Self Storage- Is now a good time to invest?

[Henry Clark]

Is now a good time to invest in Self Storage, looks like it is saturated?  I will get this question every once in a while.  Like any Real Estate investor, my canned answer; what do the numbers say?  "Any time is a good time to buy or build."

The last person that asked me, who is in Real Estate, said he got that, but is it historically a good time to get in?  They are doing a 1031 and want to move into Self Storage, but had not done any research yet.  Realize they are on a time line, I have been crunched myself before on a reverse 1031.  I say sure.  They say of course, but your experienced.  I just explained he has an information or experience deficit he needs to overcome in a very short time.  And explained how to do that with the resources in BP.

Generally:

a.  Is the market Saturated?  I always tell people, even without knowing the market and assuming not one more Storage unit will ever be rented in that market; I would still build or buy in that market.  And their market is probably not saturated.

b.  Historically is now a good time to invest in Storage?  The next 10 years is the best time in the history of mankind to invest in Storage.  Now I want you to check to see if my hand is in your pocket, getting your wallet.  Read all of my posts.  I think the only thing I have ever asked for was a picture of a great Abalone meal, to bring back memories.  I gave the advice, but didn't get the picture. Basically, I'm not selling you anything.  But really, how good is it?  Think of all the Eastern side of the United States, all of the trees being harvested.  Think of 100,000,000 buffalo being slaughtered on the Great Plains.  That is the magnitude of the moment.  No those actions weren't great.  I always get a kick about the 94,000,000 cows about to kill us with gas.

60 or 70 percent of all locations (not units) are owned by Mom/Pop.  They basically have to sell in the next 10 years, even if they don't realize it.  Their kids aren't coming back home to run a small Self storage location.  They don't know it, but they have to sell.  There are limited buyers in there market.  I'm 60 and on the end of the Baby boomer generation, and even I am making plans.  You have a chance to buy.  Put together a Group of similarly managed locations, you have a chance to Sell.

The other 30 or 40% is owned by REITS or national firms who are on a feeding frenzy.  All large corporations have two driving forces, Growth % and increased margin %.  It gets harder and harder to do, thus they get more and more aggressive.  Do not compete in this market.  All industry that start to consolidate are not around the industry itself but about operations, finance, distribution, marketing, etc, which won't ever be your strength, above and beyond theirs.  If you size correctly, you have a chance to sell.

The above two groups are generally two different products and business models.  They very rarely collide.

The next 10 years is the Greatest Time in Mankinds History to get into Self Storage.

Start small and Make Your Big Mistakes Early.