The real estate market is divided into asset and property classes. Contrary to popular belief, these are completely unrelated labels. Property classes are letter-grade designations that can be applied to any type of building, regardless of its use. Real estate asset classes, on the other hand, are properties that are divided into either residential or commercial types.
Self-storage facilities are considered to be commercial property. The purpose of self-storage is to rent space to tenants for their belongings. This is like a hotel, but for inanimate objects. Rental payments can be requested either on a month-to-month or long-term contractual basis. Spaces can vary widely in size, going from lockers to containers, to rooms, to outdoor space to store RVs and boats. People who are looking for investment opportunities may gravitate towards the idea of a self-storage facility because it seems pretty low maintenance. That doesn’t make it a fool-proof venture.
Before investing in any type of business, it’s important to do your due diligence and find out if this is a proper fit for you. After doing some research you will see that there are pros and cons to investing in the self-storage industry.
When dealing with residential units, it is the responsibility of the owner to become involved with the inner workings of issues on a consistent basis, even through the hiring of a third-party property manager. There is a lot of time and money that needs to be invested with residential properties that storage units don’t require. For people who want a side hustle that generates income without much interference, self-storage interactions are limited to the beginnings and ends of contracts and if any issues arise.
In any situation, there are going to be people who don’t play by the rules. In the world of real estate, this could come in the form of unpaid rent, theft, or property vandalism. This is also why you need to buy insurance, which is a cost you might not have accounted for. The money you invest in this venture needs to be presented to you in a clear way by a professional, such as an accountant or lawyer, so you know what you are getting yourself into.