There’s a Growing Demand for a Business Nobody is Talking About

Everybody has heard of small side hustles like flipping things, writing, or some other quirky or super generic side hustle.

Then there are side hustles that turn into full-blown businesses, like having rental properties or making a company out of your hobby. But, we often find that the hustles we run across are pretty generic. This one stood out to me, both because of the numbers and how insanely niche it is.

And based on the picture above, you may have guessed it, storage units. But not just storage units, specifically small-bay warehouses.

Here's how it works and why it’s so lucrative:

Breaking It Down

After the great recession, virtually nobody was building storage facilities or warehouses. This means that, despite the quickly growing economy, there is no supply around to feed the demand.

And this is even more so when we consider that people who run e-commerce stores or workshops are the ones that need these kinds of spaces to maximize their efficiency.

So now not only do you have what essentially is a super small supply of small-bay warehouses, you now have a quickly increasing demand for these spaces.

And this is where you come in

As an investor, you can purchase one of these small-bay warehouses, and lease it out to companies in need. But, you’ll need to shell out a few pennies… In fact, about 1 million dollars.

But just wait a minute! The capital requirement isn’t really a roadblock. I can explain by showing

How the Numbers Work

Now, you’re not just going to be throwing money at any small-bay warehouse, you’re going to want to look for ones at or below 70,000 square feet.

This is because these units tend to be the hardest to get, and because of the demand, also allow you to charge the highest amount of rent.

In fact, this study shows that the average annual rent per square foot is about $8.00. And you should also consider spaces like this are low in maintenance, compared to real estate that houses tenants.

And on top of all of that, these kinds of properties are more likely than not leased via a triple net lease. Meaning the tenant, (person(s) leasing), is in charge of paying for things like maintenance and other costs associated with owning a property.

And this also means that these properties will be less subject to volatility, as you’ll have these businesses most likely agreeing to and paying a 1-year lease, if not longer.

So now you know what you can expect to make, you may be curious, asking yourself:

I don’t have or probably never will have a million bucks just sitting around!

Worry not, there are a bunch of things that can help you

Bring The Initial Cost to Purchase Down

First and foremost… look for partners! Remember that financial saying, your network is your net worth? This is where that comes into play. You can collectively come up with the money for a down payment.

If you get a loan via the SBA (Small Business Administration), you can find yourself paying 10%. Otherwise, you’re looking at shelling out enough for 30%. And well, 30% on a million bucks is still $300k.

So,

Summarizing the Costs and Benefits of This Relatively Unheard of Business Idea

It’s real estate! Real estate is one of time’s longest-lasting assets for a good reason. This is because real estate fills the basic need for housing. In our case, the housing business and its operations.

And because it’s real estate, it’s more likely than not (if done properly), going to:

1. Appreciate in value
2. Be a relatively reliable source of income
3. Be a physical asset! Not a picture on a screen tied to some code.

Studies also show that the self-storage industry is expected to grow at 5.45% annually, going from $48.02 billion in 2020 to a projected $64.71 billion by 2026. And if you’re in the Asian market, it’s currently the fastest growing and heaviest competing areas in the world currently.

Now, it’s not all sunshine and rainbows.

Because of the lucrativeness of this business, properties are being tossed into other people’s hands like hot potatoes. And to add insult to injury, you’re looking at $500k-$1 million dollars for a 70k square foot place. On top of the already burdening 30% down payment. But the returns are more or less secured, and the maintenance is minimal. Ideal for anyone that wants something less volatile.

Thanks for reading!