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Updated over 3 years ago, 04/16/2021
Self Storage
I've had an interest in self storage for years and may have finally came across a piece of real estate to start my pipe dream. I've been doing a lot of research looking to find the best ranges on building costs. It's only an acre plot, but has a huge value based on location. I'm looking at only 80-90 units on an acres(please correct me if I'm wrong). Any thoughts on what I'm looking at per square foot to build the storage units? I know what the real estate will cost. Trying to get an idea on overall cost. Thanks for the info!
Ethan
Ethan,
I own, manage, and build self storage facilities across the north west. The price per square foot can vary dramatically. Depending on how your are building you can see a range of $26 a foot or like current project, 38 a foot not including the land. If the project makes sense or not depends on multiple factors. If you want to give me a call I would be happy to help in anyway and give you all the information I have. 2088909969
Good luck with your project!
AJ Osborne
@AJ Osborne good morning, My name is John and I came across this post. I know it's old but I am in the early stages of self storage investing and I was hoping you could answer some questions for me being as how I do plan to build in my local area. Also if you know of a particular book or YouTube video to review that would be great too. Thanks, have a good day
@John Pelaez I would be happy to help! Give me a call 2088909969.
Thanks
@Michael Wagner pretty tacky man
Originally posted by @John Pelaez:
@AJ Osborne good morning, My name is John and I came across this post. I know it's old but I am in the early stages of self storage investing and I was hoping you could answer some questions for me being as how I do plan to build in my local area. Also if you know of a particular book or YouTube video to review that would be great too. Thanks, have a good day
Bigger Pockets is a great resource as well! So may of us are working this sector daily and getting good returns on it. Feel free to post any questions you may have! We all love having a good discussion here!
Scott
Originally posted by @AJ Osborne:
@Michael Wagner pretty tacky man
We've covered that already:)....figured better to be tacky and helpful than not helpful at all. He asked for a youtube resource...I pointed him to one....one that sells nothing I might add :)....Had he asked for a resource that I didn't build, I would have gladly sent him there as well. All the best!
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Now I wanna see the post :(
@Michael Wagner thanks Michael and everyone else. I appreciate the eagerness to help. I have so many questions. I'm pretty far away from getting started so I really need a good foundation of knowledge to help navigate these waters. I have 2 small MFR so far and I'm trying to figure out if analyzing facilities ( to determine a deal) on loopnet is done the same way. I'm also trying to figure out the inner workings of running a facility. I would like to run by myself for a year at most before I hand it off to a property management company so that understand it better. I guess what that comes down to is:
How to find tenants
Typical lease agreement lengths
Problems to avoid signing new tenants
Remedies for late or non payment
How to setup the gate operating software etc..
I have not looked up that video yet. I'm in the middle of moving and I have been lucky to even respond to this.
Originally posted by @John Pelaez:
@Michael Wagner thanks Michael and everyone else. I appreciate the eagerness to help. I have so many questions. I'm pretty far away from getting started so I really need a good foundation of knowledge to help navigate these waters. I have 2 small MFR so far and I'm trying to figure out if analyzing facilities ( to determine a deal) on loopnet is done the same way. I'm also trying to figure out the inner workings of running a facility. I would like to run by myself for a year at most before I hand it off to a property management company so that understand it better. I guess what that comes down to is:
How to find tenants
Typical lease agreement lengths
Problems to avoid signing new tenants
Remedies for late or non payment
How to setup the gate operating software etc..
I have not looked up that video yet. I'm in the middle of moving and I have been lucky to even respond to this.
Hey John,
I'd be happy to shed some light on your questions above as well as any others that you have. Probably quicker for both of us to do that by phone. Shoot me a PM if you would like and we can set up a call. The next couple days are crazy as I prepare for two closings out of state this week but perhaps late next week or thereafter. I'll also put some 10 second answers here for the benefit of others:
How to find tenants--> Mostly via the internet...google, SEO and aggregator sites (think priceline but for storage). ALl of this can be Super easy and automated.
Typical lease agreement lengths--> typically month to month with a 30 day notice requirement.
Problems to avoid signing new tenants --> not something to lose sleep over. Clearly you need to avoid meth labs but generally speaking, a rental agreement and driver's licence/photo id gives adequate protection.
Remedies for late or non payment--> This is one of the BEST thinks about storage. Lien laws are used instead of eviction laws and every state has a well spelled out process you need to go through. Our aging accounts receivables hover in the 1-2% range....meaning the systems we use force people to pay in a timely manner.
How to setup the gate operating software etc.. This takes some coordinating but, again, not something to let stand in your way. There are a bunch of software providers out there. I have my favorite and will gladly share but it will also depend on the type and size of facility you are running and how much "management" you want to outsource.
Hope that helps some!
Be well and I look forward to hearing from you if you decide to reach out!
In Your Service,
Mike
Originally posted by @David Zheng:
Now I wanna see the post :(
Don't feel bad for missing it David.....nothing earth shattering:)....I just directed the OP to a video that would freely answer some of his preliminary questions about self storage. It was an inadvertent violation of BP's (very valid) anti-self promotion rules....I thought they only applied to selling stuff and didn't realize that they extended to free content as well. Mea culpa!
Hello @John Pelaez. If you are this new to the basics I would suggest a lot of reading. There is a wealth of knowledge out there. I would also recommend if you want a really good crash course, look into @Scott Meyers Storage Academy. I attended the three day event in Indy last fall. It really gives you the tools you need to be able to do this, but of course it isn't required, I don't regret it though. We still have not managed to buy or build a facility yet, but it will happen! We have had communication with owners about selling but the ask prices have been too high so far.
Originally posted by @Corey Herr:
Hello @John Pelaez. If you are this new to the basics I would suggest a lot of reading. There is a wealth of knowledge out there. I would also recommend if you want a really good crash course, look into @Scott Meyers Storage Academy. I attended the three day event in Indy last fall. It really gives you the tools you need to be able to do this, but of course it isn't required, I don't regret it though. We still have not managed to buy or build a facility yet, but it will happen! We have had communication with owners about selling but the ask prices have been too high so far.
Thanks for the shout out!
@AJ Osborne hello just tried to call and left you a voicemail I have a commercial lot in Lakewood, WA I would like to see be developed into self storage!
would it be possible to get the correct numbers and feasibility for maybe 40 to 60 self storage units in towns smaller than 5000?
Originally posted by @Brandon Moore:
would it be possible to get the correct numbers and feasibility for maybe 40 to 60 self storage units in towns smaller than 5000?
Yes, storage can work in towns of nearly any size! I actually prefer to operate in the small towns in secondary and tertiary markets. The analysis is usually quite a bit easier as there's less competition to analyze. Our last property is in a town of 1119 people! Its 24K square feet (190 units) that we bought for $465K and is now worth $1.3-$1.4 Million just 18 months later. Keep in mind that you want to look at the population within 5 miles of a property like this (not within the "town limits". All that said, a small property like the one you are looking at a full blown feasibility study. You can absolutely learn what you need to learn to do your own study on a existing property. Depending on the purchase price (or cost to build) a feasibility study might be a good confirmation of what you think you know about the property and market but it is never a replacement for doing the leg work yourself first (until you get to the point where time is tighter than money!
@Michael Wagner I have about 1.2ac of family land in my small Tennessee hometown (I now live about 30 minutes away). My brother still lives in the area and we are considering self storage. It is a rural area with a population of maybe 8,000 in the city/county. There are a few other self storage businesses in the community. You mentioned on a previous post of having a feasibility study prepared. A few questions:
Where do I find someone to do this study and what should I expect it to cost?
If I can do it myself, what all goes into it?
As newbies, might it make more sense to try to buy an existing facility to learn the ropes before building one from scratch? (I guess the feasibility study might help answer this.)
Thanks for any help.
Originally posted by @George Welch:
@Michael Wagner I have about 1.2ac of family land in my small Tennessee hometown (I now live about 30 minutes away). My brother still lives in the area and we are considering self storage. It is a rural area with a population of maybe 8,000 in the city/county. There are a few other self storage businesses in the community. You mentioned on a previous post of having a feasibility study prepared. A few questions:
Where do I find someone to do this study and what should I expect it to cost?
If I can do it myself, what all goes into it?
As newbies, might it make more sense to try to buy an existing facility to learn the ropes before building one from scratch? (I guess the feasibility study might help answer this.)
Thanks for any help.
Short on time this morning for a response that these questions deserve. So I shot you a PM to connect!
@AJ Osborne, came across this post and was wondering if your phone number is still available to be used, didn't want to be rude and just call if you didn't extend that invitation. Big fan of your book and podcast also great content! Thanks.
Hey Mike,
I like to think I'm the Storage Whisperer 😂, but your response caught my eye. I'm typically getting under 1% (Of 1,140 units), most recently for the month of March 2021 it was at 0.32%... But I can always improve my game.
We use to begin the auction process at the 60 day mark, but have changed it to begin at 30 days. Our late fees are $20 on the 6th and $20 on the 29th.
Good old fashion follow-up via call, text, and Email with payment methods over the phone, website, in person, or the best option: auto pay.
I would love to read about your system in place to force those Delinquent accounts to pay in a more timely manner.
"Big" Henry
Originally posted by @Henry M.:
Hey Mike,
I like to think I'm the Storage Whisperer 😂, but your response caught my eye. I'm typically getting under 1% (Of 1,140 units), most recently for the month of March 2021 it was at 0.32%... But I can always improve my game.
We use to begin the auction process at the 60 day mark, but have changed it to begin at 30 days. Our late fees are $20 on the 6th and $20 on the 29th.
Good old fashion follow-up via call, text, and Email with payment methods over the phone, website, in person, or the best option: auto pay.
I would love to read about your system in place to force those Delinquent accounts to pay in a more timely manner.
"Big" Henry
HEy Henry,
Your collections are quite strong! Personally, I don't see a need for you to spend much energy trying to improve what you are doing given your numbers. That said, here's my take.
Nothing too fancy. Just consistent systematic collection policies. Late payers are locked out on the fifth, charge a late fee on the 10th and auction proceedings begin between the 35 and 45th day late (depending on state). At each step of the way they are automatically texted and emailed. On the 10th, they also receive a letter via snail mail. I think the biggest key to success is removing the "human" element to the greatest extent possible. Too often I see owners who "collect when they feel like it". And as they old saying goes, "You get what you tolerate". So eliminate the tolerance of non-payers and they will go away;)