Reasons to Invest in the Self-Storage Sector

Investing in the self-storage industry is a great idea for clients seeking to maximize their Private Equity Real Estate returns. This strategy is effective because;

The Industry Has a Promising ROI

Most companies in the self-storage industry have consistently produced good returns on the shareholder's investments since the sector began. Its recession-resistant nature means that this might not change, even with the global market recessions caused by the Coronavirus.

The compound annual growth rate is projected to be above 130% between 2020 and 2025. With a steady demand for the product and a high average rental price, starting a self-storage facility is a smart investment.

The Properties’ Ease of Maintenance

Maintaining a self-storage facility is less of a hustle compared to other products with similar private equity real estate returns. Unlike other real estate equity investment, you do not need a full-time property manager when managing the investment.

Rookie owners may need the help of experienced personnel when setting up the facility, but day-to-day operations can be easily managed through the use of web and mobile applications.

Needed technologies, in this case, include surveillance systems and remote check-in programs. This is mainly because the security of items is one of the primary client concerns, and failing to invest in these items will reduce the demand for your services.

If the property is not physically manned, you may need to acquire online signing equipment. This helps new subscribers look through, sign the property contact, and get access to the rented space. You could also offer assistance to stranded clients through a web portal.

Room for Expansion

Real estate companies offering self-storage have many expansion opportunities, especially by providing complementary services. This increases the business revenues and creates opportunities for the owners to market the original product.

Most investors in the self-storage sector prefer venturing into the moving and transportation sector as clients often need reliable means to move the stored items to and from the facility. Offering this service for free, within certain parameters, increases interest in your product without costing you a lot.

Add-ons to the transportation services include boxes, dust covers, and furniture slides which can be offered at a premium to help cover other costs in the facility.

Availability of Affordable Financing

Small business administration loans offer attractive financing alternatives to investors opening a self-storage facility. One of the options allows the business to put down payment that's often as low as 10% towards the project. The financial institutions then offer loans that are repayable at a set interest rate for about 25 years.

Syndication deals are also a commonly used financing alternative in the industry. Pulling your money with other investors reduces your risks and increases your idea generation ability. This ensures you get the best private equity real estate returns.

Utilization of Unused Space

It is not uncommon for real estate companies to have huge unused spaces on prime land earmarked for future developments. Self-storage offers the investors a low-cost, high-margin opportunity to make money off this unused property.

Having a large space allows you to create multiple alternatives for the clients, diversifying your self-storage facility investment. Since clients require different storage sizes for rent, you can model the business to offer large vaults or smaller safety deposit boxes depending on the unused space available.