How to invest in self storage: A 2023 guide

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

Self-storage is a lucrative investment opportunity that has been gaining traction over the years. With the increasing demand for space to store personal and commercial items, investing in self-storage facilities can be a profitable venture. If you are looking to invest in self-storage, this guide provides a comprehensive overview of everything you need to know before making your investment decision.

Understanding Self Storage

Self-storage is a facility that provides storage units to individuals or businesses for storing personal or commercial belongings. These units are usually rented out on a monthly basis, and customers have exclusive access to their belongings. Self-storage facilities range in size and can accommodate a variety of storage needs. They are also equipped with security measures to protect customers' belongings. There are underserved markets and there are over saturated markets. There are always mom and pop facilities looking to sell their self storage business off market without a broker. This is one of your opportunities to get in the game.

Benefits of Investing in Self Storage

Investing in self-storage has several advantages, including:

a) Low maintenance: Self-storage facilities require minimal maintenance, making them an ideal investment for busy investors who do not have time for constant upkeep.

b) High demand: The demand for self-storage units is high and continues to grow, making it a lucrative investment opportunity.

c) Steady income: Self-storage facilities provide a steady income stream as customers pay rent on a monthly basis.

d) Flexibility: Investors have the flexibility to purchase and manage multiple self-storage facilities, depending on their financial capacity.

Types of Self Storage Investments

There are two main types of self-storage investments:

a) Development: Investors can purchase land and develop a self-storage facility from scratch. This option requires significant capital and a considerable amount of time to complete the development process.

b) Acquisition: Investors can purchase an existing self-storage facility, which already has an established customer base and generates income. This option is less time-consuming and requires less capital than development.

Factors to Consider Before Investing

Before investing in self-storage, there are several factors to consider:

a) Location: The location of the facility is a crucial factor to consider. The facility should be situated in an area with high demand for self-storage units.

b) Competition: The level of competition in the area should be assessed to determine the feasibility of the investment.

c) Market demand: The demand for self-storage units in the area should be assessed to determine the potential income generated.

d) Facility size: The size of the facility should be determined based on the demand for self-storage units in the area.

e) Security measures: The facility should be equipped with security measures to protect customers' belongings.

f) Legal requirements: Investors should be aware of the legal requirements for operating a self-storage facility in the area.

Financing Self Storage Investments

Financing a self-storage investment can be done through:

a) Traditional lenders: Investors can obtain a loan from a traditional lender, such as a bank or credit union.

b) Private lenders: Private lenders, such as individuals or companies, can provide financing for self-storage investments.

c) Self-financing: Investors can use their own funds to finance the investment.

Managing a Self Storage Investment

Managing a self-storage investment requires:

a) Property management: The facility should be managed by a professional property management company to ensure its smooth operation.

b) Marketing: The facility should be marketed to attract potential customers and maintain a steady stream of income.

c) Customer service: Excellent customer service is crucial to retaining customers and generating positive word-of-mouth.

This article was written in cooperation with Fire Cash Buyers