Self-Storage is More Stable than Other Commercial Real Estate

Why is self-storage more desirable than other types of commercial real estate; there are no toilets. In fact, there is usually no plumbing at all unless you are dealing with fire suppression systems. In addition, it is less expensive to maintain, and easier to manage so it can be more profitable.

When you are in the rental business, you are often in the apartment rental business. This means that you are dealing with a lot of toilets, clogged toilets. You are also dealing with upset tenants, late rents, vacancies, repairs between tenants and the list goes on. When you are in the self-storage business, there is very rarely any plumbing. Unless you are renting to high end clients or you are in an area that requires you to have fire suppression systems of some sort, you probably won’t need plumbing. If you do, you shouldn’t need more than 1 or 2 toilets: one toilet for your manager and one for your tenants. This also reduces your water costs which improves your bottom line.

Another advantage to self-storage is that your costs are usually between 35% and 45% of your gross income. This number varies depending on your area, your marketing costs, manager costs, utility costs, property taxes etc. Because you can keep your costs down, your profit margins are better.

Self-storage is also easier to manage. Rental properties usually require one manager for every 20-40 properties. On the other hand, a single manager can handle hundreds of self-storage units. Because self-storage units are easier to manage, your manager has more time to focus on advertising and marketing.

There is always demand for self-storage. When you are in the self-storage business, you are in the trauma and transition business. This means that when the market is bad, people need a place to store their belongings temporarily while they downsize. When the market is up, they need a place to store their belongings while they relocate to something more desirable or remodel. Either way, there is always demand for self-storage. Vary rarely is self-storage affected by large market changes. This makes it a very stable asset in addition to being profitable. The combination of these two qualities makes self-storage very desirable.

It is always a great time to buy self-storage. Right now, as interest rates climb, there are a lot of sellers who are going to find that they need to get out of their property. They may not be marketing the way they should to get the right occupancy rates, or they may have gotten in the wrong way. Now is a great time to market to distressed properties. As always, happy investing.