Thinking About Investing in Luxury Storage Units?

JOIN OTHER SAVVY SELF-STORAGE INVESTORS LIKE BILL GATES

Gold bullion with money on table close up

If you’re among those considering investing in the quickly emerging trend of luxury storage units, you‘re not alone. In fact, savvy investors like Bill Gates are seeking opportunities in the recession-resistant self-storage unit industry, projected to have a CAGR (Compound Annual Growth Rate) of 134.79% between 2020 and 2025. Even more, the global self-storage market was valued at USD 48.02 billion in 2020 and is expected to reach a value of USD 64.71 billion by 2026.

These shrewd investors are not looking for the traditional industrial park-style storage unit facilities of the past. They’re investing in luxury storage units customized for everything from storing rare and classic vehicles, world-class works of art, and other treasures, to creating extra entertainment spaces away from home. And these luxury spaces are popping up right now everywhere across the country for a variety of reasons, both professional and personal; some stemming from COVID-19.

Professional Reasons

The global pandemic has led multiple business owners to opt for self-storage. And working from home for most of 2020 drove up the demand for self-storage to cut out the cost of rental spaces for work. Now that more and more companies have decided to permanently shift toward a remote work model, the need for office space is decreasing. Especially in metropolitan cities, where office space can be extremely expensive.

Our nation’s improved economic outlook, combined with that of Europe and Asia is positively augmenting the market evolution too. People are buying more stuff, which means they need places to store their purchases.

Personal Reasons

The global pandemic is also a driving factor when it comes to renting storage for personal use. Unemployment levels in the United States during the COVID-19 crisis resulted in jobless tenants unable to pay rent, which obviously affects them and their landlords too. As these tenants moved back home with their family or explored other house-sharing options (and still do), downsizing their residential space created opportunities for the self-storage sector.

Self-storage popularity is also driven by families who need more room, combined with the downsizing of baby boomers. The increasing rate of urbanization is another significant factor driving the market growth. The increasing urban population means smaller and increasingly expensive living spaces in cities with more renters who move around frequently. These urban dwellers need more space to entertain.

READ: Downsizing Your Home: 5 Signs It Might Be Time

Steady Demand and Accessible Financing

Rarely do you find an investment that offers such unwavering demand along with accessible financing. Let’s start with the demand first. Because of the reasons outlined above, many investors are seeking opportunities in self-storage. Demand for these units is steady, with 9.4% of households currently renting self-storage units. The national average cost for these units is $87.89 per month and the opportunity for investment is endless as even the hallways of these facilities are being rented out like the photo above illustrates.

And the industry has a strong track record when it comes to an investor’s ROI. From the years 2009 to 2018, the average self-storage facility offered an annual ROI of 16.9%, a number higher than office, industrial, retail or apartments during the same time.

Then there is the fact that getting financing to invest in the storage space is easier than ever thanks to SBA 504 loans. In fact, some experts say these loans have revolutionized financing for self-storage facilities along with other passive investing opportunities like dividend stocks, CD Ladders, Annuities, and my personal favorite, rental properties, to name a few.

Thanks to SBA 504, buyers only need to put down as little as 10% toward their passive investment projects. This makes it much easier for investors who are just getting started to enter the market. And the terms of these loans are even better news for these investors who won’t have to refinance every five to seven years like before. That makes the interest rate very competitive to market rates, which helps keep payments low.

How To Get Started

The emerging popularity of luxury storage units, combined with their excellent return investment probably has you wondering how to get started. A great place to begin is by visiting the Self Storage Association, the paramount resource for industry information, education, research, and technical expertise. There, you will find important information regarding your two options:

Storage REITs
The easiest way to invest in self-storage is by purchasing shares in a self-storage real estate investment trust (REIT). This is the most passive investment option that requires the least amount of time while still receiving a return on investment through dividend returns.
Active Participation
If you would prefer to actively participate in self-storage, you can invest in your own self-storage facility. There are two options when it comes to actively investing in self-storage: developing a self-storage facility from the ground up or purchasing an existing facility.

While investing in luxury storage units may be an excellent way to create your own passive income, as I mentioned above, residential rental property is another fantastic way to bring in a passive income every month. Plus, you can outsource the running of your property to a management company to make this a truly passive alternative.

READ: Buying a Second Home? You Are Not Alone.

There are a lot of ways you can invest in rental properties depending on your goals and interests. You can be a limited partner in a large residential or commercial property, or you can purchase individual residential properties for use as vacation homes. If you want to investigate the possibilities, just call me at (805) 886-9378 or email me at Cristal@montecito-estate.com. With more than three decades of luxury real estate experience in Santa Barbara, Montecito, and Hope Ranch, I have my finger on the pulse of the local market.

Back to Articles

Client Reviews

“It was an emotional experience selling our mother’s home in Montecito that we all loved so much but Cristal made the process easier on our whole family by guiding us through the transaction every step of the way. She knows the market so well and everything she recommended was on point including the asking price, painting, and staging the home, which looked beautiful and helped the buyer envision her new home. We sold it the first day it hit the market with an offer above asking! Cristal did an incredible job communicating with us and the buyer to ensure that the transaction would run smoothly. We highly recommend using Cristal, she was a pleasure to work with! ”

- J & A

“Cristal is a pleasure to work with! Her knowledge of the local real estate market coupled with her amazing listening skills resulted in her showing us an array of homes that were all excellent choices. Her low-pressure patient attitude made us feel extremely comfortable with the whole process. I cannot recommend her highly enough.”

- M.F.

“Cristal Clarke is #1 in her field - and you don't become #1 by luck. Cristal works harder, and longer, and with more charm and patience than any real estate agent I have ever worked with in the past; her calendar has no weekend, her days have no clocks, her only concern is selling your property as soon as possible and for the best price on the market. Am I a fan? You bet!”

- P.B.

“We have used Cristal now several times and cannot express how grateful we are for her expertise, dedication, and unwavering support throughout the entire home-buying process. Cristal is knowledgeable, patient and attentive. Her attention to detail is remarkable, and she consistently went above and beyond to provide us with all the information and resources we needed to make informed decisions. Cristal is a skillful negotiator and advocate. She can navigate complex negotiations with professionalism and grace and felt like a true partner to us in the home-buying process. Cristal has a genuine passion for real estate and a deep commitment to her clients' satisfaction. I cannot speak highly enough of Cristal and her exceptional service. She is a true expert in her field and her dedication to excellence, combined with unwavering support is the reason we choose to work with her for all our real estate buying needs.”

- T.C.

“Cristal is a top-notch realtor who sold my home before it ever went on the market. I had two competing offers that enabled me to get top dollar for my home. Not only is Cristal superb but her team is extraordinary. I cannot say enough about Cristal and her team. They are simply phenomenal, the consummate professionals, who took care of every possible detail, making the sale and transition period, smooth from our end. They are also lovely, caring people, who knew all the right professionals, to get the job done. Thank you, everyone!”

- D.R.

“I could list lots of cool adjectives to describe Cristal. All good by the way. But, that is not why I or anyone should hire Cristal. My reason for hiring her, which proved to be correct, is very simple. She got the job done. And, she does it time and time again and with zero issues. And, that is why she is one of the top agents in the country. End of subject. ”

- M.A.

“Working with Cristal was a complete pleasure. Cristal was extremely patient with us as we evaluated nearly 2 dozen homes over a span of 2 years. Her knowledge of the market is unmatched. Cristal provided us with exceptional counsel as we evaluated opportunities and negotiated pricing. The closing process was handled thoroughly and efficiently. We could not be happier with our purchase and even more happy to now call Cristal our friend.”

- D.K.

“Cristal Clarke has conducted numerous real estate transactions for me beginning 13 years ago with the purchase of a Lemon Ranch. She has handled both large and small purchases and sales with equal dedication. As a negotiator, you can’t find anyone better. Her transactions are always conducted in the most appropriate and professional manner. Cristal has considerable knowledge of the Santa Barbara market.”

- S.N. Decker Ph.D.

“Living in Europe, we were to say the least, unaccustomed to the nuances of Real Estate acquisition in California and Cristal steered us through the process with absolute professionalism and personal attention to detail at every turn. Her in-depth knowledge of the market place combined with enthusiasm and drive was the only reason we secured the property of our dreams and will be forever grateful. If you are looking for personal discrete and private representation of the highest quality we suggest you look no further than Cristal Clarke.”

- Johan and Paula van den Berg

“Cristal is very straightforward, cheerful, helpful, professional and trustworthy….we felt very lucky to work with her.”

- John and Lacey Williams

“After considering our many choices, we are grateful it was Cristal Clarke of Sotheby’s International who represented the sale of our Montecito cottage. We are familiar with Cristal’s reputation of hard work and dedication to clients, but it was her attention to detail that made our experience so positive. She offered suggestions for staging the property, worked in harmony with potential buyers and was even able to secure back up offers. The sale of our cottage was completed much sooner than we expected, due in great part to Cristal’s professional skills and support. We highly recommend Cristal as a first choice for anyone needing representation with real estate.”

- Michael & Nancy Lee

“Our experience in working with Cristal Clarke resulted in the successful and discrete acquisition of a property which was not yet on the open market. Her knowledge of the Montecito/Santa Barbara area and vast expertise blended with her passion for real estate and architecture, provided us with the very highest level of professionalism and personalized services. Cristal exhibited a rare combination of excellent communications, attention to detail, creativity and patience.”

- Richard and Catherine Frinier

“Cristal really breaks the mold. She knows every nook and cranny of this real estate market, understands value, and follows up on everything, all the time. She was incredibly patient with our two year quest to find the perfect house. Every house hunting trip from across the country was well planned, and our time was never wasted. On top of her professionalism and expertise, she is delightful to spend time with. We are thrilled with the home we purchased, and grateful to Cristal for so wisely advising us through this process, right through to the close and beyond.”

- Laurie Siegel

“We met Cristal first in the course of renting a winter home (for three years), then buying a house using her as our agent. She was amazingly good at listening to our wants and showing us homes that fit our needs. Her mastery of the paperwork was perfect. Most importantly, there was never a situation where we doubted her straightforwardness or integrity. If we do another real estate transaction in Montecito (which I doubt, we’re happy with what we purchased), without question we’d use Cristal again.”

- Ken Saffir

“Susan and I just want to thank you for your efforts in the sale of our home. You are really quite amazing. Your competence, persistence, optimism and humor made the entire process effortless. Every problem that arose, you somehow fixed; any obstacle, you overcame. We have bought and sold many homes. It has never been such a painless and enjoyable process!”

- Michael & Susan Marquart

“A little something about “our” realtor, Cristal Clarke. My wife and I came to Santa Barbara about fifteen years ago looking for a seasonal home from which to enjoy the weather and amenities of the central coast. Being in the real estate business myself I was familiar with agents and brokers so entered the market with open eyes. We “flipped” a few houses in the early years, dealing with various agents and finally ended up in Montecito. That’s when good fortune put us together with Cristal. To say we were impressed is to put it mildly. Cristal really knows the market. She is familiar with the area, its history and trends. When we have questions about a particular property she either has the answers immediately or gets back to us by phone or email. There is no waiting or wondering with Cristal. She is an agent who is “on top of it.” Her recommendations as to price points, contractors, inspectors and title agents have proven to be exceptional, showing great insight and the highest professional standards. We consider ourselves exceedingly fortunate to say that Cristal Clarke is our realtor and would recommend her services to any serious buyer or seller.”

- Rob & Judi Kelch