Investors
Why to Invest In Self Storage
You likely already understand the potential profitability and stability that comes with investing in various property types. However, allow me to shed light on why self-storage properties present an excellent opportunity for your investment portfolio. Self-storage properties are a smart investment for several reasons.
Firstly, self-storage facilities tend to exhibit consistent demand, regardless of economic fluctuations. During economic downturns, people often downsize their living spaces or move to different locations, creating a need for temporary storage solutions. Conversely, during economic upswings, consumers have more disposable income to acquire goods, which also drives demand for storage space. This inherent resilience provides a stable cash flow and reduces the risk of vacancy and revenue fluctuations.
Secondly, self-storage properties typically require lower operational and maintenance costs compared to other types of real estate. Unlike residential or commercial properties, there are fewer amenities and maintenance responsibilities involved, significantly reducing the operational burden. Additionally, management can be streamlined with the use of modern technology and automated systems, or third party companies, making it a cost-effective and efficient investment.
Lastly, investing in self-storage properties allows for scalability and diversification. As the demand for storage space grows, you can expand your property or portfolio by building or acquiring more. Moreover, self-storage assets provide a valuable diversification opportunity, helping you hedge against potential risks and market volatility.
In conclusion, investing in self-storage properties can offer you a reliable and lucrative addition to your real estate portfolio. With steady demand, lower operational costs, and the potential for expansion, self-storage assets can become a robust and rewarding component of your investment strategy. As you continue to explore new opportunities in the real estate market, consider the unique advantages that self-storage properties can bring to your overall financial success.
Case Studies
Pawling Self Storage (Pawling, NY)
This Self-Storage Investment opportunity included a Class A Climate Controlled facility – located in the lower Hudson Valley – consisting of approximately 20,400 Net Rentable SF. There was an approved 20,050 Net Rentable SF expansion. The expansion was inside the vacant portion of the existing warehouse. After completion in summer of 2022, facility was 40,450+ NRSF of class A self storage units. With the the 5-mile market underserved by approximately 81,000 SF (4.3 SF/ Person Currently), and terrific visibility on a major road (20,000+ Avg. Daily Traffic Counts), and strong market rents the facility is leasing up quickly. Projected five year returns to investors:
19.3% IRR, 2X Multiplier on investment.
Space Station Storage (Kingston, NY)
This Self-Storage Investment opportunity includes a Class C, non climate controlled facility – located in the Hudson Valley, NY – consisting of approximately 34,375 Net Rentable SF. In addition, there are approximately 48 outdoor rentals. The market rents are significantly higher than what the current owner is charging at the subject site. In fact, the Extra Space Storage nearby has in-place rents of $31 / SF +/-, while the subject property was charging closer to $9 /SF. The sponsor is implementing capital improvements (primarily new roll up doors and paint), engage professional third party management, and increase rents (to $16.50 / SF by the end of year 1) and still remain the low-cost provider. Also, this property is 6 acres +/-, so the sponsor may seek an approval for an expansion, which would offer a potential future buyer on the exit additional “Value Add”. Projected five year returns to investors:
23.6% IRR, 2.17X Multiplier on investment.
STOW Self Storage (Anderson, SC)
In collaboration with Streams Development this is a ground up development site on 3.5 Acres in Anderson, SC. There was a small storage facility there upon acquisition, but functionally obsolete. Sponsors are building a class A self storage facility composed of 60,200 net rentable square feet with a mix of both traditional drive up units and climate controlled units. There is no competition in the 2 mile radius, only 4.2 SF / person in the 3 mile radius, and market rents are healthy. This site also is within the Opportunity Zone.
Projected five year deal returns:
28.44% IRR