Examining the Advantages of Self-Storage Investments

In 2023, self-storage emerged as a top-performing asset class, boasting an average occupancy rate of 92%. This trend suggests that self-storage is a viable alternative investment option, offering benefits like passive income, inflation protection, and reduced tenant stress.

Historically viewed as a solution for hoarders, self-storage has become essential for many Americans, with 40% renting units. Life events such as death, divorce, downsizing, and dislocation drive this demand, especially during economic downturns. While traditionally used by owners of smaller homes, there's an increasing trend among more significant homeowners. A typical self-storage unit, often a 10x10, saw a 13% rent increase in 2022. Between 2001 and 2024, self-storage yielded an average return of 20.87%, highlighting its attractiveness to investors.

Many investors turn to self-storage as an inflation hedge due to the flexibility of month-to-month rentals, which can be adjusted regularly to match inflation rates. Additionally, owning a self-storage facility involves different expenses than other property types like multi-family or retail spaces.

Investment opportunities exist in self-storage turnaround projects for those not looking to build from scratch. These involve acquiring underutilized properties or mom-and-pop-owned facilities, which make up over 60% of the self-storage sites in the country. This approach capitalizes on buying off-market at a lower price, adding value such as asphalt or upgraded security, and exiting at a higher value.

With economic uncertainties predicted for 2024 and beyond, self-storage is a resilient investment option, providing inflation protection and steady income. This sector offers accredited investors a compelling alternative to traditional investments.