If you’re looking to invest, the self storage industry is a great place to start. However, you might not be sure how to go about investing in a self storage business.
That’s what we’re here for. Check out our top five tips for investing in self storage, and you’ll be able to get started in no time!
1. Decide How to Invest in a Self Storage Business
Of course, there are a number of ways to invest in self storage. You might decide to purchase shares in a self storage real estate investment trust, or REIT, or be more of an active participant by obtaining a facility or developing one through the entire process.
Should you settle on the former, you’ll be making life easier for yourself with passive investment. You’ll get a decent return and won’t need to spend too much time on your self storage investment.
2. Consider the Demographic
Be sure to keep an eye on who’s living in the area around the facility. Who’s moving in? Consider their age and socioeconomic status, as these will give you an idea of your customers — both now and in the future.
At the same time, population changes should also be noted. Are more people coming or going? Will you still have enough potential customers in the future?
You’ll need to ask yourself these questions. Predictions about the future of self storage are one thing — focusing on your area specifically is another.
3. Think About Financing
Consider how you’ll finance everything — will you be paying upfront? This is often the most logical step when you have the means to do so, but it’s worth considering alternatives too.
If not, you have options. Loan programs offered by the small business association include the SBA 504, for developing facilities, and the SBA 7a, for facilities already existing.
Of course, there’s also other, more conventional financing available. Though these will require a minimum of 20% down, working capital or capital improvements won’t be included in the loan coast — after a few years, they’ll increase substantially.
4. Check the Facility
Before you decide to buy a facility, have a look at it in close detail.
Are they any major damages or issues to be aware of? Perhaps there are external risks, like extreme weather conditions. Before making any big decisions, deal with problems straight away, or you risk financial difficulties down the line.
5. Look Towards the Future
Self storage investment isn’t something for the short term only. Low risk, it can withstand turbulent economies, and get you rewards later on.
If you’re looking for a quick buck, it might not be ideal for you, but with a degree of patience and perseverance self storage can be a great investment. Particularly if you decide on passive investment, you’ll get passive income in return.
Investing in a self storage business can have numerous benefits, and with these tips, you can make it work for you. This could be your next great investment, so take our tips on board, make sure you do your research, and you should be ready to invest!
If you’re considering a passive investment, have a look around our website, or contact us for more information — schedule a free consultation with us today.