Summary: Self Storage real estate investment trusts (REITs) are a niche within the real estate sector that’s gaining popularity as it allows you to invest in the property market without the hassle of owning and managing physical properties. In this piece, we take a look at the top 3 self storage REITs to consider this investing in this year, each available on our broker of choice, eToro.
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About Self Storage REITs
Self Storage REITs focus on storage facilities, which can include units for storing personal belongings, household items, or even business inventory. They offer a convenient and relatively stable source of income. What’s more, investing in REITs provides you an opportunity to benefit from the growth in the self-storage industry without the challenges of owning and managing storage properties.
Furthermore, Self Storage REITs usually own a portfolio of storage facilities across the country, generating rental income from tenants. As such, they are legally required to distribute at least 90% of their taxable income to shareholders in the form of dividends, making them an attractive investment option.
Top 3 Self Storage REITs
Thanks to thorough research, we’ve come up with our top 3 Self Storage REITs worth considering:
- Public Storage (NYSE: PSA);
- Extra Space Storage (NYSE: EXR);
- National Storage Affiliates (NYSE: NSA).
Public Storage
Public Storage is one of the largest and most well-known Self Storage REITs in the United States. Founded in 1972, it has a market capitalization of over $40 billion. The company owns and operates thousands of self-storage properties across the nation, making it a dominant player in the industry.
Your capital is at risk.
Extra Space Storage
Extra Space Storage is another major player in the Self Storage REIT sector. Founded in 1977, it boasts a market capitalization of approximately $30 billion. Extra Space Storage owns and manages self-storage facilities in the United States and also has a presence in Puerto Rico.
Your capital is at risk.
National Storage Affiliates
National Storage Affiliates is a unique Self Storage REIT that follows a different business model. Instead of directly owning and operating self-storage facilities, NSA operates as a real estate investment trust focused on acquiring and managing self-storage properties through its affiliate network.
Your capital is at risk.
How to invest in Self Storage REITs: Step-by-step process
If you’re interested in investing in the three Self Storage REITs we’ve mentioned above, or any other for that matter, you can follow this simple step-by-step process:
Step 1: Choose a brokerage
The first step is to research and select a reputable online brokerage that offers access to the stock market. However, be sure that your chosen platform offers REIT investments. Once you do so, you can create an account with the chosen brokerage, which usually involves providing personal information and funding your account.
Our go-to broker for investing in Self Storage REITs is eToro, a widely popular platform with more than 30 million registered accounts worldwide. Also, it’s licensed by FinCEN and offers a myriad of useful investing features like:
- Commission-free stock trading;
- Access to over 2,000 stocks from 17 different exchanges;
- The option to purchase fractional shares;
- A user-friendly platform that simplifies the trading experience.
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Step 2: Fund your account
With a broker account, the next step is to transfer funds into it. You can typically deposit money via bank transfer, wire transfer, or other accepted methods. Nevertheless, ensure you have enough capital to invest in the Self Storage REITs of your choice.
Step 3: Place your order
The third step is to use the brokerage’s trading platform to search for the Self Storage REITs you want to invest in, such as Public Storage (NYSE: PSA), Extra Space Storage (NYSE: EXR), or National Storage Affiliates (NYSE: NSA).
Once you locate your chosen Self Storage REIT with its ticker symbol, you should choose the number of shares you wish to purchase and specify your desired price (market or limit order). Confirm your order and wait for it to be executed.
Pros and cons of investing in Self Storage REITs
Pros
- Steady income: Self Storage REITs offer a consistent source of income through dividend distributions;
- Diversification: Diversifying your investments with multiple properties across various locations can reduce risk;
- Liquidity: REIT shares are easily tradable, providing flexibility to investors;
- Professional management: REITs handle property management and maintenance, relieving investors of these responsibilities;
- Tax benefits: REITs offer tax advantages, such as pass-through taxation and potentially lower tax rates on dividend income.
Cons
- Market sensitivity: REITs can be affected by changes in interest rates and market sentiment, impacting share prices;
- Lack of control: Investors have no direct control over the management of the properties in the REIT portfolio;
- Dividend taxation: While dividend income from REITs is often taxed at a lower rate, it may not be as tax-efficient as capital gains;
- Economic conditions: Economic downturns can affect the self-storage industry, potentially impacting rental income.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the top 3 self storage REITs to consider
Are Self Storage REITs a safe investment?
Self Storage REITs can be relatively safe due to their stable income, but like all investments, they carry some level of risk. Factors such as economic conditions and interest rate changes can influence their performance.
How do I receive dividends from Self Storage REITs?
Dividends from Self Storage REITs are typically distributed directly to your brokerage account. You can choose to reinvest them or withdraw them as cash.
Can I invest in Self Storage REITs with a small budget?
Yes, you can invest in Self Storage REITs with a small budget. Nevertheless, many brokerage platforms allow you to purchase fractional shares, enabling you to invest with as little as a few dollars. This fractional share option, therefore, makes Self Storage REITs accessible to a wide range of investors.
How can I assess the performance of a Self Storage REIT?
To evaluate the performance of a Self Storage REIT, you can look at key financial metrics such as Funds from Operations (FFO), occupancy rates, and rental income growth. Additionally, analyzing the REIT’s historical performance and comparing it to industry benchmarks can provide valuable insights.
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
