How to Identify and Acquire Self Sotrage Space

Question

After having done a few small Multifamily investments, I’d like to start looking at commercial and more specifically self storage space. I’ve had great success finding off-market properties through direct mail, cold calling, and hustling. I’d like to get some tips or pointers on how to find and acquire self storage space. Does anyone have any experience with this?

Henry Clark · Answer

@Owen Schwaegerle

I actually did an analysis for someone in that area this past month.

Please read my Member Blog under Education on "site selection".

For a quick spin, do the following:

a.  Pull up "Sparefoot" and type in Perris, CA.

b.  Pull up google self storage, Perris, CA.

c.  Pull up Loopnet, CA

d.  Look at the 1057 W. 7th st. Perris, CA. $1,579,000  3.31 acres.  See if zoning its grandfathered in for RV's only or if you can build Self Storage units.

Normally I say start small and make your Big Mistakes Early, except in California most storage locations run $5 to $13mm per location.

Here is what I "see":

1.  Perris, CA has a population of 79,000 which means it has a market for 4,740 storage units.

2.  Sparefoot search, switch to distance.  Only shows 2 nonlisted storage locations. You would need to go see for yourself.  This means no one in Perris is using Sparefoot, which is great for you.  You will immediately be Number 1 on the internet if you use them.

3.  Google search for self Storage Perris, CA.  I see about 9 locations.  This "Astra" location is by itself in the city, which is good, it will pull the locals.  Its kind of a bad spot since it is out of the way.  Luckily the internet, they will come.  Plus no one is using Sparefoot in Perris, so you would be immediately ahead on Internet searches.  Also switch software to "Storedge" management software.  Not a recommendation.  Just know locally for me a "new" location used them and they are ranked high on Google almost immediately.

4.  Need your boots on the ground.  9 locations can't be eating up 4,740 units.  Thus there is a lot of unmet demand.  You need to spend a weekend there and count units and sizes.  You can do this through the internet google earth and through their fences.

Why?  Why look at this place.  Normally RV/Boat storage brings a lot less revenue than Storage.  Read my other posts or blogs.  Thus the property will be valued at RV/Boat storage value versus a converted Self Storage.

This is what I call a "Cherry" location.  Valued at a lower product usage.

Not recommending this place.  But work through this process.  Do it on some other small towns/Cities.  Its a little different in large cities, you have to be more strategic.  This and the blog answer your question on how to search.  The next question you need to cover is: A.  What is the market size and demand potential, B.  How to value.

Good luck.

Henry Clark · Answer

@Daniel Krantz

First don’t trust anything I say.  All things in self storage can be validated.  You need to own the info

Storage is about life events.  Death, divorce, moving, fires, remodels, etc

Rich, poor, city, country, etc.  They all have the same life events noted above.

Pick smaller towns. Get the populations off google

Either google all storage locations and look on google maps street view and count the units.  Or preferably go count them yourselve.

Once you do this exercise you will own the metric.  We own 8 locations.  This metric was used to select the town and sizing for each location. We have tested this and used it for all deals.  There is some leeway in this metric.  My town has the highest ratio I have seen and we are still building.

Sam Shueh · Answer

If you are asking for storage space for sale. There are just one or two for sale in any major metropolitan. In San Luis there may not be any for sale. If you are looking a prime land setting up lockers etc. You need to co-invest with some one rich. Pricy.

Daniel Krantz · Answer

@Henry Clark - Just read the post. Thanks for pointing me that direction. I understand your process, and I'm surprised that the ratio holds so consistently across geographies/demographics.

When you're doing step one (identifying capacity), where do you get the information you need to count all of the units in a market? Is it just going to the website/calling each storage facility in town and asking?

Daniel

Henry Clark · Answer

@Daniel Krantz

Look up this post I did.

Self storage-  Will they come?

Do that then contact me to discuss the metric.  Of all my posts this is the “one”.

Daniel Krantz · Answer

@Henry Clark where did you get the 6% number that you applied to the 79,000 population in order to get the number of units a market could support?

Daniel Krantz · Answer

@Henry Clark wow what an awesome contribution to this thread - thanks so much for sharing your thought process. Appreciate the generosity.

Henry Clark · Answer

@Owen Schwaegerle

Good luck.  Send me a picture to remind of a California trip.  Have a meal of Abalone with a glass of Chianti, with some Bruschetta for me, looking out over the ocean.  Look forward to it.

If you see another town or asset your interested, do the above analysis, then have me look at it.  Lets compare notes.

Key take away from my notes above and your approach.  Do your approach, cold calling, but lets pick the best towns/cities to do it in.  Would you rather look at a town that needs 500 units, or one that has 500 to many?  Same amount of effort, but better investment.

Owen Schwaegerle · Answer

@Zach Quick￼

Thank you, Zach!

Owen Schwaegerle · Answer

@Henry Clark

This is an awesome and thorough response! Thank you!

How to Identify and Acquire Self Sotrage Space

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