3 Reasons That you Shouldn’t Invest in a Self-Storage Site

There are 3 reasons that a site won’t work for self-storage. Low rental rates are the number one reason and there is nothing that you can do to change that. You cannot force your competition to raise their rates. Demand is number two and location is number three. Sometimes you can get caught up in an idea or get excited because a seller said yes and so you set aside the facts. You cannot buy the property if it doesn’t work.

Sometimes you will find a motivated seller who is willing to take a low offer because the property isn’t performing well. You need to verify whether or not the property can perform better than it is. Sometime properties don’t perform well because they are being mismanaged. However, sometimes, they are not performing well because the market is oversaturated, and so rental rates are low. Rental rates may be low because you have a bunch of mom and pop shops that have never raised their rents. This will also force rental rates down. You cannot go in expecting to charge more when the market will not allow it.

You also need to make sure that the market can handle the additional self-storage that you are thinking of adding to the market. If you are building, you want to make sure that the market is undersaturated and that you are meeting a need or demand. If you are building in a stable market, you will oversaturate the market and you won’t be able to fill your facility.

Finally, you need to be in a good location. You don’t want to build across the street from 3 other self-storage facilities. What will set you apart to get customers to come to you instead of the others? You also don’t want to build a long way away from your customers when there are self-storage facilities between you and them. Customers will choose the most convenient location.

Once you believe that you have a good location, you should always get a feasibility study done to back yourself up. This study will validate everything that you think you have learned about the property. You can take this document to your investors and lenders.

Research your property before you purchase it. Make sure that you are in a good market with good rental rates and in a good location. As always, happy investing.