Self Storage Business Model

[Jim Stout]

I’m considering starting a Self Storage business to find locations, build and flip Storage Facilities. In my mind the 2 or 3 Principals of the company would source the projects, raise money on a project basis, manage development and operations through lease up, then flip the cash flowing facilities to another investor. The original investors would get payout based in on a preferred return when the facility sells and the Principals would keep the land and receive rent from the new owners under a long term lease. My question is, does this seem like a feasible business model that leaves enough value to go around and have willing investors and buyers on both ends?

[Michael Wagner]

Originally posted by @Jim Stout:

@Michael Wagner definitely a consideration, don’t want to scare off buyers, especially if it’s simpler and easier to just cash out and move to the next project.

That's exactly what I do Jim, but i buy them with the intention (or at the very least willingness) to own them forever.  And then I sell only when someone pays me a premium.  I've bought two in the $330-$360K range and later sold off for $1.8 Million and $1.325 Million respectively.  Of course we invested in expansion to get those sales prices but the cash flow during ownership basically paid for the expansion.  Storage is a great model because you make money whether you end up selling or not...assuming you buy right! We've got 3 in various stages of "overhaul" right now.  It truly is a great little niche.  If you haven't seen it, you might find some value in my little blog here on BP:

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