New to Self-Storage? – Start with the 5 rules of Thumb

Self-storage is a great business to be in, especially with a potential recession and the housing market resetting itself. There are a lot of people who are going to find themselves in need of storage. One of the great things about self-storage is that we are in the transition business. When someone needs to move and temporarily store their belongings, we are there. When someone is downsizing or upsizing or remodeling or moving, we are there. No matter what the transition is, we are there to help. Transitions never stop no matter what the interest rates are or what the economy is doing.

When you are just getting started in self-storage the first thing that you want to do is learn the 5 rules of thumb. These 5 rules will help you to navigate the ins and outs of self-storage.

The first rule in self-storage is that you must actively look for properties every day. There are several ways that you can look for properties and we will discuss each of these in great detail. If you are not actively looking for properties and talking to sellers, you are not in the self-storage business.

The second rule of thumb is that you need to be willing to make offers in a way that the property owners will accept them. The offer is probably the most important part of the negotiation process. You need to know how to structure the offer so that they take your offer instead of all the other offers they are presented with. A lot of getting your offer accepted is in how you present your offer.

The third rule of thumb is due diligence. You must make sure that your property will work with your investment model. The due diligence period allows you time to check all the details involved in the process from planning and zoning to financing to your feasibility study. If you find that the property doesn’t work for you, your due diligence period gives you time to back out of your contract.

The fourth rule of thumb is financing. Once you find your dream property or potential dream property, you need to find a way to finance it. This is probably the one of the most critical aspects of your project. If you can’t get the money to buy the property, then all of your hard to work to get to this point is wasted.

You may only have a vague idea of how you are going to buy a self-storage property when you first find it, but part of your due diligence needs to be finding the money. You may be getting traditional financing, or you may be bringing in private investors. Either way, as soon as you know you have a viable opportunity, and it is under contract, start talking to lenders and investors about working with you.

The final rule of thumb focuses on the management of the property. Before you purchase a property, you need to know how you are going to run the property. You need to know if you are going to manage the property yourself or if you plan on hiring someone to do that for you. If you do plan on hiring someone, how are you going to manage them? If you are planning on building a portfolio of self-storage businesses, then you need to plan on being the one that manages all of your managers not the day to day management of the facility. Having effective management is critical to your success.

Over the next few months, we are going to talk about each of these rules of thumb in great detail so that you can start building your self-storage business. As we discuss them you should feel more comfortable and more confident talking to property owners and negotiating with them to purchase their properties. These 5 rules will help you move your business forward. As always, happy investing.