Investing in self-storage facilities has become popular since the COVID-19 pandemic due to the industry’s exponential growth. You may be asking yourself, why all the buzz around self-storage lately? Below are a few reasons why investing in a self-storage facility could be an excellent idea.
When investing in traditional properties, landlords spend many hours on upkeep and maintenance. There could be faulty wiring in your unit, a leak in the roof, or defective plumbing. All these issues are pressing and in need of quick and extensive management.
However, as the owner of a self-storage facility, there is much less need for direct action on your part. There is no plumbing and limited electricity in your units, and there are no appliances that need to be fixed. You most likely will not need an extensive maintenance staff since storage units are largely self-sufficient.
If you have more advanced units with climate control or security devices, these amenities may need some maintenance occasionally. However, using self storage as investment is advantageous because, overall, you need to do little work to keep the units up and running smoothly.
Buying or building a self-storage unit is great for people who want to get into real estate but may not have extensive amounts of free time to invest in a large project. Managing single-family homes or apartments requires copious time and energy, since there are many more considerations to take into account with tenants and maintenance. Storage units can be relatively hands-off, and if you manage your rentals with storage unit software, you can even do so remotely.
For example, you can install electronic no-key entry to allow renters to access their units by using their phones as keys. This is helpful because you don’t have to hire an on-site security team, and the hassle of copying keys or frustration of renters forgetting their combination codes is minimized. You can also invest in door controllers and smart padlocks so you can monitor your facility and tenants from wherever you are.
Easy Lease Agreements
Compared to traditional investment properties like single-family homes or apartment complexes, self-storage units have straightforward rental agreements. This is because the other types of real estate investments have lengthy policies and addenda about guests, parking, utilities, and other considerations that self-storage units don’t require.
Usually, you will not have to interact with your tenants beyond signing the lease. They will most likely move their belongings into their unit and then leave it alone for however long they need, oftentimes a period of weeks or months.
Resistant to Economic Recession
One of the best aspects of self-storage investment is that it’s more recession resistant than most other industries.
When investing in a new business venture, it’s important to consider whether it would survive in the face of an economic depression or recession. The self-storage industry may increase in demand during these times, since business owners and homeowners will often look to downsize and need somewhere to store their excess belongings. Recession usually prompts large-scale change in people’s lives, whether it be a shift in your living situation or a career change. Self-storage facilities benefit from change since people need places to store their items in periods of transition.
High Occupancy/Low Vacancy
When analyzing the success of a real estate venture, investors focus on metrics like occupancy and vacancy rates. These rates are a good indicator of your business’ financial health.
In the self-storage industry, you most likely will not experience vacancy rates above 5 to 10% beyond the initial start-up period. In fact, self-storage facilities in the United States increased their occupancy rates by 16% since 2010, according to Neighbor.com. The average occupancy rate is around 92% for self-storage facilities, meaning you aren’t likely to struggle to fill your units each year.
Self storage investment opportunities certainly sound like a great idea, but it’s important with any business opportunity to do your own research to decide if it’s right for you personally. There are many pros to buying or building your own facility, and it’s a great way to get started in real estate without as much money or work up front.
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