The 1st Rule of Thumb – What kind of markets are you looking for?

You can find the perfect property over and over again, but if the market is oversaturated or if the community is declining, these may not be the perfect markets for a self-storage property. You want to make sure that not only does the property fit your criteria, but that it will be profitable. You don’t want to become the next motivated seller because you didn’t do your research.

Your particular market is the area between you and the next self-storage property. People are not going to drive past a self-storage facility to get to yours unless there is a really good reason. Typically, that reason is financial. You don’t want to have to underprice your facility in order to get renters so you need to find out what the market is doing in your particular market so that you can be competitive.

Every real estate market goes through a cycle. There is a period of intense growth, then a correction period, then a recovery period, then a stable period. There is always a need for self-storage during each of these periods.

For us, we want to mare sure that we are buying in an area that is not turning into a ghost town. If people are moving out of the area with no intention of ever coming back, they are not going to be storing their belongings. We want an area where they are predicting population growth. We are in the trauma and transition business, but we can’t rent to ghosts. We need there to be a solid population base so that we have customers to rent to.

You want to find an area where there is a strong job market in the area you are looking into. Try to find a market that has job growth over the next 10 years. If there is job growth then typically, people are moving into the area to fill those jobs. If there are people moving in and out of the area, you are usually looking at a healthy market which means self-storage renters.

There are many other criteria that you need to look for, but these are two to start with. Finding good markets is a science and can be predicted, you just need to know how. As always, happy investing.