Should I Enter into The Self Storage Niche?

[Saverio Nestico]

Looking to connect with any investors that have experience in self storage investments. Looking for feedback on entering the self storage investment niche. I am interested in exploring the option of divesting my interests in residential real estate and entering into a investment where the tenants don't sleep. Any feedback or guidance would be helpful

[Lynnette E.]

I got some storage units with an apartment I bought.  I am going against the grain here, but I HATE them!  Really, so much work for so little income.  

Maybe if there were more it would be worthwhile, could put more technology in, but for 22-24 units its not worth it.

What I hate:

1.  You meet someone to rent a unit and sign the contract.  1 out of 3 do not show up, even after spending time with them on the phone arranging and confirming the time/place.  So I drove 45 minutes each way for nothing.

2.  Meeting people to rent units takes about 2 hours, for either $50 or $100.  Many people use units when they are between houses/couches, and only rent for 1 to 2 months.  My time is worth more than what I get in profit.  This is especially true with the one month rentals.  Average rental time is 3 months, but that is only because I have 2 long term renters.  Medium is 2 months.

3.  When people do leave, well, they leave what they decide they no longer want.  I end up having to spend an hour or 3 taking the filthy couch to the dump and $8 in dump fees.  Oh, yeah, they do lose their $10 or $20 deposit.  And I lose 5 hours of my life, including my driving time to get to the storage units from my home.  There is not enough profit to pay someone else to do this.

4.  Monthly trip to spray the weeds that grow in the cracks, usually timed with a showing or clean up.

5.  There is not plumbing, but there is a roof that needs replacing $15k, and the pavement needed to be redone as it was previously not maintained $20k, electricity for lights $85/month, and the security camera $350, plus installation, plus ???

6.  They get broken into a lot!  If the locks are good, they just kick in the doors.  I have 2 units out of use now with kicked in doors, not sure how to fix them.

7.  The people who rent these units know the tricks.  When they are behind they put double locks in themselves to not let the landlord lock them out.  They break into another locker and move their stuff there and put on a very good lock.  Some poor soul pays their bill and the stuff that gets auctioned is from the other unit that is paying---but their stuff is gone and they don't know.

8. It cost $ to advertise the unit for auction when they do not pay. They will break in and steal their stuff as soon as you advertise, now you are also out another broken door.

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The good, for my experience at least: The property is a very good tax deduction. The CAPEX is wonderful for depreciation. The income is sooo low, even with me not getting paid for the management/time I spend on it, it still shows a significant loss which of sets my earnings from other rentals.

I put much more time into these units than I do in any house and the houses rent is the same as the storage units, if all units were full and paying.  And they are not full or paying!