Economic downturns can’t stop you from investing! All you need to turn a profit even during a pandemic is to find a recession-resistant deal. With Scott Krone, we’ll be discussing that kind of investment – the self-storage industry.
Scott Krone began his career as an architect and manager in real estate projects. Now he runs Coda Management Group, which specializes in managing a wide range of real estate (single-family and multi-family houses, retail, commercial warehouses, self-storage facilities, multi-use athletic spaces, etc.), and he’s ready to share his insights into the industry.
Real Estate Investments – Secure and Steady
Real estate always provided ways for investors to gather steady income without worrying too much. The benefits of investing in real estate outweigh the risks and costs by a mile. In fact, real estate investment is a hugely popular wealth-building strategy for helping people reach financial freedom and secure their retirement.
Steady income and long-term financial security are the most obvious benefits you’ll get from investing in real estate. Furthermore, the income you get from real estate properties, like self-storage facilities, is often passive. You have the opportunity to invest in a project through REITs, syndication, etc. without taking an active management role. Just put in the initial investment and let the passive income drop.
The only catch here is finding good deals. Not every deal is profitable, so make sure to carefully consider your options. You’d also need to find deals that are lucrative in the current economic moment. Since we’re in a recession partially caused by the pandemic of the Covid-19 virus, you’ll want to invest in recession-resistant projects.
Why Is the Self-Storage Industry Recession-Proof?
The term recession-resistant refers to deals that aren’t greatly affected by an economic downturn, such as assets in industries like alcoholic beverage manufacturers, discount retailers, funeral services, etc. In the real estate world, some asset classes are more vulnerable than others. For example, many people are downsizing, and they look for smaller homes. This leaves a lot of big houses empty, with new homeowners of small units looking for a place to hold their belongings. Enter the ever-popular self-storage sector.
Scott Krone and his team conducted due diligence before Covid-19 to start self-storage developments. Although the pandemic stirred things up, not much has changed with conversions. On top of this, efforts to boost economic development provide even more fluid opportunities for entitlements. Projections are optimistic because self-storage units are in demand regardless of the recession.
People always need a place to hold their belongings with very short notice. When the economy is booming, people are traveling and need to stash their things somewhere. When it’s slowing down, people are downsizing, businesses are shutting, college students are moving, etc. Again, they all need storage units: people in smaller houses, those whose offices have permanently closed, students who have moved in with relatives.
The construction and development real estate sectors are often limited by zoning and tax laws. During our current recession, these laws are becoming looser because authorities hope to boost the economy. Hence, investors have more favorable options to put their money to good use. Market research will help you find those lucrative projects, from mid-scale REITs to single self-storage deals.
Advice for Investing in the Self-Storage Business in 2021
In any market, you must avoid pitfalls. Although this is a recession and it’s the right time to buy, you still need to find a good deal. Be patient and don’t rush into investments. It’s never the time to get too aggressive in this marketplace.
Forget about the “fear of missing out” and conduct thorough research. Read advice from experts, talk with people in the community, and consult with the best. We’ll happily welcome you into our self-storage community. You’ll be able to ask all your questions and get the information needed to make a firm decision.