What Do You Want in A Self-Storage Property?

Not every self-storage property is a good opportunity. Some sellers want to charge top, top dollar for their property and so there is no way to make the property cash flow much less provide a good return on investment. We are going to leave these properties for someone else to buy. We are looking for properties that have the following characteristics.

The first thing that we are looking for in a property is the upside potential. Does this property have potential. Can we take it from where it is today and make it better? By making a property better, you increase its value. This is critical when you are working with investors. Typically, your investors are going to invest for between 3-5 years. This means that you have a finite amount of time to increase the value of the property and make a profit. If you don’t buy a property with an immediate ability to increase the value of the property you are going to have angry investors.

There are several ways to increase the value of the property, there may be a way to bring in more rental income by expanding into a large parking lot. Or you could take that same large parking lot and turn it into boat or RV storage. There is even the possibility of bringing in portable storage containers to increase your rental size. Any of these options would increase your bottom line, which would increase your upside potential and current value of the property.

Sometimes the property needs work. As a result, the only way to get people to rent there is with low rents. By doing the deferred maintenance, you can improve the appearance of the property, bring in higher paying renters and then gradually increase the rents on the current tenants until they are up to current market value. This is also a way to improve the upside potential of a property.

The next thing that you are looking for in a property is the size of the lot. You want property that has at least 3-5 acres of land. This is the ideal size. This gives you enough room to be able to build the perfect facility. If you are looking at potential conversions, look for something with this size of lot.

Finally, you need the property to have at least 50,000 square feet. If it doesn’t have this much square footage, you are paying someone to manage a very small property. This is going to be a lot of your cashflow. It costs about the same to manage a 50,000 square foot property as it does to manage a 100,000 square foot property. However, the returns are significantly different.

Now that you know what you want in a property, start looking around to see what is available in your area. If there is something on the market, go check it out. Does it meet all the requirements? If so, you may want to pursue it further. As always, happy investing.