How do I know where to look for self-storage properties?

If you are asking yourself where in the country you should start looking for self-storage properties, you are asking the wrong question. There are so many potential opportunities out there, you just have to find them. They might be clear across the country, and they might be in your back yard.

If you put one hundred self-storage investors/developers in a room together and ask them where to buy self-storage, approximately 50 of them will say, go to the markets with the hottest growth or find markets that are under served and then choose one of those markets and invest there. The other 50 investors will say that they are looking for a deal. Their approaches are deal valuation or market analysis based.

I like to find opportunities first. I would rather find a building that has a low cost per square foot and then look to see if the local area/market will support self-storage. I also do this with land. If I can find a piece of dirt that is very inexpensive that is zoned for self-storage, then I will research the location. Once the property has been located, then we do a five mile radius survey to determine whether or not we want to invest there or not.

The size of your market for self-storage is about five miles. You are going to be investing in a micro market business. You need to be able to dominate 5 square miles for your facility. You need to determine what the supply index is in that location, what are the rents, what are the building costs? Can you make this potential self-storage building profitable?

Find out what the property is worth today and then determine what it is going to be worth in the future after you have made all of your renovations. It’s nice to know what the upside potential of a property is going to be, but you need to base everything off of today’s values. What if something happens to your project and you have to back out of it immediately? If you overpaid for it, you are stuck with it? You don’t know how long it will take for a property to appreciate. Make sure that you buy a property at the right price.

Don’t paint broad strokes when you are looking at places to invest. You may determine that a city is overbuilt and pass by a great location that is undersupplied. Look at properties and then research the surrounding five miles. As always, happy investing.