Why Self Storage is a Safe Investment?
Drive around your city or any city, and you’ll notice various self-storage units. These buildings come in all sizes with just a few on one property and dozens on another. You may have seen them, but you may not have realized that they are a good investment, especially for real estate investors.
Recession Proof & Boom Proof
It really doesn’t matter how the economy is doing. Self-storage is necessary in any economic climate. When times are tough and unemployment is high, many people have to move from their homes and downsize into a smaller, cheaper space. They are hopeful that times will get better, so instead of selling their extra stuff, they store it.
When the economy is booming, people buy more stuff. They still need a place to put things they aren’t using right now, so they look to storage units. In either situation, self-storage units are becoming a necessity.
Low Costs High Profits
According to the Self Storage Association, about 49,000 facilities are in existence. These facilities generate about $32 billion in revenue each year. Nearly 90 percent of units are occupied, but only less than 10 percent of households are using these units, which means potential for growth.
There is very little cost to owning these facilities. They are just a box that takes little maintenance day to day. Plus, you don’t have to deal with tenant issues. Nonpayment is also not a big deal compared to getting someone to pay rent on an apartment or house. With storage facilities, you just put a lien on the stuff inside and sell it to recoup your money. Reliable income is one of the appealing features about investing in self-storage.
Challenges and Solutions to Self-Storage Investment
One of the biggest challenges to investing in these self-storage facilities is the high turnover rate. Many renters only need a unit for a month or two while they move from one place to another. However, the work involved in getting a unit ready for the next renter is minimal. Most of the time, you just clean out anything left behind and make sure the door works correctly.
You also have to figure out how to get payments from renters. More facilities are using online payments with a website for convenience to their renters. It also decreases the risk that the renter will fail to make the payment.
If you decide you don’t want to deal with the responsibilities of managing a self-storage facility, you can become an investor and hire a manager. You can also get involved with investing in a current facility.
For those who want to be involved from the ground up, your biggest concern is finding the perfect location. More investors are looking to smaller towns where there is less competition. It’s not uncommon to find two or three different facilities in small towns with most of the units filled.
If you’re looking for a safe real estate investment with a lot of income potential and minimum work, consider self-storage facilities. The return on investment makes it an attractive option for your portfolio.