Why The Self-Storage Investing Sector is Big Right Now
Generally speaking, when someone chooses to invest in real estate properties, chances are good that they are thinking of housing. After all, housing is something that is in-demand by the overwhelming majority of consumers, meaning that it is natural for real estate investors to look into its potential. However, interested individuals should never lock onto something to such an extent that they overlook other potential options, with an excellent example being self-storage facilities for real estate investors. Here are some of the main reasons that real estate investors should consider self-storage facilities:
Constant Demand
There are a lot of products and services that are either cyclical or counter-cyclical in nature. Essentially, cyclical means something that sees its demand rise and fall in correspondence with the boom and bust cycle, whereas counter-cyclical means the same but in reverse. For investors, the cyclical or counter-cyclical nature of investments can be a serious issue because it means that their investments are exposed to prevailing economic sentiments as a whole. As such, it is worth noting that self-storage facilities see demand during both the boom and the bust periods of the economic cycle. During boom periods, people buy more stuff, meaning more need for storage space. Meanwhile, during bust periods, people move out of expensive housing options into more affordable counterparts, thus generating demand for self-storage because of the stuff that needs to be put somewhere besides their own homes. Combined, these factors ensure more stable earnings from self-storage facilities, which should make it much easier for interested individuals to plan out their rates of return.
Inelastic Demand
Speaking of which, there are some products and services with elastic demand, meaning that price changes can produce significant changes in the number of people who consume them. For example, if one generic brand of salt raises its price by 100 percent, the number of buyers will plummet because they will just buy some other generic brand of salt. In contrast, other products and services have much more inelastic demand, with an excellent example being life-saving drugs whose consumers don’t have much choice on the matter. It would be an exaggeration to compare self-storage facilities to life-saving drugs, but they do tend to be on the inelastic side of things, meaning that interested individuals can raise rents without seeing too much of an impact on the number of people who choose to use their services. Of course, there are serious limits to what people will and will not put up with, but it is nonetheless useful for investors looking to generate some more revenue from their investments.
Various Ways to Make Money Off of Them
On a related note, there are a lot of ways to make money off of self-storage facilities, thus making them that much more suitable for a wider range of individuals. For example, the simplest and most straightforward method would be just buying self-storage facilities and then renting out the units. However, it isn’t uncommon for investors to pour some extra money into upgrading them for the purpose of increasing their revenue generation. For that matter, there are people who choose to buy and flip self-storage facilities because there is more and more interest in such investments, which in turn, means a bigger and bigger market for such real estate investors. As for the various ways by which more value can be added to self-storage facilities, examples include but not limited to additional fees that are small enough for the consumers to soak up, raising the rent by similar margins, and adding new kinds of storage for items that can’t be accommodated at other places.
Final Thoughts
With that said, it is important to note that the standard rules for investing in other real estate properties are applicable for self-storage facilities as well. In short, there are potential downsides, meaning that interested individuals will want to make sure that they understand what they are doing before getting started. Furthermore, they might want to build up a team of real estate professionals who are familiar with self-storage facilities beforehand so that they can get the help that they need to make the process as smooth as possible.
