How to Invest in Self-storage
No matter how hard people deny it, there’s a bit of a hoarder in everyone. Somehow, a lot of people just cannot resist the urge to buy stuff and hold on to them for a long time. Even when some of these items have already gone beyond their usefulness, they are still kept for sentimental reasons or maybe in hopes that they can be used again someday.
The penchant of a lot of people to hold on to things that they do not necessarily need at the moment has helped the self-storage industry stay afloat. Even during the times of recession, self-storage still managed to get profits unlike other forms of real estate.
Why Invest in Self-storage
A self-storage business is a good investment to put your money in. It belongs to an industry that is not affected adversely by economic swings. It’s also a business that does not require a lot of operational processes and capital infusion. You only need a piece of real estate property, storage containers, and a secure perimeter for this business. For those who do not want to run a self-storage business themselves, investing in self-storage companies would be a good option.
During recessions, when people are downsizing their homes, self-storage facilities remain to be high in demand. In most cases, it is cheaper to store their stuff inside self-storage facilities rather than to try to cram everything in a small apartment. Besides, it would be expensive to look for a bigger apartment just to accommodate all the accumulated furniture, fixtures, and other miscellaneous items.
On the other hand, when the economy is doing well, people tend to turn to storage facilities for excess items that result from their increased ability to purchase more goods. The more the buy and the less they throw away or give to others, the more they need additional space in which to store their items.
Experts in investing predict that the demand for self-storage units and facilities will remain high in the coming years. Anyone engaged in the self-storage business and those who have put their money into these businesses are in for great returns.
Opportunities to Invest in Self-Storage
There are many ways for you to tap into this market and cash in on its gains. Here are a couple:
• Stock Investment – The easiest way is for you to buy shares of stocks of publicly listed self-storage facilities. This works like any other stock investment. You simply have to contact a broker to look for a viable self-storage company where you can invest your money in. If this is your first time to invest in stocks, ask the broker to run you through an introduction to the rudiments of investing. This way, you have an idea about what to expect especially when it comes to risks, returns, and investment amount involved.
Carefully study the risks of investing in stocks and be wise about your choices. This goes for your choice of broker as well. He should be able to give you credible information about the stocks that you are about to purchase. You should also do your own research on the financial viability of the self-storage company you are planning to invest in.
Try buying stocks of well-known storage facilities to ensure that you are getting stocks that have high rate of returns. Well-known storage facilities, unlike smaller companies, have facilities all over the world. So even if one facility get compromised, there are still more places where they get income. Stocks of well-known storage facilities are also more stable than smaller up and coming companies.
Take note of the amount of time within which you can reap the gains. There are some stocks take a number of years to make substantial gains. Ask about lock-in periods within which you cannot liquidate your stocks or recover your investment. There could also be restrictions when it comes to selling these stocks to realize your gains. It is best to find out what these restrictions are as well as the penalties and options you have for cashing in or opting out of the investment.
• Owning a self-storage facility – You can build a self-storage facility yourself. If you have a piece of property somewhere that’s just sitting empty, why not convert it to a self-storage facility? A self-storage facility takes less cost to build than a set of apartments. It also requires very little maintenance. This means there is no need to hire a full maintenance crew. In some cases, all you will need is one or two caretakers.
Building a self-storage facility is a more economical way to earn income from your real estate property. There is also no need to spruce up the place once the last tenant moves their stuff out. You do not need to hire an interior decorator to make the space beautiful. Just clean it up and place a for rent ad online. The turnover rate for self-storage facilities is also lower as people tend to hold on to their containers for long periods.
Your Risk Appetite and Investment Personality
Whether you choose to invest in self-storage stocks or set up your own self-storage business, there are always risks involved. It could be quite difficult for you if you do not have the heart to take these risks. Make sure that you know what you are getting into and that you are ready to face all the challenges that your choice will bring. The self-storage industry is one where lucrative options abound. It’s up to you to choose which one of these options you are ready to risk your money and resources on.
Self-storage facilities are easy investments that anybody can get into. Whether you choose to invest in an existing company or create your own storage facility will depend on your capacity to invest. You should dedicate ample time and effort into making sure your investment will flourish.
Think also about how this investment will affect your day to day spending and the long-term implications. Though there are proofs of success in this kind of investment, nothing is ever full proof. Always be aware of your rights as an investor. Do your research, go with reputable brokers, and take every precaution to protect your investment.