Is Self Storage a Good Investment?

self storage investing Sep 21, 2019

Is self storage a good investment?

The self storage industry started long ago with sheds in a backyard. Its meager roots began as “mini-warehouses” as ancillary income for otherwise unusable land. Over the past five years, the industry has grown up and come into its own as a recognized commercial real estate investment. Self storage has grabbed the attention of private equity companies and real estate investors. Cap rates have dropped like a rock and development has increased to a frenzy. With so many people eager to invest in self storage, we must consider if self storage is a good investment.

Here are some reasons to invest in self storage:

Vacancy Risk

Self storage is inherently more stable than other commercial real estate classes. Storage properties can range from 200 - 2,000 units which spreads the vacancy risk compared to retail with 5-10 units. In a business with five units providing revenue, losing 1 unit will result in a 1/5th drop in income. In a 500 unit...

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