Self Storage Investment Articles

In 1928, right before the Great Depression a year later, there was a national meeting of business leaders to go over how great things were going and what their predictions for the future were.

People keep money in gold, silver, stocks, bonds, CDs and many other alternatives. But one that many people do not think about are self-storage facilities – and yet these may be an excellent way to store your wealth in an unstable America.

The self-storage industry is going through some seismic shifts due to the new America, and one of these is described in this recent article about Global Self-Storage (GSS) and interview with their CEO, Mark Winmill https://www.wealthmanagement.com/investment-strategies/global-self-storage-ceo-points-smaller-markets-sector-s-future . Here’s what was said in the interview

This is no time to deal with financial insecurity. It’s hard to be happy when you’re life is filled with stress. Even if you have a successful career and money in the bank, all Americans are within financial harm’s way 24/7 due to an unstable world and financial markets that are at unsustainable all-time highs. So how can you improve your financial sanity with a self-storage facility?

Have you ever talked to someone who is bragging about all the money they’ve made in self-storage investing, and then you come to find out that the story is from the 1980s? Indeed, it would seem that most of the self-storage success stories out there are from an era roughly 30 to 40 years ago. And that’s a problem if you are looking to these stories to help you make money in today’s world.

Every self-storage facility purchase requires a title company to handle the transaction – but which one should it be? The answer is that you should always steer for the largest title company in the metro area in which the property is located. There are several good reasons for this.

To build a self-storage facility typically requires going before Planning and Zoning as well as the City Council. Sometimes it’s just to approve your plans, but in other cases it’s required to get the zoning necessary to have the right to build this usage category. While there are professionals who offer their services in this regard, they are expensive and may not fit your budget. So here’s how you can attack these situations like a professional.

Self-storage serves many roles for many customers. And, assuming that these customers all come from similar positions to need storage, it might be a good marketing plan to work backwards and match the key drivers for demand to ways to reach these distinct groups. So what are the top reasons for storage demand and how can you market to them?

The concept of “income properties” revolves around that one sole focus: making income. There is no reason you would ever want to own a self-storage facility other than to make money. And making money is pretty simple too – you have to produce enough revenue to cover costs and your mortgage and still have cash flow to put in your pocket. Yet many of the largest self-storage companies fail miserably in this concept.

Many a self-storage deal has been saved through creative seller financing. This is the concept in which the seller offers great lending terms to the buyer that offset the other drawbacks. So how can you make a deal work with seller financing that would not work without it?

We all hate spending money, but sometimes the cost is offset by having greater confidence in your deal – all the way to the point of having the guts to pull the trigger and sign the closing documents. And the source of much of this confidence are third-party reports. While many of these are bank requirements, others are simply the smart way to proceed even with seller financing. So what are these third-party reports that are a big part of buying any self-storage facility?

All self-storage investing revolves around obtaining financing. While most people think this is their job and must do it themselves, there is another option and that’s utilizing a “capital consultant” which is also known as a “Loan broker”. And you should think about this before you start contacting lenders.

Bill Gates is best known for being the founder of Microsoft and one of the richest people in the world with a net worth of around $140 billion. But he has recently branched out into a new arena as a significant self-storage investor. He has bought a large stake in StorageMart, which is the largest privately-owned self-storage provider in the world.

Self-storage investing is not bullet proof, and there is no Kevlar vest to protect you if you do not plan accordingly. Although self-storage did well during the 2008 Great Recession – the implosion of the single-family market – it has done nearly as well in weathering the Covid pandemic which began in March of 2020. And there are already lessons to be learned.

It’s a simple fact that many self-storage managers can’t make the cut. Some people are just not manager material. And there’s no point in hiding from the fact. There’s an old saying that “it’s easier to change people than to change people” and that’s as true today as it was when that motto first was invented. So how do you get rid of the failing storage manager and make way for the new candidate?

>Every action has a corresponding reaction. When you couple this withhe mantra that “life is not fair” you end up with the net effect from a new Presidential term. Biden is about to take office and his policy comments have already sparked a reaction as to who gets hurt and who gets helped by the new administration. So how will Biden impact the self-storage industry?

Not all self-storage facilities are created equally. Well, they may be built the same, but there’s a whole lot more to a storage property being “investment grade” than just metal walls and roll-up door. And the entire self-storage “media” often point you in the wrong direction regarding what you should be buying and what you should avoid. So what makes up an “investment grade” property? Let’s explore that issue.

One of the greatest tools in self-storage investing – the most powerful of them all – is leverage. The simple existence of sensible leverage on a storage property can spike the return up significantly as well as to allow the buyer the ability to own something far beyond their typical budget. So how does leverage work as a beneficial tool to make money with a storage facility?

One aspect of self-storage facilities that gets little attention is the fact that it’s made up of tens or hundreds of little customers. This is not a source of frustration but actually an asset for those who own them. So what’s so great about having a ton of tiny customers?

Virtually all investors in the self-storage arena buy their properties using debt. That’s always been the attraction to real estate: the availability of getting leverage. And leverage is the tool that allows cash-on-cash returns to be stronger than traditional investments that have no leverage. One of the metrics banks use to underwrite loans is the “coverage ratio”.

You cannot buy a self-storage facility without engaging in the old-fashioned art of negotiation. Nobody knows when the first negotiation in the world transpired, but it probably dates back to cavemen trying to get that extra piece of firewood. You simply cannot be an effective buyer without understanding its principals and engaging in the gamesmanship that has become negotiation today. So what are the basics you need to know?

Hurricane season is always a good reminder of the importance of keeping mindful attention on the existence of flood plain when buying a self-storage property. Even in non-coastal areas, a severe weather event can lead to high levels of rain, and this can result in danger if you are in the flood plain. Sowhat do you need to know about self-storage facilities and flooding?

The life’s blood of a self-storage property’s occupancy is the calls coming in from prospective customers. All of your marketing is contingent upon what happens when the phone rings. Yet too many storage owners cede control over their important conduit to the manager, without adequate safeguards. So how can a self-storage facility owner take control over that phone line?

Like any business, self-storage owners cannot succeed without collecting their rent each month. To make this possible, smart owners build a “collections ritual” that influences the action steps they take and help shield them from liability and failure in getting the necessary funds. So what are some ideas for a successful “collections ritual”?

America changed in March of this year, when the acknowledged arrival of the Covid-19 pandemic rattled the U.S. population with self-quarantine followed by urban riots and unrest. On top of that, many of the activities that we had all learned to enjoy (dining out, movies, theater, shopping) suddenly ceased to exist in the manner they had before. This ushered in what is now known as the “Great Reshuffling” by Bestplaces.net – which refers to the population moving from urban to more suburban and rural markets.