage facility can really only ever be used by a self storage business, without major re-development, which ultimately impacts the amount of money a financial institution will lend against the value of the property.
Loan to Value Ratio (LVR): Funding is generally available between 50% – 60% of the market value for most applications, however we have been successful in negotiating terms of up to 70% for strong applicants.
Valuations: The market value of the property will be established by a formal valuation conducted by a commercial property valuer. A valuation will usually be required even where you are purchasing the property in the open market through a valid contract of sale.
Repayment Terms: Up to 15 years are available however, similar to rates and fees, the maximum term and repayments will vary dependent on the financier.
Self Storage Business Success Factors
Outside of acquiring the physical asset, there are a number of key factors that will impact the successful day-to-day running of your business, including:
- Credit Risk Management – with individual contracts with multiple small consumer clients, it’s important to have strong control on the invoicing and payments side of the business.
- Access to Other Markets – as well as bulk storage for personal items, there are also opportunities for operators who can cater to specialised storage requirements for valuables such as wine, collectibles, and art works.
- Pricing Policy – with a number of larger competitors in the market all competing on a similar product offering, it’s important to ensure that your prices are appropriate for your target market.
- Security – ensuring adequate onsite security is vital and will be a key decision-making factor for clients selecting between similar facilities.
Our commercial finance specialists can help you negotiate the best possible deal for your particular circumstances. Simply give us a call on 07 3899 2866 or fill out your details below and we’ll be in touch shortly.