Self Storage- Why Storage? Why you?
Self Storage investors. Keep up the effort and put your foot on the gas, right now. Right now is the best time to invest in self storage, I am not a financial advisor, just in the game of Storage.
There are three investor groups in the Storage business right now:
REITS or large regionals- I'm from the corporate world as a CPA (largest CPA firm in the world), Controller and CFO ($1bl sales in manufacturing); I can think like them and have lived their world. REITS are mainly keying on Climate Controlled and "Management on Site" locations. Because these are large dollar projects and are "managed". They can't do 25/50/100/200 unit locations and that are self service; doesn't fit their magnitude or profile. As a fund grows, everyone is looking for the same thing every year. Last year we grew 25% and our profit margin was X2%. This year our management and investors are wanting even better; so our target is to grow 30% and have a profit margin of X3%. This growth and increased profit margin % is not sustainable. You run out of deals and market after a while. Also your competition is doing the same thing and you 10? companies aren't communicating (against the law) thus a market will get outstripped very quickly and then your in a price or 3 months free war, which sends profits down. Point is don't compete with them. They have bigger finances and better SEO power than you.
Current Small Location Owners- I'm ad libbing. Someone somewhere has a study. Most existing owners are baby boomers who will start to age out of the market and although Storage is easy, they will want to drop managing this. Kids have moved 5 states away and the business is to boring, not big enough to sustain their life style and they have their own careers. Locals don't understand this business, high dollar entry, and you have to be an entrepreneur to do a business. Most locals are not this. Someone needs to buy these companies. Also they have not grown and the market needs more storage.
You: A. Entrepreneur; B. Financing savvy; C. Don't mind Boring ($$$$$).
Financial plays for you:
Pick a driving radius around you and make this your base of operation. I live in the country and have barely touched my market in a 40 mile radius and I'm am totally happy and saturated with this investment type.
A. Preferably buy an existing location- Reduces mistakes. Reduces unknow cash flow timing, during rent up phase. "Will they come?" is already answered. Gets more pricing control of the market, one less competitor.
B. Build a location. Out position the existing competition. They built for their convenience and not the customers. Fill extra market demand.
C. Within that same town Build or Buy up to 60/70%; then you can manage the market pricing. Increase $10 per unit. Doesn't sound like much but both your profit margin and Cash flow just skyrocketed.
D. Combine several towns and locations together. Now you have an investment big enough to attract larger investors than just the local investors. They will pay you additional premium because you have packaged the deal for them, something they literally don't have the time or inclination to do.
E. Keep the properties and get your Kids or a manager to manage. The Cash Flow after paid off is "Phenomenal".
Profits- You did the base deal. You did the price increase. You did the package deal. On the same property you made profit three different ways. The last two without putting any money into the deals.
Timing: What's the rush? Your lucky, I'm happy and satisfied, moving on to other investments and life styles. Forget me, there are other people just as ambitious and driven as me out there. As I have helped forum users out here and in Europe, I have come to know there is a huge amount of investment potential out there. This could be Franchised and a $2 to $3billion (products you can't conceptualize) could be done. Baby Boomers are ready to sell, they just don't know it. Just like the Large REITS will outgrow their market, this smaller market will also consolidate rapidly. Keep in mind $1mm can be a $10mm investment. $10mm can be a $100mm investment with leverage. With a Franchise format, $1mm investment could be a $1billion platform.
Why Now?: As I have stated before it takes three things to get wealthy and they aren't (hard work and being smart).
A. Financing- interest rates are at Once in a Life time lows.
B. An idea or product- Small to mid level self storage is primed for consolidation. At one time there were over 10,000 coffin makers in the US. Today there is only one.
C. Entrepreneurship- jump off that 8 to 5 cliff; that is so secure and comfortable. 10 years from now you can be Broke, or you can be worth $10mm and not working at age xx?. 10 years from now you didn't make a decision, and you have a great job and are worth $500,000 and will work till your 65, in a shrinking and more competitive corporate world. Bank amort for 20 to 25 year term; Deal use an 8 to 12 year payback; or what ever are your personal metrics and goals.
Without getting into the details in about 1 1/2 years, I won't be on this forum. The only reason I'm ever on these forums is because I am waiting for the next phase of a project to start up. I do enjoy helping some of you, but in no way would enjoy making a business of helping masses of people.
There are folks who have the knowledge and have systematized their training approaches that can handle masses of investors and that is part of their business model. Keep in mind, I have made $10,000 up to $130,000 mistakes on some of my projects. Get someone to help you on yours. Me, I have to get back to enjoying myself. Have a load of Pineapple pups in, and decide with my Caretaker family in Belize where and how to plant them. Planting them today, see below. Mangoes ready in a month. Apple bananas ready in March. This is you in 10 years. Grab your success picture in your head and hang on to it for 10 years.
REMEMBER: Start small and make your Big Mistakes Early.
Comments