Self Storage

102 Replies

@Jedd Braunwarth ,

You are right that there is some degree of hands on required to succeed in self storage but that is true of any investment. For the first two years after buying my facility, I ran it myself by commuting 60 miles each way 4-5 days per week. This was somewhat do to my OCD/type A personality but the facility was quite neglected when I took it over so it really needed some attention. I also added 10,000 sq. feet during that time so that required my attendance as well. That being said, for the last year, I have had a manger who works just 16 hours per week in the office plus 1-2 hours for appts. Total cost is less than $1000 per month including WC and disability etc....Small price to pay given that total revenue is $15,000 per month and I now visit the property 1-2 per month spending less than 20 hours per month "managing" this investment. I do move people in remotely when my manager is not available. I use Logmein.com and email paperwork to them, take payment over the phone and have locks hidden onsite so they can buy those too! Super easy. CHeck out my blog at the link below for a summary of my experience (if you havent already). Im happy to answer any other questions that havent been addressed yet.


@Andrew S. ,

Sorry for the delayed response...not sure how I missed this. My Storage facility is actually in Syracuse, I am only there a couple times per month but Id be happy to show you around if your schedule allows when I am there.

Mike

Are there any alternatives to Loopnet for finding self storage listings? We are thinking about going in this direction with our next chunk of money.

@Tabitha Kix

SSBA has a decent amount of properties, but they are just ONE Brokerage Company among approximately a dozen that specialize in Storage. SelfStorages.com is also another good site, and I frequently post on SelfStorageTalk but I have NEVER found a deal worth buying that anyone has ever discussed.

The very best deals that we and our students find are by sending our targeted, direct mail to owners (that's pulling approximately 6%), and through the 65+ Small business Broker sites. We've sourced hundreds of deals from those 2 sources alone, in addition to approximately 9 other strategies we have honed over the years to fill our funnel with screaming good deals (where nobody else knows where to look....

Happy Hunting!

Originally posted by @Nick Keesee:

Use Loopnet to create a list of brokers who have the self storage listings in your target market.  Once you have that list, start contacting them with the type of deal you are looking for.

Loopnet is great for finding brokers....not so much deals.

 I totally agree. I have never seen a good deal out of Loopnet but I used it to find & meet brokers.

Someone asked about the zoning previously. In my county, you have to have industrial zoning to even think about building a storage facility. Industrial zoning is not handed out willy nilly. The only property type the county will think about rezoning to industrial from another type is one that happens to be along railroad tracks. 

@Michael Wagner  Do you just have the one employee at your self-storage facility, and then you pick up the slack for when they go on vacation or aren't available?  When you were spending the two years commuting, were you the only "employee?" How much is security a concern or liability for you? How much monthly volatility / tenant turnover do you generally see?

I'm a multi-family landlord in California with a regular J-O-B, but considering cashing out and moving back East to be closer to family. Luckily my properties have appreciated well and I have good equity to put into a new business, as I won't be able to port my current career over to my new new home. I've been researching the idea of getting into a larger multi-family, but a broker just put me on to self-storage and after seeing a few of the deals he sent, the numbers look very good. But I don't know the business, and that scares me.

@George Fitz  

Yes I have just one employee.  And yes I pick up slack as needed.  She works 16 hours per week (8 of which she actually helps me with another business that I own). When she vacations, we just close the office with a sign on the door having folks call.  THe calls are forwarded to my cell phone and I can then move them in or assist them via remote log in to my office computer.  Pretty easy stuff!

Security is a concern but not one that should be seen as a deal breaker.  We have a perimeter fence, barbed wire, 17 cameras, electronic gait access.  For the most part this is to "keep up with the joneses" and impress the customer.  We have had one break in in the three years I have owned the facility and it was a hassle and headache but from a legal standpoint, I have no legal liability for the customers' belongings.  I did compensate some with a free month and a lock to replace the cut one but that was a business decision to prevent negative word of mouth.  We are in a quiet suburb....more urban areas with higher crime rates might call for additional measures but again, don't let this deter you.

Over the last three years we have averaged 8 NET move ins per month.  If I were to guess, I would say that we probably have 8 move outs and 16 move ins per month on average....roughly one move in/out per workday....this varies considerably where I live as we are most volatile from April to June and Sept. to Nov....Winter is slower (in and out) as is mid summer (vacationers?)

I started in landlording and trust me when I say if you can succeed there, you can EASILY succeed in storage. Income/Expense ratio is Way more favorable.....Does take a bit of more specialized knowledge of the local market but thats all easily learned.  Hope you find as much success in storage as I have.  It truly has been life changing.  Where on the east coast are you potentially moving?

Mike

Thanks @Michael Wagner  It's definitely intriguing and since I'm in the early stages of my research, doesn't require a total re-think.

As of now, we are planning to move to the western NC / Asheville area. I'm originally from Kentucky so it's close to home, and most of my family has relocated to the Carolinas. But our timeframe is a year from now, so we're still figuring everything out.

I work in film/tv post-production and while I may be able to do the work from home thing with that job (at least to some degree), I will need to replace much of my income with this new business.

Thanks again- I'm sure I will have more questions as I do some more exploring.... 

Originally posted by @Michael Wagner :

@Jedd Braunwarth ,

You are right that there is some degree of hands on required to succeed in self storage but that is true of any investment. For the first two years after buying my facility, I ran it myself by commuting 60 miles each way 4-5 days per week. This was somewhat do to my OCD/type A personality but the facility was quite neglected when I took it over so it really needed some attention. I also added 10,000 sq. feet during that time so that required my attendance as well. That being said, for the last year, I have had a manger who works just 16 hours per week in the office plus 1-2 hours for appts. Total cost is less than $1000 per month including WC and disability etc....Small price to pay given that total revenue is $15,000 per month and I now visit the property 1-2 per month spending less than 20 hours per month "managing" this investment. I do move people in remotely when my manager is not available. I use Logmein.com and email paperwork to them, take payment over the phone and have locks hidden onsite so they can buy those too! Super easy. CHeck out my blog at the link below for a summary of my experience (if you havent already). Im happy to answer any other questions that havent been addressed yet.


@Andrew S. ,

Sorry for the delayed response...not sure how I missed this. My Storage facility is actually in Syracuse, I am only there a couple times per month but Id be happy to show you around if your schedule allows when I am there.

Mike

Mike you mention your gross income is $15k on your SS property. What does the NOI look like? What do average monthly expenses generally look like on these facilities and how to they break out? A rule of thumb for multifamily is 40-45% of gross income for expenses on residential rentals (not including debt), curious if there is a rule of thumb for SS?

Originally posted by @Rob Cee :
Originally posted by @Michael Wagner:

@Jedd Braunwarth ,

You are right that there is some degree of hands on required to succeed in self storage but that is true of any investment. For the first two years after buying my facility, I ran it myself by commuting 60 miles each way 4-5 days per week. This was somewhat do to my OCD/type A personality but the facility was quite neglected when I took it over so it really needed some attention. I also added 10,000 sq. feet during that time so that required my attendance as well. That being said, for the last year, I have had a manger who works just 16 hours per week in the office plus 1-2 hours for appts. Total cost is less than $1000 per month including WC and disability etc....Small price to pay given that total revenue is $15,000 per month and I now visit the property 1-2 per month spending less than 20 hours per month "managing" this investment. I do move people in remotely when my manager is not available. I use Logmein.com and email paperwork to them, take payment over the phone and have locks hidden onsite so they can buy those too! Super easy. CHeck out my blog at the link below for a summary of my experience (if you havent already). Im happy to answer any other questions that havent been addressed yet.


@Andrew S. ,

Sorry for the delayed response...not sure how I missed this. My Storage facility is actually in Syracuse, I am only there a couple times per month but Id be happy to show you around if your schedule allows when I am there.

Mike

Mike you mention your gross income is $15k on your SS property. What does the NOI look like? What do average monthly expenses generally look like on these facilities and how to they break out? A rule of thumb for multifamily is 40-45% of gross income for expenses on residential rentals (not including debt), curious if there is a rule of thumb for SS?

 Hey Guys, 

Thought I'd weigh in - the Rule of thumb for Self-Storage Expenses is 30-35%.  That's why we love the sector - Average rent/sf for Storage is $1.12, and Average Rent for Multi-family is $1.01.   

Do the Math!   

That's why we sold all our Single Family and Apartments to invest only in Self-Storage!  Plus the added benefit of not having to deal with tenants, toilets and trash anymore.   

My Real Estate Business is very simple and Extremely Lucrative.......... Now. 

Cheers, 

I couldn't agree more with @Sam Green Self Storage is a great business to get into, but it's important to do your research on the trending market first. If you just open up a facility and expect it to be filled the next day, it's not that easy. I would definitely do some research on what kind of budget it takes to keep the place thriving and so forth. Research on upkeep etc. etc. The reason I say this is because when this was first posted on biggerpockets.com the industry was different and capturing leads was by far easier. Now heavily trafficked keywords need to compete with 1 million results. The idea is getting it into the first page and eventually above the fold. 

I've Actually gotten into the business of self storage near Garfield NJ. and it's very competitive, but at the same time it could be very lucrative if done correctly. 

The main objective is to take advantage of the google business listing because there's a bigger chance of you getting yourself indexed on first page there quicker than your actual website. Then focus on advertising in websites that your competitors are using for leads. 

I can promise you one thing though, if you're not taking care of the customer and making sure they're happy, you're a dime a dozen as a self storage facility. Nine times out of ten you're one of ten other places within a 5 mile radius. If you don't provide exceptional service, they will never come back again. the whole, "Under New Management" isn't a good look for businesses. It's extremely important to make sure that the back end office process is flawless. 

I will illustrate an example: Guy gets hired by a company in Garfield New Jersey because of his familiarity with the industry and the relationships he has, but then decides to bring in his vendors he has a rapport already built up with as aggregators and Space Control etc. There's nothing stopping him from fixing the numbers or tampering with the data because that guy or gal has full control. I am having an experience with this right now. Not to mention if the guy or gal leaves or is let go then having proper management over all of these avenues becomes a headache because you do have the administrative access under full corporate control. 


Anyone thinking about buying or investing in self Storage in Texas? I would be interested in speaking to you.

Hands down my favorite subject. If you are a new potential or want to be owner, I can be a wealth of experience on the day to day operations and more.

"Big" Henry 

@Henry M. I am interested in looking at Self-Storage properties in Texas. I'm a multi-family property investor and this would be my first foray into self-storage, but I would like to find out more about it and see some potential listings and their respective numbers.

Originally posted by @Vasundhara Ranjani :

@Henry M. I am interested in looking at Self-Storage properties in Texas. I'm a multi-family property investor and this would be my first foray into self-storage, but I would like to find out more about it and see some potential listings and their respective numbers.

If I can he of any help or if we can partner, let me know. Colleague me so we can exchange info.

"Big" Henry 

I think you will find agreement among experts in the industry that kiosks are on their way out.  Web based management software and smart phones shortened the lifespan of kiosks!  That's not to say that they have no value...just that their are more cost effective ways to accomplish the same thing in most situations.

I'll second what @Michael Wagner said. Which is a normal occurrence, but anymore people tend to pull out their phone and research before just going somewhere and figuring it out. I think a good software and answering your phone will help a lot more than the kiosk.

We are closing our 3rd self storage facility with over 100k rentable sq ft in Orlando Fl, all managed by CubeSmart.  Forbes calls it a recession proof asset class.  It actually was the only asset class to increase in value during the last downturn .  We are doing ground up, given the metrics of Orlando creating a lot of value out of the ground, but caution folks to keep an eye on new housing starts in a given area and watch for oversupply. When done right, storage is a great investment.