Real Estate Investing

Investing in Self Storage REITs

As the world becomes more consumer-oriented, self-storage facilities are on the rise. Self-storage is a highly demanded service, and its importance continues to grow, which is why self-storage REITs have become an attractive investment option. In this article, we will discuss what self-storage REITs are, their advantages and disadvantages, and the best strategies to invest in them.

Investing in Self Storage REITs

What are Self-Storage REITs?

A self-storage Real Estate Investment Trust (REIT) is a company that owns, operates, and manages self-storage facilities. REITs are corporations that own and manage income-generating real estate properties. They are publicly traded on stock exchanges, making it easy for investors to buy and sell their shares.

Self-storage REITs have become popular because of the high demand for storage space. They have become a convenient way for investors to invest in the growing self-storage industry. Self-storage REITs are usually classified into two types: equity REITs and mortgage REITs.

Equity REITs are companies that own and operate self-storage facilities. They generate income from rents and profits from the sale of properties. Mortgage REITs, on the other hand, finance self-storage properties by providing loans to owners. They generate income from the interest on loans.

Advantages of Investing in Self-Storage REITs

There are several advantages of investing in self-storage REITs. These include:

  1. Diversification: Investing in self-storage REITs allows you to diversify your portfolio. This is because self-storage REITs are not closely correlated with other sectors of the economy, making them a good hedge against market volatility.
  2. Steady Income: Self-storage REITs generate steady income from rents and profits from property sales. This makes them a good investment option for those looking for a regular source of income.
  3. Tax Benefits: REITs are required to distribute 90% of their taxable income to shareholders in the form of dividends. This means that investors in self-storage REITs can enjoy tax benefits, including reduced tax rates on dividends.

Disadvantages of Investing in Self-Storage REITs

There are also some disadvantages of investing in self-storage REITs. These include:

  1. Economic Cycles: Self-storage REITs are sensitive to economic cycles. During economic downturns, people may downsize, and they may need less storage space. This could lead to lower occupancy rates and reduced income for self-storage REITs.
  2. Competition: Self-storage REITs face stiff competition from other players in the market. They may also face competition from new players who enter the market, which could lead to reduced occupancy rates.
  3. Regulatory Risks: Self-storage REITs are subject to regulatory risks, such as changes in zoning laws and regulations.

Best Strategies for Investing in Self-Storage REITs

  1. Analyze the Market: Before investing in self-storage REITs, it is important to analyze the market. This includes understanding the supply and demand dynamics, the location of the self-storage facilities, and the pricing strategy of the self-storage REIT.
  2. Assess the Management Team: A strong management team is crucial to the success of a self-storage REIT. Before investing, it is important to assess the management team’s experience and track record in the industry.
  3. Consider the Fundamentals: When investing in self-storage REITs, it is important to consider the fundamentals of the company, such as the occupancy rates, rental income, and profitability.
  4. Look for Opportunities: Investors should look for opportunities in the self-storage industry. This includes investing in self-storage facilities in high-demand areas or investing in companies that have a unique business model or value proposition.
  1. Evaluate the Financials: Before investing, it is important to evaluate the financials of the self-storage REIT. This includes analyzing the cash flow, debt levels, and dividends paid.
  2. Consider the Risks: Investing in self-storage REITs involves risks, including economic cycles, competition, and regulatory risks. It is important to consider these risks before investing and to diversify your portfolio.

Top Self-Storage REITs to Invest in

Here are some of the top self-storage REITs to consider investing in:

  1. Public Storage (PSA): Public Storage is the largest self-storage REIT in the United States, with over 2,500 locations across the country. It has a diversified portfolio of properties and a strong management team.
  2. Extra Space Storage (EXR): Extra Space Storage is the second-largest self-storage REIT in the United States, with over 1,900 locations across the country. It has a focus on customer service and a strong digital presence.
  3. CubeSmart (CUBE): CubeSmart is a self-storage REIT with over 1,200 locations across the United States. It has a focus on customer service and a commitment to sustainability.
  4. Life Storage (LSI): Life Storage is a self-storage REIT with over 900 locations across the United States. It has a focus on technology and a commitment to innovation.


Investing in self-storage REITs can be a lucrative investment option for those looking for a regular source of income and portfolio diversification. However, it is important to consider the advantages and disadvantages of investing in self-storage REITs and to evaluate the market, management team, financials, and risks before investing. By following these strategies and investing in top self-storage REITs such as Public Storage, Extra Space Storage, CubeSmart, and Life Storage, investors can potentially benefit from the growing self-storage industry.

Stock Market Investing

Real estate investment trusts or REITs

Real estate investment trusts or REITs are companies that own, operate, and finance income-producing real estate. They offer investors the opportunity to own a diversified portfolio of real estate assets, such as office buildings, shopping centers, apartments, and hotels, without having to directly purchase and manage individual properties.

Real estate investment trusts or REITs

How do REITs generate income?

REITs generate income by leasing their properties to tenants and collecting rent payments. The income generated by the REIT’s properties is distributed to shareholders in the form of dividends. REITs are required by law to distribute at least 90% of their taxable income to shareholders in order to qualify for special tax treatment. As a result, REITs can be an attractive investment for income-seeking investors.

Types of REITs

There are several different types of REITs, including:

  • Equity REITs: These REITs own and operate income-producing real estate properties and generate income from the rent paid by tenants.
  • Mortgage REITs: These REITs invest in mortgage-backed securities, rather than owning and operating real estate properties. They generate income from the interest payments on the mortgages they hold.
  • Hybrid REITs: These REITs combine elements of both equity REITs and mortgage REITs. They may own and operate real estate properties, as well as invest in mortgage-backed securities.

Advantages of investing in REITs

  • Diversification: REITs offer investors the opportunity to own a diversified portfolio of real estate assets, which can help to reduce the overall risk of their investment portfolio.
  • Professional management: REITs are managed by professionals who are responsible for acquiring and managing the REIT’s real estate assets. This takes the burden off of individual investors to directly purchase and manage properties.
  • Liquidity: REITs are publicly traded on major stock exchanges, which makes them more liquid than owning individual real estate properties.

Risks of investing in REITs

  • Market risk: Like any other investment, REITs carry some level of market risk. The value of REITs can be affected by changes in the real estate market, as well as economic conditions and interest rates.
  • Management risk: The performance of a REIT can be affected by the quality of its management and the decisions they make.
  • Leverage risk: Some REITs use leverage, or borrowing, to finance their operations and acquire additional properties. This can increase the REIT’s risk profile and make it more sensitive to changes in interest rates.

Before investing in REITs, it’s important to carefully consider the risks and potential benefits, as well as your investment goals and risk tolerance. You can also consult with a financial advisor for guidance.

Overall, REITs can be a useful addition to an investment portfolio, offering investors the opportunity to own a diversified portfolio of real estate assets and potentially generate income through dividends. However, like any other investment, REITs carry some level of risk and it’s important to do your own research and consult with a financial advisor before making a decision.

How to buy and sell REITs?

Real estate investment trusts (REITs) can be bought and sold just like stocks, through a brokerage account. Here are the steps to follow to buy or sell REITs:

  1. Open a brokerage account: In order to buy or sell REITs, you’ll need to open a brokerage account with a financial institution or online broker. This will allow you to trade stocks and other securities online.
  2. Choose a REIT: Once you’ve opened a brokerage account, you’ll need to choose the REIT that you want to buy or sell. You can use online tools or consult with a financial advisor to help you find the right REIT for your investment portfolio.
  3. Place an order: To buy or sell REITs, you’ll need to place an order through your brokerage account. You can choose to place a market order, which will be executed at the current market price, or a limit order, which allows you to set the maximum price you’re willing to pay (for a buy order) or the minimum price you’re willing to accept (for a sell order).
  4. Monitor your investment: After you’ve placed your order, you’ll need to monitor your investment and make any necessary adjustments as needed. This may involve rebalancing your portfolio, selling off underperforming REITs, or buying additional REITs to diversify your portfolio.

It’s important to note that investing in REITs, like any other investment, carries some level of risk.

There are many real estate investment trusts (REITs) that are publicly traded on major stock exchanges. Here are a few examples of popular REITs and their ticker symbols:

  • Equity REITs:
    • Simon Property Group (SPG)
    • Prologis (PLD)
    • Public Storage (PSA)
  • Mortgage REITs:
    • Annaly Capital Management (NLY)
    • New Residential Investment Corp. (NRZ)
    • AGNC Investment Corp. (AGNC)
  • Hybrid REITs:
    • Hannon Armstrong Sustainable Infrastructure Capital (HASI)
    • Ladder Capital Corp. (LADR)
    • EPR Properties (EPR)

This is just a small sample of the many REITs that are available. It’s important to do your own research and consider your investment goals and risk tolerance before choosing a REIT. You can also consult with a financial advisor for guidance.


You can also invest in REITs through exchange-traded funds (ETFs). There are several benefits to investing in REITs through ETFs:

  1. Diversification: REITs ETFs allow investors to own a diverse portfolio of real estate assets without having to individually research and purchase individual REIT.
  2. Professional management: REITs ETFs are managed by professional fund managers who research and select the underlying real estate holdings in the fund.
  3. Liquidity: REITs ETFs can be bought and sold on a stock exchange, making them more liquid than owning physical real estate assets.
  4. Lower cost: REITs ETFs typically have lower fees than actively managed real estate mutual funds.

It is important for investors to thoroughly research and carefully consider any investment before making a decision. That being said, some of the most popular REITs ETFs, based on assets under management, include:

  1. Vanguard Real Estate ETF (ticker: VNQ)
  2. iShares Core U.S. REIT ETF (ticker: USRT)
  3. Schwab U.S. REIT ETF (ticker: SCHH)
  4. Invesco S&P 500 Equal Weight Real Estate ETF (ticker: RWRE)
  5. iShares Global REIT ETF (ticker: REET)
Financial Literacy Investing

What Are The Main Investment Types?

We’ll try to list the main investment types out there, how they function, i.e. how do you make money from them and we’ll try to classify how passive they are and the usual expected volatility.

What Are The Main Investment Types?

1. Real Estate

There are several ways to invest in real estate, from land acquisition, land development, single family rentals, multi family rentals, office rentals, industrial rentals. While there are a lot more hybrid investment types from house hacking to vacation rentals, we’ll only go through the main investment types in this introductory post.

1.1 Single Family Rentals

This is probably the most straightforward investment type in the real estate space: acquiring single family homes and rent them out. The business is simple: rent the home and maintain it in habitable condition for the customer.

The owner of the rental also may also profit down the road by selling the property for a profit if it appreciates.

1.2 Multi Family Rentals

Similar to single family rentals, but the asset is in general an apartment building. Duplexes and triplexes, smaller buildings, also qualify as multi family.

1.3 Land Acquisition

This is usually an appreciation play, where one would simply acquire land hoping to sell later in time, for a profit, if the land appreciates in value over time.

There’s one main exception regarding agricultural lending, where one can lend its land to a farmer to exploit the land. The owner of the land receives a rent and in exchange the farmer can exploit the land growing crops or farming livestock.

1.4 Land Development

Land development consist in acquiring raw land and developing it, usually bringing electricity, water and sewer to sell it to a real estate builder to then build and sell buildings, often multi family or single family homes.

1.5 Office Rentals

This is similar to multi family rentals, in the sense that this involves usually bigger buildings, however they’re usually leased to companies or specialized professionals.

1.6 Industrial Rentals

This is similar to office rentals, but concerns industrial buildings usually leased to companies. In this categories we usually have warehouses or industrial buildings able to house machinery.

2. Stocks

Stocks are usually fractions of a company traded on an exchange.  By buying the stock, you buy a fraction of said company.

2.1 Regular Stocks

By buying the stock, you expect the company to do well and have its share price increase to later sell it for a profit.

2.2 ETFs

ETFs or Exchange Traded Fund are usually funds that invest in several companies/stocks or track some indexes. It allows you to own a pool of investments without the hassle of having to buy every single one of them individually.

Similar to stocks, you’d buy the ETF expecting it to go up in value to sell for a profit.

2.3 Dividend Stocks

Dividend stocks are stocks that pay a dividend, sometimes monthly, but usually quarterly, as long as you’re holding the stocks. These stocks are usually from more established companies, with proven business models, where the growth of the stock usually lower but compensate for it with its dividend.

Dividend are taxed differently than capital gains from selling stocks for a profit and can be interesting in that regards.

Also several dividend companies tend to increase their dividend over time. Dividend aristocrats are dividend companies that have increased their dividend for at least 25 years.

2.4 REITs

REITs or Real Estate Investment Trust are companies that invest primarily in you guessed it, real estate. To qualify as a REIT must have at least 75% of its income derived from real estate and it must distribute at least 90% of its taxable income as dividend to its shareholders.

REITs income is usually taxed as income, unlike dividends and based on your tax bracket, it may be advantageous to hold them in tax preferred accounts such as a 401k or an IRA.

3. Bonds

Bonds are loan to a government (government bonds) or to a company (corporate bonds) for a certain period of time (maturity)and you receive interest (the coupon) , until the loans matures at which point you receive the principal payment.

4. Leveraged Financial Instruments

4.1 Options

Options, commonly on stocks, but can also apply against other financial instruments, are just that: option (not obligation) to buy (call option) or sell (put option) at a given price (strike price) until a certain time, the expiration date.

These investments are usually more volatile and riskier, because of the leverage builtin into the contract.

4.2 Forex

This is the currency market, where ones can profit from the gain of a currency against another. While usually reserved for more advanced investors, the concept is often eye opening that whatever you own that changes in value is a paired trade. When the USD/JPY forex pair trade goes up it means the US dollar goes up against the Japanese yen. When your home goes up in value, it means your home value goes up against the dollar. At which point you want to ask, is the house gaining in value or is the dollar losing in value?

Forex symbols are usually traded with leverage which can increase the risk if not managed carefully.

4.3 Futures

Futures are contract, usually on commodities but also on stock indexes and currencies. The contract establishes the price of an amount of a commodity at a certain date, e.g. The June 2020 Gold contract, at $1583, establishes the price of an ounce of gold by June 2020.

The market allows producers of such commodities to lock in a price for their production, while speculators, often blamed for commodities volatility allow the market to exist in the first place.

While not perfect, it should be noted that the existence of the market allow producers to hedge their production and many producers would not be in business without the existence of the futures market.

Futures , like the Forex, are usually traded with leverage which can increase the risk if not managed carefully.

5. Alternative Investments

This involves structured financial products in various area, such as art, real estate, marine, legal… It often involve lending money to a third party using various assets from the third party as collateral.

It’s usually reserved to accredited investors, i.e. investors earning more than $200,000 annually if single ($300,000 if married) or have more than $1,000,000  in assets excluding the primary residence. Or institutional investors like investment banks, pension funds and so on.

6. Private Equity

Private equity is generally speaking part of the alternative investments class, but probably deserves a note of its own. Like for alternative investments, these investments come mainly from accredited investors or institutional investors. There are 2 main segments in private equity: one for early stage companies or startups, one for later stage companies and distressed companies.

6.1 Early stage companies or startups

That’s usually where venture capital and angel investors come in. They will pool money or invest their own money to help develop early stage companies, usually in the hope the resell it at a higher price to a bigger company or take it to the public market, where they can exit their position.

The game in startups investing is that most of your investments will go to zero, but the few who survive will make a disproportionate amount of money.

If you want to put some rough numbers, successful startups investors, often see 90% of their investments go to zero. 9% percent of their investments get a 10-50x returns. And 1% turn into a 100-2000x returns and sometimes more.

The downside is that there’s usually no liquidity, so it’s very hard to liquidate your holdings and it’s usually a long game. It will take usually more than 5 and often around 10 years for those early companies to mature to the point where you can expect those enormous gains.

6.2 Distressed companies

Another side of private equity is to invest in failing or distressed companies. Investors usually buy the debt of a company at a steep discount and will try to turn the management around and eventually turn it into a profitable company again, so they can eventually collect the debt repayment.

If that ideal scenario fails and the company is forced into bankruptcy, investors will try to recoup some money during the bankruptcy process.

7. Institutional Investments

This are types of investments reserved for institutions (e.g. CDS), usually due to the amount required to participate in such investments which can range from several hundreds millions of dollar or billions of dollars and sometimes require special licenses to be allowed to participate into such investments. We won’t discuss much about these but it’s good to know that they exist because they can have some influence into other types of investments accessible to the general public.


We’ve presented most of the common investment classes. As far as building a passive income portfolio, we’ll talk more about rental real estate and stocks. We’ll also touch upon alternative investments and also discuss some opportunities with leveraged financial instruments when they arise.