While it’s a far less glamorous way of investing than other real estate opportunities, self-storage presents a convenient type of real estate with low expenditures and is an investment strategy that generally remains resilient throughout economic downturns. In fact, the trend of investing in self-storage has even been referred to as “recession-resistant.” However, like any investment, self-storage presents risks as well, and the method of investing used should be chosen carefully.

Understand what you’re getting into.

It is recommended to think about the type of investor you’d like to be before making an investment in self-storage. It may seem that buying a portfolio and having the operation run by a management team would be more hands-off, but the reality is that a retail business like self-storage will always be difficult. For example, technologies that improve security systems or allow for climate-controlled environments might be a requirement of the area you choose to invest in self-storage, and maintaining these area-specific characteristics of the property will be your job. Even if you choose to hire a management team to run the business while you remain on the behind the operation, you’ll still be required to take a hands-on approach in maintaining your investment.

Think about your approach.

When investing by using REITs, an investor can benefit from not having to take a hands-on approach to their investment. This way, an investor owns a share in a company’s stock and will earn income from their shares. The investor then pays income tax on the dividends paid out to shareholders. In addition, a benefit to REITs is the lower entry costs when investing in a REIT.

For longer-term growth and higher returns, real estate syndications can be a more appropriate option for your goals. Essentially, investors using real estate syndication own their investment and take a more direct management role in the self-storage company itself, whether it is behind the scenes or not.

However, in both cases, your situation should be considered carefully before landing on any major decisions. Read more about the difference between REITs and real estate syndications here.

The time is right for self-storage investing.

We are in an age with the opportunity to reach distinct demographics by investing in self-storage: baby boomers and millennials. Where baby boomers now store their collections and possessions amassed over the years outside of their homes, the tendency towards renting and increase in the average times millennials move over their younger years means there is not always guaranteed space or the need for certain items, so millennials tend to let their possessions spill over into outside storage units.

Of course, there are positives and negatives to investing in self-storage in general. Risks like overdevelopment and oversaturation and the potential for an oncoming recession in the next two years can pose risks and should be seriously considered.