Property Vs Self Storage

Good Morning, Store Nation,

Yesterday I showed you the ROI comparison between my property investor friend and my self storage facility — 

If you missed it, get yourself back over there and read it!! 

Today, we're looking at Cash on Cash returns, 

Andddd the year-by-year breakdown is where it gets really interesting.

Quick recap — 

Cash on Cash is simply how much cash you're getting back on the cash you actually put in. 

Not the total value of the asset, just your real money working hard for you.

My Friend's Property CoC:

A typical buy-to-let mortgage requires a 25% (sometimes higher) deposit, so his numbers looked like this:

• Deposit: £13,750

• Renovation work: £10,000

• Total cash in: £23,750

• Annual return: £6,900

• Cash on Cash return: 29%

And this is genuinely impressive. 

29% cash on cash on a buy-to-let is a really strong result … My friend has been doing this for ages, so he’s a master 

My Self Storage CoC:

My total cash invested was £97,500 — 

That's £75,500 in setup costs (groundworks, gate, planning, solicitors, signage, CCTV, lights and access system) 

Plus £22,000 in negative cashflow during the first six months while the site was filling up.

AGAIN … I want to point out, this is worst case scenario, and I’m spending more than most people would, as we’re going for the premium look

Here's where it gets mind-blowing. 

The Cash on Cash return looks negative in the early years — 

BUT that doesn't mean the site isn't making money. It is. 

The CoC is negative because the setup costs are so large relative to the early profits. Here's the full picture:

• Year 1: CoC -94.9% — Profit £3,824

• Year 2: CoC -30% — Profit £49,032

• Year 3: CoC 136% — Profit £125,571

• Year 4: CoC 413% — Profit £209,567

• Year 5: CoC 816% — Profit £303,587

• Year 6: CoC 1,359% — Profit £410,522

See what's happening? 

Even in year one, the site is profitable — 

By year three, the Cash on Cash return has already blown past the property's 29%, and from there it just runs away.

The first year or two in self storage requires patience. They aren’t as good as property  

My friend's property investment would show a stronger CoC in those early years, and there's no point pretending otherwise. 

Buttttt the self storage site is profitable from year one, and from year three onwards there's simply no comparison.

My friend is a professional property investor who is amazing at what he does —  His words, haha

Even he can see that from year three onwards, self storage just runs away from everything else. 

He's now looking at opening his own self storage site. 

PS. Want to see how these numbers could work for your own site? My free training breaks it all down —

Watch it here: https://www.mrselfstorage.com/self-storage-investing-academy

PPS - Tomorrow we are looking at the profit if we were to sell …. This is where it gets exciting

Loads of self storage love,

Dean ❤️ 🙃