Have you ever driven past a row of self-storage units and thought, “Who actually uses these things?” Turns out, a lot of people do. From folks downsizing their homes to businesses stashing extra inventory, the demand for extra space is real.
But what if you’re on the other side of the equation, as an investor? Could owning or investing in storage units be a smart way to grow your money?
Understanding Storage Units as an Investment
First things first: what does it mean to invest in storage units? Essentially, it’s putting money into self-storage facilities where people rent space to store their stuff.
These can be big warehouse-style buildings divided into units of various sizes, often with options like climate control for sensitive items.
You can invest directly by buying or building a facility, or go passive through things like real estate investment trusts (REITs) that own multiple properties.
The business model is straightforward, tenants pay monthly rent, and you handle the upkeep. No dealing with leaky faucets or noisy neighbors like in apartments.
The self-storage industry has been around since the 1960s, but it’s exploded lately.
In 2025, about one in three Americans rents a unit, driven by everything from urban living to life changes like moves or divorces. It’s not just a niche; it’s a multi-billion-dollar market.
The Pros of Investing in Storage Units
One big draw? Stability. Self-storage tends to hold up well even when the economy wobbles.
During tough times, people downsize homes but still need somewhere for their belongings. That means consistent demand and rental income.
Low operating costs are another win. Unlike multifamily housing or retail spaces, you don’t need a full-time staff on site.
Tenants handle their own units, and maintenance is minimal, think occasional roof repairs or security updates. Profit margins can hit around 41%, which is impressive compared to other real estate.
Then there’s the flexibility. Leases are usually month-to-month, so you can adjust rents quickly if costs rise or demand spikes. No long-term contracts locking you in.
Plus, these facilities don’t require prime downtown real estate. You can build on cheaper land near residential areas, keeping entry costs down.
Scalability is a perk too. Start small with one facility, then expand by adding units or buying more properties. Many investors love how self-storage can generate passive income once it’s up and running.
And in 2025, with trends like remote work leading to more home offices (and less space for stuff), demand looks solid.
Finally, tax benefits shouldn’t be overlooked. Depreciation on the buildings, plus deductions for expenses, can sweeten the deal. If you’re looking for a hedge against inflation, rents can be tweaked often to keep pace.
The Cons and Risks to Watch Out For
Of course, no investment is perfect. Market saturation is a big one. In some areas, too many facilities mean competition drives down rents and occupancy.
Before jumping in, check local supply, aim for spots where square footage per person is low.
Economic downturns can bite too. While storage is resilient, a deep recession might see people selling stuff instead of storing it.
Delinquent payments rise, and you could face auctions for unpaid units, which isn’t fun.
Upfront costs aren’t cheap either. Buying or building a facility might run you hundreds of thousands, plus ongoing expenses like insurance and security.
If you’re going solo, managing it takes time, marketing to fill units, handling auctions, and dealing with the occasional tricky tenant.
Location matters a ton. Pick a spot too far from people, and you’ll struggle with vacancies. Oversupply risks are real in hot markets, where new builds pop up fast.
And while maintenance is low, unexpected repairs from weather or wear can add up.
Passive options like REITs reduce hands-on work but expose you to market swings. Share prices can drop, even if the underlying business is okay.
Overall, it’s not entirely “set it and forget it”, you need a good strategy to succeed.
Self-Storage Industry Trends in 2025
Heading into 2025, the self-storage market is showing signs of stabilization after some post-pandemic ups and downs.
The U.S. market is valued at around $44.37 billion and is projected to grow to $49.88 billion by 2029. That’s a steady CAGR of about 2.44%, not explosive but reliable.
Demand is rebounding with increased mobility, think more moves due to job changes or housing shifts. About 57 million square feet of new space is planned for 2025, down 9.2% from last year, which could ease oversupply pressures.
Climate-controlled units are hot, outperforming standard ones as people store sensitive items like electronics or furniture.
Third-generation properties with tech like app-based access and AI security are gaining traction. Consolidation is big too, with REITs snapping up smaller “mom-and-pop” operations for efficiency.
Rental rates dipped slightly in early 2025, but experts see a comeback as housing markets heat up. Regions like the Southeast and emerging markets in growing cities are prime spots.
Overall, it’s resilient, self-storage weathered inflation and recessions better than many sectors.
| Trend | Impact on Investors |
|---|---|
| Increased Mobility | Boosts demand for short-term storage |
| Tech Integration | Lowers costs, improves tenant experience |
| Supply Slowdown | Potential for higher occupancy and rents |
| Consolidation | Opportunities for acquisitions or REIT investments |
Different Classes of Self-Storage Facilities
Not all storage units are the same. They’re often grouped into classes based on age, location, and amenities. This can affect your investment choice.
- Class A: These are the newest builds (under 15 years old), in prime spots with bells and whistles like climate control and top-notch security. They command higher rents but cost more upfront. Low turnover is a plus.
- Class B: Older than 15 years, still decent but without all the frills. Think average maintenance and rents. Good for value plays if you upgrade them.
- Class C: The veterans—often in less ideal locations with basic features. Cheaper to buy, but higher vacancy risks and lower rents.
Picking the right class depends on your budget and goals. Class A might suit passive investors via REITs, while hands-on types could flip Class C into something better.
How to Get Started with Storage Unit Investments
Ready to dip your toes in? Start with research. Analyze local markets using tools like Radius+ for supply, demographics, and competition. Look for areas with growing populations but low storage saturation.
If going direct, scout properties on sites like LoopNet or work with brokers specializing in self-storage. Financing options include SBA loans with just 10% down, great for beginners. Budget for land, construction (if building), and operations.
For passive routes, check REITs like Public Storage or Extra Space Storage. They’re traded on stock exchanges, offering dividends without the hassle. Crowdfunding platforms might have deals too, but verify accreditation requirements.
Management is key. Use software for bookings and payments to automate. Marketing via Google Ads or local partnerships can fill units fast. And don’t skip insurance—protect against theft or damage.
Expect returns around 8-12% annually, depending on location and management. It’s not get-rich-quick, but steady.
Real-Life Examples and Tips
Take AJ Osborne, who built a self-storage empire from scratch. He focused on undervalued properties, added value through tech, and scaled up.
Or look at REITs: Public Storage saw positive trends in early 2025 despite challenges.
Tip: Diversify. Mix storage with other investments to spread risk. And always do due diligence, visit sites, talk to owners, and crunch numbers.
FAQs About Are Storage Units a Good Investment
Q. What is the average ROI for storage units?
Typically 8-15%, with profit margins around 41%. It varies by location and management, but it’s often higher than traditional rentals due to low costs.
Q. Are storage units recession-proof?
Not entirely, but pretty resilient. Demand rises during downsizing, and they’ve performed well in past crises like 2008 and COVID.
Q. How much does it cost to start a storage unit business?
Entry can be $400,000 for a small rural setup, up to millions for urban ones. Passive investing via REITs starts much lower, even a few hundred bucks for shares.
Conclusion
So, are storage units a good investment in 2025? For many, yes, thanks to steady demand, low overhead, and growth potential. But it’s not without risks like saturation or economic shifts.
If you’re patient, research-savvy, and okay with some management, it could be a winner. Weigh your options, maybe start small with REITs, and see where it takes you.
Disclaimer: This post is for informational purposes only and not financial advice. Consult a professional advisor before investing, as markets can change and individual circumstances vary.
Anurag is a personal finance blogger dedicated to helping readers take control of their money and build long-term financial freedom. Through practical insights on budgeting, investing, and smart money habits, he simplifies complex financial concepts for everyday people.