Self Storage Vs. Commercial Real Estate Investing
Commercial real estate investments can mean buying, selling or leasing properties for retail, office and other commercial purposes. Technically, investing in self storage is also a type of commercial real estate since you will rent this space to customers. Still, this subset of commercial real estate has a few advantages.
In general, investing in commercial real estate can require a larger capital investment than self storage because commercial properties tend to have higher values. The appearance and location of commercial real estate are also essential because these properties need to attract foot traffic and be presentable for clients.
Self storage can be a more flexible form of investment. Odd-sized properties and those outside areas with high foot traffic are ideally suited for self storage since their functionality is the priority. These characteristics allow landowners to use property that is not as appealing to commercial investors and is more affordable.
Facilities for self storage can be retail businesses, too, since the office can sell packing tape, boxes and other supplies for moving possessions. This business model’s flexibility can offer a more stable return on investment than many commercial real estate investments.
Benefits of Self Storage Investing
For both new and experienced investors, self storage offers many benefits:
- Less liability: In a multi-family apartment building or facility with a commercial lease, landlords often carry considerable liability and can be sued. In self storage facilities, while proper security is important, the laws are more favorable toward property owners.
- Better diversification: Self storage units can have anywhere from a few units to hundreds of spaces for customers. You can offer temperature-controlled units, spaces of different sizes and storage specifically geared for individuals or businesses to diversify your facility.
- More tenants: More diversification also means more tenants. You can attract everyone, from college students going away for the summer to small businesses seeking to store inventory. Even if some tenants leave, you can always rent out more units because there is a demand for storage.
- You can change rates easier: With residential and retail properties in some cities, there may be limits on how much and how often you can raise the rent. There are fewer rules for self storage, and with higher turnover, tenants are less likely to be upset about rate increases.
- Perform well in all states of the economy: Storage units are often considered recession-proof since they perform well in virtually all economic cycles. Individuals are always moving, and many will require self storage for some time. In a recession, people may be decluttering and downsizing, necessitating storage.
Get Started With Investment Real Estate
If you’re interested in self storage investment, IRE investment brokers can help you buy and sell your property. We have the white papers and data to help you maximize your investment. To get started, contact IRE today to learn more.