Playbook #023: Storage Facilities
🖼️ The Big Picture
Self Storage is an extremely attractive asset class for many real estate investors. Small to medium-sized facilities can be mostly automated, requiring minimal part-time management, leaning them towards the passive side of the business spectrum.
Leases are usually month-to-month, which means you can easily increase rental rates if you can find and acquire an underperforming asset. Construction costs are lower than other commercial real estate investments. You can add solar panels on top of your buildings to decrease expenses, gain tax credits, and if you're in a state that allows net metering, earn extra cash flow.
Also, small business owners account for 73% of self-storage facilities, including “mom and pop” family businesses. At Wealth Factory, we often talk about the massive transfer of wealth upcoming as Baby Boomers retire and pass down or sell businesses. This is a fantastic example of building a cash flow investment that you can pass on to the next generation. With it comes the opportunity to avoid the banks and buy with seller financing.
As an additional bonus, self-storage assets have proven to do well during recessions. And with the flexibility of month-to-month leases, you can easily increase rates as needed to combat rising inflation.