Self Storage RE. Suggestions on getting started?

12 Replies

Hi. I'm a (very) small RE investor, but am interested in growing and looking at self storage opportunities. I've looked at the economics of the space, and it looks very compelled. Looking for any suggestions for someone very new to this. Thanks

@Jon Molitor

Hi Jon, I would recommend starting with AJ Osborne’s podcast: Self Storage Income and he has a new book out this year called The Investor’s Guide to Growing Wealth in Self Storage. Both are great for getting started.

@Jon Molitor , yes self storage is a good asset class.  Without knowing what level of knowledge you have already acquired, it is hard to give recommendation.  However, apart from adding notifications on biggerpockets for "self storage"; you can look at youtube videos from Mark Helm and The Storage Rebellion, self storage income.  There is also training from those sources plus self storage university and self storage academy by @Scott Meyers .  Hope that helps!

Hey Jon!

(And thank you @Ronak Shah for the shout-out.)

There are a few ways to get the knowledge you'll need in Self Storage investing.  You can piece together articles, blogs, and videos from your local & national Self Storage Association; Inside Self Storage; and You-Tube Videos.

Also, there are many, many articles in BIGGER POCKETS over the years giving good information.  Henry Clark has recently been blowing up the forums with all kinds of details and sharing of his knowledge and experience.  And Scott Krone is an authority & expert too.

If you go this route, please note that just about everything you need to know & do basically falls in these 4 categories: Finding, Evaluating, Purchasing, & Managing Existing Self Storage Facilities. I say that because 1) it's true, and 2) unless you have a system, the information is NOT going to come at you structured, and so you're not lost, keep your bearings by realizing that is the roadmap simply stated. If you add in Development & Conversions plus the 4 listed above, that runs the full gamut.

And in the end, there are a handful of us who have a structured process and system that works (but only if you work) - e.g. Mark Helm, Mike Wagner, AJ Osborne, and of course myself.  I'm more partial to the latter, but I'm sure one would expect that, right?

Please let me know if I can be of any help.

Good luck!

Scott

looking at buying a self storage. They are asking 125k when they bought it 2 years ago for 65k. The cap rate is 7.13% on that 125k

I know its tough to get an idea of the value of a self storage. They didnt really do anything other than paint, new security cameras and " increase rent" on 3 units of 18 total.  

NOI is 8,916.00

I guess my question is.. How can I know whats a good deal and if I should pay 125 on a property that sold for 65k 2 years ago?

@Dee Brock Not enough info. I'd completely throw out in your mind what they paid for it, it should be irrelevant to you. How do rates compare to competitors? How will you add value? How will you manage? 

Those are the things I'd worry more about.

Thank you @Scott Meyers for the advice and great info. I may be reaching out to you soon.

Originally posted by @Scott Meyers:

Hey Jon!

(And thank you @Ronak Shah for the shout-out.)

There are a few ways to get the knowledge you'll need in Self Storage investing.  You can piece together articles, blogs, and videos from your local & national Self Storage Association; Inside Self Storage; and You-Tube Videos.

Also, there are many, many articles in BIGGER POCKETS over the years giving good information.  Henry Clark has recently been blowing up the forums with all kinds of details and sharing of his knowledge and experience.  And Scott Krone is an authority & expert too.

If you go this route, please note that just about everything you need to know & do basically falls in these 4 categories: Finding, Evaluating, Purchasing, & Managing Existing Self Storage Facilities. I say that because 1) it's true, and 2) unless you have a system, the information is NOT going to come at you structured, and so you're not lost, keep your bearings by realizing that is the roadmap simply stated. If you add in Development & Conversions plus the 4 listed above, that runs the full gamut.  

And in the end, there are a handful of us who have a structured process and system that works (but only if you work) - e.g. Mark Helm, Mike Wagner, AJ Osborne, and of course myself.  I'm more partial to the latter, but I'm sure one would expect that, right?

Please let me know if I can be of any help.

Good luck!

Scott

 

@Zach Quick They only have one vacancy as of right now. They have half of their units grandfathered in at 55.00 when going rate is 65-80.00 and still currently at that rate.

I called around to other units and those are all full. It looks like the demand is there.

I would raise rent probably 5-10.00 each unit. You would think 10.00 wouldn't make or break someone using your storage unit. I would manage it myself. Not a lot of profit in this deal to have someone else manage it.

I feel like maybe I answered my own question... What do you think?

@Dee Brock I'd just be deciding if it's worth your time really. You can't leverage other humans on a deal this small, not saying there is anything wrong with that, and maybe you want that. But by and large if you answer your phone and sell the spots well price will be fine to match with competitors or very lightly drift below them.

@Zach Quick I ended up getting it for 109k That would put my cap rate at 7.9%. Plan is to keep for 2 years and raise rent and sell at 150k. That's the "plan" If I can get that then it would be a win. 150k would be a 7.6% Cap rate.

Thanks for the feedback. 

Dee, as Zach mentioned, there's too little info to know if it's a good deal without seeing the actual NOI. It may be too late now, but you should make sure you REALLY understand the nuances of how to calculate the True NOI of a Self-Storage Facility. We have helped many people avoid making big mistakes when taking the owner's P & L, (which is NEVER 100% accurate) and get to within dollars of the actual NOI.

Just my $.02 as I review the thread - But this is what we do - we educate people.  And sometimes, it's too late, and the market provides the education....

Either way, Keep us posted and let us know how it's progressing and how we can help from here. 

Talk soon.