Self Storage Fast Start Guide
1) One way to get started in self storage is by developing your own facility from scratch. This means you would build your own facility from the ground up.
This approach has some serious flaws. It requires expertise, capital, location selection, and a myriad of other time-consuming and expensive tasks.
2) A popular alternative would be to acquire an established self storage business. The best terms can usually be found when mom-and-pop operators want to get out of the business. These operators typically sell because it’s been unsuccessful for them. But with an in-depth understanding of this market you can turn these babies around.
Mom-and-pop self storage businesses are rarely listed with conventional real estate brokers.
Here are three simple questions you can ask to determine if an existing self storage business is worth the asking price and if it has the potential to make money for you:
- How many units does the business have?
- What is the current occupancy rate?
- What is the actual drive by auto traffic number?
If a self storage business has 100 (10’ x10’) units… and the current occupancy is 40 to 50 percent... it could be considered a “prime target” by self storage “insiders.”
But it must have at least moderate levels of drive-by traffic (2,000-5,000 cars per day).
Self storage owners can’t lie about how many units they have, but they might try to “cook the books” regarding occupancy. But if you do your homework, you’ll know if you can make a particular location profitable.
3) Instead of going for a mom-and-pop self storage business, you could acquire a self storage facility in a prime location – one where the traffic (and cash flow) is much stronger. These locations are usually very pricey – in the $1 million to $2 million range.
But when you start digging you’ll see why investors gladly shell out the big bucks for these cash cows!
Here are some self storage businesses that were being offered for sale in prime areas on major highway intersections recently:
Western New York, Texas, and Mississippi (12 self storage centers) – $35 million
Southwest Florida (39,000 sq ft/16 acres) – $1.5 million
Loudon, New Hampshire (27,200 sq ft) – $1.2 million
San Clemente, California (22,760 sq ft) – $3 million
Augusta, Georgia (29,900 sq ft) – $545,000
Bow, New Hampshire (16,900 sq ft) – $550,000
Las Vegas, Nevada (74,800 sq ft) – $3.7 million
Coos Bay, Oregon (13,500 sq ft) $650,000
Lubbock, Texas (54,445 sq ft) – $1.2 million
South Chicago Heights, Illinois (49,600 sq ft) – $1 million
Hickory, North Carolina (21,240 sq ft) – $285,000
Paris, Tennessee (7,800 sq ft) – $229,000
Prescott Valley, Arizona (40,300 sq ft) – $2.1 million
Gainesville, Georgia (14+ acres) – $1 million
Ankeny, Iowa (10 acres) – $850,000
Kissimmee, Florida (35,200 sq ft) – $3 million
4) If starting from scratch or buying an existing mini-warehouse business doesn’t work for you, there is a fourth option.
In years past, the success of self storage was dependent on prime real-estate exposure.
But today, there are rundown, older buildings in many downtown areas which can be converted to a self storage operation.
Granted, some of these areas aren’t the best place in the world to do business…..including self storage.
But hundreds of areas across the U.S. and Canada have seen a resurgence of revitalization.
The one advantage of centrally located self storage in major metro areas with easy access is people – lots and lots of people!
It’s fairly easy to do. And this redevelopment is often welcomed by local civic leaders because they’ve lost a good chunk of their population as a result of the exodus to the suburbs (and exurbs).
In some cases, you can acquire old buildings at deep discounts.
By the way, you don’t have to limit yourself to older buildings right in the center of town.
There’s another growing trend too. It’s converting empty barns and steel buildings in rural areas and retrofitting them for self storage facilities.