Is A Shipping Container Storage Facility The Best Investment In Real Estate?
Most investment advisors agree that investing in real estate is one the best long-term investments you can make. Some of that enthusiasm however was tarnished after the bursting of an 8 trillion dollar housing bubble in America that lead to the Great Recession. Many rental property owners lost their investments or ended up with trashed properties. On the other hand, some savvy investors snapped up properties during that period for pennies on the dollar and have made small fortunes fixing up, flipping or holding properties for long-term gains.
Today, we’re going to talk about a different type of real estate investment that you might not be familiar with. This method of real estate investing has a lower startup cost and a higher potential return on investment compared with rental homes. I’m referring to a storage facility utilizing shipping containers!
Single family homes vs a storage container facility
The median single family home price today is $189,000 in the USA with an average rent just shy of $1,000. If you owned 5 of them they would provide a 6% CAP rate ($60,000/$945,000). Compare that to a shipping container storage facility with 50 units: land $250,000 + containers $150,000. At a conservative rental price of $100 per month * 50 units = $5,000 per month. This translates to a 2 1/2 times larger CAP rate of 15% ($60,000/$400,000)!
Even higher investment returns can be achieved by increasing the number of containers for rent and/or financing the facility. Here’s a table to illustrate these points:
Shipping Container Storage Facility vs Rental Property
| Storage Facility 50 Units | Storage Facility 200 Units | 5 Rental Homes | 20 Rental Homes | |
|---|---|---|---|---|
| Total Investment | $400,000 ($250k Land + $150k Containers) | $1,200,000 ($600k Land + $600k Containers) | $945,000 ($189k * 5) | $3,780,000 ($189k * 5) |
| Monthly Revenue | $5,000/mo (50 * $100) | $20,000/mo (200 * $100) | $5,000/mo (5*$1000) | $20,000 (20*$1000) |
| Typical Financing Available | 50-75% on the land and 100% on the containers! | 50-75% on the land and 100% on the containers! | 80% | 80% |
| Out of pocket money to start (down payment) | $100k to $200k (75%*250k / 50%*$250k) | $150k to $300k (75%*$500k / 50%*500k) | $189,000 | $756,000 |
| Typical Interest Rate for Financing | 9-18% | 9-18% | 9-18% | 9-18% |
| Annual CAP rate without financing | 15% ($60k/$400k) | 20% ($240k/$1.2M) | 6% ($60k/$945k) | 6% ($240k/$3.78M) |
| Annual CAP rate with financing | 30% to 60%! ($60k/$200k / $60k/$100k) | 80% to 160%! ($240k/$300k / $240k/150k) | 32% ($60k/$189k) | 32% ($240k/$756k) |
Why shipping containers vs a traditional storage facility built from concrete and steel?
Shipping containers are particularly good for storage facilities for a number of reasons:
- The cost to build a traditional storage facility are much higher than containers.
- Containers are strong, secure and waterproof.
- They have strong, thick steel walls and easily accept bulky, heavy goods.
- Unlike traditional facilities, containers are dustproof with tight seals around the doors to prevent rodents from entering.
- Containers are secure, with both a lock on the door handle and a special lock box for additional security.
- Container doors fully open ensuring very larger items can easily be stored.
- Even full size cars and trailers can be stored inside the container!
- Overall, containers are a much cheaper, better and arguably more beautiful way to start your storage facility business.
Additional requirements for your facility
A storage facility needs to have at least one employee, power and internet access. It would be prudent to install security camera(s) that can live stream a video feed onto your website as well key-card access for your security gate. The employee hurdle can be overcome partially by the use of technology. If you choose to utilize keycards for entry/exit and a Redbox style automated kiosk for renting and/or your website has your renting options on it you can eliminate most of the employees time and work.
Marketing for customers
Depending on your location, it’s possible a giant sign built from a shipping container placed next to a busy freeway could be all that’s needed to attract customers. If your location isn’t highly trafficked or a sign just isn’t enough, rental websites such as sparefoot.com come into play. They take a % of the initial rent and deliver customers to your front door. Other options include Yellow Page ads, Google ads, social media and your own website. Whichever combination of options your choose it shouldn’t be that difficult to get to 100% occupancy with a proper plan and a good location.
Chose your location carefully
Location is paramount. So is ZONING. If you buy or rent a property and don’t do your homework beforehand, you could later find out that the local city/county government won’t allow you to operate as a storage facility! Problems like these can be avoided by simply visiting the county assessor’s website where you’ll find the zoning on any parcel, and it’s permitted use(s). Once you know the zoning designation of your subject parcel it’s a good idea to phone the zoning board/assessor’s office or schedule a brief meeting. Confirm with them that your desired self storage facility built from shipping containers aligns with the current zoning and that you’ll have no issues operating it as such. Don’t let a simple piece of public information stop you from moving forward, this should be step #1 on any parcel of land you’re considering opening your business at!
Use NEW (one trip) shipping containers vs USED shipping containers
NEW shipping containers cost more but they last longer, look better and can be customized for your storage facility at the time they are built. USED containers cost less but they will likely need to be painted, maintenance will be more frequent, modifications will cost more and your facility will end up looking less professional.
We highly recommend using NEW (one trip) shipping containers made from Corten steel. This ensures your facility will utilize a product that will last for decades with minimal maintenance. Using new containers also ensures your facility will have a professional and clean appearance with matching containers and the right factory additions you need. Most importantly, new containers are eligible for Shipped.com financing up to 100%!
Financing your shipping container storage facility
If you own your land, you’re one step ahead. For everyone else, traditional bank financing for land is readily available with interest rates ranging from 9-18%. Most lenders can loan up to 75% of the lesser of the properties purchase price or appraised value. The alternative is to lease your land and completely avoid a costly downpayment. With leased land you may be able to negotiate a lease-purchase option and/or options to extend the land if adjacent plots are available. Whatever decision you make on purchasing your land outright vs financing vs leasing, the good news is that if you outgrow your land you can move your containers to a different property at a minimal cost.
That leaves the containers to finance. Only a tiny handful of storage facility leasing companies exist in the world today for containers. Fortunately, Shipped.com is one and has special DIRECT financing for shipping container storage facilities up to 100% financing! As of today, we are the only shipping container leasing company to offer such terms for storage facility businesses. We offer an attractive 8-12% interest rate for your new containers and can include the container modifications you need as well. In addition, you can choose the color of your containers, add your storage facility logo and customize all of your container’s features. And unlike traditional real estate loans, we will only loan on facilities where the numbers work in your favor to ensure that your facility will be a positive cash flow business. This special financing enables you to get your storage facility operating right away and avoid a massive out of pocket startup expense.
Final thoughts
Have we inspired you to start a self storage facility using shipping containers? We hope so. Choosing excellent land along with assessing the competition from nearby storage facilities are the two most important components of the deal. Getting the shipping containers from Shipped.com with or without world-class financing will be the easy part! We’ll help make your facility look as nice and professional as it can, along with financing that will get your business up and running in the shortest amount of time possible.
Feel free to get in contact with your sales manager, Karl Brimmer to talk about containers or to discuss financing contact Jason Fox on our about us page. Thank you and good luck with your shipping container self storage business!
Hey this is a great article. I’ve wanted to start my own storage company for a very long time. I looked at ISO containers before but couldn’t find a good company to work with. I’d love to get more information and pricing from your company.
Great article. Best thing about a shipping container storage facility is that you can scale it easily. Need more units just add them. A lot of small towns do not have any storage facility, this is a great way to fill a need. I have built traditional storage for years and am now building container storage.
Hello, what about heat in the summer?
Containers have vents in the upper corners to dissipate heat. Items inside such as furniture, computer equipment or other “sensitive” items are actually just fine inside. This has been confirmed by 2 facilities we’ve financed in Las Vegas and AZ. The exterior metal will be warm, but the air inside will be close to the ambient temperature. Overall, not a worry.
Very great post. It is very best information about a shipping container storage facility. I love reading your weblog posts. Thanks for sharing this post with us. Jem Romiyo
This is a great article thanks! I am getting ready to get approval to develop 90,000sf of container self-storage in San Francisco Bay Area – cannot wait to send in my pictures of the completed project to you next year!
Hi Chris, we would love to feature your project on our site. Email in your photos when it’s done. support {at} shipped.com – Thanks!
Hey Chris what is status here? Would love to see progress. Best to you.
Hey everyone,
My name is Jeffrey, I live in Brazil. I’m just here to share a few information about buying quality shipping containers. It’s safer to transport goods and services using shipping containers because there is a 98% chance that those goods will be unharmed. I
was hoping to buy shipping containers to transport cars from Italy and I saw an advert of shipped.com market site where cheap, new, used and durable containers where sold and I purchased 15. I entrusted my money in them and the result was amazing. I received my cars in due time, shipments unharmed. Ever since then I’ve been enjoying business.
Hi Jeffrey,
I’m not familiar with your particular purchase but I’m glad to hear your purchase worked out. If you have any photos of your cars being loaded or removed from the containers we’d love to see them by email: support {at} shipped.com
curious to visit the Las Vegas facility mentioned
Great article. One thing not mentioned is the cost of site prep/development and it looks like the containers are on concrete pads which is nice but not cheap. We just completed the purchase (paid in full) of just a little less than 4 acres and a house just off of Interstate 95 near Fayetteville NC on a 4 lane hwy. Before we purchased it I talked to the man who was the mayor of the town for 50 years, he assured me he can help get it rezoned as he has helped others do the same. It’s a nice flat piece of property as part of it has been used as farm land for years. I was at first think car/camper dealership since that’s where my experience is but I like this idea.
One catch, there is a small storage facility just one lot over. It’s a self storage with just a couple of short rows and very little parking for stored cars, campers and boats. They don’t even have a sign out front, I only found their name by searching the internet.
The land is made up of two parcels, the one without the house is 2 acres. I wonder how many 20’ containers I could comfortably fit on that site? I have also thought about this before and wondered if a 20’ with doors on both ends and a dividing wall creating two smaller units would be feasible?
Hi Shawn,
We sell 20′ or 40′ containers with doors on both ends. We also sell the the divider walls and they go into place in 5 to 15 minutes! Let us know if we can help! Thanks
How many acres is needed for a 50 unit facility?
Hi Chris,
Here are some approximate numbers to give you an idea:
1 acre = 43,560sq ft or 660ft by 60ft or 208’x208’
208/8.2 = 25 – 5 containers for driveway in and grass area. = 20 wide
LEFT 20’ for grass and fence + row of 20’ + space for driving 30’ + 2×20 (40’) + space for driving 30’ + 2×20 (40’) + space for driving 30’ + row of 20’ + 20’ for grass and fence RIGHT
If you fudge the fencing/grass width and the driving width you can fit these on 1 acre.
= ~120 containers per acre
120 containers @ 100 month rent each = $12,000 a month.
Get in touch so we can give you more info: https://shipped.com/about.php
Hi can you help with the design and layout of a complete lot and suggest a good location to start Shipping Container Storage Facility I would like to use this Idea foe a storage area/warehouse for my own bushiness.
Thanks
Mark Klimek
734-788-1104
I own property that I would like to make a storage facility. 574-249-2768
I am interested in starting my own container storage facility. Where is a facility already set up I can go view near Michigan?
Give us a call at +1 503-SHIPPED for more information. Thanks
i HAVE A UNIT WITH 20 OF 10’X10′ STORAGES ON FOUNDATION BUT NEED TO EXPEND MY BUSINESS TO 50 OR 60 UNITS I NEED SOME 10X20′ AND 10X10′ . I READ YOUR ARTICLE AND TRULY BELIEVE THIS COULD WORK FOR ME.
VAL
i own 2 acres in arizona.thinking about shipping container storage facility.any other such facilities in az i can look at?
Hello! I am not entirely sure of your questions or your goals but are you trying to acquire shipping containers to build a storage facility on your acreage? We sell retail and wholesale shipping containers so if you are interested in purchasing, please email me at wholesale@shipped.com attn Sarah 🙂
Looking to use property to store empty containers only for the port, does anyone know of a contact?