How To Invest In a Self Storage Business

Self-storage locations have been around for decades, and have always represented a solid investment opportunity. Recently, the demand for storage units has skyrocketed. With properties getting smaller, hybrid working becoming the norm, and people need clean and secure places to store their items. There are new storage facilities appearing in areas all over the country to deal with the demand.

If you’re considering investing money in the self-storage sector, then there are a number of ways to do this. Which one you choose can depend on a range of factors such as your budget, where you live and the level of involvement you want to have in the business.

This article will discuss some of the most common self-storage investment options.

What is a Self-Storage

Unless you’ve used a self-storage facility in the past, your opinion of them may be colored by what you’ve seen on TV or in movies. Modern self-storage facilities are clean, secure, and high-tech. After all, if people are willing to pay to store their possessions, then they expect them to be safe.

The typical self-storage facility offers units of varying sizes that people can rent out in the short or long term to store their items. These items could be anything from additional furniture after a house move, stock from a business, or just items that you can’t fit in your home but also don’t want to get rid of.

There is also a market for specialist storage facilities. These can offer extras such as temperature-controlled units, or additional security for high-value items.

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Invest In An Existing Business

If you’re new to investment, or want to put your money into a business that is already established, then this is the perfect option for you. You can do this in one of two ways. Firstly, find a storage company that is publicly traded and invest in shares. You’ll receive annual dividends if the company is doing well, and if the stock prices rise to a very high level after you’ve invested, then you can always sell for a good profit.

The second way to invest in an existing business is by finding a privately run storage business that is looking to take on investment partners. This business could be a stand-alone storage facility, or run a chain of them. It’s very important that you get advice before undertaking this type of investment. Unless you have a background in business or finance, you will need someone to review the investment details for you as well as look into the historic performance and financial accounts of the company.

You will also need to agree on the return on investment pathway. For example, will you receive a percentage of profits quarterly or annually? Is this calculated before or after taxes?

Build Your Own

Compared to other types of real estate investment opportunities. Self-storage can be relatively cheap to set up and run as a facility. If you think that there is a gap in the market in your area, or that the existing self-storage facilities aren’t sufficient, then this can be a lucrative investment.

But what if you don’t want to run a business? Again, there are a few options for this method of investment. Either you can invest in buying the property and setting it up as a self-storage business and pay someone to run it for you. This way, the day-to-day responsibility of running a business isn’t on your shoulders, but you’re still reaping the financial rewards.

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Alternatively, you get the site set up and then sell it in its entirety to someone else. However, this would only be a one-off profit for you. So if you’re looking for a longer-term investment, then you could consider leasing out the facility for another business to run. In this scenario, you’re making money from rent, and potentially from the profits of the business too.

Key points

As we’ve already discussed, the self-storage industry is very resilient and is an excellent investment opportunity. Like all investments, the sector can be affected by political and economic changes but has historically been very resilient.

As with all investments, you need to take the time to research the opportunity to ensure that it is the right one for you. The level of expected returns is dependent on a lot of factors including your initial investment and how much involvement you want to have in the business.

If you don’t have any experience in this area then you should seek out professional advice from a financial planner or financial advisor.