Storage Unit Investing
Looking to connect with some Storage Unit Investors and glean from them!
Any specific questions? It's a great business!
@Taylor L. yes, I am interested in learning about purchasing an undermanaged facility and adding technology to increase efficiency and allow for remote management. If anyone has done this, I would love to know what technology they use, and about how long the process took.
Quote from @Katelyn Andrews:
@Taylor L. yes, I am interested in learning about purchasing an undermanaged facility and adding technology to increase efficiency and allow for remote management. If anyone has done this, I would love to know what technology they use, and about how long the process took.
Electronic gates, Easy Storage Solutions software, call center to walk people through online renting process and Google AdWords. That’s the hands off formula I’ve been told. Usually the software companies also handle the website so customers can reserve, rent and make payments online. They get a code and use that code to enter the electronic gates. Of course you need a 6 foot tall fence around the facility to make this all work plus you need it for security.
I bought a storage facility in 2021 with 135 units. It literally takes 3-4 hours a week to manage, maximum. It produces far more cash flow than I could ever get with residential rentals and has been my best investment so far. I have the software set up so renters move themselves in, completely hands off.
- Attorney
- Dallas, TX
- 2,084
- Votes |
- 5,074
- Posts
Yep, its a solid business with a real estate component. Be prepared to be on site multiple times in the beginning. You'll always needs reliable boots on the ground nearby for emergencies though.
We use Easy Storage, it even has gate code integration if you're springing for that technology. Its very pricey though!
Can anyone tell me how they prevent theft? What is keeping people from jumping the fence and cutting the locks to the units?
Quote from @Nathan Gesner:Good input. For a hands off facility, do you use a contractor to clean out units in preparation for the next renter?
I bought a storage facility in 2021 with 135 units. It literally takes 3-4 hours a week to manage, maximum. It produces far more cash flow than I could ever get with residential rentals and has been my best investment so far. I have the software set up so renters move themselves in, completely hands off.
- Developer
- 2,992
- Votes |
- 3,127
- Posts
Self-Storage will always get broken into.
We try to prevent thefts and future thefts by running out when our alarm goes off and shooting their tires and engine. We live in a small community and word gets around.
This guy is convicted and got 20 years in jail. When they went to his house, they were able to tie him to about 12 thefts over the last 1 1/2 years.
Recommend 12 gauge with number 7 bird shot. That way if they are too far away you don't hurt them too much and get in trouble. If they are close up, you hurt them.
@Henry ClarkSo you live on the premises?
What about those owners who don’t? Just try to invest in good cameras? What do you do for the tenants who’s stuff gets stolen?
- Developer
- 2,992
- Votes |
- 3,127
- Posts
@Katelyn Andrews There are a million questions about Self storage, you need to approach this in a systematic way.
We live 2 minutes away. Cameras are an after the fact approach. You need an alarm system to catch them in the act.
Are you serious about Self Storage?
a. Grab some books. Watch all of the podcasts. Read all of the posts.
b. Join a group. Attend seminars.
c. Do about 5 self-storage analysis to buy locations. Use these as your learning tools. Make these your post and use them to ask questions.
d. This will cause you to develop a system. If you ask 100 questions on here, you will get lost.
Before you even start down the road, you should ask about Self storage from a Financial, lifestyle, scalability, Technical, profitability approach; why do you want to get into this.
Use your current REI background as a starting point. So, what do you currently do? Then ask for comparison versus that, with the above approaches.
So what do you do? SFH, MFH, CRE, fix/flip, hack, etc. Then ask us to compare that versus self storage. Before getting to know storage, figure out how it compares against what you are already doing.
Start small and Make Your Big Mistakes Early.
Quote from @Matt Hertzler:No, moving them in is hands-off. When someone moves out, I still have to inspect the vacant unit, possibly clean it, and secure it. I carry a broom and bucket in the truck. It takes ten minutes to sweep a 10x20 and slap a lock on it.
Good input. For a hands off facility, do you use a contractor to clean out units in preparation for the next renter?
Quote from @Nathan Gesner:
Quote from @Matt Hertzler:No, moving them in is hands-off. When someone moves out, I still have to inspect the vacant unit, possibly clean it, and secure it. I carry a broom and bucket in the truck. It takes ten minutes to sweep a 10x20 and slap a lock on it.
Good input. For a hands off facility, do you use a contractor to clean out units in preparation for the next renter?
I gotcha. That's pretty much what I was expecting, but I was thinking you were managing remotely, so you would have contractors to do that work in lieu of a full-time on-site manager.
Quote from @Ronald Rohde:If you don’t use the gate code entry I would anticipate you’re running over there every time you have a new tenant moving in ?? Any other solutions you can share ? Also on average how long do self storage tenants stay for 6 months..12 months … ? Thanks
Yep, its a solid business with a real estate component. Be prepared to be on site multiple times in the beginning. You'll always needs reliable boots on the ground nearby for emergencies though.
We use Easy Storage, it even has gate code integration if you're springing for that technology. Its very pricey though!
- Attorney
- Dallas, TX
- 2,084
- Votes |
- 5,074
- Posts
Quote from @Peter Albanese:
Quote from @Ronald Rohde:If you don’t use the gate code entry I would anticipate you’re running over there every time you have a new tenant moving in ?? Any other solutions you can share ? Also on average how long do self storage tenants stay for 6 months..12 months … ? Thanks
Yep, its a solid business with a real estate component. Be prepared to be on site multiple times in the beginning. You'll always needs reliable boots on the ground nearby for emergencies though.
We use Easy Storage, it even has gate code integration if you're springing for that technology. Its very pricey though!
Not necessarily. Henry Clark has a really good system using pre coded locks, he provides them to tenants inside the unit for free. Its like an old school pen and paper booking system.
I'll let him chime in on avg stay. My guys stay for years, not months...
Quote from @Katelyn Andrews:
@Henry ClarkSo you live on the premises?
What about those owners who don’t? Just try to invest in good cameras? What do you do for the tenants who’s stuff gets stolen?
It is impossible to completely stop theft. We have cameras and our facilities our well lit.
We have property insurance and we also mandate that tenants have tenant insurance for their property that is being stored. Tenant insurance is a win-win because generally the owner will get a cut of the premium if the tenant opts in to the owner's recommended tenant insurance.
- Developer
- 2,992
- Votes |
- 3,127
- Posts
Look at our YouTube on our website how to rent a unit. Clarkstoragellc.
Length of stay you can look for one of my posts we show the breakdown.
How long they stay doesn’t matter. They don’t know. If we were completely full except one unit. And you told me you only want to rent for one month, I would rent to you. Because you truly don’t know how long.
Quote from @Peter Albanese:
Quote from @Ronald Rohde:If you don’t use the gate code entry I would anticipate you’re running over there every time you have a new tenant moving in ?? Any other solutions you can share ? Also on average how long do self storage tenants stay for 6 months..12 months … ? Thanks
Yep, its a solid business with a real estate component. Be prepared to be on site multiple times in the beginning. You'll always needs reliable boots on the ground nearby for emergencies though.
We use Easy Storage, it even has gate code integration if you're springing for that technology. Its very pricey though!
We use combination disc locks and give tenants the combination, and instructions on how to change the combination, after they have e-signed a lease and paid the first month's rent and security deposit online. We do not have gates/fences at our facilities. We have multiple tenants that have rented at this facility for 25 years and running, my wife and I have owned it for 7 years. Some tenants stay for a couple months and others stay for years, really a mixed bag for the most part.
I haven't physically been to the facility in months and it's only 10 minutes from my house. If you have systems in place and enforce your rules it can be a very hands-off business.
@Brad L. I am curious what sort of cash flow you are having? Do you self manage remotely?
Quote from @Katelyn Andrews:
@Brad L. I am curious what sort of cash flow you are having? Do you self manage remotely?
I self manage, but I wouldn't necessarily say I do so remotely as I still live within 10 minutes of our facilities. I do have systems in place so I don't have to go to them often, but if something went wrong I do have the advantage of being able to get there quickly as opposed to someone that's actually managing remotely from hours away. I'd rather not discuss cash flow on an open forum, but I value my time and expect cash flow that pays me accordingly.
What the best way to finance a new construction storage build? And what kind of pricing are we looking at in todays world for cost?
- Attorney
- Dallas, TX
- 2,084
- Votes |
- 5,074
- Posts
Quote from @Ben McMahon:
What the best way to finance a new construction storage build? And what kind of pricing are we looking at in todays world for cost?
Best? Lowest risk in this environment would be 50% LTC 18-24 month i/o construction loan with mini perm to stabilization.
Pricing maybe 5-6%
Quote from @Ben McMahon:
What the best way to finance a new construction storage build? And what kind of pricing are we looking at in todays world for cost?
I was just quoted last week and I don't have the numbers with me so I could be a little off, but here's how I think it broke down:
Wood frame buildings erected - $21/sf
Ashpalt for drives - $3.50/sf
Concrete slabs - $5.50/sf
Site work at this property is negligible and electrical will run me a couple thousand.
No fence or gate because that's not necessary or common in my market, and the existing buildings have wireless solar security cameras which I'll add to the new phase also. I was told that all steel construction would be about double this cost. There are other expenses of course, but what's listed above is the vast majority cost-wise. This will be our first time building though, so someone like @Henry Clark can probably be more specific and accurate.
- Developer
- 2,992
- Votes |
- 3,127
- Posts
@Ben McMahon. In your market you're looking at around $5mm minimum to build on the low end. You could go with an SBA loan, via a construction loan with a local bank. They will do up to $5mm. Example: 10% you- $1mm; Local bank 45%- $4.5mm; SBA 45%- $4.5mm. As, @ Ronald Rhode stated ask for interest only during construction, then interest only during the rent up phase say either to 65% occupancy or 18 months. You obviously can-do smaller projects. You will only be able to use the collateral in this SBA project on another SBA project though.
So, before you dive into details, google Loopnet Commerical Self Storage San Diego, or the area you want to look at. Look at the Realtors handling those sales and look at their listings and ask to get on their email listing for new Storage sites. This will help you with and order of magnitude. With costs having increased 40 to 60% for Self storage buildings in the last 3 years, here are some good markers to even look at an area. Land cost higher than $100,000 pe acre; 10x 20 rent $90 or lower. You might make a profit, but it won't be a good financial deal.
You can call around your area and get the 10x20 rent or google sparefoot for your zipcode.
There are lots of places to build Storage competitively today, you just have to determine your financial metrics, learn a lot, then do your research.
Start small and Make Your Big Mistakes Early.
Cool, yeah that helps. Im actually looking in Virginia. My brother lives there, and says all the storage in the area is waiting list. He also has a piece of land picked out across the street from a new development going in, and at the intersection of two major highways. So its peaked my interest.
Hi all! Our family has owned two storage facilities for 40+ years. For many years our properties were run very old-school and we are currently in the process of upgrading everything. My hubby and I took over the management in January of this year. We are in the process of upgrading our fences to 7' iron with spikes, as chainlink is child's play to cut and enter. We have automatic gates with a key code box (integrated with our software) and our gate hours are 7AM - 8PM. We are upgrading our security cameras, but as a previous poster mentioned, if no-one is watching the cameras at night or the system is not setup to alert you, the cameras are only good for monitoring during office hours and playback for thefts that occur during the night. We have an office at our larger facility that manages both properties and is open 9-5, six days a week. We have had a very hard time with management and we are currently living at the facility managing ourselves. We are in our second eviction for our live on-site managers this year.
Managing remotely seems like a pipe-dream for us, to be honest. Maybe that works if you are in an upscale area where people always behave and follow rules...heh. We do a drive-through of the facility every night after gate hours to hustle people out who have not left, and to check all locks, and nooks and crannies for dumped trash, etc. Just last night we had a couple who had not left after the posted gate hours. My hubby told them they needed to wrap it up and leave within 10 minutes (they had stuff strewn about in front of their unit.) My hubby went back to the office. Then a neighbor (another storage facility owner that lives on-site) called him and said there were people screaming in our back units. My husband went out again and the couple were having a domestic dispute (this happens with our customers more often than we care for!) and the husband had thrown and broken things. They swept the items in a pile and covered it with a tarp for the night. The man was supposed to come back today to clean it up. People often stay past gate hours and have to be physically told to leave and watched to make sure they do. We've had domestic disputes that could have turned very ugly (guy had done time for shooting someone in the face) if we were not there to stop it, call police, etc. We've had homeless people attempting to live in their units and stay at the facility all day. It seems like we have people or unit issues on the daily.
We also do a drive through of the property first thing in the morning. We often notice that people have not secured their locks properly or have accidentally taken their lock with them and the unit is unsecured. We then secure the unit with our own lock and call the tenant to let them know. I'm not sure how this kind of thing would be accomplished remotely without having boots on the ground every day.
Regarding cleaning out units: We often get people who move out and leave stuff. We then have to load the trash in a utility trailer and haul it to the transfer station. We have also had people move out and dump things in a corner on the property so their unit looks clean to get their deposit back, but they've left a mountain of stuff in a corner somewhere. If a manager is not monitoring the cameras, this is not caught until later. We live in an area where there are black widows and other undesirable spiders, so we have a pest service come every single time someone moves out; however, if a unit is empty for a time, black widows move back in and must be exterminated before a tenant moves in, so we do an inspection of every unit before someone moves in to make sure it's ready to go. Sometimes people just move out without notice, so if we are not inspecting the place every single day, we would not know until our system charges them rent and we attempt to collect.
Even with all it's complexities, I prefer self-storage to residential rentals – at least the gate locks tenants out after 11 days if they are behind on rent. The lien process is lengthy though and labor intensive.
I would love to hear from other owners/managers on how they have accomplished remote management. We would like to work smarter, not harder. ;)
Thanks for listening and for any input you may have,
Jenny