If you are considering trying your luck in the self-storage sector of real estate, then you are not alone in this world. In the current year that is 2020, this industry is seeing big profits and an increase in growth. And according to research, it will continue to experience this growth during the upcoming years, which provides investors a much bigger incentive to invest in it. There is no doubt that COVID-19 affected the economy of every country in the world. But when talking about the self-storage industry, the occupancy rate only saw a drop from 92 to 91.8 percent. It has only decreased by two percent.
One of the reasons this industry saw such stability in 2020 is that when every sector got closed down, only self-storage facilities were open 24/7. If you want to invest in such an industry, this article will provide you with the incentives you need. They will help you decide whether you should invest in it right now or wait a few years till the COVID-19 pandemic is over. We will go over them below.
STRONG RETURN OF INVESTMENT
During such a time of despair, self-storage still proved to be recession-free. Even during such a poor economic situation, statisticians predict the industry’s compound annual growth rate (CAGR) is around a hundred and thirty-four percent between 2020 and 2025. Due to such a reason, numerous investors are still looking for ways to somehow invest in the self-storage industry.
While it has a stable growth rate, the self-storage industry always had a high ROI. According to research, the average annual ROI in the self storage industry was around sixteen percent from 2008 to 2018. And nowadays, as companies go through downsizing, the demand has seen a steady bump even in such deteriorating financial times. Due to such a reason, finding the right self-storage facility to invest in can sometimes be challenging. However, if you know the right people and do your research, opportunities will come towards you.
EASE OF ACCESSIBILITY TO FINANCING
In addition to a high return on investment, obtaining financing for investing in a self-storage facility has become less challenging due to the availability of passive investments and SBA loans. Such a loan or investment opportunity allows potential investors to put down ten percent towards their investments. It is making it easier for those who are just starting in the world of investments. Also, instead of renewing refinancing after every five years, this type of loan has a constant interest rate for twenty-five years.
There is another method of investing in a real estate property, such as a self-storage facility. It includes different investors joining forces and putting their investments in one large pool. They can then utilize these funds to purchase larger self-storage units while sharing all the daily operational costs.
ABILITY TO EXPAND
Another benefit that investing in a self-storage facility offers investors is expanding into other ancillary products. The term ancillary products mean a bonus or a product that a customer acquires while attaining primary services. You can not only offer your customers safe storage, but you can also provide them with complementary services such as transportation.
These services can allow you to double your income and decrease the time of making your investment back. The more complementary services you offer alongside storage services, the better chance of customer retention and growth.
MAINTENANCE IS EASY
Another bonus of owning a set storage facility is that they are easier to maintain than other real estates. Suppose you can find individuals that are experts in self-storage facility management. In that case, they will provide you with the expertise required to manage everything properly. They will also help you control day to day operations without a hitch.
A variety of management software is available on the market, allowing you to remotely control and monitor your self-storage facilities through surveillance cameras and check-in updates. It sometimes also negates the need to hire a full-time maintenance manager.
There is no better option for investors who want to invest their money in the right type of real estate than a self-storage facility. As the COVID-19 pandemic forces many businesses to restructure or downsize, there will be an increase in the requirement of efficient storage facilities. So, to answer the question, is self-storage still stable in 2020? Yes, it is most definitely!