What Happens When Disaster Strikes a Self-Storage Facility?

It seems like all year round, every part of the country faces its own set of natural disasters. Wildfires in the west, hurricanes in the east, and tornadoes running right down the middle. Not to mention smaller, yet still impactful, natural events like flooding, snow, falling trees, and damaging winds can all cause serious damage to property.

When you put your capital into a hard asset, like a self-storage facility, a natural disaster or emergency can threaten your investment. Let’s explore what happens when disaster strikes a self-storage facility, and how Belrose helps protect your investment.

Identifying Potential Hazards

Just like buying a house, we want to be sure the facility we’re acquiring has good bones and few issues. Neglecting to look “under the hood” of a new facility would put ourselves and our community of investors at risk of costly repairs that would impact the profitability of our investment.

We use a third-party company, 5-fold Technical Consultants, to conduct a thorough assessment of a self-storage facility before purchasing. At the end of their review, they produce a property condition report (PCR) that covers all aspects of the property’s physical condition including:

• Grading (potential for flooding or water damage)

• Roof and gutters

• Interior and exterior sides

• Fencing and gates

• Electrical

In addition, we have an environmental assessment done to check for possible contaminants in the property’s soil. 

The success of any commercial real estate investment depends on the ability to buy at a good price and minimize operational expenses. By identifying potential damages upfront (rusty pipes, faulty wiring, leaky roof, etc.), we’re better able to protect our investors’ dollars when identifying our next investment opportunities.

The Importance of Insurance

Once a facility does pass inspection and is purchased by Belrose, it’s our responsibility as operators to take necessary steps to protect our investment from future damage or disaster. This is one of the big benefits of investing in a hard asset like self-storage, as opposed to the stock market or other alts, such as crypto. You can’t buy insurance for your stock portfolio, at least when it comes to traditional investments. But for commercial real estate, like self-storage facilities, we have insurance policies on every facility which protect our investors' hard-earned money from costly damages or natural disasters. 

We have property and casualty insurance policies on all of our facilities, which cover any number of disasters or emergencies—vandalism, damage from rough weather, broken pipes, etc.

One notable advantage of investing in self-storage is that most emergencies are less detrimental to your bottom line, especially as compared to other types of commercial real estate like apartment complexes or office buildings. Because the facilities themselves are simply constructed (essentially concrete floors and metal doors), they’re relatively easy to repair. 

Consider a pipe burst in a self-storage facility versus an apartment. In an apartment, you’d need to supply temporary housing for your tenant (or multiple tenants), rip apart drywall and ceilings, reconstruct rooms, and replace furniture, flooring, and fixtures. In a self-storage facility, there’s less damage to the actual facility that would need to be addressed. Considering the floors are concrete, there’s little in the way of fixtures or furniture, and nobody needs to be rehomed.

Renters Insurance

When we acquire a facility, we require all tenants to obtain tenant protection for their belongings. They can either provide proof of coverage through their homeowner’s policy, or we give them the option to participate in our own tenant protection program.

Our facilities are never liable for the contents of tenant units, and any damages to our facilities are covered under our own property and casualty policies.

Protecting Your Investment Against the Unexpected

As an investor, it’s reassuring to know that your investment is protected in the event of an emergency. It’s just one of the many reasons why our team at Belrose is passionate about helping our community of private investors experience the growth, security, and income potential of investing in self-storage. 

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