SELF-STORAGE HISTORICAL TRENDSHOW SELF-STORAGE FUND IS DIFFERENT THAN SYNDICATION AND OTHER REAL ESTATE INVESTMENTS?
Explore The Key Differences Between
Self-Storage Fund and Syndications
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INDEX
INTRODUCTION
When it comes to passively investing in the real estate market, there are numerous options available such real estate investment trusts (REITs) or Syndication, there is no shortage of choices for investors. One investment that has been gaining popularity in recent years is self-storage fund. But what makes self-storage fund different from syndication or other real estate investments? Let’s explore.
UNDERSTANDING SELF-STORAGE FUND INVESTMENTS
Self-storage fund, also known as self-storage real estate investment trusts (REITs) are a type of real estate investment that focuses on the ownership and operation of self-storage facilities. These facilities are typically used by individuals or businesses to store their belongings, and the rental income generated from these units is what drives the returns for investors.
Unlike traditional real estate investments, self-storage fund offer investors the opportunity to invest in a diversified portfolio of properties across multiple locations. This provides investors with exposure to a broader market and reduces the risk associated with investing in a single property.
UNDERSTANDING SYNDICATION
Syndication, on the other hand, are a different type of real estate investment. A syndication is created when a group of investors pool their resources together to purchase a property. The investors then share the profits and losses of the investment, based on their proportional ownership in the property.
While syndication can offer investors the opportunity to invest in larger properties that they may not be able to afford on their own, they also come with higher risks. Because investors typically have less control over the investment process, they are often more reliant on the expertise of the syndicator to make the investment successful
SELF-STORAGE FUND VS SYNDICATION
One of the biggest differences between self-storage fund and syndication is the level of control that investors have over their investments. With self-storage fund, investors typically have more control over the investment process, including the selection of properties, the management of the properties, and the distribution of profits.
In addition, self-storage fund offer investors the opportunity to invest in a more stable and predictable market. Unlike other real estate investments that can be impacted by changes in the economy or fluctuations in the housing market, self-storage facilities tend to be more resilient and can generate steady income even in challenging economic conditions.
Finally, self-storage fund offer investors the potential for higher returns than other real estate investments. Because self-storage facilities have lower operating costs than other types of real estate, they can generate higher net income, which translates into higher returns for investors.| PASSIVE INVESTING IN A SELF STORAGE FUND : | SYNDICATION : |
|---|---|
Generally requires less upfront capital, as investors can typically invest smaller amounts in a fund. | Typically requires a larger upfront investment, as investors are investing in a
single property or a small group of properties. |
Offers diversification, as
investors are investing in a
fund that owns multiple self
storage properties. | Offers the potential for higher
returns, as the property is
actively managed and there
may be opportunities for
value-add strategies. |
Typically has lower fees
compared to syndication, as
the fund manager is managing
multiple properties and
investors. | Provides more control for
investors, as they are typically
involved in the
decision-making process for
the property. |
THE PROS AND CONS OF INVESTING IN A SELF-STORAGE FUND
SELF-STORAGE FUND :
FACTORS TO CONSIDER BEFORE INVESTING IN SELF-STORAGE
GROWING DEMAND
Self-storage facilities have become big business. One in ten U.S. families now rents one self-storage unit. There is a high demand for self-storage, and construction cannot keep up with demand. Therefore, occupancy rates are high, rents are increasing, and there is a possibility for expansion. The growing demand for self-storage in the U.S. is created by people moving and various lifestyle transitions, such as retirement, marriage, divorce, a death in the family, etc
LOW MANAGEMENT REQUIREMENTS
Self-storage facilities require minimal management compared to other real estate assets, such as apartments or office buildings.
RECESSION-RESISTANT
Self-storage facilities tend to perform well during economic downturns because people are more likely to downsize and need storage space for their belongings.
DIVERSIFICATION
Self-storage fund typically invest in multiple facilities across different locations, which can spread the risk.
FAVORABLE DEMOGRAPHIC TREND FOR SELF-STORAGE. GEN-X, GEN-Z AND MILLENNIALS ARE HEAVY SELF- STORAGE USERS.
2021 STATISTICS - SELF STORAGE INDUSTRY
TENANT DEMOGRAPHIC
Tenants in a normal self-storage facility can be temporary. They are often undergoing/experiencing some level of stress in their life. Sometimes these tenants have trouble paying their monthly rental fees. Hence, the manager should be aware of this phenomenon and accommodate the tenants as much as possible to keep the business running.
MARKET POSITIONING
Self-storage facilities must be located in areas with heavy car traffic where there is no competition. It is also essential to offer a suitable mix of units to meet the local community’s needs.
THE PROS AND CONS OF SYNDICATION OR OTHER REAL ESTATE INVESTMENTS
ACCESS TO LARGER DEALS
Syndication allow investors to pool their money to invest in larger real estate deals that they might not be able to afford on their own.
DIVERSIFICATION
Syndication can provide exposure to different types of real estate assets across different geographies.
LIMITED CONTROL
Investors in syndication have limited control over the investment decisions, and they have to rely on the sponsor’s expertise and judgment.
POTENTIALLY HIGHER FEES
Syndication typically involve management and performance fees that can eat into investors’ returns.
MANAGEMENT REQUIREMENTS
Other real estate investments require more hands-on management, including finding tenants, handling maintenance issues, and managing cash flow.
HIGHER RISK
CONCLUSION: WHICH INVESTMENT IS RIGHT FOR YOU?
While there are many different types of real estate investments available, self-storage fund offer investors a unique opportunity to invest in a stable and predictable market with the potential for high returns. By understanding the differences between self-storage fund and other real estate investments like syndication, investors can make informed decisions about how to diversify their portfolios and maximize their returns.
CHECK OUT CURRENT PASSIVE INVESTMENT OFFERING - STORAGE UNITS EQUITY INCOME FUND
12-18%
Avg. Annual
Returns
1.5x-2.0x
Targeted Equity Multiple
6%
Monthly
Cashflow
Income
Potential
Plus Potential Real Estate Profits
Emerging Markets
in the
Southeastern U.S.
Vertically Integrated
Professionally Managed Storage Facilities
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