For years, the self-storage market has been considered the red-headed stepchild of real estate investing, all of which should not matter one iota to those who have chosen to pursue this niche. You’re probably laughing all the way to the bank as you cash monthly checks with no tenant hassles and very little maintenance. If you think self-storage is good now, we have some information indicating it might be set to get even better.
Peggy Alford, who is some sort of high-up muckity muck at Rent.com, recently made the observation that she expects the price of residential rents to rise as much as 15 percent over the next four years. This is good – make that EXCELLENT – news for self storage owners and you have the recession and foreclosure crisis to thank.
Here’s how it works. People are losing their houses to unpaid mortgages and foreclosure left and right, which leaves them on the streets, unable to get another loan, and suddenly facing life as a renter. Bad for them. Good for you. Increased demand from more renters competing for the same number of units is what will drive the rate for residential rentals upward, as Alford hypothesizes. More renters means there will be a correspondingly large increase in the number of people who need space to put their stuff.
You can bet that these people who have been forced out of their homes are already plotting a return to home ownership, and will be badgering lenders until they find one. This “short term renter” mindset will make it more likely they’ll prefer to pay you a few bucks a month to stash stuff, while they work on rebooting their American Dream. It doesn’t matter that they might end up spending five or ten years in that ratty, snot-infested apartment. The only thing that matters is perception. THEIR perception, and they think they are short term renters.
By the way, keep your finger on the pulse of residential rent increases and implement your own self storage unit increases in proportion. Now get out there and get to work on your American Dream.
The Commercial Investing Center Team
Flickr / Clexow