One in ten American households pays for storage space according to real estate news source, MillonAcres. This need for self-storage continues to grow with the U.S. population’s demand.
As a $39 billion dollar industry, self-storage presents attractive opportunities for investment in this asset type.
If you’re an investor or looking to get started in real estate, consider taking a look at the passive income opportunities that self-storage investment offers. Check out everything you need to know to get started in self-storage investing.
Why Invest in Self-Storage
In addition to the growing demand for self-storage units, there are additional factors that make self-storage investment a great opportunity. Here are some compelling reasons to invest in this commercial real estate asset type.
Viable Passive Income
It can be hard to find a truly passive income stream in real estate investment. Investing in a self-storage facility as part of a real estate syndicate puts your money to work without the day to day headaches of property management.
A real estate syndicate is a group of investors combining their funds to increase their buying power. This allows for a lower barrier to entry and passive cash flow for you.
Lower Costs and Maintenance
In comparison to other types of commercial real estate asset classes, self-storage typically will have fewer unforeseen costs in terms of repairs and maintenance.
Lower capital expenditures mean higher cash flow for you the investor.
Preferable Leasing Terms
Self-storage leasing terms are most commonly month to month. This allows rents to be adjusted more nimbly to be competitive with the market.
Due to rates remaining competitive, tenants are likely to continue their lease rather than jumping to a competitor.
This creates stability of income for the investors and the ability to increase rates as needed.
How to Evaluate a Strong Investment
Investing in unknown territory can be intimidating. Here are a few key things to look for when assessing a potential self-storage investment opportunity.
Research Demographics
Doing some research into the demographics of the area you are considering investing in is essential. Ensuring the area is projected to have continued population growth is key to having self-storage tenants.
Check the Asset
If possible, tour and check out the asset you are considering investing in. Consider the neighborhood and if you would want to store your goods there.
Look for signs of potential large repairs that might be needed. Some repairs can be a great value-add opportunity, but you’ll want to ensure they are not too extensive or costly.
Think about extreme weather events and conditions that might affect the area and if this would be a wise choice.
Do Your Homework
Learn everything you can about the self-storage industry so that you can make the best investment decision possible.
There are multiple ways to invest in self-storage, all with different levels of involvement, risk, and capital. Investing in a REIT or as part of a real estate syndicate are two passive investment strategies to consider.
If you are looking for more hands-on opportunities, consider purchasing an existing self-store facility or developing one.
Start Creating Passive Income
If you’re ready to start generating passive income with self-storage investing, visit our website today.
We have over 25 years of real estate experience and are the nation’s top experts in the self-storage industry. We look forward to helping you get started on your journey.
