How Does a Feasibility Study Work? Why do I need one?

A feasibility study does several things. It starts by verifying that your location is good. It will grade your site and as usual you want an A+. Self-storage is all about location and if you are in an average or below average location, you may find that you have a below average rental rate. Self-storage used to be in industrial areas, or back parking lot locations. Now it is in prime, retail areas. However, the cost of some of these locations can be exorbitant. This is why we try to get creative when we are looking for land. We want to find great locations that are not as expensive. As a result, they may need a zoning change, or you will want a feasibility study to back you up when you say it is a good location.

The study will also tell you about the location. What is the traffic count, how good of a location is it for your target audience? What are the chances of your property being out located by another self-storage facility and finally, they will research what other projects are in the works so that you don’t oversaturate the market.

A feasibility study will go over the projected income to verify that you don’t have unrealistic expectations for your returns. This will prevent you from paying too much for the land. If you have put in an offer that is too high, the study can help you show the sellers why they cannot ask that much for the property. If they are not willing to listen to you, at least you won’t by a property where you will lose money.

You want a feasibility study to prevent yourself from overlooking any major or minor details that could prevent your self-storage project from being a success. Take the time and spend the money to make sure that you are in the right location, paying the right amount of money for the project that you want to build. As always, happy investing.