STORE YOUR WEALTH IN A SELF-STORAGE FACILITY By Frank Rolfe

STORE YOUR WEALTH IN A SELF-STORAGE FACILITY

People keep money in gold, silver, stocks, bonds, CDs and many other alternatives. But one that many people do not think about are self-storage facilities – and yet these may be an excellent way to store your wealth in an unstable America. So why would a self-storage property be a good option for you, as compared to the other options?

Safer than stocks, bonds and “paper” assets

There’s something reassuring in actually owning a tangible asset, as opposed to an I.O.U. which is what paper assets really are. When you own the stock of a railroad, you do not have a piece of a railcar that you know you can sell for scrap, but instead simply a sheet of paper or a computer-generated statement that is, of itself, of no value. I have a pile of stock certificates that a long-lost farm relative bought prior to the Great Depression and become completely worthless, and only have a purpose today as potential wallpaper or to wrap a present.

Income producing vs. pure speculation

When you owe virtually all paper wealth it pays no dividends of any type. Whether it’s Tesla or Apple, there’s no meaningful distribution coming your way. That’s because very few stocks even pay a dividend. And CDs and bonds are paying incredibly low amounts – something like 1% per year. But self-storage facilities typically pay around 6% to 7% per year if you buy them for all cash, which means you get about 6 times more per year in income. And since storage properties are valued based on income produced they remain very stable. Stocks, on the other hand, are only tied to the opinion of the herd and are therefore subject to huge swings in value. Additionally, self-storage facilities pay out regular amounts to the owner, as they receive monthly rent which, after expenses, goes to the owner as return on their investment.

The ability to use leverage

When you buy a self-storage facility, you also have the ability to “leverage” your investment, which is an option that does not apply to many other financial equivalents. This feature allows you to buy a much larger property than you could with your cash alone, which allows you to leverage the positives of storage ownership on a larger scale. On deals over $1 million, you can even obtain “non-recourse” financing for these purchases, which is hugely attractive and removes a huge amount of risk.

Benefits from inflation

America is in the midst of rising inflation, as a result of the burgeoning federal deficit coupled with endless new government spending. When inflation rises, the only assets that benefit are precious metals (gold and silver) and real estate. If you own a storage facility that can raise rents to match inflation, then the value of the asset will grow proportionally. In the 1970s – when inflation was at it’s worst with 10% being a normal level – real estate grew in value more than any other decade. Remember that the debt on a property does not increase with inflation, so the faster the value rises the less the debt is as a percentage of value.

You get paid twice with a storage facility

While the income on a storage property is of great interest and importance, there’s another feature of income that you also benefit from, and that’s the equity you build in the property as the income grows. For example, if you buy a storage facility for $1 million and raise the income by 30% over time, you have created a second profit stream – beyond the monthly cash flow – of around $300,000. This is a huge additional benefit.

Conclusion

A storage facility is a terrific place to store your assets. You don’t need to put them inside a 10’ x 10’ with a roll-up door and a lock, but simply in the ownership of a self-storage property. You owe it to yourself to explore this possibility.

By Frank Rolfe

Frank Rolfe has been a commercial real estate investor for almost three decades, and currently holds nearly $1 billion of properties in 25 states. His books and courses on commercial property acquisitions and management are among the top-selling in the industry.