Is it TRUE that self storage investment better returns than rental or multifamily

Question

Right now I am a fix and flip and buy and hold investor thinking to buy below 4 units.

someone told me self storage gives better money than fix and flip, buy and hold, multi family or so..

What are your thoughts on self storage investments.

Michael Margarella · Answer

Hi Rajesh, we operate self storage facilities and this is true. Commercial real estate values, particularly in sector like self-storage is less prone to economic volatility, offering a more secure investment option.In fact, certain real estate classes like self-storage outperformed during the Great Recession.  From 2008 to 2012, the major publicly traded self-storage companies - CubeSmart, Public Storage, Extra Space Storage, and Life Storage - saw a brief share price decline in 2008 before soaring the following three years.  Not only did commercial real estate assets like self-storage outperform the market during the Great Recession, they increased in value dramatically.

Now we syndicate self-storage projects. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. Feel free to reach out

Chris Seveney · Answer

@Rajesh Kasturi

The only way to look at this is to take properties of similar quality in a specific area. So let’s take a class A office, multifamily, NNN lease and self storage

Now self storage may provide the greater return but is it going to be worth the risk? Would I rather get 1% less with a 30 year lease from Bank of America on a NNN lease ? Would I take less on a MF asset that in long term is a better asset?

These are the questions you have to ask yourself.

Is it TRUE that self storage investment better returns than rental or multifamily

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