Self Storage Is Trending, How Do You Get In The Game??
Self Storage is really “trending” right now. So how do you GET IN THE GAME??
Dudes like Nick Huber and AJ Osborne are some of the celeb names in the industry, but many others reference how awesome of an asset it is. Even Robert Kiyosaki has had his hands in storage at one time.
But to most who are looking at it from the outside, there’s a crazy mystery about how in the world to get into the storage game.
EVEN if you’re in residential real estate, storage is still a different world that takes some time to get to know.
“Getting in” to the self storage game consists of a handful of different variables, but let’s just simplify WHAT TO LOOK FOR.
This is the 10,000 foot overview here, but it’ll give you a place to start.
Surface level:
This is the criteria we started with. It’s important, but still just in the surface level. It’s when you combine all the layers here that you have a very conclusive search machine.
- Size of the facility: Personally, we aren’t looking for any thing less than 20k NRSF. It takes the same amount of time and energy to operate a 100 unit facility as it does a 300 unit facility. You’re just making more money with the bigger facility
*** No marketing, limited online presence: This is a sign that it’s being operated the same way now as it has been for the past few decades. By JUST adding a website and online presence, you’ll increase traffic and revenue. And if I’m being honest, just answering the phones is a huge value add. Seriously.
- Mom and pop owned: This goes along with the last one. Theres a shift in the industry happening RIGHT NOW where baby boomers are retiring and selling their businesses. This is for more than just storage.
Surprisingly, their kids don’t want to take them over. That’s okay, we will then.
Mid Level:
Market with at least 20k people: What you’re looking at here is a large enough population to support the number of units. If the rooftops just aren’t there, you could have a super low sf per capita and it still wouldn’t matter. Some areas are just too small.
Positive population growth: You want to be in the path of growth. A growing population means more stuff. People moving in and needing a place to store that stuff. Ideally we want anything above 0%. So just a positive growth path.
No new storage being built: The biggest competitor for storage is STORAGE. Pay attention to the new developments coming in. Underwrite those as well. It could take you from a home run down to a single, real quick.
Deep Level
This is where we start getting into the juice🧃
- Stagnate rates: What are the market rates verse the rates of the facility you’re looking at acquiring? You want room to increase.
Truthfully if there’s not a whole bunch of room to raise rents, it’d have to check all the other boxes for it to not be a pass. This is important.
Apartment rent Vs. Storage rent: A little math involved here, but you’ll want to find the average apartment rent per month and the average sf of apartment in that area. Then divide the two to figure out the price per sf for the apartments. Do the same for your facility. What you want is it to cost LESS to rent storage than to rent an apartment.
Education level: Taking a line from one of the storage greats, Mark Helm, he says:“When times get tough, in this rapidly changing economy, I have seen people with more education rebound faster and keep their earning power.” You want to be in a market that’s able to rebound better. If they have money, or the ability to find money, you will too.