Self storage anybody building it?

[Alecia Loveless]

While I know its not housing, there's a shortage of self storage in my area. I've found a potentially great piece of land and was wondering if anyone is doing this, and if so, pointers and companies to buy buildings from. Thanks!

[Henry Clark]

@Ali Garced

Luckily we are done building locations, otherwise, I would move to Tucson and build.

1.  Not a lot of locations for sale in Tucson, and in the near future there should not be, unless for exorbitant prices.  Its a great market to own in.

2.  Tucson proper should have about 32,400 units.  Looking at Sparefoot and Google, there can't be but about 1/3 of those.  Thus large demand for development.

3.  Not the answer you want to hear, but I would recommend developing versus building.  I'll give you an example.  Option A:  Buy the exact same location and pay $3,500,000.;  Option B: Build the exact same location and cost $2,000,000 day 1, with no tenants.  And be able to sell for $3,000,000 day one.  This is the market your in.  You will have a very hard time buying an existing location without paying above 1.5 times the cost of building.

4.  There are a lot of reasonably priced Industrial and commercial "land" properties for sale.  Check zoning and access.

5.  There are some big holes, needing filled with storage in the Tucson market.  Midvale, Sunnyside, Casas Adobes, West of I 10 Barrio Hollywood and the rest of the area, Eastside, anywhere north along the Rillito River or Tanque Creek.

6.  Your rents are high.  Everyone is full.  

7.  Very few people are using Sparefoot.  They are full.  If you come on board, you can be the number on the internet within 12 months, from an advertising standpoint.  Your rent up phase should be very fast.

Steps:

1.  Check on zoning for Self Storage.  Read my I-3 zoning post.

2.  Financing.  Determine how much funding or collateral you can bring to the table.  Then determine what financing avenue you will take.  Read my post on Self Storage New Investor.  This will determine the size of the deal you need to pursue.

3.  If you decide to move forward then read my Self Storage Checklist 101 post.

4.  Depending on your Family situation.  See how much your military BHA is.  Then add an office and living quarter to the Storage location to live at.  Get the rest of us to help pay for your facility while you are in Tucson.

Start small and Make Your Big Mistakes Early.

If you choose not to develop, then:

a.  Google Sparefoot and type in Tucson for a search.

b.  Look at all of the locations that are gray and not using Sparefoot.

c.  Develop a contact list and inventory.

d.  Exclude everyone that will be above your Investment level $$$$$$.  See my note above.

e.  Contact each person individually.  No Calls, No Letter, No emails.  Ever. Just interpersonal.  Ask them to sale.  Keep talking with them every 6 months.  Make sure your financing is in order and you are ready to buy from them in a week.  Do all of your due diligence ahead of time, other than survey or title/lien search.  In the meantime, use Loopnet Self Storage for sale "anywhere".  Look at deals that are your size.  Run the numbers and go through the Checklist 5 times.  Put these analysis out on Bigger pockets and ask people to go through your logic.  This will get you ready to make an offer in a week, when the deal comes up.

f.  Even if this is a little short of your financial profit targets, go for it.  Learn on a small location.  You can always resell and move up in your market for the next 10 years.  Under supplied market.