408: Boring is Good: The Case for Self Storage

For those of you who have participated in our self-storage offerings in the past with Reliant Real Estate, you know that you can make a lot of money in this space. One of our deals, while not planned this way, nearly doubled investor equity in less than a year.

Those kinds of returns are sexy but self storage itself is NOT sexy at all. It’s just where people keep there stuff when there’s no room for it in the house. But in times like these, boring is good. In fact, when it comes to business, boring is a very good quality in all seasons of the business cycle.

Self-storage facilities have historically shown resilience during economic downturns. Unlike other real estate investments, they often experience steady demand even in challenging economic conditions, as people downsize, relocate, or seek temporary storage solutions.

Everyone needs storage space whether in urban areas where living spaces are smaller, or in suburban and rural areas for personal or business use.

And from the standpoint of the owner of these facilities, it takes advantage of one of the major characteristics of mankind—inertia.

Do you have stuff in storage? I do. How badly do I want to move that stuff to another storage facility in order to save $10 per month? Not nearly enough.

That’s why those rents creep up over time without losing much in the way of occupancy. It’s a great business model if executed well.

Reliant Real Estate has done it well for several years and, although I am not partnering with them on their current fund, I am investing in it and promoting it for them as I think it represents a really good opportunity with minimal risk.

This week on Wealth Formula Podcast I wanted to make sure I got Kris Benson, Reliant’s Chief Investment officer on the show because there are just a few weeks left before the fund closes and I wanted to remind you of that while reviewing some of the key elements of this unique real estate asset class.

Show Notes:

00:04:04:09 The story of self-storage

00:06:56:17 The inertia behind the self-storage business

00:13:51:17 How has the run-up of rates and inflation affected self-storage?

00:16:55:15 How does debt work in self-storage

00:19:51:02 Institutional vs. mom-and-pop

00:23:12:10 The current reliant fund opening: https://reliantfund4.com/