Tips For Getting Going In Self-Storage Investing

Self-Storage Investing

Self-storage units are the sorts of things that tend to fly under the layman’s radar; we know they exist but we’re rarely confronted by one. In a marketplace where unusual investments are being held in higher regard than traditional ones, self-storage real estate can be just such a thing. Forget building lots and high-priced apartments for your investments, these giant lockers have excellent resilience and a surprising amount to offer the average investor. It requires knowledge, guts and a willingness to think outside of the box, but you can find some excellent results, fueled by great capitalization rates, when you put money into a storage unit (not literally!). So, with that said, let’s take a look at things to consider as you begin in self-storage investing.

Reasons To Get Involved

When you look at the marketplace over decades, one thing amongst many becomes clear: people always need storage. We have a market that’s built for the purchase of, for want of a better word, stuff. That stuff always has to go somewhere and a good proportion of it ends up in storage units, keeping them constantly relevant.

There’s a simplicity with self-storage real estate. You have very few jobs to get right and, provided you handle them well, people will always remain satisfied. All of the complexity of standard real estate, such as sanitation, dealing with constantly present tenants and much greater risk of damage to the building, is all gone with self-storage. That simplicity makes it an excellent place to get involved with investment because the actual bread and butter of what you are attempting can be understood by anyone.

It is always the case that 1 out of every 10 people in the US uses a self-storage unit, making the it a 220 billion dollar industry. But, the really exciting thing for potential investors is that of that enormous industry, 80% of owners are small, family or independent, also referred to as mom-and-pop owners. This is a striking percentage for an industry that boasts as much value as self-storage real estate does and speaks to the real results that can be achieved by jumping in. Owners are drawn to the aforementioned simplicity, the decent passive/semi-passive cash-flow and the long purchasing period that most individuals have, with average stays between 1 and 3 years.

Getting Involved

When you’re looking to get into the self-storage real estate game (and you aren’t a land developer) you essentially have two options: you can either buy into an REIT (or, Real Estate Investment Trust) that you know has some sort of a particular focus on this sort of an asset, or you can look to actually buy your own storage facility on your own (or with partners) near to where you are.

These two methods have their own unique challenges, but in general the latter is always going to prompt the biggest questions. With the former, you’re mainly going to have trouble finding REITs that have investment opportunities in the storage facility world since, as mentioned previously, it is a bit of a niche, particularly for larger companies to be involved in.

The problems with purchasing your own facility are much more complex. We’re still leagues away from the sorts of issues that would arise with purchasing an apartment building for example, but you have to deal with much more of the practicalities that arise, turning it less into a passive income and more a full-time investment that requires tending to.

In both cases, but particularly the latter, you need to do market research. The evidence is all positive in general for the storage unit world, which means your market research needs to be particularly focused. In this case, you have to research your location: how close are your competitors, what are their rates, what sort of storage do people in this area want. Provided you do your due diligence, you should be ok.

Conclusion

Overall, there’s a great deal of opportunity for profit and for simple, easy to understand investment in the storage facility real estate game. By doing your research and playing things safe, you’ll be up and running in no time.

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