Why Self Storage is a "Dime"
Picture this. You are walking down the street and you see a dirty penny on the ground. Trampled on by hundreds of other pedestrians. Is it going to stop you in your tracks? Will you go out of your way to go pick up that single penny? Probably not. What if it were a 1874 CC Seated Liberty Dime, valued at $3,192? I can guarantee that you would be willing to stop traffic for one of those! That’s an investment piece that you would clutch right on to. You can feel confident in knowing that dime in your pocket is something to hold on to... self-storage investing is that valuable dime among dirty pennies!
We will start off by asking a simple question. Are you thinking of making a real estate investment? Self-storage may not be the first thing to enter your mind. Maybe you are like me and had golden dreams of the perfectly staged home, apartment, or condo. The scent of fresh baked cookies lingering in the air, fresh flowers on the tables, newly shampooed carpets beneath your shiny shoes ready to run to a great deal. Or maybe you are the fixer up type, looking for that diamond in the rough. Regardless of what you THINK you want; self-storage is one type of investment that deserves a slice of your time and consideration.
Did you know that self-storage facilities are probably one of the EASIEST properties to invest in? Property taxes are mild and the maintenance is minimal. When an accomplished self-storage manager is employed and and a comprehensive preventive maintenance program is in place, investors enjoy a relatively low hassle, inexpensive operation to oversee in comparison to other types of properties. Like any real estate investment, you have to walk the four corners of your business. BUT the biggest difference is that turn over rates are much less of a drag on cash flow compared to other forms of real estate.
When one tenant moves out, we simply sweep it out, check for any damage, and move the next one in! Renting out a home, apartment, or condo, it certainly isn’t that easy! Repair materials for self-storage buildings are easier to come by for storage units, and cheaper due to them not needing to be “pretty” for occupants. You also won’t have the normal upkeep for your units. No toilets to unclog, holes in the walls to fill, and no carpets to replace!
The need for self-storage units is done nothing but increase since the great recession. With more and more millennials putting home buying on the back burner, the storage business is booming! When individuals can’t afford to buy single family homes, they are usually forced into a residence smaller than what is ideal or needed. Apartments and condos are usually lacking in one major thing; STORAGE! There are never enough closets. You have the lack of a basement, attic, and garage. This means that there will be an overflow of things with no home. Christmas decorations, collectibles, tools, motor sport equipment, seasonal clothing…this is just the short list of things that will need to find a home.
How big is your dream?
It’s good to determine what kind of self-storage facility see yourself owning. Starting out simple is never a bad idea. A few outside access buildings will be the easiest to manage. But if you are ready to jump in feet first, moving up to a facility with inside corridors and temperature control may always be in the cards as well.
Will you offer third party insurance?This is largely an overlooked item for our customers, and another revenue generating opportunity for the Facility owner. Renters insurance is offered for an additional fee, and the facility owner receives a percentage of the premiums on a monthly basis
No matter what kind of real estate investing you are looking into, it is extremely important to start at the beginning and to get all of your ducks in a row. Make sure that you know all the facts before making a real estate deal. And if you haven’t made an absolute decision as to what kind of property you want to invest in, research it! And make sure to add self-storage investing to the top of your list!
This is the first of ten articles to illustrate why self-storage is an awesome market for long term investing.
Look for our next installments to be published every Wednesday.