Investing is Hard
Whether you are investing in the stock market, into real estate, businesses, or anything in between – investing can be really challenging. Stomach-churning headlines speaking of impending financial doom, global energy crises, and world wars seem to come out nearly every other day. If it isn’t Fox News or CNN, then it’s surely CNBC or other local news channels. There simply is no escape.
So, how can you – the aspiring investor – make sense of all this noise? Is there even a place to hide and protect your capital for yourself and the future generations that rely on you?
The answer is simple – it’s self-storage investing.
Self-storage investing can provide the type of protection you and your family need in today’s challenging investment landscape. Self-storage can be the source of dependable earnings and asset appreciation every investor yearns for and dreams of achieving. Self-storage is the key to your investment success, and we can help you get there.
In this article, we’ll discuss three major benefits of becoming a self-storage investor. Once you hear them, you won’t look at any other investment the same.
Benefit #1 – Diversification
Diversification is the key to success. Times are changing. And, with changing times comes unexpected events. These events can come in the form of a natural disaster or a rapid rise in interest rates. Or they can come in the form of a roof leak or robbery. No matter which way you shape an investment – either real estate, the stock market, or a business – disasters seem to always rear their ugly heads.
Diversification is your ticket to sustainable investment success – and self-storage provides just that. With other investments – stocks and real estate a like – it’s hard to be fully diversified. Let’s say you invest in a retail strip mall with 10 tenants. Although it might seem like you are diversified, are you really? If any one of those tenants vacate you’ve just dropped from a 100% occupancy to a 90% occupancy overnight. If the market turns quickly and interest rates rise, is there really much room to raise rents if you are locked into long-term leases? No!
Self-storage – and the diversified array of tenants it enjoys – provides the necessary diversification you’ll need to weather any storm – whether financial, tropical, or property-specific. Any given self-storage property contains hundreds of units on short-term leases with tremendous optionality. These are units with different configurations, different usages, and different types of tenants. If anything were to happen to the market or any number of these units, you have the flexibility and the bandwidth to weather the storm, shift your rents accordingly, or rely on the hundreds of other units being rented out.
Benefit #2 – Short-Term Leases
Self-storage is a high demand asset. Now that Covid has subsided a bit, towns are getting repopulated with young professionals and growing families. These city members need extra space to compensate for their small apartments or houses. This has created a structural boom for the self-storage industry. And – best of all – these tenants are all on short-term leases. That gives you, the landlord, the ability to shift your market rate along with the prevailing demand.
Traditional multi-family and commercial properties have long-term leases. For multi-family, these can last 1-2 years. For commercial, the standard lease can extend for over 10 years. Although this sounds comforting on the surface, it isn’t. Costs have risen rapidly, and demand has only strengthened. A multi-family owner can’t raise their rents to combat inflation as quickly as a self-storage investor with 500 units all on a month-to-month lease. The flexibility is nearly unparalleled in the industry.
Benefit #3 – Recession Proof
The last benefit (and potentially the most important one) is the fact that self-storage is a recession proof asset.
We are in challenging times – it is no secret. Interest rates have risen at the fastest rate in history and asset prices are getting crunched. However, self-storage has – and will continue to be – tremendously resilient.
Why It’s Simple
People need self-storage and it’s a low fixed cost. Self-storage is used to store precious items. That could mean an old car, a couch, furniture in between moves, or anything of the like. And not only is the space needed, it’s a relatively cheap sunk cost. Self-storage units generally cost roughly $50 – $100 per month. When looking to cut back spending, people consider taking public transportation or eating out at restaurants less often – they don’t think to reduce such a small monthly storage fee.
Restaurants and gas can cost upwards of $300-$500 a month. Why let go of a much-needed storage space that is costing $50 a month when you can cut back somewhere else and save more money.
For that reason, self-storage has remained extremely reliable and resilient through inflationary and recessionary periods alike.
Now that you know the three benefits of becoming a self-storage investor, is there really any better place to invest?
For more information on how to invest in self-storage, check out our website at www.safestorageinvestors.com.