Investing In Self Storage Facilities: Pros & Cons

Investing In Self-Storage Units: A Good Investment?

Investing in self-storage units has become increasingly popular in recent years, and for great reason. Plenty of real estate investors are getting in on the action, and with the right real estate investing tools and knowledge - it can be a game-changing investment.

Why Has Investing In Self-Storage Grown?

If you’re going to invest in self-storage units - we need to understand why this has become a more popular investment over the past 10 years. 

The self-storage industry's general steady rise is the primary force behind an increase in self-storage facilities as an investment. As the population and number of households have increased, there has been an increase in the need for self-storage; however, the supply of storage units has not kept up with this demand, which has resulted in greater occupancy rates and storage costs.

The relative simplicity and low cost of entry have further boosted the appeal of investing in self-storage units. Self-storage facilities are available to a larger variety of investors because many times, they may be bought for less than $100,000.

Additionally, a lot of self-storage companies provide turnkey solutions, which means that they will handle day-to-day management and leasing, giving investors a passive income stream.

 

So to summarize, investing in self-storage facilities has become a more appealing investment over the years due to;

1. The rising demand for the space
2. The relatively low barrier to entry
3. The hands-off, turnkey offerings to investors

Pros of Investing in Self-Storage Facilities:

• Self-storage is frequently in high demand since individuals and organizations frequently require a location to store surplus items.
• Self-storage facilities are very simple to run because tenants often rent on a month-to-month basis and are in charge of maintaining the cleanliness of their units.
• Self-storage investments can have a relatively low financial barrier to entry 
• The value of of the land these self-storage units sit on tends to rise over time as land values increase.

Cons of Investing in Self-Storage Facilities:

• Costs associated with maintenance and repairs, particularly for older facilities, can be high.
• It’s exceedingly difficult to find good deals on land in high demand areas without software.
• Cash flow may be impacted by a high vacancy rate.
• Storage facilities are not passive investments. It's possible that you, as the facility's owner or operator, will need to participate in daily managerial duties, or outsource these (and thus cut into your profit margin).

Investing In Self-Storage: Things To Consider

Location, Location, Location

One of the most important factors to consider when investing in self-storage is location. It's important to find a facility in an area with strong demand and relatively low competition.

Use a real estate Ai tool to analyze the area’s population density and the demographics. Look for areas with high growth rate, high median income and a high density of renters.

Being close to highways and main roads can also make a facility more convenient for customers.

Zoning Laws & Overall Condition

Before making an investment, do a deep dive into the zoning regulations and the general state of the facility. Before putting any money down, speak with a local attorney who focuses on zoning laws and make sure to arrange for a thorough property examination. These are small investments that can pay off big-time down the road.

In conclusion, self-storage investment can be a lucrative endeavor, but it's critical to do your homework and take into account several key points before making a decision. And if you’re an aspiring investor looking for tools to help you identify the best up-and-coming areas to invest in self-storage facilities, or to make real estate investments in general - give Leadflow a try. And make sure to grab your 7-day free trial below!