11 Sep Are self-storage units a good commercial real estate investment?
According to recent statistics, the U.S. self-storage industry generates $38 billion annually with between 45,000 and 52,000 storage units and 1.7 billion square feet of rentable storage space. Public storage units dominated the market with $2.75 billion.
Self-storage units have many advantages as a real estate investment:
- Demand is consistent for self-storage regardless of economic conditions and in all geographic locations. People will always have a need for storage, particularly those who are moving to a smaller home for the purpose of downsizing.
- Tenants are less likely to balk at rate increases. After all, tenants would have to rent a moving truck and relocate the contents of their unit, which is a big hassle— they aren’t likely to do this for only a nominal increase in rental rates.
- The ROI potential with self-storage units is high. With a few enhancements, you can upgrade the property to institutional standards and sell to another investor for a nice profit.
- Minimal maintenance is required on most self-storage units. If the units are climate controlled, they will require HVAC maintenance services which can be contracted out.
There are a few downsides including non-payment of rent. In the event a tenant becomes delinquent and does not pay their storage bill, it may become necessary to hold a public auction to sell the contents of the storage unit to satisfy the outstanding debit. In such a case, most states require the property owner to first notify the non-paying tenant either by registered or certified mail. The tenant can then pay their debt anytime up until the time of the auction to reclaim property.
When you find your next investment property, whether it’s a self-storage unit or some other type of commercial real estate investment, why not let us handle all the transaction details? Our legal experts prepare real estate closing documents efficiently and at reasonable rates. Contact us for a consultation.