All Forum Posts by: Michael Wagner

This is definitely area specific.  I feel you should be able to up the rent regardless of where it is.  IT may just be more modest in certain places.  Start by calling a self storage facility and seeing what they charge for a comparable size unit.  Trying to get the same might leave you holding a vacancy until you find the person that truly NEEDS the garage but getting 50-75% of what the SS folks charge seems reasonable to me.

To me, the single biggest decision that must be made before one starts investing is "What do I want my life to look like?" To many folks start down an investing path that "more is better". We look at that guy with 100 houses and say "Wow, that guys a success!".  And he may be....but he might not be as well.  What if he is running around working 100 hours a week and cashflowing the same amount that he earned in a 40 hour work week when he had a day job?  Is that still successful.  Before deciding anything else, I think someone starting out needs to decide what success is to them (not to the world at large) and then formulate a strategy to create that picture of success. 

@Erik W.

At risk of embarrassing Scott, I wanted to share that all of my experiences with him and his company have been positive.  I credit his educational resources for much of the success that I have been fortunate enough to experience in self storage. Attend one of his boot camps if at all possible.  Great information and Great People to network with. Check them out for sure.

@Erik W.

Your hesitation is a healthy one! You need to do everything you can to get smart before diving in.  Self Storage has its nuances but it is not rocket science.  The key to buying a distressed property is making sure of TWO things.  First you must be able to identify with near certainty all the reasons that the property is under-performing.  And then you need to figure out if you can fix that problem.  If the reason (as is often the case) is a neglectful manager, then you can fix it.  If its in a blighted city with too many competitors and not enough demand....well you can't fix that.  The answers to all your questions are out there (many of them here on BP).  My advice would be to hit the pavement and try to find a under-perfomring facility.  Do your initial analysis and if it passes, do whatever it takes to get smart, mitigate risks, find someone to verify your analysis (third party consultant or feasibility company)  and then pull the trigger once you are satisfied that you have a winner. My first facility was about 55% full at the time I purchased it.

@Erik W.

Your idea certainly has some merit.  Challenges I see might be securing land and getting it "ready" to accept your containers for the modest investment you have on hand.  Earth work and site prep often make up a considerable portion of a typical facility's construction budget.  And if you look to get a loan, the bank will need to see that your project will be above water in a reasonable time period. This gets in the way of your "start small and grow as you can" strategy (though it is a good concept to adhere to).  There is a threshold that you must reach as far as rentable square feet in order to justify the "non-revenue producing" (site work etc.) These are just some things to think about.  They can be overcome but you need to be aware of them.

I know you said there are no facilities for sale near you but I'm guessing that what you really mean is that there are none LISTED FOR SALE.  There's a difference! Have you approached the mom and pop owners in your area to see if they would consider selling?  This can be done by opening doors and walking in, sending letters, or a combination of the two.  Buying an under-performing facility is a great way to make a limited down payment go a long way.  Both the facilities I bought were purchased with $20-$40K out of pocket.  They are now worth $1.0M and $1.8M respectively (obviously there was some refinancing and expansion within the last 5 years).  And one of those was found by cold calling a mom and pop facility 7 miles from my house.  Purchasing existing allows you to have some revenue from day one, eliminates (or delays) the need to spend money on earth work, etc. Just some things to think about.  I wish you all the best as you look to get started in storage.  Check out my blog here on BP "All Things Self Storage" as it might offer you a few more things to think about.  And please don't hesitate to reach out if you have questions.

In Your Service,

Mike

https://www.biggerpockets.com/blogs/3915-all-things-self-storage

My blog here on BP will give you some entry level info on Storage. Feel free to give it a look and contact me with any questions you might have as you look to get started in this niche.  Storage is, in my admittedly biased opinion, a phenomenal investment vehicle!

Currently refinancing a smaller facility $800,000 at 4.5%...cash out refinance for expansion.

Welcome to BP!  I love everything about storage.  Check out my blog here on BP for some entry level intro type storage stuff.

Welcome Luke,

Storage is a phenomenal investment.  I got into it back in 2011 and have been pleasantly surprised by how lucrative and "lifestyle changing" it can be.  Check out my blog here on BP for a couple introduction articles and feel free to reach out with questions as you move along this new exciting path.

All the best,

Mike