Investing in Self Storage
Why invest in self storage?
Today, it's no secret among real estate investors that self storage has taken off. It boasts attractive returns, low maintenance expense compared to some other assets, has the lowest delinquency rate in terms of bank foreclosures (meaning, people who own self storage very rarely forfeit) and offers a relatively stable cash flow. If you are a Wall Street follower - REITs that own self storage (such as Public Storage and Cubesmart) have provided excellent, stable returns for their investors.
Is it really growing?
Past economic drivers have increased demand over the years, and as each generation of Americans shift their lifestyles and consumer habits - projections indicate that consumers' need for storage will be higher than ever. In our own experience, new self storage facilities are popping up left and right.
Should I invest in self storage?
Maybe a decade ago, self storage wasn't really common news. Even now, among other investors, we find that most tend to visit other asset classes first. Perhaps it's because the idea seems foreign, or not as clout-building and "sexy" as new multi-family acquisition or development... Now that we've been in the trenches for almost a decade: we can say it's one of our favorite investments. If you are looking for somewhere stable to put your money, want a stress-free investment and don't care about bragging rights, this is the way to go.
What are some downsides of self storage?
As the industry has gained more mainstream attention, competition has also increased quite a bit. More self storage was erected in the United States in the past five years than ever before. Wall-street backed companies are entering the fray, making smaller, "mom and pop" facilities struggle more than ever.
In cities across the country, zoning and planning committees are becoming less enthusiastic about allowing more self storage and implementing more restrictions as the industry gains more attention. Since most self storage properties are not known to be magnificent works of architecture nor employ as many people as a retail center, more hurdles need to be jumped to get your project green lit. In addition, extra expenses (on top of already sky high building costs) may be incurred to improve your facility's curb appeal and meet city planning and design goals.