From a macro perspective, Americans do not like to throw or give away their stuff, which explains the high demand for self-storage. Thus, in this Expert Insight Interview, Kris Benson discusses investing in a part of a real estate investment market, called self-storage space. Kris Benson is a Chief Investment Officer at Reliant Investments, which provides institutional quality investments to accredited investors.
The interview discusses:
- Advantages and Disadvantages of self-storage investing
- Investor Requirements
- Volatility through economic downturns
Advantages and Disadvantages
There are two different types of investing. A direct investor is someone who pays for the place and runs it. A passive investor is someone who partners up, invests in the space, and waits for other people’s expertise to deliver the returns. The advantages of investing in self-storage space are tax efficiencies and the fact that it is not dependable on the traditional equities market. This type of real estate investment does not have volatility but rather consistent value. In terms of investment returns, it typically takes around 5 to 7 years to start seeing the return. The disadvantages are illiquidity and the fact that passive investors do not have control of it. What passive investors invest in is the team who will be in control of running the business and bringing the profitable returns later.
To become an investor, most of the time, there is an accreditation requirement. Being an accredited investor means having around 2 to 3 hundred thousand dollars yearly income or a net worth of at least 1 million dollars besides the primary residence. However, some platforms allow other investors to raise their equities as well. The returns in this business are around 15 percent, but as previously said, it takes years to return. Thus, this is not a good opportunity for quick-return chasers.
As an asset class, self-storage space did not suffer as a significant impact from Covid19 as some other industries, but there is a noticeable downturn in 2019 and 2020. However, historically looking, this asset class generally manages through economic downturns very well, which enables prices to stay steady. The new developments are beneficial for the customers because new estates entering the market lowers the market prices. In conclusion, this might isn’t the first thought when it comes to investment vehicles, but it is definitely one worthy of considering.
John is the Amazon bestselling author of Winning the Battle for Sales: Lessons on Closing Every Deal from the World’s Greatest Military Victories and Social Upheaval: How to Win at Social Selling. A globally acknowledged Sales & Marketing thought leader, speaker, and strategist. He is CSMO at Pipeliner CRM. In his spare time, John is an avid Martial Artist.