Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
You need a good locatiion with good demand and limited ability to build more. They're cheap to build, so if the demand is there, someone will build another. Minimal utilities, low (in theory) expenses, no toilets. You need a full time onsite manager. If someone calls and nobody answers, they go to the next listing in the phone book. Since the tenants don't talk to each other like in apartments, you can experiment with pricing more easily. Need a good mix of units that's aligned with local demand. If a tenant doesn't pay, you overlock their unit. A month later you cut the lock and auction their stuff.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
I have yet to personally own them, but have analized and been in negotiations with many in several states.
There are pros and cons with every investment vehicle and this one is no different.
The pros I experienced in my research and hands on experience was that you can get higher returns, and purchase a better cap rates than apartment buildings. You also do not have the traditional tenant problems that goes along with an apartment complex. They have lower maintenance & lower OE ratios, but location is key and your competion is fierce in most areas.
Find one with a seller looking to retire, who will owner finance, one that may have had poor management (in which case you have upside to increase occupancy, increase rental rates, lower expenses) and perhaps room to add on or add trailer/boat storage space.
Riverside, CA · Member since 2008 · 49 posts · 2 votes
17y
Originally posted by nationwidepi:
I have yet to personally own them, but have analized and been in negotiations with many in several states.
There are pros and cons with every investment vehicle and this one is no different.
The pros I experienced in my research and hands on experience was that you can get higher returns, and purchase a better cap rates than apartment buildings. You also do not have the traditional tenant problems that goes along with an apartment complex. They have lower maintenance & lower OE ratios, but location is key and your competion is fierce in most areas.
Find one with a seller looking to retire, who will owner finance, one that may have had poor management (in which case you have upside to increase occupancy, increase rental rates, lower expenses) and perhaps room to add on or add trailer/boat storage space.
I have had intreast in this also. There is a RV/Trailer storage business near my work and its always full. It seems like a good business.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
You need a good locatiion with good demand and limited ability to build more. They're cheap to build, so if the demand is there, someone will build another. Minimal utilities, low (in theory) expenses, no toilets. You need a full time onsite manager. If someone calls and nobody answers, they go to the next listing in the phone book. Since the tenants don't talk to each other like in apartments, you can experiment with pricing more easily. Need a good mix of units that's aligned with local demand. If a tenant doesn't pay, you overlock their unit. A month later you cut the lock and auction their stuff.
Lakebay, WA · Member since 2008 · 48 posts · 0 votes
17y
I've been following emails from this guy on Storage Units. Here's one of his mailings.
"We continue our discussion on...
Why is self storage where you should be investing your time and resources as a real estate entrepreneur?
Here the next of the Top 10 Reasons For Self Storage;
But first consider this...
My father latched onto his first gold mine when gold was selling at $35 an ounce. Today prices for gold are more than 20 times that amount. But when you get in early, you enjoy the wealth that comes from price inflation. That's the key.
There's a similar story going on today in self storage. The demand for self storage has been rising exponentially. Roughly half of all the 23,000 self storage facilities have been built in the last 7 years. But the growth in demand is only starting its rapid climb upward. In the coming years as the Baby Boomers get set to retire, move, travel, downsize and/or buy 2nd homes, the need for self storage will absolutely skyrocket. Why? Because what do you need when you move, travel, downsize or buy 2nd homes? Storage!
Studies done by industry experts indicate that 40% of the 77 million Americans who will be retiring in the next few years, will move and 50% plan to travel. And again, what will these 77 million Americans need who plan to move and/or travel? Self storage!
Mind you, these Baby Boomer retirees have $2 Trillion in purchasing power, so don't think for a moment that they won't be buying lots of stuff and needing lots of self storage.
If you'd like to learn more about self storage, I've attached a free training audio. Just click http://www.uslandco.com/video/storage
As you'll see (when you click through to that link), to get involved and to be investing in self storage, you won't need cash, credit or pull. You can start today! You can learn how to pick up these high cash flow properties right away.
Want some more good news? It's a no toilet - no carpet - no eviction - no hassle type business. But I'll save that for one of the next installments of our Top 10 Reasons For Self Storage. For now, click http://www.uslandco.com/video/storage and pick up some more information that we have waiting just for you.
Now's the time. Don't miss out on this great window of opportunity. This could very likely be the perfect business for you.
See you at the top!
Yours for Profitable Investing,
Lee Parker
U.S. Land Company, Inc.
Cutting Edge Resources for the Real Estate Entrepreneur"
Lender · Phoenix, AZ · Member since 2008 · 351 posts · 40 votes
17y
I have to think if you can find a college town that doesn't have much competition you could make tons of money.
Now that I started thinking, If you had a school near a lake you could also do boat storage and what not that way in the summer months you get students and winter months you get boats.
I have heard a lot about this and have been interested but didn't know much about it. I am glad this thread got started.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
17y
Tony,
I'm a silent partner in one. Another way to do storage is onln ground for RVs of every kind. Most folks don't have room at home, and if you're in a snowbird area its' double the fun.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
I didn't really break out the cons, but did mention some. Competition is the big one. These are easy and cheap to build. If there is demand, and land is available, new ones will pop up. Given there are several big, national companies in this business, you can bet every location is being scrutinized.
You have to be up to date. I remember looking at one of these (to rent a space) in 1995 that was nothing but a set of buildings out in the open on the edge of town. No office, just a number to call. The one I ended up renting was marginally better. It had a fence. But the gates were open only from 8AM to 8PM or some such. Anybody could get in during that time, no control. Nobody could get in outside those hours. That won't fly. You need fences, security systems that allow and control access, cameras and video systems to watch over the place. You need an onsite manager to deal with tenants and take phone calls.
Depending on your area, climate controlled storage may be needed. Stack boxes of books in a uncontrolled unit anywhere along the gulf coast and you won't have to worry about them after a few years. The upside is that you control the settings. Tenants don't get to crank up the heat and open the windows. And, climate controlled doesn't mean 72 degrees year round.
You'll have to advertise. People won't just come.
You'll have to deal with planning and zoning. Storage, especially any sort of open storage, can become a target when cities start doing redevelopment. That happened to the guys I work with. The city condemned their open storage and forced them to move.
As for may investments, buying a distressed, underperforming property and improving it can be very profitable. Building can be challenging, if the city doesn't want such facilities. If the city easily allows it, then you'll get competitors.
Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
17y
Owning a storage facility is one of my dreams. I found a couple in my area which were for sale, but never proceeded since I didn't have a formula which seemed to accurately indicate cash flows, costs, etc.
I'm still very interested in becoming an owner, however.
Real Estate Investor · Toledo, OH · Member since 2008 · 234 posts · 53 votes
17y
I too would love to own a storage unit property. One con that I might mention is because of the economy, situations where owners are finding people actually living in them are popping up.
Storage Unit As Shelter Not Unique, Workers Say
Girls Found in Md. Shed Spotlight Housing Woes
By Susan Kinzie and Joshua Partlow
Washington Post Staff Writers
Wednesday, November 24, 2004; Page A01
In 20 years working in commercial storage, years when she has also had to work nights waitressing at the Golden Corral to help support her children, Robin Lawrence has seen lots of people living in storage sheds.
"Sometimes they can fix them up really nice," said Lawrence, who works at Economy Storage in Waldorf. They might add insulation, carpet on the floor, a bed, a rack for their clothes, a television, a hot plate, maybe even a little grill out back. "It's just like a little efficiency, but without running water."
Rest of the article is here:
http://www.washingtonpost.com/wp-dyn/articles/A8714-2004Nov23.html
Lakebay, WA · Member since 2008 · 48 posts · 0 votes
17y
There is a program I'm seeing here in the Puget Sound Region for storage units that are for sale. I'm sure it's throughout the nation though. Seeing storage facility units being built with the individual units for sale, just like a condo setup. You own a percentage of according to the number of units you purchase. Pricing is resonable and is just about the same process as buying a home. My thoughts are to aquire the land and build units for sale rather than owning the project. Any thoughts on this?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Rich, you are right that I did not lay out the cons, I only mentioned the main two which were:
Competition is a big con and having a poor location would also be a huge con. The other potential negatives are that operations that are operating with good numbers are harder to find and if you do find them, the owner wants a mint for them, as they should. The best deals will be finding an underperforming unit (poor management, neglect, owner death, etc. etc) and then getting a great price. You will have to have a large reserve as you could easily be cash negative at the start, before you get the upside complete.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Originally posted by Mark Yuschak:
To take this thread to the next level: what is the proper way to assess a value on a storage facility?
Since it is a commercial property, it is valuated based on the financials so you would need to identify the NOI (net operating income) and then divide it by the going cap rate for that type of property in that specific area. For instance, if the NOI was $50,000 and the going cap rate in that area for storage units was an 11 cap, then the value would be $454,545.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Market cap rates can be difficult. You will need to research several sources. Use a commercial agent in the area, particularly from a larger firm. They have more complete and accurate data. Pull past sold listings, analize the deal to determine the NOI and from the final sales price, you can determine the cap rate.
There are also organizations who track and write articles on storage unit facilities. Use "Google" search engine with key words to locate.
Finally, it is all about what type of return you want as an investor. Will you only by a 10 cap or above, then go with the highest cap rate so long as all the other financial criteria is met. Note that cap rate is only one of several mathematical equations to perform, and in my opinion, all must be met before proceeding with a deal.
Real Estate Investor · Member since 2008 · 340 posts · 34 votes
17y
Originally posted by Kel S:
I too would love to own a storage unit property. One con that I might mention is because of the economy, situations where owners are finding people actually living in them are popping up.
That is not a con, it is a pro. In all, but a few states, storage unit facilitates don't fall under tenant eviction laws. It is a piece of cake to have people and personal items vacated from the storage unit.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Very true. In fact, in the rental agreement, it states that the tenant may not personally occupy the storage unit and thus, has no rights in that regard. Simple, "get the heck out" would suffice.
They could even be arrested in most states for refusing to leave.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
17y
Only person I know who actually owns any is my dad and he got a small building when he purchased a commercial package that included a mobile home park with it. From talking to him about it the pros are easy management and no tenant headaches. The cons are they sit vacant for a very long time between tenants and the cost of marketing vs. rental income is higher than his residential units.
What helps is he has his management system in place that takes care of his residential units so it was very easy to tack these onto the existing system. They don't "show" the storage units, they give dimensions. People rent them at the office and away they go. They get into the unit themselves and lock it themselves and it's all left alone from there provided they pay on time.
Greenville, MI · Member since 2014 · 1 post · 1 vote
12y
mark..even though you asked in 2008 and now it is 2014... http://www.ministorageoutlet.com/ here is a site you can use if you cant click it just copy and past it.. it tells you the estimate of what a storage unit will cost you and it lets you pick all the measurements and stuff..not as much as you would guess.. my husband thought around 100-200,000 for a unit.. it was only 12,000 for 14 units and all the measurements i did