Realtor · CA · Member since 2021 · 11 posts · 5 votes
4y
Self-storage seems to have a continued prosperous future ahead! One of my goals is to own a few self-storage properties eventually. Thank you for sharing
What I cannot understand is that the self-storage construction cost seems to be around $60-80 per sqft, while the available self storage listed in the market tend to ask for $90-200 per sqft. That means a competitor can easily build a new one and compete with me. Yes there is a storage constraint right now, which will keep me profitable for a while, but eventually supply catches up and I will be screwed. Is this right? Apartments are different. Construction costs are around $200 per sqft, and the available apartments for sale are asking at or below this, so I would not worry much about future incoming supplies that competes with me because i can always afford to rent it for less than the new comers, and still be fine. The other concern I have is property manager fraud. I think it is much easier to get defrauded by the property manager on site for a self storage, unless I have automated system to track every unit to make sure it is occupied/vacant as reported. How do you overcome this problem?
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
4y
@biggerpockets-94f07038c0f8a9eb51702a2f75327274:disqus this is a great point. The issue is that, in part, with sticky tenants, the current property often has an edge. If a small competitor comes in, the current facility can often outmarket and underprice them to keep them from getting to stabilization. If a big national competitor comes in, they usually see enough demand growth to make it worth it for them to do ground-up. They may be able to outprice, outmarket, and outlast you, but with a growing population, both should survive. This happened to me in a fast-growing market in FL.