Finding the Best Markets for Self-Storage!

How many times have you heard that location matters? That is because it does. If you are in a bad location or a bad market, you will have a much harder time making your self-storage facility thrive. You want to find great locations in strong markets so that you can get the best results. So how do know if this is a market that you can thrive in? Research.

One of the first things that you need to research is the demographics around your property. You need the median income to be at least an average of $45,000. If you are in areas where the income is much higher than that, the homes are typically much larger which allows them to store at home. If you go lower than that, then they don’t have two nickels to rub together for self-storage. You need to find that median range where they don’t have quite enough room for everything, but they also can afford to pay for self-storage.

The next step is looking at the ratio of owner occupied to rental properties. You want to be in an area that has more stability. You want long term renters not 5 minute renters. You want to find a neighborhood that is about 75% owner occupied. In some parts of the country, housing is unaffordable and so the majority of the population rents. If this is the case in your area, then make sure you are looking in an area where people stay a long time. Make sure that you aren’t near student housing. Young adults have not had the time to acquire as many belongings, so they are less likely to need self-storage.

You also need to look at the competition. How many self-storage facilities are within 1 mile of your facility? If there is a lot of competition, what is going to get someone to drive past a bunch of other self-storage to get to yours? Most people want something easy to access and close to home. If there are 10 facilities within that mile radius, your market may be oversaturated. To entice someone to use your facility over another may cost you financially.

Finally, you need to make sure that your market is not oversaturated. Demand cannot be created. People either need self-storage or they don’t. You want to make sure that there is not too many self-storage facilities in your area. If the demand for self-storage is 10,000 units and your area has 20,000 it is unlikely that any of the self-storage facilities will be more than half full. You want to make sure that you are in an area where you can have high occupancy rates rather than working tirelessly to keep the place half full.

Demographics are important. Location can make or break a property. Research the market that you are considering. Remember that the market changes even within a city. Find out what the demographics are. Verify that you are in an area that can afford self-storage and don’t invest in markets that are extremely oversaturated – it will take years for the population to catch up. As always, happy investing.