Investing in Self Storage: What You Need to Know to Make a Wise Decision
When you invest in self storage, you put your money to work so that you can make more money. That’s a simple concept, but you need to remember that investments involve risk. You don’t have a crystal ball or a set of tarot cards to help you magically eliminate that risk. But, you do have plain old common sense. You can lessen the risk by educating yourself, performing your due diligence, and trusting the people that you trust with your money. Following are a few fundamental tips to help you make the right decision when you decide to dive into self storage as a method to build wealth.
Good Advice to Help You Make the Right Investment Decision
- Understand the self storage industry and why investing in it is a good decision. Don’t invest your hard-earned money into something that you don’t understand. There are multiple reasons why self storage is a lucrative investment opportunity. Investment in self storage can quickly compound your wealth and grow your net worth. In most areas of real estate, the standard thinking is that you make money when you buy. The Pinnacle Storage Properties self-storage formula is to buy under-managed, under-enhanced, and under-developed facilities, upgrade to institutional standards, then refinance or sell to a REIT. Cash flow is stable, and you’re making money through the entire process. For more information read Why Investing in Self Storage is Red Hot.
- Don’t let your emotions blur your judgment. Looking for an investment can be exciting, and finding what looks to be the right investment can be an emotional rush. Control your enthusiasm so that you can make a sound investment. Look at the property and run the numbers. Perform due diligence and base your decision on sound business principles.
- Perform your due diligence. Read investor materials to understand how the market, the financials, and the physical property work together to obtain the best outcome. Simply put, due diligence is the confirmation of the underwriting product. You want to be assured that the operators can build enough value into the facility to make money, repay lenders, and give investors a competitive return. Read Underwriting Self Storage Properties for more information.
- Be assured that you don’t have to be wealthy to make money in this industry. Self-Storage investment requires very little capital outlay as compared to other types of commercial real estate. You don’t have to be wealthy and you don’t have to actually understand how to operate a storage property. At Pinnacle Storage properties we partner with small investors, but there is no “typical” investor. A variety of individuals, from all walks of life, recognize the potential in commercial real estate, particularly the self-storage model. They recognize the recurring cash flow, appreciation potential, tax benefits, and lower correlation with the public markets.
- Avoid unqualified and untrustworthy people. The reality is that people make poor investment decisions every day. When you do decide to invest in self storage, work with people with whom you can form a relationship. You want a level of trust and comfort that allows you to ask questions and be honest about your concerns. The people that you choose to invest with should be able to explain associated risks, demonstrate a history of successful projects, and provide a competitive return on your investment.
These are just a few guidelines to get you moving toward successful investment strategies.The bottom line is that self storage is a low risk investment that can build wealth and grow your net worth. If you find the right people and the right deal, you’re on your way to making a wise investment decision that will provide the outcome that you’re looking for.
To be sure that your interests and options are protected, a qualified attorney or real estate professional should review any documents prior to signing.