Real estate is always a hot investment. Typically people think of flipping houses or rental units as good revenue sources, but there is another plan that is exceptionally profitable and smooth to operate.
The self-storage industry is resilient, even weathering the COVID-19 pandemic. Keep reading to learn what you need to know about investing in this profitable sector.
Why invest in the self-storage industry?
The short answer is that it tends to be a money-maker. People in America generally have lots of material objects and need places to store them!
When people move to a new area, downsize their homes in retirement, or when Millennials move back to their parents’ homes, it creates a temporary or even long-term need to store stuff. So, the demand is always there. Through recessions and booms alike, self-storage facilities have proven to be a smart investment.
Not only is the demand high, but the upkeep for you as the landlord is low compared to rental units or fixing up houses to resell. There are no tenants, no appliances to break down, and very rarely are people present on your property.
Also, even if you only end up renting about half of your units, you’ll likely still make some money since the breakeven point is usually about 40-45-percent capacity. This makes the investment low-risk.
The rate of return is typically about 11 percent as a landlord of a storage unit. This is a solid, respectable profit that rivals just about any other long-term investment.
It’s not completely passive income since you do have to sign on clients, advertise, and hand over the keys. But, the ongoing time commitment is not great day-to-day. You could even hire a part-time employee to handle those tasks and still come out far ahead.
What are the costs involved with self-storage investing?
Invest in storage offers the potential for large returns, but it doesn’t come without some costs. The initial investment will be significant, perhaps millions of dollars for the facility itself. For those who can afford the start-up cost, it’s worth it.
The ongoing costs are marketing, basic maintenance, security systems, and utilities if it’s climate-controlled.
What kind of business plan is best?
Any business requires a solid business plan to be successful. But there is no need to re-invent the wheel. An experienced company can offer investors tools and plans to help them get started in the business.
Don’t give yourself more headaches or problems. Use a business strategy that successful people have utilized before you.
Grow your investment portfolio
This investment type may not involve a glamorous outward appearance, but the typically high rate of return is quite attractive. For those investors that can afford the steep initial cost, this industry is a great addition to your investment portfolio.
Original Source: Equity Trust