What You Need to Know to Make a Wise Self Storage Investment
Self Storage Investment
Self storage brings to mind images of unattractive, warehouse-type buildings filled with people’s belongings. They don’t have the charm of a luxury shopping mall or an exclusive restaurant, but they offer a solid investment opportunity. If you think self storage isn’t a rewarding investment option, think again.
The appeal of self-storage investing lies in its capacity to grow wealth with little capital outlay. It isn’t only for the wealthy and well-connected but attracts a variety of people from a host of backgrounds.
Single-family homeowners, multifamily property owners, and commercial real estate investors are only a few of the groups attracted to self storage investment. These people recognize an alternative avenue to passive income and increased wealth.
According to John Manes, CEO and Partner at Pinnacle Storage Properties, in his book, The Working Class Guide to Building Wealth With Self Storage – A Path From Rags to Riches, owning a self storage business is profitable if done right.
In most areas of real estate, the standard thinking is that you make money
when you buy because you buy low at the right price and sell high to make
a profit. Our self storage formula is to buy under-managed, under-enhanced,
and under-developed self storage facilities, upgrade them to institutional
standards, and then, based on the new higher value, refinance or sell to a
REIT. Cash flow on these types of storage businesses is stable, and you’re
making money through the entire process.
Self Storage Investment: Beginning Your Self Storage Investment Journey
Becoming a self storage investor is relatively simple, but there are crucial factors to contemplate before diving in head first.
You can lessen the risk of making a mistake by educating yourself and performing your due diligence. Be certain that you trust 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.
Tips for a Wise Decision
Understand the Self Storage Industry
Get acquainted with the self storage industry and discover why it’s a smart move to invest in it. Having first-hand knowledge of self storage operations isn’t necessary, but it’s a good idea to know something about what makes a facility profitable.
It’s true that self storage investing can quickly compound your wealth and grow your net worth. To make this happen, however, it’s critical to invest with experts who can clearly explain how and why this investment works.
Keep Your Emotions Under Control
If this is your first investment in the self storage industry, finding the right property can give you a surge of emotions. Don’t let your enthusiasm blur your judgment. It’s important to keep your excitement in check in order to make an informed decision.
Take the time to carefully evaluate the property. Make it a point to have experts complete all financial analysis details. Your choice should be grounded on sound business fundamentals, not emotional impulses.
Recognize the Importance of Due Diligence
In simple terms, due diligence involves verifying and validating the underwriting process. Good results ensure that the operators have the ability to add sufficient value to the facility in order to generate profits, repay lenders, and provide investors with a competitive return.
You Don’t Have to Be Wealthy to Invest in Self Storage
Investing in self-storage requires minimal upfront investment compared to other forms of commercial real estate. You don’t need to be wealthy or have in-depth knowledge of managing self storage facilities.
At Pinnacle Storage Properties, we collaborate with small investors from diverse backgrounds. These people recognize the potential in commercial real estate, especially the self-storage model. They acknowledge the consistent cash flow, potential for appreciation, tax advantages, and reduced correlation with public markets. There is not a “typical” investor; people from all walks of life are attracted to this opportunity.
Partner With the Right People
It’s not a secret that many individuals make unwise choices when it comes to investing. However, if you choose to invest in self storage, it is crucial to connect with individuals who want to establish a meaningful relationship with you.
You should feel a sense of trust and ease that allows you to openly discuss any concerns you may have. The people whom you decide to invest alongside should be capable of explaining the potential risks involved. They should have a history of successful endeavors that offer an attractive return on your investment.
The above ideas are meant only as suggestions to help you develop effective self storage investment strategies.
The main point is that investing in self storage is a low-risk opportunity that can increase your wealth and boost your net worth. If you connect with the right individuals and find a good deal, you’ll be making intuitive investment choices that will deliver your desired results.
To be sure that your interests and options are protected, a qualified attorney or real estate professional should review any documents prior to signing.