A Beginner's Guide to Self Storage Investing

Welcome to our beginner's guide to self-storage investing! If you're considering entering the world of real estate investing, self-storage facilities can be an attractive option. In this guide, we'll walk you through the basics of self-storage investing and provide you with the information you need to get started.

Understanding Self-Storage Investing

Self-storage investing involves purchasing or developing self-storage facilities to generate rental income. These facilities offer individuals and businesses a secure space to store their belongings, making them a popular choice for those in need of extra storage.

Benefits of Self-Storage Investing

There are several benefits to investing in self-storage properties, including:

• Stable income: Self-storage facilities often provide a steady stream of income, as tenants typically sign long-term contracts.
• Low maintenance: Compared to other types of real estate, self-storage facilities require minimal day-to-day maintenance.
• Resilience: Self-storage properties tend to be less affected by economic downturns, making them a relatively stable investment option.

Factors to Consider

Prior to immersing yourself in self-storage investments, it's crucial to take into account the following considerations:

When contemplating investment in self-storage, a thorough examination of the surrounding market conditions is imperative. Is there a consistent trend in population and job growth? What is the predominant housing scenario—more homeowners or renters? Additionally, consider the proximity of the location to university campuses, residential areas, or businesses.

Given that self-storage is a business highly dependent on micro-locations, it's advisable to scrutinize these metrics within a 3- to 5-mile radius of a facility. Conducting comprehensive research on local market conditions provides a clearer picture of the viability of acquiring a specific property.

It's paramount to assess the level of competition within your selected market radius. If numerous self-storage facilities already exist nearby, attracting new tenants might be more challenging compared to a scenario with limited options. Additionally, consider the presence of facilities under construction or in the planning stages, as these can influence your property in the future.

When evaluating competition, examining the market's saturation level can be beneficial. The saturation level is determined by the gross square feet of storage space available per person. Currently, the average self-storage inventory per capita across the country is approximately 7 to 8 net square feet. A market exceeding this average is typically considered oversupplied, while anything below is deemed undersupplied.

Regulations: Gain familiarity with local zoning and building regulations that may impact the development or operation of a self-storage facility.

Getting Started

If you're ready to take the plunge into self-storage investing, consider the following steps:

1. Educate yourself: Take the time to learn about the self-storage industry and the intricacies of investing in this sector.
2. Build a network: Connect with industry professionals, potential partners, and experienced investors to gain insights and build valuable connections.
3. Conduct due diligence: Thoroughly research potential investment opportunities and assess their financial viability.

Conclusion

Self-storage investing can be a lucrative venture for those willing to put in the time and effort to understand the industry. By carefully evaluating potential opportunities and staying informed about market trends, you can position yourself for success in this growing sector of real estate investing.