Have you been looking into investing in self storage units? And wondering if it will be cost efficient for you? When deciding to invest anything you have to weigh out the pros and the cons, and do some research to ensure you are making the right move. Below we discuss how investing in self storage will be the right choice for you.
Why Invest in Self Storage?
Self storage is becoming more popular these days. Self storage has become the quickest rising commercial real estate segment over the past 40 years in the United States, bringing in a whopping $27.2 billion in annual national revenues since 2014! According to the Self-Storage Association 9.5 % of Americans currently rent a self- storage unit. Another plus, the self-storage market dominates in the stock market. Before you go diving right in after hearing all of that, your choice always weighs on many other factors, your investment strategy and risk appetite, as well as whether you are looking for stable cash flow or potential high returns. Lets keep going and learn some more about all of this!
Benefits of Investing in Self Storage
Low Overhead
Bloomberg reported in 2014 that low overhead costs tempt entrepreneurs looking to make an investment in self-storage. Self-Storage has progressed along with technology, by doing so it has cost owners of self-storage, for example having to paint and improve the unit, clean the carpet when the tenants leave. New technology has arrived such as keyless and biometric entry, as well as programs that now allow clients to book online and make payments, all of this stands to lower property operating costs while improving the experience of the tenants.Another positive is that like other real estate ventures, self-storage owners are now protected against non-paying clients. If you have to evict it it can take up to 60 days to go into effect, but when it does all the property in the storage unit can then be auctioned and use money received for past-due rent. This brings peace of mind to self storage owners.
Consumer Overhead
It is estimated that 52,952 self-storage units in the United States, with the expectation that the number will rise to 60,152 or around 13.6 percent by 2020 according to a report completed by IBIS World Research. The study saw a steady population spike in the self-storage industry. With all of that being said, here you choose to have your self-storage units determine the type of tenants you would have. Most commonly tenants want to be in high trafficked areas, clean and well lit for safety reasons.
Economic Durability
Self-Storage has always been consistent in holding its ground in during any economic downturns.Self-storage was the only real estate investment trust sector to post a positive return during the 2008 economic downturn, bringing in a total return of 5%, according to an article by SmartBreif. According to the National Association of Real Estate Investment Trusts reported that the REITs posted the highest total returns of 2015 for the first five months at 8.2%. Tenants will always need storage, it is not something most will be able to let go and do without. That is your job security, because people will always need a place to store their belongings, no matter the state of the economy.
An Alternate Investment Strategy
Investing in self-storage can be costly, and it may feel like this investment will not pay off, but in due time it will. If you are not going to be raising funds or self funding for self-storage you can go an alternate path and invest in REITs, is one way to start working towards your goal. And not having to run self-storage yourself. Another option is letting an experienced self-storage run your units and you still benefit from the profit from it. Crowdsourcing your real estate investment is a smart path!
Casey Development, Ltd: Self Storage Investment Experts
Casey Development has been helping investors diversify their real estate portfolio through smart commercial and industrial real estate investments in Central Texas. Casey Development, Ltd. has the experience, knowledge, and expertise in developing self storage properties into long term, high yield investments. Contact us today to learn more how we can help you get started.