Regardless of what industry you’re in, margins are everything. In short, the self storage industry is one of the lowest overhead real estate investments that anyone can make, and therefore, it’s one of the highest margin situations that a landlord can find themselves in. They use automated keypads to provide tenants with entry into their spaces, reducing the need for on-site management.Īnd generally speaking, there isn’t a lot of plumbing or cosmetic maintenance that these properties have to worry about (a good commercial roof and HVAC system for higher premium climate controlled spaces are the main things that a landlord needs). If a tenant stops paying rent, landlords in this industry can recoup some of these costs by selling the assets stored in their facilities.Īnd due to the barebones layouts of these facilities, the risk of property damage inside of each unit is extremely low.įurthermore, self storage facilities have reduced overhead over the years by relying on SEO and digital assistant-like infrastructure to find and book tenants. In general, eviction in the self storage industry is a quick and easy process (especially compared to residential properties). Yes, they still have to pay taxes (that’s unavoidable).īut, tenant issues and overhead are minimized in this space with the use of auctions and automation. You see, investors who own properties in this industry don’t have to deal with the 3 T’, at least, in the traditional sense. Now, if it makes sense for you to invest in physical real estate, when it comes to the commercial property space, one of my absolute favorite industries to invest in and own are self storage facilities. Remember, staying diversified across your investment portfolio is very important… as is staying liquid (it can take weeks, months, or even years to sell large-scale real estate investments). The individuals who make up these teams have decades upon decades of combined experience when it comes to screening investment properties, finding reliable tenants, generating cash flows, and maximizing shareholder value.Īnother problem with investing in physical real estate is that even if you’re someone who is willing to leverage debt to acquire a cash flowing property, there’s a chance that you can’t (or shouldn’t) receive a loan large enough to buy income property(ies). However, simplicity is key to sleeping well at night.ĭividends paid by REITs are truly passive income the only things required to generate these reliable payments are the patience and discipline required to make investments and hold them over the long term.īy owning REITs, you allow professional investment teams and property managers to take on that work (and the headaches that come from the three T’s) for you. Using leverage to build wealth can be attractive to more risk-tolerant investors. The reason why so many people are REIT investors, rather than physical landlords, is because they’d rather avoid the "three Ts" - toilets, trash, and taxes. You have to deal with tenants, property maintenance, and pay taxes on your assets. What’s more, cash flow coming from real estate is not truly “passive” income.īelieve me, it takes a lot of work to be a landlord. With this in mind, I know many investors who aren’t comfortable with debt-fueled real estate empire plans. Using debt to build a real estate portfolio is one of the lowest risk ways to use leverage to your advantage.īut, debt is still debt… no matter how reliable a property’s cash flow is thought to be. Using debt to accumulate cash flow properties, allowing other people to pay down that debt (tenants) and build your equity, and generate positive cash flows allows real estate investors to build vast fortunes with relatively little cash down. I’ve seen studies showing that real estate is the most common source of value creation for millionaires.Īt the very least, this is likely due to the capital appreciation of the average Joe’s primary residence (assuming that they’re a homeowner).īut many people take this a step further, using investment properties to build wealth and accelerate their journey toward financial freedom. Real estate is one of the very best ways to build wealth over the long term. Hoarding disorder: An ongoing difficulty throwing away or parting with possessions because you believe that you need to save them.
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