When it comes to investing in real estate, there are options to consider. As an active investor, you may be trying to decide which is best for you, owning apartment buildings or storage units. Both asset classes can be profitable, but they come with different benefits and drawbacks.
Let’s break down the pros and cons of owning apartment buildings and storage units to help you make an informed decision.
Should You Own Apartment Buildings or Storage Units?
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Apartment Buildings
Pros:
Cash Flow One of the most significant advantages of owning apartment buildings is the potential for consistent cash flow. Multifamily properties generate rental payments, so as an investor, you benefit from a steady stream of income.
Appreciation Over time, the value of your apartment building is likely to appreciate. This can provide a significant return on your investment, especially if you hold the property for a long time.
Diversification Owning an apartment building allows you to diversify your investment portfolio. You can spread your risk across multiple tenants, reducing your exposure to potential losses.
Cons:
Management Managing an apartment building can be time-consuming and requires a significant amount of effort. You need to ensure that the property is well-maintained and that tenants are happy, which can be challenging, especially if you're managing the property yourself.
Tenant Turnover One of the biggest challenges of owning an apartment building is tenant turnover. You need to market the property to attract new tenants and ensure that the property is occupied.
Maintenance Costs Multifamily properties require ongoing maintenance, which can be expensive. You need to ensure that the property is well-maintained to attract tenants and prevent potential liabilities.
Storage Units
Pros:
Low Maintenance Compared to apartment buildings, storage units require relatively low maintenance. Once you've built the units, there's little ongoing maintenance required, which can save you time and money.
Low Tenant Turnover Storage unit tenants typically stay longer than apartment tenants, which can reduce your marketing and turnover costs.
High Demand There's a high demand for storage units, which means that there's always a market for this type of investment.
Cons:
Limited Income Storage units generate less income than apartment buildings since the rental rates are typically lower.
Dependent on Location The success of a storage unit investment is heavily dependent on the location. You need to ensure that the property is located in an area with high demand for storage units.
Lower Appreciation Storage units are unlikely to appreciate in value as quickly as apartment buildings. This means that your return on investment may be lower than if you were to invest in multifamily properties.
So, should you own apartment buildings or storage units? Ultimately, it depends on your investment goals and risk tolerance. If you're looking for a low-maintenance investment with relatively low tenant turnover, then storage units may be a better fit.
If you're looking for consistent cash flow and potential appreciation, then apartment buildings are the right choice for you.
Regardless of which asset class you choose, it's important to do your research and understand the market. You need to ensure that you're investing in a property that's in high demand and that has the potential to provide a significant return on investment.
Both apartment buildings and storage units can be profitable investments for active real estate investors, but if your goal is financial freedom, multifamily will present you with the opportunity to get there. And we can help. In 30-60 days, you can gain the experience that will get brokers to take you seriously, know how to find deals, analyze deals, and raise money. This is something everyone can learn very quickly. You can become financially free in one to three years with apartment buildings.
If you're ready to get started and close on your first deal, watch this free training.
