Buying a selfstorage facility is much more difficult than you think especially if you want to make money with it. Over the years, there are some basic features that distinguish winning plants from losers. And the genetic code is hard to break.
There are many who will tell you all about buying a selfstorage facility to sell a book, course or start camp. But they really have either limited or no experience. The concepts we will tell you here are based on information about reallife tasks and much of itfrom running one of the largest websites owned by the industry. And it can be very different from what you have heard before.
50,000 inhabitants within 3 miles of the facility.
The myth that you can build a selfcontained facility in the middle of nowhere and fill it must be exposed. Selfpreservation depends on people people who need to store things. In the absence of population you have no demand. You can not build or buy a selfstorage facility in a small city of 5,000 people and be successful at least not sufficiently successful to earn money with it. Population density is the key.
Traffic bill past facility of 25,000 + cars per day.
The majority of customers for selfstorage find their storage space at home from running it. It is in many ways a purchase decision. Few people submit a scientific study of where to store their cases. They look comfortable, and often enter the first one they pass close to home or the business. As a result, it is also a myth that you can have a successful selfcontained facility hidden from a view or stuck on a twolane street without traffic.
$ 50,000 median household income.
To pay for storage, to pay $ 100 per month or more, the customer must have discretionary expense. If they struggle to cover their rent or mortgage, they will not have the desire to add their already fighting finances. In order for them to be stored, they must also have unnecessary belongings. Only people with higher incomes can collect enough materials that need to be stored.
400 units and upwards.
There are some large fixed costs in a selfstorage facility, the largest of which is the manager. You must have enough devices to support the necessary staff to run the complex. You can not drive a selfstorage facility from a kiosk, contrary to what some people can suggest. And you can not drive it without any kind of management. Therefore, small rural complexes are always on the market for sales.
High barrier for entry.
You may have noticed that there is a great deal of access to selfstorage units in almost all major cities in the United States, and also in most midrange markets. It is extremely important that you choose a market that allows for almost no further development of selfstorage facilities. Otherwise, you can find that the coating can never exceed a certain level as there is always more supply on the market.
These barriers to access can not contain any properly zoned property or a high price per square meter for appropriate zoned land, which makes building a new facility uneconomic.
No more than 6 square meters of storage space per person on the market.
A market of 100,000 inhabitants should not have more than 600,000 square meters of space available. If so, the area is overbuilt. The best markets have much less than 6. Keep in mind that the markets tightness has a lot to do with this. In areas with much denser housing there is less available land for selfstorage facilities and a larger population supporting it. San Francisco, which is extremely dense, is a major selfdefense market, where Stockton, California, is always suffering from vacancies.
Rental rates of about $ 1 per square meter on existing storage.
A healthy selfpreservation market will have a rental rate of approximately $ 1 per square meter. This is the number that maximizes the plants economy. When you meet prices well below $ 1, it does not just mean that supply / demand is worrying, but you will not be able to generate enough returns to make the facility a winner.
Buy in need, if you can.
We are entering into a period of uneven dislocation on the lending markets, combined with the current US recession. Many commercial real estate properties perhaps most will be encountered in the next few years, as their existing listings can not be renewed because they paid too much for the property. There will be a large number of REO real estate in the market, as well as desperate sellers.