Property Spotlight: Investing in Self-Storage, Storage Units, Or Storage Space

Is this storage unit big enough?

Thinking about investing in storage units?…I mean storage space….what I meant to say was self-storage?

Greetings from the metropolis of Cedar Crest, NM!

Actually….from Corley’s Automotive…where my car is in the shop…again.

Anyway…

This is the second post in a series that will highlight the different types of properties available to investors. The posts are an overview of general information. As with all investments, you should properly research the opportunities to determine whether they fit your portfolio.

What are storage spaces?
Storage spaces are properties that lease units designed to store personal property but are not designated as living spaces. Storage spaces may offer a variety of unit sizes, with some large enough to hold automobiles. Many storage spaces offer an on-site manager that processes paperwork during office hours and lives on-site to provide security. Many managers receive their living arrangements in addition to a nominal salary in exchange for their services.

What Do I Need to Know About Investing In Storage Space Properties?
Storage spaces can be a very efficient way to build your wealth, but you need to do your research to find the right opportunity for you.

1. One of the easiest ways to invest in a storage space is to invest in a Self Storage Real Estate Investment Trust “REIT”. According to investorwords.com, a REIT is a corporation or trust that uses pooled capital of many investors to purchase and manage income properties. REITs require no minimum investment, and pay yields in the form of dividends, which are not based on share performance. Investing in a REIT will yield regular income without the hassle of active management.

2. A significant number of storage space tenants are clients. This means that you secure long-term, low-risk tenants. The bottom line is that you receive steady income with low risk.

3. Economic data has shown that this sector has not been hit as hard as others by the recession.

4. Barriers to entry are significantly lower because construction costs are less than that of other types of property.

5. Maintenance costs are low. Storage spaces are generally constructed from steel or other high-grade industrial materials that are designed to last longer than standard residential materials.

6. Eviction costs generally do not exist. Most states require that unit contents be auctioned.

7. Taxes and insurance costs are typically lower than other types of properties.

What Are the Cons To Owning Storage Space Properties?
Storage space properties can be quick income generators; there are drawbacks to owning this type of property. The market you want to invest in may be too well penetrated. This means the supply of storage spaces may outweigh the demand. Additionally, your region may not have the demographics to support the need for storage spaces. Do many of the residences in your market offer full basements that could feasibly store large amounts of personal property? Is your area full of late teens that may not have acquired enough property to fill an apartment, let alone a storage space?

In Conclusion
Storage space properties are a common addition to many investment portfolios. If you are considering investing in a storage space property, take the time to tour other properties in the market and look at each building’s performance. And, as always, if you have questions, contact the experts at The Real Wealth Company.

Until next time…..rob

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