The benefits of owning a storage unit vs leasing one

The benefits of owning a storage unit vs leasing one

(A checklist from the individual owner/user viewpoint)

I want to explain why many storage facilities customers become owner/users and more would prefer to own the space instead of renting:

• 1. There are some inherit disadvantages in any lease contract such as: automatic escalation clause, large security deposit, intimidating and limiting caveats, exorbitant charges for additional services and so on.
• 2. While no one can predict the future of prices, it is a known fact that rent prices increase over time to meet inflation while a mortgage payment to own a storage facility will remain the same until the unit is paid off.
• 3. The mortgage payment to own is often same or less than the rental price for the same unit size and space.
• 4. The unit will be paid off sooner or later and the owner/user would just have the small monthly fee to use the benefits of the facility (That he/she would pay for anyway if he/she rented endlessly)
• 5. Owner/user could list the property as an asset on his/her balance sheet
• 6. Owner/user could enjoy an eventual increase in value if market keeps up with inflation as it has for decades through the ups and down of market price fluctuations
• 7. Owner/user will receive tax benefits such as depreciation and the deductibility of mortgage payment interest (especially if he/she uses a business entity name)
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• 8. Owner/user could improve the storage unit by adding certain amenities to accommodate his/her specific use
• 9. Owner/user could rent it out if he/she decides not use it for a period of time and make it an income center or a break even
• 10. Owner/user will enjoy a partnership participation in the management and maintenance decisions of the storage facility
• 11. Neighboring owner/users in the same development will have the same care and vested interest in keeping the storage building safe and in great condition
• 12. Owner/user could recapture expenses for improvements at the time of sale if and when he/she disposes of the storage unit in the future.

These are but some of the benefits I see an Owner/user gaining from the ownership versus a rental scenario.

If, as commercial real estate investors we always think of the customer as an owner/user with expected benefit than we gain an edge and a fresh viewpoint.

This is how we can create our competitive advantage and our blue ocean opportunities. Blue Ocean is where there is no competition and more smooth sailing.

But if we don’t have this edge, we will remain in a red ocean. This is where it’s bloody, from competitors beating each other up, slashing prices and cutting services and expenses.

The choice is yours and it is all a matter of training, education and smart execution.

Here is to customer creation, retention and growth in the storage facilities business.

Cherif Medawar

CMREI.com