What are the best ways/ sites to find self storage units?
New to Real Estate · Rock Island, TN · Member since 2019 · 97 posts · 69 votes
So I am quite interested in buying my first sect storage units. What are the best steps? Is it like SFH, you first find a market, then a team and then a deal?
I’m having a hard time finding any self storages for sale yet alone in a market I like. Am I just looking in the wrong places? Where should I look online?
As for building out a team, can you do Self Storage out of state the same as SFH? Is the list of team the same or are there team members in Self Storage that I would need that differ from SFH or small multi family?
Thanks for all the help BP community.
Nick
Hey Nick! I like to say that there are 11 Ways to fill your funnel, because, well, it's true, but in the end all those strategies really boil down to two: On-Market or Off-Market. There's pros & cons to each method, certainly.
Typically, we also recommend starting with a 3-hour drive radius around your hometown as the market you should start with for a variety of reasons. When you do find a prospective Facility, you're going to want to conduct a 3-Mile market Study & Competition Analysis. 3 Miles (5 if it's rural) because that is typically the maximum distance folks are willing to travel to store their treasures.
I'm sure you did the math, which means that there are A LOT of 3-mile markets in a 3-hour drive radius from your hometown.
After working that strategy for awhile you determine that you are truly in a bad market, then I'd go about looking for another state. But work that first, and I think you'll be surprised at what's available.
I hope this helps. Good luck!
(@Ronak Shah - thank you for the shout-out!)
Scott
@Nick Troutman welcome to the world of self storage! Can you help others help you by explaining what do you know about self storages so far so they can guide in right direction?
@Ronak Shah I am just starting in the world of self storage. I currently own a couple smaller multifamily units and I would like to add self storage to my portfolio. Right now I am trying to figure out how to find my first deal in self storage and I have been having a harder time finding them in markets that I would like to be in. I am not sure if I am looking in the right places, or if I have to open up to nation wide market for self storage? I would love any help and pointers along my self storage journey. Any other books, podcasts, programs etc to help learn the ropes would also be much appreciated. Thank you for your help and time.
@Nick Troutman, ok so it seems like you are not rookie to real estate which means you can spend time and $ in learning and executing! You can learn from @Scott Meyers, @Michael Wagner (also has online presence as thestoragerebellion), Mark Helm (youtube search)! As for where to look for and what to look for, are similar concepts to residential (specially multifamily) with a beneficial twist that it is human resource and maintenance light so you can look outside your area! However, try to look into places where you like to be so you can mix business and pleasure!
@Ronak Shah Thanks for your advice. I'll do some digging into the content of these guys.
@nicktroutman I am happy to have a chat with you. I have sold quite a few and my partners are very experienced storage unit owners. I have several storage unit facilities all over the country that I am wholesaling. Send me a quick message and I will respond with my name and #.
@Rebecca Jensen thanks so much. I'd love to talk with you.
Hey Nick! I like to say that there are 11 Ways to fill your funnel, because, well, it's true, but in the end all those strategies really boil down to two: On-Market or Off-Market. There's pros & cons to each method, certainly.
Typically, we also recommend starting with a 3-hour drive radius around your hometown as the market you should start with for a variety of reasons. When you do find a prospective Facility, you're going to want to conduct a 3-Mile market Study & Competition Analysis. 3 Miles (5 if it's rural) because that is typically the maximum distance folks are willing to travel to store their treasures.
I'm sure you did the math, which means that there are A LOT of 3-mile markets in a 3-hour drive radius from your hometown.
After working that strategy for awhile you determine that you are truly in a bad market, then I'd go about looking for another state. But work that first, and I think you'll be surprised at what's available.
I hope this helps. Good luck!
(@Ronak Shah - thank you for the shout-out!)
Scott
@Scott Meyers That helps a ton for sure. I will start with that. Thanks so much.
@Rebecca Jensen I would like to learn more about this as well if you don’t mind!
@Charlie Anne of course! Happy to chat with you!
@Nick, going to give you a ton of info, in separate posts. Remember anything free is worth that. Own the info and data, I give you. Start small and make your Big mistakes early. Remember Self Storage is not a zero sum game, you don't loose down to $zero. Key though is to concentrate on the following:
1. Zoning, The harder the better.
2. Market, will they come. Use this to determine which town or investment to take first.
3. Return analysis. Hidden costs. What size of investment are you looking for $300,000; $750,000; or $2,000,000 up? This would help narrow down the discussion. Rock Island, Tn rec area. This can be a specific type of investment for that location.
4. Look for a sweet deal. Example: 440 unit 2 year old location only 30% rented up. In a market that only has 30% market penetration, zoned so "Stupid" money will have a hard time moving in. Family just had a medical issue and want to dump. Bleeding $15,000 per month. They don't know Storage basics. You can find this near you.
@ Nick. Zoning. Some of the info I give you may be a little disjointed, because I wrote them for a different person or situation. You will get the jist. Communicate how big of an investment you want to do. This will narrow my advice down a lot. If I don't respond for a few days, its because we are finishing ground work for our latest location 330 units.
ZONING, I-3 RIGHT?
When ever I take a look at a new town to do storage, I take two approaches at the same time. Do I build? Do I buy? Do both of these at once and go with the one with the best return or impact. Preferably, I like to buy because this takes out competition, greater control over pricing, and hopefully they have some land to expand on. The expansion of an existing facility is always more profitable than the initial purchase or build.
A. Look at zoning either online or at the City or County courthouse look up both the Zoning Map and get a copy, if one exists of a Zoning template, which explains what each zone permits and may allow under a Special use or Condition permit.
B. Read each Zone in detail, unless they have a cross reference table showing “allowed” and “special use”.
C. Ask for the Future planned zoning map. This will tell you where you probably can ask for a change in Zone or for a Special Use permit; and have a greater chance of getting it approved.
D. Talk with the local realtors and they may know what is not on the above Maps and tables. Most cities don’t allow “Spot” zoning. So they don’t get sued. One city I know designated an entire area “Agriculture”, the lowest zoning possible, so they could control allowing what industries come.
E. Most of the time Storage is designated to an Industrial zone. But not always. I have seen it under Agricultural, Planned Residential, Commercial and some Industrial zones.
F. Look at a GIS map of the city. See if Railroads cross through. The Federal government gave both city sites and land along the tracks to the railroad. The Railroad then sold this land to help finance their construction. Look for any land that is still owned by the railroad and ask them to buy it. It won’t have a “For Sale” sign on it, but it will most likely be available for sale if it is not used as a work yard or siding. The good thing about this property since it is so old, it will be in the middle of the town, in a great location. It will probably be zoned “Residential”, but the Railroad will not sale it without putting covenants on it, that no human habitation (home, daycare, school, retirement home, etc) can be built there. Another good thing, is the Railroad does not pay property tax, anywhere. Put in an offer subject to zoning approval. Ask the Zoning committee to allow you to do a “Special Use” permit since the Railroad will never allow “Human Habitation” in this Residential zone. Also ask them to let you pay property taxes. Your units will be well landscaped and they will provide a noise buffer with the railroad.
G. Look at Non-Allowed zoned properties, next to Allowed zoned areas. Still look at these properties since Zoning committees may allow you to switch the zoning or do a special use permit. They do not regard this as “Spot” zoning, since it is next to an allowed area.
What do you do with this information?:
1. Now, that you know the zoning, look for any spots greater than 2 acres (“drive up” storage). Start checking on the prices, even if a location is not for sale. So you don’t waste your time looking at all locations, prioritize and pick locations that put you in a more favorable location between your future competition and your residential customers. Most storage facilities are Mom/Pop and were built with the owner in mind and not the customer. Examples: Gas station owner had two acres and built on one. Hotel operator had additional space. Etc. They did not necessarily build closer to their customers or for ease of access or street advertising. Buy them later when you have a footprint in the town. You don’t want to buy them first and have to go check on 30 units, 30 miles away. We built in one town, and before construction was done bought two other locations that were offered.
2. Line up your potential purchases in priority and start making short and time sensitive offers. You are now in power since you are not tied to one location or even one town. You have a 40 mile radius or whatever you consider a comfortable distance to manage.
3. The harder it is for you to find a location, the better. Less chance for “Stupid” money to build next to you, or out position you.
Zoning Adjustment Meetings:
“Just the Facts.” You will get to speak first, remember your an “Outsider” and don’t vote in that community. Take your time describing your facilities. The property and sales tax it will bring. Explain the current taxes and current look of the property. Show them a “Look” of the new facilities. No one may show up, or you might get 30 people to show up. You “personally” may have to notify everyone within a 200 foot radius or the City might do it. When the public speaks, don’t argue with them. They get their say. Hopefully your added property/sales tax dollars outweighs the public view point. When the vote (good or bad) is over thank each of the members, they’re not paid and most have businesses.
If the Zoning Adjustment committee approves or disapproves it, you then can go to the City/County board for another public hearing and a vote. Don’t waste your time, if the Adjustment committee voted against you. If the City/County Board approves, ask them to waive the need for future “Reading” meetings. The above two public hearings, possible two more “reading” meetings and the final “vote” meeting may take you 4 months, 4 weeks or maybe just two meetings. Depends on how often the boards meet and how much opposition/benefit there is.
Happy hunting. This is the most stressful and fun part of the process. You have very little control, but your decision on property will be the most important of the whole build/buy process. Add Control, by adding more location/city options. ClarkStorageLLC is done growing, but you never stop looking. The best spot yet, is a cornfield where there isn’t a house for a mile. Would love to have built a 1,000 unit location there.
Remember, start small and make your big mistakes early.
@Nick. Market- Will they come. I could give you the ratio, but I'm going to make your earn it. I have used this ratio for all of our Buy/build decisions. Others will mention sqft/population. Use the one I'm giving you. Should take you two weekends. Come back and tell me the ratio and I will let you know if your close. You need to own this piece of info. It will be the basis for any future Self Storage investment.
Market
Demand- “Will they come?”
I'll
give you the tool I use, but you will have to make an investment of
your own time. Otherwise you
don't own
the
data.
Step
1 "Capacity":
Count
the units and sizes in that market. Get headcount by googling the
town or zip code. Be aware if the town is standalone, or it might
have a large population outside since it is a suburban community to a
larger town nearby. Add those people in by using County or School
area population.
Example:
Town
1:
#of
units/headcount= 300 units in the area/ population 3,000= 10 units
per 100 people.
Town
2:
500
4,000= 12.5 per 100
Town
3:
and
so on.
Do
every stand alone town in a 60 mile radius, or until your satisfied.
You will get a High, Low and a average. I have a certain ratio per
100 headcount (not households, not age, not sex) I use when deciding
to buy or build in a town. You will get to the same answer I
have.
Luckily
we are all the same. Death, divorce, fire, home sale, floods,
layoffs, etc. No matter whether your Rich or poor, city or country
folk. The ratio above works anywhere.
Step
2 "Existing":
In
each town count the number of units by size. When I do my ratio I
assume all units are the same. Count the 10/15/20's. Any smaller
units just make them equivalents of a 10 x15. 3 5 x 10's= 1
unit
Although
I am counting them all as the same, the reason, I say count by size
is for when you build.
Now
lets calculate "Demand":
Number
of units needed (Step 1) minus Number of units existing (Step 2) =
Quantity to build.
Town
1:
500
- 400 = 100
Town
2:
300
- 100 = 200
Town
3:
and
so on.
This
will help you pick which town you have the greatest potential for
success. "Subject" to other factors that is where you want
to either buy or build first. You only need to do the above once. I
have kept this ratio in my head since the first time and make all my
decisions using it, before I move into a market. If your in a large
city, use this ratio. Pick the zip codes in your territory.
Many
exceptions to the above.
a.
My town has the highest per 100 count around by far, and I am still
building. There are reasons.
b.
I just built in a town that was not the best of the ratios. But the
largest facility with 1/2 the business is 4 miles out of town by
themselves.
c.
There is a town that is Fully Saturated. No extra unit will ever be
rented in it. I would love to build there. Everyone built 10 x 20's
for some reason and they did it at the south end of town where the
zoning is easiest. I can build halfway to the population who is in
the Northend of town and I would hone in on 10's and 15's with some
20's. Everyone thinks they have less than they have. They will rent
10's or 15's first.
d.
We are building our last location. Your eyes never stop looking. The
best spot I have seen is a cornfield where you can't see a single
house. Would loved to have built that one.
You
don't know me.
1.
Own the data yourself. Don't have me give you the figure. Question
the logic, “all of us are the same”.
2.
We are in 5 towns, 8 locations. Most are in towns of 5,000 or less.
We are in Phase 1 rent up stage in our first large city location
(630) and in building stage across town (330).
I
have used this tool for all of the Buyouts or build outs above. "Put
your money where your mouth is."
Ad
Hoc- Traffic
counts
Two
locations, one with 70,000 Vehicles per day and one with 15,000 per
day. Both in the same general area. I picked the 15,000; why? Learn
the nuances. Start small and make your mistakes then.
Don’t
trust me. Own the info, it’s your money. Everything in the
Storage business can be validated.
@ Nick. Quick answer to your original questions.
Look at Loopnet/Tennessee/Self Storage.
Use the following to sharpen your decision skills. Take the property Tennessee Storage that is for sale in Memphis. Go through the due diligence motions. "Do Not buy this property".
1. Go through the zoning notes I gave you. Look for 3 Miles around this property, see how hard it would be to purchase a piece of ground and build there. Price, zoning, availability. The harder it is, the safer an investment for you. A large REIT can't come in and devalue you. You can raise the rents. I normally do this on new customers. You could do on all customers at once, but you might end up floating most of your note. You could do by size every six months. Example: All 10 x 10 increased. Wait six months and then do 15's. Then 20's later.
2. Market. A. Get the population headcount for 3 miles around and 5 miles around. B. Count all of the storage Units within 3 miles. Keep track of the sizes, but treat 15/20 units the same. Any 5/10 make them into 15 units. You will use A and B to determine the ratio of units to headcounts. This will tell us if this is a good market.
3. It says something about 45 parking spots. These must be in Doors, cause the pictures don't show out doors. If outdoors, this is sweet. Build Storage units in their place. Parking doesn't bring in much money.
4. Check the land to the West and North West. See zoning, usage, availability, pricing. If this is bare ground like the map shows, this can be a "Sweet" deal if the market can take the extra storage units, or do RV/Boat/Vehicle storage if you can get away with "Rock" surface. Your looking for items like this, for that "Sweet" deal. The Northwest property is odd shaped, so good for storage, bad for other usage. Lowers the price.
Team:
A. Bank- your in real Estate, but I will say this any way. Pick a local bank with a large enough Loan cap rate to cover your future plans. You don't want to have several banks and have to educate each banker. Don't go with a large national or regional bank.
B. If you build new and need to choose a manufacturer. The actual Storage building itself is only about 1/5 the cost of the facility. I mean just the "metal". Land, Concrete, erection, fence, security, electric, water, etc make up the majority of the cost. Go around and look at buildings that are 20 years or older. Pick the building you like the best (paint) and doors/locks. Try to find their local distributor/builder, so they can service you.
C. Facility Insurance/Customer Insurance/Management software/Advertising/security/Fencing/gate/whole other discussion.
"Do Not buy this property";
Start small and make your Big mistakes early.
@ Nick Return analysis. Don't thing I can send you my Excel file through this forum. So I will cut paste what it looks like.
Its on my other computer. Use this control log, to help you get your head around this project, whether you buy or build.
I did this for a young guy in Croatia, just disregard the non applicable parts.
| Storage Startup Checklist 101 | |||
| Response to Zagreb, Croatia startup | |||
| 1 | Why Do Storage? | ||
| 2 | Why Storage? Why you? | I’ll do a separate Topic. Don’t know your financial’s, but you will outstrip your collateralization fast. Develop a relationship with someone you trust and bring them along for the ride. Preferably an Apartment developer. They don’t have to invest in the first project, but you will need them later. Make sure this a solid relationship, otherwise they will cut you out once your successful. | |
| 3 | Market/Demand: | ||
| 4 | Market size | See post, if your the “first”, then you don’t care. You have more than enough Market, in a 800,000 Pop city. | |
| 5 | Outside or climate controlled? | Let your search and “deal” decide. Look for both an outside Land acquisition or an old industrial building. If you get a large enough building, finish it out in stages. | |
| 6 | Market location | Seek your higher income areas first. Pick along the A2, A3, A4 corridors first. Stay away from the mountains. Do several small locations, no smaller than 1 hectare. Once you have the experience and Financial support, go for a Climate controlled location in an old neighborhood that is high income or rebuilding itself. | |
| 7 | Zoning | See post | |
| 8 | Site location | Have several searches and deals going at once, most of them won’t pan out for the price you are willing to pay. This way you “can walk away”. This gives you negotiating power. | |
| 9 | Site acquisition | ||
| 10 | Financing: | See “Topic” | |
| 11 | Financing-construction | Find a banker who knows Apartment building construction | |
| 12 | Financing- rent up stage | Same as above. You want “interest only” and not principal for a portion of the rent up period. | |
| 13 | Financing- long-term | If your going to grow, unless you have significant capital at your disposal, find a future business partner. | |
| 14 | Business Model | I’ll clean up and post one of my spreadsheets later. | |
| 15 | Construction: | Use local knowledge/availability | |
| 16 | Permits | ||
| 17 | Building type | ||
| 18 | Building manufacturer | ||
| 19 | Contractor | ||
| 20 | Day to day: | ||
| 21 | Rental Contract | Post a “Topic” on this Forum and ask for some copies sent to you. | |
| 22 | Rental Rates | Zagreb’s GDP per capita is $19,132 versus where I live $60,246 metro area of 1mm. Thus if I say a 10 x 20 “Foot, not meter” unit is $120, then yours would be around $40. Making this simplistic. Get on Sparefoot and pick a US city similar to Zagreb and pick out prices for 10 x 20/15/10/5. Then take 1/3 of that for your price in US $, then convert. Recommend you don’t use this as your starting prices; go after a richer neighborhood and charge higher prices. | |
| 23 | Auction rules | Post a “Topic” on this Forum and ask for some copies sent to you. | |
| 24 | Security system | Situational, work with your local security firm. | |
| 25 | Fencing | situational | |
| 26 | Self Service or manager | situational | |
| 27 | Management software | Since the world is internet based, see if you can use one of the Storage management softwares in Zagreb. Do not do this on a spreadsheet or paper. You need to develop a system to grow with. | |
| 28 | Marketing: | ||
| 29 | Website | check ClarkstorageLLC, and others on this forum. Take the best from each and make a template, for a better one. | |
| 30 | SEO management | Since your the only one, you just need Google Map Pins and build up your google ranking under key words. | |
| 31 | Marketing Software | Sparefoot or similar in your market area. If none exist for Storage, seek out Apartment, home, AIRBNB, Craigslist sites. If you have Craigslist, put an add out there with your offering and price. Different sizes and prices. Get feedback. | |
| 32 | Marketing | Something you probably already know. | |
| 33 | Social Media | Something you probably already know. | |
| 34 | Insurance: | Leave to you for local knowledge | |
| 35 | Business | ||
| 36 | Renters | ||
| Sundry: | Leave to you for local knowledge | ||
| Property taxes | |||
| Legal system |
Some notes on project estimation. References the excel file.
PROJECT ESTIMATION TEMPLATE
Whether I am building or buying a location, I always run the Estimation template to dial in whether I can or should do the project. Each of us will have our own Payback, CAP rates, cash flow models and Tax implications thresholds; I am not covering that. This is a back of the napkin estimation, just on a spreadsheet.
We are in 8 locations and 5 towns; and we have used this approach to determine upfront whether to invest or not. Six of the locations are in towns of less than 5,000. Two of the locations are in a 1mm metro area (630 and 330 units). We will have built 47 buildings once we complete these last two sites.
This project list is for outside Storage and for the locations/cities we have looked at. Own the thought process. Example: HVAC, Fire Sprinklers, Facade, frost free footings, Storm retention ponds, road type, fire hydrants, etc. These and others, are the items that will hurt you, if you don’t own your knowledge. This spreadsheet is not all encompassing. For example on this project, I was “done with the spreadsheet”. I missed that there is a “Wet” spot in the middle. We will need to put in a $30,000 drain tile not reflected in my estimate. Still learning. You might want to put a SWAG factor (5%) in, up front.
Fill in the green areas. For the building quote, get one in your local area. This should represent the Building material, concrete base, and erection all delivered on site.
Side notes:
A. You can also use this template in reverse without knowing your site. Leave the “Land” amount blank and plug numbers in. This will give you a range of how much you can pay for the Land.
B. How many buildings should you build Phase One? I always have my first set of buildings pay off all of the land, fencing, initial ground/electrical/plumbing work. We use a 65% break even factor. This is a Cash flow estimate of how many of the units need to be filled to cover all expenses (except Depreciation) plus Principal/Interest payments. Although this is a little Chicken and Egg, or Circular logic. If you need 150 units to pay these costs, then add 80 more units for a total of 230. 230= 150 divided by 65%. Your building/road layout might dictate you build 240 or 204, then that is what you build. We never want to build just enough units (65%). The most depressing (counter intuitive) time for a storage owner is when you hit 90%; you have to decide if you build another building.
C. Phase 2, you will find your break even is around 35%. This is where the money starts to roll and your occupancy rate risk starts to decline.
See spreadsheet on our website (xxxxxxxxx). Where ever it says spreadsheet, then hit the open button at the bottom. Change it and adapt it to your needs.
Again, don’t Trust anything I tell or give you. Own your info and data. Anything in the Storage Business can be validated. Start small and make your big mistakes early.
@ Nick. Last note.
Stay away from Climate Controlled. Don't play with the Big Boys.
Digest the above.
If you want more info, please pick the size of investment you are looking for. I can tailor my response to that. Example: Seeing where you are at. I would start a facility near there, in the middle of "No where" ( I grew up in a creek bottom, so you have more people than where I grew up). Far away from the Cities and populations. It would be a special setup.
Good luck. Gotta go meet the Engineer.
@Nick, I'm going to break off this thread and start a new discussion, so more people can see. If there is a topic you want covered let me know. Thanks.
I know that AJ Osborne is the guys in that space, and he has an ‘inner circle’ community. I’d start there.
@Ravi S.. Check out Scott Meyers. He has a great mastermind and a mentoring program team can help students find the units.
I have been looking at building my own. I know the conventional wisdom is that it should be around 5 acres and have an onsite manager. However, I have a few small pieces of land that are zoned for storage and are in a residential area. They should be zoned residential, but are not. I already own SFH's in those areas. I could build around 15 units. Not a home-run, but I expect the demand would be huge. Who would't want an extra garage in their neighborhood to store their toys or junk. Some of the locals may not like the idea, but the city allows it.
@Charlie Anne of course! Happy to chat with you!
Hello Rebecca,
Would like to connect.
Thank you