12 Reasons Why Self Storage is the Only Real Estate Investment You Should Ever Make

Real Estate: Self Storage

If you’ve been looking for a way to expand your real estate portfolio, self storage can be a sound investment that enables you to grow wealth with little capital outlay. Self storage real estate market conditions are excellent right now, and research forecasts suggest they may stay that way for at least the next few years. Compared to other commercial real estate investments, self storage has its own set of particular reasons why its a more attractive investment.

Multi-Housing News predicts another strong year for self storage due to several demographic trends. Older millennials are forming families and establishing homes, and retirees are downsizing. Not to mention the pandemic, which has prompted people to leave urban centers in favor of more affordable suburban areas and smaller cities. These trends should continue through 2022 and into 2023.

If you’re on the fence about investing in self storage, now is the time and Pinnacle Storage Properties is the place to get you started. Adding self storage to your investment portfolio is a smart move and one of the best investment opportunities in the current market.

Real Estate: Investment

12 Reasons Why Self Storage is the Only Real Estate Investment You Should Ever Make

Attractive Return on Investment (ROI)

ROI and compound annual growth rate for the self storage industry is forecasted to increase over the next five years. Self storage ROI has been outperforming retail, office, apartment, and industrial spaces since 2009. According to Green Street Advisors, even during the pandemic, self storage was down only 16% compared to strip mall (down 24%) and multi-family (down 23%) investments.

Passive Income and Tax Benefits

Self storage is a great source of supplementary income. As a passive investor, you don’t have to put any time or energy into understanding self storage operations. You can relax, collect stable income, and reap additional tax benefits stemming from real estate investment. Consult a professional tax advisor to get more information on the potential tax advantages.

Real Estate: Increased Cash Flow With Accelerated Depreciation

You can increase cash flow by accelerating depreciation through cost segregation. This extra cash flow allows more opportunities for further investments and funds necessary property improvements. In addition, increased depreciation provides an immediate reduction in federal income tax. For more information read Will a Cost Segregation Study Benefit My Self Storage Property.

Very Little Capital Outlay

Self storage investment requires very little capital outlay as compared to other commercial real estate sectors. You don’t have to be wealthy and you don’t have to understand how to operate a self storage property. As a matter of fact, Pinnacle Storage Properties partners with investors from all walks of life who recognize the recurring cash flow, appreciation potential, and tax benefits of self storage investment.

Low Risk

Self storage doesn’t have the typical peaks and valleys of occupancy that are common with retail or office space. If you have a 250-500 unit self storage facility and 10-20 units, your overall rent is minimally affected. In the unlikely event of large-scale move-outs, the advantage is that rate management can be used to increase occupancy. Once occupancy is stable, street rates can be raised.

Recession Resistance

Moving to more conservative investments like self-storage offers investors more stability than traditional investments in stocks and bonds. In a booming economy, people are purchasing goods and growing their businesses, which means they need a place to store the overflow. When the economy is impacted negatively, self-storage is historically recession-resistant because people are forced to downsize their homes or businesses. They need a place to store household goods and business inventory until the economy picks up.

Faster Turnaround Time

Refreshing a multi-family space is time and labor intensive, and the cost will be somewhere between $4,000 and $8,000. The includes carpet cleaning, painting, making repairs, and cleaning appliances, among other things. Not to mention that the unit is off the market for a period of time. A self storage refresh requires only a broom and dustpan and takes about 15-20 minutes. The space is ready to rerent immediately.

High Demand

Over 10% of households in the U.S. currently use a self storage unit. According to the Self Storage Association, the majority of these tenants live in single-family homes with a garage, and 33% of them also have a basement. Yet, they still need the extra space that a self storage unit provides. Most self-storage customers rent long-term, with 52% of those surveyed reporting that they’ve kept their storage unit for one year or more. Only about 16% of customers rent storage for less than a year.

Painless Rent Increases

The flexible, month-to-month self-storage lease theoretically allows you to change the rental rate every 30 days. The industry doesn’t typically do that, but the short term of the lease does allow you to raise the value of the property faster than you would be able to with an asset that has a longer-term lease. Self-storage tenants are willing to accept more rent increases than tenants in other real estate classes. If an owner increases rent on a $100/month unit by 5%, it’s highly unlikely that tenants are going to waste time relocating their belongings for $5. It doesn’t make sense. An apartment dweller, however, might see a 5% increase on $1,000 as motivation to save money by moving.

Lower Operating Costs

According to the Parham Group, self storage operating costs range from $2.75 to $3.25 per net-leasable square foot. Compare this to operating costs for the other real-estate properties surveyed, which range from $3.50 to $5 per square foot. Apartments, offices, and retail properties employ staff to continually maintain the grounds, appliances, plumbing, electrical fixtures, and a variety of other items.

Fewer Management Staff

The average number of employees in a self storage facility is 1.5 per store. Smaller facilities may employ only one full-time employee. Some facilities offer online rental or kiosks that enable contactless transactions, meaning that there is no management staff. In multi-family, you have leasing agents, office personnel, general managers, and maintenance teams, all creating extra expenses.

Opportunities for Ancillary Income

Self storage is primarily a service industry, but retail sales play a big part in the increase of ROI. Adding retail sales to your facility attracts customers, increases profitability, and adds value to your business when it’s time to sell. Don’t think of retail as an added hassle; think of it as an added opportunity. Truck rental, moving and packing supplies, insurance, and tenant protection plans are all sources of ancillary income.


The self storage market is booming and there are countless reasons for investors to explore the available opportunities in this sector. Trends predict that the need for extra space isn’t going away anytime soon and that self storage will continue, at least for the next few years, to be a sound investment that will provide a stable cash flow.