{"id":702,"date":"2021-11-26T11:32:36","date_gmt":"2021-11-26T11:32:36","guid":{"rendered":"https:\/\/listselfstorage.com\/uk\/industry-insights\/?p=702"},"modified":"2021-11-30T13:17:57","modified_gmt":"2021-11-30T13:17:57","slug":"budgeting-for-the-big-stuff-how-to-reserve-funds-for-your-self-storage-capital-expenditures","status":"publish","type":"post","link":"https:\/\/listselfstorage.com\/uk\/industry-insights\/budgeting-for-the-big-stuff-how-to-reserve-funds-for-your-self-storage-capital-expenditures\/","title":{"rendered":"Budgeting For The Big Stuff: How To Reserve Funds For Your Self-Storage Capital Expenditures"},"content":{"rendered":"


\nIf an expensive component of your self-storage facility breaks, like your HVAC unit, will you have the necessary funds for repair or replacement? Without dipping into your operating cash flow? You will if you have a plan for ongoing capital expenditures!<\/i><\/span><\/span><\/span><\/p>\n

\"Budgeting.jpg<\/a><\/p>\n

Find out how to create a budget and build up a reserve.<\/u><\/i><\/span><\/span><\/span><\/p>\n

One of the most attractive features of owning a self-storage property is low ongoing capital expenditures (capex). Unlike with multi-family, office or even retail properties, there\u2019s very little required to keep the operating cash flowing. But while storage capex are minimal, they do exist. You\u2019ll occasionally need upgrades and fixes, and you never want to be caught off-guard. This is why you should maintain a budget to cover them. With proper reserves set aside, you\u2019ll rarely\u2014maybe never\u2014be forced to tap into your operating cash flow.<\/span><\/span><\/span><\/p>\n

A few years ago, one of my facility signs was destroyed by wind. Because it was visible from an expressway, it was imperative that we replace it as soon as possible, and it was going to be pricey. The original sign cost more than $60,000, and our insurance deductible was $10,000. That\u2019s still a lot of money, but because of our modest reserve fund, we were able to pay it without missing even a penny in monthly distributions. Why? Because we had a capex plan!<\/span><\/span><\/span><\/p>\n

Developing a budget means you\u2019ll have the resources to pay for larger expenses when necessary.<\/span><\/span><\/span><\/p>\n

Evaluate Your Property<\/span><\/u><\/span><\/span><\/h2>\n

The budget process starts with a thorough facility inspection. Consider the life expectancy and condition of all the major mechanicals and other components. With traditional self-storage investments, there\u2019ll be ongoing depreciation of capital assets. Some things will need upgrades and replacement over the years, such as:<\/span><\/span><\/span><\/p>\n