A publicly traded corporation called EXR, or Extra Space Storage, runs self-storage facilities all throughout the country. Prior to selecting whether a stock is a suitable one to buy, as with any investment, it is crucial to take into account a number of aspects. The company’s financial performance is one of the most crucial elements.
EXR has shown impressive financial performance in recent years. The business recorded $1.4 billion in revenue in 2020, up 5.5% from the year before. Additionally, its net income increased 6.9% from the prior year to $376.7 million. These outstanding financial results indicate that EXR is a profitable business with significant development potential.
The industry itself should be taken into account while assessing EXR as an investment. Self-storage has a 7.7% CAGR from 2019 to 2024, making it a sector that is expanding quickly. Factors like urbanization, an increase in small enterprises, and e-commerce are what are fueling this expansion. EXR is in a good position to profit from this expansion as a major participant in the self-storage sector.
Investing in EXR can be a good alternative for people looking for passive income concepts. EXR must pay out dividends to shareholders in the amount of at least 90% of its taxable revenue since it is a real estate investment trust (REIT). The dividend yield for EXR in 2020 was 3.1%, which is a respectable yield for those seeking passive income.
It’s critical to comprehend the prospective cash flow if you’re thinking about investing in self-storage units yourself. According to a SpareFoot survey, a 10×10 self-storage unit generates an average monthly income of $97.11. On the basis of location and competition, there are, nonetheless, significant variances. Before making a purchase of any particular storage unit, careful investigation must be done.
So, in 2021, would self-storage be a wise investment? Self-storage business has survived COVID-19 epidemic with resiliency. In fact, when people move or downsize their houses, the demand for self-storage has surged, according to numerous companies. It’s expected that demand for self-storage facilities will remain high while the economy keeps improving.
Finally, it’s critical to establish the value of your storage company if you’re thinking about selling it. The value of a storage company is influenced by things including its location, occupancy rate, and level of competition. To begin, figure out your company’s net operating income (NOI), and then use a cap rate to estimate its value.
Finally, EXR is a solid performer in a developing sector and can be a wise purchase for people seeking passive income. A potentially profitable investment opportunity, the self-storage sector is also anticipated to expand through 2021 and beyond. However, as with any investment, it’s crucial to do extensive research and take into account a number of aspects before making a choice.