It’s All About Timing: The Stock Market Vs. Owning A Self-Storage Facility

Everything runs in cycles, and you’re seeing that first-hand with the U.S. stock market which has begun its predictable descent. The market had a great run but it’s clearly over. If you are getting disgruntled or have lost confidence with stocks, then you might consider another investment option: income properties. And if a self-storage facility is in your list of income property resources, then here’s a comparison between storage investing and stock investing going forward.


Just like the stock market, self-storage investing also has its own cycle. While stocks are heading down, there are also challenges for self-storage in urban centers where over-building and an outflow of population from city centers has created a tough environment. However, that population is heading outward into suburbs and exurbs and that’s where the good part of the storage cycle is beginning. If you buy a self-storage property in the suburbs and exurbs you will be well ahead of other investors and should be able to ride that cycle up for years into the future.

Return levels

Self-storage facilities are valued differently than the stock market. Stocks are based on share price increases (or decreases) while storage facilities are based on the net income. It’s this “gambling” nature of stocks – with no tie back to income – that has created the current mess. Tesla, for example, has virtually no income but has a greater valuation than all other car manufacturers combined. Self-storage properties, on the other hand, are bought and sold based on a cap rate of the existing income. You are essentially buying an income stream. While the average stock dividend in the U.S. is around 3%, most storage investors won’t touch a property with less than a 10% cash-on-cash return. And with income properties, you get paid a second time upon sale of the asset, so returns can get a second turbo boost.

Security of cash flows

Stocks are based on perceptions while storage properties are based on income. That’s a huge difference. When the bottom falls out of the market – because people have lost confidence and experience a “herd” mentality – then there’s no limit to how low things can go (think 1929). However, since storage facilities are bought and sold based on income, they are backstopped by this reality. Now storage properties will never have the huge highs of a stock like Tesla (which has no tie-back to performance) but they will also never have the lows of stocks that have no foundation on income (the market is peppered with companies that have fallen to zero).

How to “investigate” before you “invest”

If you have an interest in looking at buying self-storage properties in suburbs and exurbs, then you need to investigate the asset sector before you invest a cent. Buying into self-storage without doing your homework puts you in the same position of speculation that you can do in the stock market. So how can you best learn the correct way to identify, evaluate, negotiate, perform due diligence on, re-negotiate, finance, turn-around and operate storage properties? The answer is our Self-Storage Investing Home Study Course. It’s the bible of the industry for those wanting the straight facts with no sugar-coating – just all the information you need to make informed decisions on how to successfully buy and operate storage facilities.

Frank Rolfe has been an active self-storage investor for around two decades, with self-storage units in many states throughout the U.S. His nuts and bolts knowledge of what makes for a successful self-storage facility has led to a three-decade career without a single failed property.