Building Self Storage

[Barrett Boone]

Newbie here. 

I am considering developing a self storage facility on land that is already owned by my family. I don't know much about investing in self storage, but the few things I've seen it seems that the main strategy in this space is to find and existing mom and pop facility and buy it for a good price and improve the operation.

I wanted to get opinions on building a new facility on raw land that is already owned outright.

The property we are considering is located just south of Sherman TX (about an hour north of Dallas TX). The land is about 10 acres on a two lane highway. There has been a recent spurt of development in the area, and there are several large housing developments currently breaking ground. 

Interested to learn what the forums think, and what kind of questions and research I need to be doing to evaluate this idea.

Thanks!

[Henry Clark]

@Barrett Boone

Hope you don't mind me conveying some of the info, I gave you offline.  I like other people to learn.

1.  Location, location.  Traditional 1 to 3 miles for storage. Your 2 miles as the crow flies but about 4 miles by road from the major town and development.

2.  The road you're on is a side road.  Does not lead from Sherman to another destination.  Not a major feeder road.

3.  10 acres is a lot of storage, even with parking.  Your location, I would only do maybe 25 units to start with and parking.  Put it off to the side, so you don't compromise the 10 acres by building in the middle.  

4.  Most Mom/Pop build where they had land or it suits them.  If you really want to do Storage, I would sell your 10 acres as house lots and 1031 into another more suitable location.

5.  Use the Sparefoot and Google Self Storage techniques I gave you to look for empty holes or cross roads for a place.

6.  Texas- Even more so you have to do Risk analysis.  Texas Counties do not have zoning.  All of your neighbors can build self-storage.  I intentionally look for locations like your proposal that have Storage already set up, proving the market, then build closer to the population, cutting off your future renters.  I helped my brother build a location south of San Antonio and we cut off an existing 220 unit location that is fully rented, but 4 miles in the middle of nowhere, going nowhere.

7.  Market analysis.  I use 6 units per 100 people.  Doesn't matter if they are 10x15 or 10x20.  This is people and not households. Your area doesn't have enough market for even a major part of 10 acres, or 1 acre.

8.  If you want to do storage at your location, then I recommend a "Commando" approach.  Use the Texas County no zoning to your advantage.  I would seek out 1/4 to 1 acre lots at cross road sections away from cities.  Put portable storage or Conex/containers there.  You can move these around and install as needed.  Don't put any fences, cameras, electric there (make the numbers work); unless it is very cheap for electric/camera/internet.  Pick a "Route".  Once a week take some weed sprayer and a sandwich/Coke/cooler and go for a drive.  Start with 10 units at each location and add or move around as necessary.  This is both a Storage and Land play.  This also avoids Property tax on the units, since not attached to the ground.  Insurance, you need to cover them through Personal and not Building coverage.

9.  Develop your "systems" to operate, run numbers, market analysis, developing or buying out.  Then decide if you want to take over the world.  This is the perfect time.  Most of the Mom/Pop locations will need to sell in the next 10 years as they age out and their kids don't come home to take over a small location.

The most important thing of all is to "Start".  In 7 years, you should have a $10,000,000 operation.  Get your financing in order and develop a game plan for your endgame number.  Again, pick a Route and Chain link your locations so the customers can't get away from you.  Then raise the prices as your last Value Add technique when you have them "Corralled".

Start small and Make Your Big Mistakes Early.