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A lot of discussion whether it's better to own self storage directly, as a limited partner or via a public REIT. Clearly every real estate sub-sector has its nuances. A retail investor can easily invest in single family homes or apartments but not towers or data centers directly.
The calculation comes down to how much time and energy you actively want to spend managing a business versus the cost you pay to a pro to manage on your behalf. If you own it, you keep all the tax advantages and levered property appreciation for yourself but it's hard work
If you buy a property and outsource management to a third party self storage management firm, the cost is generally 6% of revenue or $2,500/month. Not bad for an owner who doesn't have to work but still will earn less than an owner operator running it directly
As for the consideration between a limited partner in a fund or project versus a publicly traded REIT, it depends on the costs. As an investor, the explicit cost is the SG&A of the fund or REIT. The differences come down to liquidity, cost of capital, and capital allocation.
While small operators can clearly make good returns in a variety of ways in this fragmented market, there are huge financial and operational advantages to scale. For example, size is a huge advantage for absorbing recent significant SEO cost increases and SG&A overhead.
On the other hand, many REITs have questionable incentives, to put it mildly, and are empire building for the benefit of management, not shareholder returns. So it all comes down to your assessment of management's respect for their limited partners or REIT shareholder capital.
"It depends" as always but in my opinion, a public REIT with a strong capital allocator at the helm and cost of capital advantage such as Extra Space, for example, would be superior to a private operator or fund.
