Invest In Self Storage

Self-Storage Investing

Smarter Investment: Comparing Self Storage to Other Commercial Real Estate

If you’re eager to invest but unsure about the available options and which asset class suits you best, you’re not alone. Navigating the abundance of information can be overwhelming, and determining the ideal investment strategy for your specific goals can be challenging. That’s why we’re here to provide a comprehensive breakdown of your choices: self-storage versus other commercial real estate investments.

We will delve into the details, including risk and return potential as well as market trends. By the end, one option is bound to emerge as the clear winner. Are you ready? Let’s dive in and determine if self-storage investing is the right path for you!

An Overview of Alternative Investment Types

If you’re interested in investing but don’t want to limit yourself to the stock market, alternative investments are worth considering. Accredited investors with a high net worth often make these quality investments, which come in various forms. The main categories of alternatives include hedge funds, private capital, natural resources, real estate, and infrastructure, ensuring there’s something to suit your needs.

Real estate is one of the most popular alternative investments, offering several options within the asset class, each with its own benefits and risks. Let’s focus on one of these subcategories: self-storage.

Why Self-Storage Stands Out Among Commercial Real Estate Investments

Self-storage properties are appealing to investors for several reasons. They typically require less capital than other types of commercial real estate investments. Additionally, they often generate higher net operating incomes (NOI) due to the unique leasing structure. Moreover, self-storage facilities have low vacancy rates, ensuring a more reliable stream of rental income.

However, it’s important to note that self-storage investments can be more capital-intensive in terms of maintenance and day-to-day operations. Nonetheless, if you’re an experienced investor seeking higher returns and lower risks, self-storage may be an excellent fit. Let’s examine the pros and cons of self-storage compared to other commercial real estate investments.

Examples of alternative investments include private equity, venture capital, hedge funds, managed futures, commodities, collectibles, and real estate. These options cater to different investment goals, such as steady income streams or long-term capital appreciation. Real estate investments, for instance, offer opportunities for investors to build wealth and generate passive income over the long term. Investors can acquire and hold properties, aiming for both short-term cash flow and long-term appreciation in value.

If you’re considering diversifying your investment portfolio beyond stocks and bonds and seeking a reliable source of supplemental income or long-term capital appreciation, alternative investments like self-storage may be the right choice.

Read More – How to Evaluate Self-Storage Investment Opportunities

Risks, Returns, and Market Trends in Self-Storage Investing

When evaluating the risks and returns associated with investing in self-storage, there are several factors to consider. Recent market shifts have made self-storage investment activity more attractive, thanks to its potential for profitability and stability. Present market dynamics highly favor self-storage investing, with the industry generating $39 billion annually, offering significant potential for capital owners to capitalize on this rapidly growing sector. (Source: Self Storage Association, 2023)

In terms of risk, the self-storage industry is one of the most recession-resistant asset classes. Many operators have reported stable revenue growth even during challenging times like the pandemic. The short-term nature of self-storage leases and efficient customer occupancy management contribute to its reputation as a secure and consistent asset class, appealing to long-term investors seeking steady cash flow and low volatility.

Investing in a self-storage facility brings a range of benefits, such as diversified cash flow streams through rent payments, fast-paced appreciation, tax advantages through depreciation and cost segregation strategies, and long-term development opportunities. Furthermore, returns on investment often exceed those of traditional real estate investments, making it an attractive option for many investors.

Ultimately, investing in a self-storage facility offers an opportunity for portfolio diversification and a reliable, steady income stream. Self-storage facilities provide investors with a low-risk option to create wealth that is largely recession-proof and has significant potential for both short-term and long-term returns. With many investors turning to this asset class in recent months, now is an opportune time to consider investing in self-storage.

Read More – Investing in Real Estate: Choosing Between A Self-Storage Fund and Multifamily Syndication

Advantages of Self-Storage Investments Compared to Other Commercial Real Estate

While there are various commercial real estate investments, such as retail stores and hotels, self-storage investing stands out with several unique advantages:

  • Low Operational Costs: Self-storage investments have low operational costs and a high return on investment (ROI). Managing tenants, major construction expenses, and long leases are not significant concerns. In fact, self-storage facilities typically have operating expenses around 50% lower than other commercial property types. This translates to less time spent on budget management and more time reaping the rewards.


  • Tax Benefits: Self-storage investments offer tax advantages, including deductions for property tax, interest expenses, and depreciation. You can benefit from attractive incentives while increasing your cash flow.


  • Minimal Infrastructure and Low Operational Expenses: Self-storage facilities require minimal infrastructure, such as plumbing, insulation, and electricity. As a result, upkeep costs and management requirements are significantly lower, making it an attractive option for property owners seeking a more hands-off approach to their investments.

Factors to Consider Before Investing in Self-Storage

Before making a decision about investing in self-storage, consider the following factors:

  • Location and Demand: Location is critical for long-term value, ensuring a steady demand for self-storage units. This guarantees the profitability of your investment, as individuals will always require storage space, regardless of economic conditions.


  • Cost of Investment: Self-storage investments have a low breakeven point as they don’t require substantial upfront investments. Costs include land acquisition, construction, equipment, and supplies. However, be mindful of operating costs, including maintenance, insurance, and property taxes, which can accumulate quickly.


  • Potential Returns: Data supports the potential for high returns in self-storage investments. When executed correctly, investors can achieve decent profits over time with minimal risk compared to other real estate investments. Moreover, the self-storage market is experiencing rapid growth, with demand outpacing supply, often resulting in higher returns compared to traditional investments like stocks or bonds.

Real-World Examples of Successful Self-Storage Investments

Numerous real-world examples demonstrate the success of self-storage investments. Public Storage, for instance, started as a single self-storage facility in 1972 and has now expanded to over 2,500 locations across the US, Canada, and Europe. This success story showcases that self-storage investing can be a highly profitable strategy with dedication and effort.

It’s not limited to large companies like Public Storage; individual investors like yourself can also achieve success. Due to low overhead costs and high growth potential, profits can quickly accumulate once you surpass the initial start-up period. This is especially true when compared to other real estate asset classes, as self-storage investments generally yield higher returns on investment. Even during economic downturns, properly executed self-storage investments have the potential to generate more cash flow than other properties due to their lower breakeven points.

In summary, if you’re seeking an efficient and effective way to invest in commercial real estate, self-storage may indeed be your best option.


Investing in self-storage is currently one of the most lucrative opportunities in the real estate market. It offers lower risk, higher returns, and less volatility compared to other commercial real estate asset classes. Moreover, it provides a recession-resistant way to diversify your portfolio.

While various commercial real estate investments exist, self-storage units outshine the rest in terms of risk, return potential, and market trends. Self-storage is an investment you can rely on to deliver satisfying returns over the long term, offering a secure and consistent source of passive income.

There are numerous benefits to investing in self-storage, and with the right guidance and research, you can ensure a profitable investment. We hope this discussion has provided insights into the advantages and disadvantages of self-storage investing, helping you determine if it’s the right choice for you.

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