Spring is here. Daylight savings time is about to kick in. The flowers are getting ready to spring up. And so is the grass. If you don’t have a “landscaping plan” in place for 2016, then you need to move fast. We traditionally like to get three written bids from professional mowing companies, unless you have an on-site manager who is capable of taking that role. Good mowing is a function of four tasks: 1) mowing 2) weed-eating 3) edging and 4) spraying round-up when needed. Essentially, you want the grass to look like green carpet, and the paved areas to have none of that carpet flowing onto them. Additionally, if you can add some seasonal color at the entrance, that’s great – but make sure that you have a plan for having it watered. And while you’re getting your mowing lined up, make sure to do a spring clean-up of your whole property, in terms of re-stripping the parking and touching up the paint on your sign out front. Winter is a time for many owners to hibernate on property condition, and Spring is the time to get out of your cave and get to work.
Memo From Frank & Dave
The Importance Of Population Density
“People who need people are the luckiest people in the world”. At least that’s what Barbara Streisand sang. But it’s also true in the self-storage business. Without people, you can’t fill your spaces, and that makes your investment a loser. You can’t be in the self-storage sector without fully understanding the dynamic of people vs. storage.
There’s a science to a healthy storage market
The general principal developed by the largest institutional facility owners is that you need a population of at least 50,000 within three miles of your self-storage property. While that may sound like a lot, in reality it’s not that high a bar to jump over. Most every urban market meets this rule, as do most medium sized towns. Obviously, it means that you want to only own storage in markets greater than 50,000 in population. While you can make money in markets with populations as small as 10,000, there’s no denying that the bigger the market, the greater the occupancy and unit rents.
Supply and demand extends to self-storage, too
Another metric that has developed over the years is that a healthy storage market should not have more than 6 square feet of storage space per person in that market. For example, a city with 1 million people should not have more than 6 million square feet of self-storage space. How do you get that stat? You’ll have to make your own unofficial study, making a list of all the self-storage facilities and then mapping out how many units they have and multiply by 100 square feet per unit. Or, in some markets, you can actually buy this study by groups that sell information on the industry.
But you can often get better deals where the population is lower or the supply of space is too great
All that being said, you will get the highest yields in markets that don’t meet these criteria. It’s long been a successful strategy to buy “broken” properties and “fix” them. And the #1 place to find “broken” properties is in markets where things are not in balance. When you have too much space and not enough people, what powers success and failure is marketing, location, pricing and solid management. If you can buy a facility at 40% occupancy and increase that to 80%, your cash value and equity will go through the roof.
The key is to understand what IS an opportunity from what is NOT an opportunity
To be an expert buyer of self-storage properties, you have to be able to discern when there is the raw material to make a success, as opposed to those properties that are hopeless. And to know those parameters, you have to know what a successful ratio of people and space is, to see how your market compares.
There is a mathematical formula to self-storage. You need to understand it. But you can often get the best deals when you are able to work around its fringes.
Self Storage Home Study Course
Our Home Study Course is not like anything you have ever listened to or read before. We do not fill it with a bunch of fluff on how your are going to make a million bucks with no money down. We tell you the whole story... the good, the bad, and the sometimes ugly.
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The Power Of Bonding With The Seller
There is a power higher than money in making a deal. It’s more important than negotiating. It’s more potent than any strategy. That power is “bonding”. All of the greatest deals in real estate began with the simple bonding between the buyer and seller.
What is “bonding”
“Bonding” is when the seller and buyer forge a bond of friendship, or when the seller views the buyer as themselves at a younger age, or the son or daughter that they never had, or some similar situation. In “bonding”, the seller has more interest in helping the buyer than they do in sheer dollars in their pocket. It is best described in the old adage “to give is better than to receive”.
A mom & pop and a debt-free property can create amazing endings
When a seller has no debt, they have no limitations on what they can do with a property. They could give you the property for free if they wanted to. Low prices, zero down, seller financing – these are all the result of “bonding”, not financial motives. What happened was that the seller wanted to help the buyer, and the only means at hand was by selling their property in such a manner that the buyer automatically hits a home run.
How you can bond with the seller
If bonding is so important, how do you get it? The answer is partly by luck, and partly by spending time with the buyer and being a good listener. The key is to spend time with the seller by phone or in person. The best way to start that process is to ask the question “how did you come to own this self-storage property?” and then listen to the answer. You will find that most sellers have a very interesting story, and that you can learn a great deal from their experiences.
Sample deals we’ve done that came as a result of bonding
All of our first deals came as the result of bonding with the seller. These allowed for super low prices and seller financing. We have done a total of 12 deals with zero down as a result of bonding. Many people think that we got those zero down deals through amazing negotiating. Not true. We got them through spending hours listening to our sellers and developing a level of trust in which they felt secure turning their properties over to us with no greater security than our relationship. We are huge believers in “win/win” deal making, and a big factor in that is forging a bond with our sellers. You know that you’re doing your job when you can get letters of recommendation from each seller you’ve bought a self-storage facility from.
Many buyers fail to realize the enormous power of bonding. Most of the best deals in history began with the buyer simply listening and spending time with the seller.
The Green Revolution Comes To Self-Storage
Green Storage Plus has opened a self-storage facility in Spicewood, an upscale suburb of Austin, Texas. The property includes 611 climate-controlled units, 42 solar panels, LED lighting, an onsite well and septic system, and an onsite recycling program – effectively a completely environmentally clean facility. “We will let it run for about a year and see our energy needs during the peaks and valleys so we don’t overbuild or under build,” said owner Shawn Sharp. “These systems will be paying themselves back [in cost savings] in six to nine years, depending on the rebates,” he said. “After that, we’re basically getting free energy. There’s no downside financially.” According to Sharp, the only outside utility that the facility needs is internet connection. The facility features a modern look with clear glass doors – totally unlike a typical self-storage. Security measures include electronic-gate access, high-definition video cameras, perimeter fencing, and individually alarmed units. “Our competitors still have facilities that look like they did in the 80s—dim lighting and no solar,” said Sharp. “Customers, so far, have been very impressed”. Is this the beginning of the Green Revolution in self-storage? We’ll soon find out.