There are many predictions for the stock market in 2022, and few of them are good. Meanwhile, the arrival of “stagflation” is going to usher in a stronger market for real estate in general and self-storage in particular. If you’ve been parking your money in traditional investments, maybe 2022 is the year to start exploring self-storage investing.
Remember the stock market of 1965 to 1995 or 1999 to 2013?
Of course not, because nobody ever wants to talk about either of those events. However, here’s the truth. If you bought stock in the Dow in 1965, your share did not advance even one point for 30 straight years. And the same thing happened if you invested in the Dow in 1999 – only this time at least you only made no money for a straight 14 years. The bottom line is that people who invest in stocks today have a very short memory – or weren’t alive during either of these two crushing cycles. If you take this 44 year period out, the stock market has only made real progress for 16 years of the past 60.
Do you prefer dividends and equity build or just equity build?
Most U.S. stocks have zero dividends. The only way you make money is in the stock rising. In the examples above, you made no money whatsoever during those 44 straight years. Self-storage properties, on the other hand, offer dividends monthly with each rent cycle, regardless of where the stock market goes. And you get paid a second time when you go to sell the property at an increased value, which is simply a function of raising rents and occupancy over time.
There are many benefits to self-storage investing including:
- • Weathers both recessions and booms well, as the demand to store stuff is consistent in both good times and bad.
- • Higher rates of return than apartments.
- • No repair issues as nobody lives on-property and no toilets to fix.
- • Very low management intensity required (just show units and collect rent).
- • Works well in all states.
- • Plentiful financing.
How do you get started?
Before you should even think about buying a self-storage property, you have to understand exactly how this sector works including how to identify, evaluate, negotiate, perform due diligence on, renegotiate, finance, turn-around and operate these assets. Then you need to start hitting listings with brokers and on-line, as well as hitting sellers directly with cold calling and direct mail. Once you understand what you want to buy and start building your deal “funnel” you will find plentiful self-storage properties to evaluate.
If 2022 is the year you plan on getting into the self-storage business – or just to evaluate it as an option – then we suggest you consider our Self-Storage Investing Home Study Course. It is the complete guide to the industry, written by two of the largest real estate investors in the U.S. It covers the A to Z of the science of how storage investing works, as well as the insider secrets and pitfalls to avoid.