Over the last ten years, the self-storage industry has grown to be a lucrative and relatively-free one. The industry can be seen as recession-proof, providing a stable cash flow. This specific industry is cyclic since families, offices, individuals, and businesses will always need storage spaces. The self-storage industry will keep increasing as most American families love storing their stuff. With over 58,000 self-storage facilities scattered worldwide, over 46,000 are in the US.
Economic growth comes with redevelopment leading to increased self-storage facilities demand. With various financing and engagement options in the self-storage industry, this niche is a viable and approachable investment option.
You can make a self-storage facility investment your primary income source or as a passive mode of income, where you earn a decent amount of money without stressing yourself.
Passive self-storage investment is also an excellent method of diversifying your real estate investments or branching into the real estate sector as a new investor.
If you’re wondering what passive storage investing is, read on to the end to discover what it is and how to invest in self-storage properly.
What Is Passive Storage Investing?
Passive self-storage investing entails putting your money into group investments popularly called real estate syndications. This practice implies pooling your funds with other investors in a company rather than buying or building property storage units from scratch. Pooling funds together will ensure you get a larger commercial property, resulting in more profits for all the investors.
With passive self-storage investment, you won’t need to work to make your money grow. You’d only need to invest your funds and start receiving cash flow checks.
Passive Storage Investment Benefits
One of the reasons most people opt for passive storage facilities is the ease of making a profit. However, the following are some of the benefits of passive self-storage investment.
Frees Up Time
Time is a precious and limited asset, so people prefer engaging in less time-consuming activities. Passive investments offer high self-storage investment returns. So once you join a syndication group, relax, sit back, and make some money without stress.
Risk Diversification
Passive investment helps protect you against certain risks. For instance, some investment provides high-risk ventures, but there’s minimal risk in real estate options like self-storage.
Investing in passive self-storage will ensure you remain financially stable when other investment types fail, helping you to achieve your financial freedom goal still.
Increased Profit Margins
Passive self-storage investing is one of the ways to get good profits without any stress. Depending on the type of storage facility you need to invest in, it might take a while to set it up entirely, but once it’s fully established, you’ll start earning continuously for a long time.
With the profits, you can enjoy your life without worrying about your investments or even go on a vacation if you desire.
Maintaining and Managing Your Self-Storage Facility
With passive self-storage investment, you won’t need to do any work since the company handles everything. However, if you want to invest in your own storage facility, here are some tips on maintaining and managing your self-storage facility.
Suppose you’re determined to buy land for constructing your self-storage facility, or you’ve decided to purchase an existing building to convert to a storage property. In that case, you’ll need to spend some money on development. Consider getting a professional designer for the building’s exterior and interior to ensure adequate space in the property.
Since there are various types of self-storage facilities ranging from mixed-use, climate-controlled, drive-up units to non-climate indoor storage, you’ll need to equip the facility with appropriate equipment.
Additionally, ensure to get them cleaned before and after occupancy regularly. It’d be best if you hire professionals to maintain and service your storage units since providing a dry and secure storage area is a major determining factor customers’ check before opting for a self-storage facility.
Ways to Invest in Self-Storage
Besides joining a real estate syndication investment company focusing on self-storage facilities, there are other means of investing in self-storage. However, it’s always difficult finding a good self-storage investment opportunity. Consider using the following tips here to discover one you might find interesting.
Building a Self-Storage Facility
Developing a self-storage facility is often energy-sapping and time-consuming. However, it’s very lucrative when carried out properly since newly developed storage facilities possess the highest storage market value. But note that it takes a higher level of experience, knowledge, and finance to ensure its success.
Storage REITs
This strategy is one of the easiest self-storage investment methods. Usually requiring a small amount of time before generating dividends, getting shares from Real Estate Investment Trusts (REITs) is one of the passive investment options to try.
Buy a Self-Storage Facility From the Owner
If you don’t see the need to build a new storage facility, consider buying an existing storage unit from the owner looking to sell. This act helps prevent pitfalls that result from developing your own storage units.
Before deciding on a storage facility to buy, ensure it has proper drainage systems for preventing freezing and flooding and is well-maintained and attractive looking. Additionally, check that it possesses enough lighting for ensuring safety at night and comes in different unit sizes at different prices.
Maximizing Self-Storage Passive Income
One of the advantages of passive self-storage investment is that there are several self-storage investment opportunities you can select from. Additionally, it gives you free time to pursue other engagements. Consider collecting data from your customers who have previously used your storage unit, then analyze the feedback pattern from several customers to check where you need to change. It could be on safety protocol, pricing policies, or any other complaint area by your customers. However, you’ve got to be sure these changes being suggested are logical and feasible.
Similarly, you can also use the collected data to change your communication strategy, launching a new marketing campaign to get more customers. One such way of achieving this is by diversifying into a new and different storage facility type or offering new services aimed at maximizing your passive investing income.
Passive storage investing is often confusing for new investors; however, it’s an excellent way to earn more income stream. For budding entrepreneurs looking for a safe, profitable, and easy investment opportunity in the commercial real estate industry, consider opting for self-storage investing. This particular investing option requires a small amount of finance to start and is unaffected by economic downturns making it a hot market to penetrate now.
