Understanding Self Storage Leverage

By Garrett Byrd

Simply put, leverage in self-storage (real estate) is using borrowed capital or debt to increase the potential return of an investment when purchasing or developing a property.

When leveraging a property, you borrow funds from a lender to be able to purchase or develop investment property instead of having to cover the entire purchase price yourself.

There are actually two types of leverage in self-storage (real estate) You can also leverage knowledge and expertise by following a proven system to reduce your risk and exponentially increase your profit potential by leaning on decades of experience and processes that have been instrumentally designed for your success.

This Storage Authority Franchise facility in Mulberry, FL opened its doors in April 2019 and after 26 months of operation just sold in June 2021.

  • Owners commitment $1M (15%)

  • Lenders Commitment $6.5M(85%)

  • Total Project: $7.5M (100%)

The facility sold very near to the asking price of $14.2M

Storage Authority OM Mulberry
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Pay off-note of $6.25M

Original owners commitment $1M

Total Gross Return $6,950,000

Leveraging the bank in this case study results in almost a 700% gross return from the original owner's commitment in less than five years.

This facility was grossing over $100k a month with room to grow it would have been just as wise to refinance pull out $2M-$3M tax-free and develop project number two and still be making a strong return on the original facility.

For the risk-averse taking on this kind of debt is unbearable but self-storage has the least failure rate amongst the real estate sector. Lenders Love Self Storage

If you would like to learn more: http://www.storageauthorityfranchise.com/opportunity2

Storage Authority Franchising is about owning your own hometown self storage business and having the professional systems and knowledge to assist and guide you. We like to say You are in business for yourself but not by yourself. If you are thinking about self storage you owe it to yourself to contact Garrett Byrd at 941-928-1354 or Garrett@StorageAuthority.com to learn more about the Storage Authority Franchise opportunity.

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