Why Self Storage?
Growing Demand
As cities and suburbs grow, there is a constant tightening of zoning and ordinances which does not allow homeowners to have storage sheds or permission to store their vehicles and equipment outside. Consequently, the self storage industry is experiencing a rise in demand. This is an opportunity for you to take advantage of the fact that good things do come in a box.
The collection of ‘stuff’ that humans accumulate has to go somewhere. Particularly when their lives are in transition. The downsizing Baby Boomer and the frequent job-changes of the Millennial workforce also adds to the demand for this asset class.
In addition to a growing demand and hassle-free tenants, self storage investments have proven to have strong cashflow in both good and bad economies. It’s a proven recession resistant investment to add to your portfolio that you shouldn’t overlook!
Although we are big fans of Multi-Family housing investing, there are issues that you must deal with that do not exist in the self storage space. One example is that your tenants are boxes of stuff and the need for lengthy eviction procedures do not exist.
Benefits of Investing in Self-Storage
Invest in Only the Best Locations
Whether you are currently invested in Real Estate or not, you’ve probably heard this expression. Yes. Location is extremely important. The location of the property location must provide strong demographic metrics that showcase a real prospect for growth.
Your best property selection will be a location where there is high population growth and surrounding development as these are signs of a growing local economy. A great indicator of this to look for businesses moving into the area which will increase the number of jobs available. Review driving forces that dictate continued growth, such as types of business that are prime for increasing their employee base through a sustainable need in the future and the demographic of that base.
Location is also important from the viewpoint of competition in the area. Research the neighborhood and surrounding area to be sure that the opportunity for your property to grow is not likely to be swallowed up by another player. Limits such as zoning restrictions, limited additional space for development on the competition’s locations can greatly enhance the potential profitability through demand and rate increases.
Your location should be in a highly visible, high volume traffic area
Value Add Opportunities
Not all properties are created equal. The property should have room for growth from both a sales viewpoint and preferably provide opportunity to expand to meet the growing demand of a market. Adding new construction and square footage means opportunity for more rental income
When we talk about value add components in self storage investing, we are looking for the opportunity to apply a variety of methods to increase efficiency and revenue through professional revenue management systems, advertising, ancillary sales revenue, tenant insurance and more.
Rent Increase Opportunities
Industry rent growth continues to show a steady increase according to industry experts. Most properties today offer climate control units which is duly appreciated by the consumer according to statistics published by The National Real Estate Investor: “Annual rent growth has been healthy, for non-climate controlled units more so than climate-controlled units.”
Choose the Best Management Team
With a wealth of experience in investment comes the knowledge that the right team is essential in all investment opportunities. This is a cornerstone for all investment opportunities at The Real Asset Investor.
When you are considering self storage to add to your portfolio, it’s imperative that the property is properly managed.
Historically, the self storage industry on average is notoriously mismanaged. This creates a tangible opportunity for the savvy investor who secures the right Management Team to run properties they have identified with management upside.
When you are looking to get into a self storage opportunity, be sure to choose a team that specializes in self storage and does it well. Look for a proven track record of success. A good self storage management team will deliver on increased sales, efficient management and find ways to increase revenue through retail sales such as tenant insurance, truck rental and more.
We like management teams who specialize in the asset class we are investing in and it is their sole focus. For instance, we would not want a management team who manages multi-family, car washes and self storage. We like a team where self storage is their ONE THING. A team of professionals who have 10,000 hours of experience under their belt perfecting their craft.
Following this formula for success, The Real Asset Investor works only with the top-tier self storage property management companies who’ve demonstrated an outstanding track record. We team up only with Management Teams that we have carefully vetted. We sit down with the principals of the company and evaluate every aspect of their business. This is an important part of the protocol for selecting the best partners.
When you invest alongside a Management Team who invests in their own properties, you can gain more confidence that the property will make good returns on investment through careful and attentive management. At The Real Asset Investor, we invest right alongside you.
Does Self Storage Make Sense for You?
You can have the benefits of investing in a large-scale asset without the risks of having to do it alone. The lone wolf investor will most likely experience a higher risk in their portfolio regardless of what investment they make. By joining the ‘pack’ you can minimize risk and profit from the opportunity to be part of the larger investor player’s market and gain access to more attractive deals and professional management.
