Is Buying a Storage Unit Worth It? What the Numbers Say

With property prices remaining high and rental yields under pressure, many Australians are looking beyond traditional housing investments. One option that keeps coming up is storage units. They are cheaper to buy, easier to manage, and often promise higher yields.

But is buying a storage unit actually worth it? The answer depends on the numbers.

This blog post breaks down the financial reality behind storage unit investments so you can decide if they make sense for your goals.

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What Does It Mean to Buy a Storage Unit?

Buying a storage unit means purchasing an individual unit within a larger storage facility. You then rent that space to individuals or businesses who need storage.

Unlike residential property, no one lives in the unit. It is a commercial-style investment focused purely on income.

Storage units are commonly used for:

• Household overflow
• Downsizing
• Small business inventory
• Students between leases
• Short-term relocations

Demand is closely linked to lifestyle changes and housing trends.

How Storage Units Make Money

The income model is simple. Tenants pay a weekly or monthly fee to store their belongings.

Rental rates are influenced by:

• Unit size
• Location
• Facility quality
• Access hours
• Security features

One key advantage is tenant behaviour. People often keep storage units longer than expected, which leads to lower turnover and more stable income.

Storage Unit Returns Compared to Property

This is where storage units attract attention.

In many Australian markets, gross yields for storage units range between 7% and 12%. By comparison, residential property in major cities often delivers 3% to 5% gross yield.

The basic yield calculation looks like this:

For example:

• Purchase price: $100,000
• Annual rent: $10,000

That equals a 10% gross yield.

This higher income relative to price is the main reason investors consider storage units.

Costs That Affect the Real Return

High yield does not mean high profit without costs.

Typical expenses include:

• Management or facility fees
• Insurance
• Maintenance
• Marketing
• Council rates or strata fees

After costs, a storage unit with a 10% gross yield may deliver closer to 6% to 9% net yield, depending on the facility.

Always ask for a full cost breakdown before buying.

Example Numbers in Practice

Single Storage Unit Example

• Purchase price: $120,000
• Annual rent: $14,400
• Gross yield: 12%
• Annual costs: $3,600
• Net income: $10,800
• Net yield: 9%

This is significantly higher than many residential net yields.

Multiple Units Example

• Five units at $120,000 each
• Total purchase price: $600,000
• Total annual rent: $72,000
• Total annual costs: $18,000
• Net income: $54,000
• Net yield: 9%

Multiple units in one location can increase income consistency.

Storage Units vs Residential Property

Storage units differ from housing in several important ways.

Key differences include:

• No tenants living in the property
• Fewer maintenance issues
• Lower emotional risk
• Less regulation compared to residential leases
• Higher income focus and lower capital growth focus

Residential property often wins on long-term capital growth. Storage units often win on cash flow.

Demand Trends Supporting Storage Units

Several trends support long-term demand for storage.

These include:

• Smaller homes and apartments
• Downsizing by older Australians
• More renters with limited space
• Business owners storing stock
• Students needing short-term storage

Urban areas and high-density suburbs tend to perform best.

Risks You Should Not Ignore

Storage units are not risk free.

Key risks include:

• Oversupply in certain locations
• Falling rental rates
• Poor facility management
• Limited resale market
• Lower capital growth potential

Location and facility quality matter just as much as with property.

Tax and Financial Considerations

Storage units are usually treated as commercial property for tax purposes.

This may involve:

• GST implications
• Different depreciation rules
• Capital gains tax on sale
• Claimable expenses

Always speak to an accountant before buying.

Who Storage Unit Investments Suit Best

Buying a storage unit may suit investors who want:

• Strong cash flow
• Lower entry price than housing
• Simple management
• Portfolio diversification
• Income over long-term capital growth

They may not suit buyers looking for lifestyle use or rapid value growth.

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Are Storage Units Worth It Based on the Numbers?

When you look purely at income, storage units can outperform many residential properties. Higher yields, lower management stress, and steady demand make them attractive.

However, success depends on buying the right unit in the right location at the right price.

If the numbers stack up and the investment aligns with your broader strategy, buying a storage unit can be a worthwhile addition to a diversified property portfolio.