If you still haven’t noticed it, there’s a lot of investors who want to join the self-storage wagon. Currently, the whole industry is experiencing a massive boom, so it’s not surprising that a lot of people want to get into passive storage investing. Some forecasts suggest that the compound annual growth rate (CAGR) and return on investment (ROI) for self-storage businesses will remain quite high over the next few years.
So, investing in this industry is very appealing right now. Also, the loans granted by the Small Business Administration (SBA) make entering into the market a lot easier. It’s also a better option for those who don’t want to deal with tenants, maintenance, and other complicated matters that their residential counterparts have.
Why Passive Storage Is One of the Best Investments Right Now
These are some of the main reasons why a lot of investors want to get into the self-storage market:
Strong Return on Investment
The self-storage industry has proven that it can withstand financial turmoil as it is projected to have a CAGR of around 134.79% from 2020 to 2025. Due to this bullish outlook, a lot of investors want to enter the market by investing. Also, the demand is holding steady with 9.4% of households are currently availing the services of self-storage facilities.
The average cost of self-storage units for all sizes sits around $87.89 per month, so it means that there are still a lot of opportunities for investors to grow. The industry’s growth rate is also projected to be steady as it has a history of high ROI for most properties.
The self-storage market also had higher growth compared to other sectors of the real estate industry such as industrial, office, residential, retail, etc. From 2009 to 2018, self-storage properties had an average ROI of 16.9%.
Since most facilities are viewed as safe investments with high returns, the industry is one of the most sought-after forms of real estate. But you need to know how and where to look for will allow you to seize many opportunities. You can scour new constructions to conversions and rehabs as it will usually lead you to discover more chances to invest in your area.
If you want to get into the market, you need to start by talking to a real estate agent near you. But if they don’t have any self-storage property listings, you can reach out to current owners to see if they are willing to sell or know other facilities that are in the market. You should also read up on Passive Storage Investing: Most Profitable Investments article and other resources as they may help you find the perfect facility to invest in.
Available Financing Options
Aside from very high ROI, investing in the self-storage industry is very attractive because it is very easy to attain financing because of SBA loans and other passive storage investing options. The SBA 504 loans have jump-started the whole industry as you can only provide as little as 10% for your investments.
So, it’s a lot easier for investors who are just starting to get into the market. These loans also have a fixed interest rate for up to 25 years instead of requiring refinancing every five to seven years. The loan’s interest rates are also very competitive compared to market rates, which also keeps the payments to a minimum.
Another alternative financing option is through investing in syndication deals. Instead of acquiring a facility on your own, you can pool your money with other investors. These funds can then be used to buy a much larger self-storage property.
Very Easy To Maintain
Another benefit of investing in self-storage facilities is that it requires less maintenance compared to other real estate sectors. So, if you find people who already have experience in the field, you can tap them to help you manage the operations of the business. They can also guide you in navigating the complexities of running a self-storage facility.
But if you can’t find a qualified person to join your team, you can use several software programs to run your facility from your home or anywhere. You can also install kiosks, surveillance systems, and allow your customers to sign documents online if you want your business to run without you visiting the site at all.
A lot of newer self-storage facilities are also using remote check-ins and other technologies to make their operations more streamlined and hands-off. These innovations can also remove the need for a full-time manager.
A Lot of Room For Growth and Expansion
The last reason passive storage investing is all the rage right now is that you can offer additional services and products. These products and services can be bought by your customers as a bonus or add-on for another purchase.
Normally, self-storage facilities offer boxes and locks to their customers, but you can also provide moving or other transportation-related add-ons. These items can be lifting straps, dust covers, trailer lock kits, and furniture slides as they might be useful for your client who may have forgotten about them.
Also, these ancillary products can become a steady source of income when it is paired with self-storage. The more services you offer, the more likely are customers going to renew or avail of new units. Managers should also be trained on how to market these products to clients. They should also be able to inform customers about them without being overbearing.
You can also use these products and services to differentiate yourself from your customers. By doing so, you will be able to cast a wider net, as you can have all of the services that people might need.
If you are a person looking for the best investments right now, this is the perfect time to start entering the self-storage market. As the world is still reeling from the effects of the pandemic, many people don’t have a choice but to downsize or declutter their homes and lives. So, passive storage investing makes a lot of sense right now since it still enjoys strong growth even during recessions. It is also one of the real estate sectors which offer the highest ROI.