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Tips for Investing in a Self-Storage Facility

Understanding the historical performance of a self-­storage facility along with revenue trends and cycles are critical when selecting an investment property. We've prepared a list of the essential tips for investors just getting started in the self­-storage industry.

Self­-storage revenue is counter-­cyclical.

The counter-­cyclical nature and minimal sensitivity to shifts in the economy helped the self-­storage industry weather the recession better than most industries. Revenue growth over the next five years is expected to be by bolstered by job growth, rising household income, home renovations, relocation for work and increased consumer spending.

More hands-­on than other commercial real estate investments.

Self­-storage facilities are an asset with many moving parts that must be managed from day to day. Immediate maintenance items after acquisition and ongoing upkeep make self- storage facilities a more hands­-on investment than other types of real estate. Your property's curb appeal is key in attracting and keeping occupants.

Low risk, but long-­term return on investment – not quick.

While self­-storage facilities are appealing as a stable low risk investment an investor can expect a slower and steadier race rather than a sprint when it comes to ROI. Often it can take four or five years for a facility to stabilize after its been purchased.

Future demographic trend research needed for specific areas (people moving to the area, but high rents).

Each market is different which is why it's useful to look at current demographics to determine the drivers of demand. Some key parameters to consider are the percentage of renters versus home owners in the area, the projected population trend over the next five years and whether the average income or net worth in the marketing area supports self- storage rentals.
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