Are you looking for a real estate investment that can you earn passive income? Have you considered investing in self-storage facilities?
Self-storage is a booming industry. The COVID-19 pandemic has prompted some businesses to abandon their offices and use self-storage for supplies. And with many people shifting to remote work, they have used self-storage to make space for a home office, driving up demand. Global investment firms have taken notice and are getting into the sector.
Read on to find out more about investing in storage units.
Why Invest in Self Storage Facilities?
Self-storage facilities are an attractive form of real estate investment because they offer the potential for solid cash flow with relatively little day-to-day management. Some of the advantages of self-storage investment opportunities include:
- Few overhead costs
- No dealing with residential tenants
- Low construction costs
- Limited maintenance requirements
- Straightforward monthly leasing
- Leverage to increase rents during high-demand periods
Unlike other types of commercial property, most owners can operate self-storage facilities on a part-time basis.
How to Invest in Self Storage
If you are interested in getting involved in the self-storage industry, there are a few different ways you can invest. You should conduct a self-storage investment analysis to decide which is right for you.
The simplest way of investing in storage units is buying shares in self-storage real estate investment trusts (REITs). These are companies that invest in real estate assets and distribute almost all their income to shareholders as dividends. This is a low-risk way of investing in the industry for passive income that does not involve any work on your part.
If you want to own and operate a self-storage facility yourself, it can be a lucrative investment. You can either find self-storage facilities for sale to buy and manage, or you can purchase a piece of land to build a new facility. If you identify a location where there are currently few self-storage facilities and high demand, you can generate high profits.
What Are the Risks of Investing in Self Storage?
While there are several benefits to investing in storage units, you should also be aware of the risks. As with any real estate investment, there are factors that could result in you losing money. These include:
- Economic uncertainty
- Oversupply of storage units
- High land costs
- Municipal permitting and zoning regulations
- Increased competition
- Security and insurance costs
Choosing the right location for a self-storage facility requires a combination of suitable land, a high-traffic area, distance from the competition, and the right community demographics. This can be a challenge, but the right location with good management can mitigate the risks of investing in self-storage.
Self Storage Facilities Can Be a Good Investment
Investing in storage units is one way to benefit from a growing industry without having to manage a rental property. Self-storage facilities offer investors the potential to generate passive income with relatively low upfront costs and limited demands on your time.
At Self Storage Investing, we give you the resources you need to profit from the real estate business. We have a portfolio of over two million square feet of storage and love to teach others how to invest in the industry. Contact us to find out about our products and coaching programs.