Granada City Lacks Self Storage Facilities

A hot investment tip… which I have to admit isn’t my own. A client brought it to my attention that Granada, Nicaragua, lacks adequate self storage facilities. I did a quick check and sure enough, there is a single self storage facility in the entire city, and it is pretty much full all the time.

There is an abundance of storage yards for vehicles offering spaces that can be rented by the day, week or month, only one of which is indoors so totally secure. However, there appears to be only one self storage facility offering secure, individual storage units. I assume this is because the cost of open storage is minimal while to offer secure, individual storage units is more expensive. By more expensive, I’m thinking $2000 per unit using cinder block construction on a concrete pad, metal roof and a standard, overhead garage doors. This may not sound like a huge investment, but to build a dozen or more units, it would be well outside the affordability of many Nica land owners.

View of Granada city, Nicaragua

Self Storage facilities have never been something I’ve paid attention too as an investment or business opportunity. My involvement has been limited to offering commercially zoned land to storage companies, and as a customer. I have used self storage units in the past, and I know well that when you need one, you need one, period. Odd that I wouldn’t have seen them as the potential investment gold mine they are… in the right market. Granada city appears to be the right market.

Besides being cheap to construct, self storage units are also attractive because the land acquisition cost can be minimized. A high visibility location would be preferred, of course. But when you’re offering something people need, they will find you. Granada’s one existing self storage facility is not in a high traffic location, nor is it even visible from the street unless you’re parked right in front and looking directly at it. As long as a property has street access, and electricity and water available, it would be ideal for a self storage facility.

A self storage facility of 20 units would cost around US$40,000 to build. Surveying costs, architectural fees, building permits, land registration, taxes, etc. would add another $6000. Exact land transfer and legal costs would depend on the purchase price of the land.

Based on the existing storage facility, 20 self storage units within Granada or on the city’s outskirts would generate $9600 per year ($40 per month, per unit net after taxes). If land cost is capped at $50,000, and construction of 20 units is US$46,000 we’re talking about a gross annual return of 10%. Figure in maintenance, staffing and property taxes, it is reasonable to assume the net return will be at least 7%.

My client that enlightened me has two adjoining lots in a quickly gentrifying area of Granada city that would be perfect for self storage units. He is selling only the land, but he’d be willing to build a self storage facility on the property if a purchaser desired a turnkey operation.

As always, if you have any questions about land acquisitions or establishing a business in Nicaragua, contact us.

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