3rd Rule - How to start your due diligence on a Self-Storage Property!

Now we are going to transition into the third rule of thumb – Due Diligence. This is probably the most important part of your purchase period. You need to research your property to not only make sure that the property is what you think it is, you want to make sure that you can also make it what you need it to be to increase the value over the next few years.

When you are doing your due diligence there are so many aspects to the property that you need to check from planning and zoning regulations, to your financials, to your competition. We are going to cover those over the next few articles, but they may not take into account everything that you need to cover on your property which is why you always need to get a feasibility study.

When you are considering a conversion on a property, you will need to make sure that the city will allow you to make those changes in that location. Every city has a planning and zoning department. They have a comprehensive general plan that tells them what kind of properties they want to have in each area of the city. Most of the future land has been plotted out into what would be the most beneficial for the city. The member’s job is to determine what the highest and best use of each property would be for the community. If you are able to show the planning and zoning committee that the changes you want to make to a property are in the best interest of the city, then they may be willing to grant you a variance if that isn’t what that area is zoned for.

One of the first things that you need to find out about your property is if you can put self-storage on it. Find out what types of commercial zoning allow self-storage in your area. Typically, self-storage is allowed in zoning codes (C-1) Commercial, (P.O.) Professional Office, or (MP) Manufacturing Park. Once you know what zoning codes will allow self-storage then you will know whether or not you have to get a variance. If you are in a residential neighborhood, it is probably less likely that you will get a variance than if you are in the middle of a retail district.

Another thing that you want to find out about your city is whether or not they are open to self-storage. If you have a city that isn’t open to self-storage, then it may be more difficult to get variances approved. Once you have the property under contract, call and ask the city if they would allow self-storage on that location. They will let you know right up front if you don’t have a chance of converting this property because of the future land development that they want to see in that spot.

Don’t be afraid to ask for a variance. This is not an uncommon thing to do, just make sure that you are not going to be fighting an uphill battle with a potentially unsuccessful outcome. Talk to your city office and see if they are open to the idea. Find out what areas are more likely to allow variances and then start looking for potential property conversions. As always, happy investing.