Beginner's Guide to Self Storage Investing

April 2, 2024

Self Storage Investing Playbook - piggy bank image
5 min

Self storage can be a fantastic investment.

It’s real estate, which is always recommended. It’s not as complicated or legally tricky as residential housing. And, famously, self storage is recession-proof! 

At least, that’s the theory.

Self storage isn’t easy money now, if it ever was. Real estate investment trusts (REITs) have surged in the industry, scooping up the low-hanging fruit. Competition is fierce, and you can’t simply drop your investment in some steel boxes and hope your money grows.

But with the right information and the right plan, self storage can still be a fantastic way to invest. 

In this Beginners Guide to Self Storage Investing, we’ll go over everything you need to know to get started investing in self storage, whether you’re growing from one facility or stepping into the industry for the first time.

Why Invest in Self Storage?

Storage is a massive industry, and it’s only getting bigger.

self storage investing guide

As of 2023, over 10% of American households use or have used self storage, and the percentage is rising. More and more people are learning how easy storage is to use and how inexpensive it is relative to adding more residential storage space.

Boat and RV storage did well over the last few years, too, as people look for ways to house their new toys that doesn’t annoy their neighbors.

Storage is an attractive industry for investors because:

  • The industry is expected to grow 5.45% from 2021-2026
  • Over 10% of US households utilize self storage
  • There are more storage facilities than McDonalds and Starbucks put together!

The industry as a whole is expected to grow over 5% in 5 years, and individual facilities can do even better than that!

But you have to know what you’re doing. Our Beginner’s Guide to Self Storage Investing is a great place to get started.

We’ll cover the industry basics, including:

  • How does self storage make money?
  • What are the costs of doing business?
  • How will my investment mature?
  • And how to determine whether or not it’s a good investment for you

StoragePug provides self storage marketing and self storage websites for the industry, and we’ve worked with thousands of clients to help grow their businesses. 

We can help you understand the depth of the industry, and when you’ve got your facility under construction, we can help you build an online presence that brings in renters!

Get the most out of your self storage investment or learn how to get started  today with our Free Self Storage Investing Playbook

Buying or Building 

This is the first decision you’ll have to make when you start digging into self storage - are you going to buy an existing facility or build a brand-new one?

Both of these approaches can be a great way to start growing your money with self storage, but they also have some drawbacks. Overall, buying is safer, but building has higher potential.

Just like in other types of real estate, new construction is going to be worth more than one that’s been collecting damage for ten years. A new construction project is also going to cost you a lot more on average.

Building will also take you somewhere in the realm of three years, provided there are no major hangups in zoning, building, and permitting. That’s a long time for your money to be invested with no return!

Buying a facility can bring you passive income pretty much as soon as the keys are handed over. If the facility has a bunch of tenants, they will start paying rent to you instead of the old owners.

Existing facilities with lots of tenants are a great source of passive income – which makes owners reluctant to sell.

Instead, if you try to buy a facility, you’re most likely going to find deals on facilities that are struggling. Maybe they’re in poor condition, or they’re unable to keep up with an influx of competition - regardless, buying a struggling facility will present some challenges.

Learn more about those challenges—and how proper investment can turn a struggling facility into a roaring success—in our playbook.

self storage investing guide

Choosing a Location

Choosing a location for your storage facility (whether constructing a new one or buying an existing one) is a balancing act.

There are three main factors that will determine where you should put your storage facility or the viability of an existing facility.

  • Population - Do you have people to rent storage units to? Storage facilities need to be positioned very near their customer base.

    That big city thirty miles down the road is not going to be close enough. People don’t want to drive very far to store their stuff, and they want their storage unit close enough to be easily accessible. Consider the population within 5-10 minutes of your facility - that’s your customer base.

  • Competition - How many other storage facilities are serving that population? The reason your customer base is only 5-10 minutes away from your facility is that if there is another facility close, customers will use them.

    Our customers don’t know a lot about the industry, generally. They want a clean facility, they want friendly service, and they want convenience. So, if your new facility is surrounded by a dozen other nice storage facilities, you’re going to have a hard time finding tenants.

  • Visibility - How easy is it for people to notice your facility? Even in our digital age, the biggest single source of renters is “people driving by.” A facility near major roads is going to outperform a facility hidden back behind some farms.

    This advantage will fall away over time as websites and all other online sources are growing as a way to find storage. Prominent visibility will always be beneficial, though, and will make your new facility more valuable.

Self Storage Investing Playbook

So is that it? Am I ready to mortgage my house for a storage facility?

Probably not. And I am definitely not going to recommend anyone do that! Our self storage investing playbook goes much deeper into these topics, and even that’s only the beginners' guide.

Before you start pouring money into the storage industry, you need to have a plan, consult with experts, and decide what your goals are.

Once you’ve done that and are ready to get serious about making money in self storage, we can help.

Looking to learn more? Check these out!

At StoragePug, we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.

Looking to break into the industry?

Get started with our Beginner's Guide to Self Storage Investing!

Self Storage Investing Playbook eBook - 2023 - Cover