Self-storage facilities have emerged as one of the most reliable and profitable real estate investment options. With a combination of high demand, low operational costs, and recession resilience, this asset class offers a lot of advantages as an investment.
1. Recession-Resilient Demand
Life transitions like moving, downsizing, or divorce drive demand for storage units, regardless of economic conditions. During downturns, self-storage often thrives as people need extra space after downsizing or relocating.
2. Strong Cash Flow Potential
With relatively low maintenance and operational costs, self-storage facilities can generate stable cash flow. Operators can increase income through ancillary services like insurance sales, packing supplies, or climate-controlled units.
3. High Occupancy Rates
The sector boasts consistently high occupancy rates. As people accumulate more belongings, the demand for storage grows, creating a steady stream of tenants.
4. Scalability
Self-storage investments range from small local facilities to large, multi-state portfolios, making it easy to scale. Investors can start with one facility and expand as their capital and expertise grow.
5. Tax Benefits
Like other real estate investments, self-storage facilities offer tax advantages such as depreciation, which can offset taxable income.
What to Look for in a Self-Storage Investment
- Location: Proximity to residential areas with limited storage options.
- Market Demand: Look for areas with population growth or a lack of competitors.
- Operational Expertise: A strong operator can maximize occupancy and revenue.