Though most investors tend to focus on residential or commercial properties, they aren’t the only properties worth investigating. In fact, self-storage is a burgeoning investment market that can be highly profitable for investors due to the high demand and usefulness of the product.
Self-Storage Yields Steady Returns
Self-storage might not be what you had in mind when you first considered investing in real estate. You probably saw yourself signing the papers for a high rise commercial building in New York City, not a self-storage lot in Pasadena, Texas.
Self-storage hardly seems to have the glamour of commercial investments, but it’s also much less risky. With commercial properties, you have the potential to make a lot of money, but you also risk plenty of empty offices. With those vacancies, you’re more likely to lose more than you gain from the rent your tenants send.
With self-storage, you make a smaller investment, meaning you owe less in the long run, but you’re promised steady returns from automatic monthly payments. Even if you have vacancies in your storage units, you’re still more likely to turn a solid profit in self-storage than in many other kinds of real estate ventures. As seasoned investors know, oftentimes less volatile, but smaller stocks are worth far more than large, but risky speculations.
Self-Storage Investments Are Growing
As of now, there are more than 58,000 self-storage facilities in the United States. There’s nothing fancy about these places, but they’re in very high demand as people jump on the minimalist bandwagon and look for ways to rid their homes of clutter.
One reason the self-storage market has become such a popular investment is REITs, which dominate this market. There are several REITs that people can buy into, including Public Storage, CubeSmart, Sovran Self Storage, Extra Space Storage, and more, promising returns to investors with reduced work.
REIT investments are popular, but not the most promising way to invest in self-storage. With this form of investment, you have to share your profits, and the returns often aren’t as high as if you purchased your own units and went from there.
Self-Storage Withstands Good Times and Bad
Some investment experts argue that self-storage unit investments are recession resistant. Anyone can get into this trend, even ordinary investors who haven’t made an investment before because they’re low-risk, low-cost, and easy to navigate.
Self-storage booms when times are good. When employment is high and the economy is performing well, people have more money. They buy new furniture, clothing, collectibles, and other items that add to a growing collection of material goods. Then, they start to get overwhelmed by their purchases and need somewhere to put it. A storage unit gives people the option of buying more than they need, without throwing out things they once loved.
The need for self-storage won’t disappear at the first sign of hard times, though. Good times are particularly generous for storage units, but bad times don’t last forever. People will hang on to their stuff and continue paying the small price for a monthly storage unit because they know a better market is just around the corner.
Get In While the Market is Hot
The economy is better now than it has been in years, encouraging interest in self-storage from both consumers and investors. The stability and high-grossing nature of the business should be very attractive, and it’s always good to get in when the promise of returns is high.
It’s important to note that this is a stable market, but it’s not infallible, nor will it make you magically wealthy. Occasionally, self-storage investments go negative for short periods of time, and you’ll see some potential losses as a result. But despite the occasional dip, it’s by far one of the most stable and highly recommended real estate investments of the age.