How to Start a Self-Storage Business

How to Start a Self-Storage Business

Well, certainly there’s more to starting a Self Storage Business than I can cover in this post so I’ll just list some Bullet “Starting” points for you. But First, smart move – this is absolutely the Industry to be investing in. Surely you’ve been reading all the positive press recently about the Self Storage Asset Class. So here’s the Short list of how to start:

• Begin by creating relationships with the Commercial and Self Storage Brokers in your area and let them know the types of facilities you are looking for
• Send Mailers to owners in your area with a simple letter explaining that you would like the opportunity to talk with them directly when they decide to sell.
• If you can get some basic #’s, then begin to calculate the Net Operating Income so that you can derive a value based upon the current Capitalization Rate in that market.
• Next, you need to analyze the market to determine the supply index and the overall strength of the players in the trade area within 5 miles of your site or facility.
• Financing is much easier than other real estate asset classes. Lenders LOVE Self Storage as it has outperformed all other forms of real estate for the past 20 years. We like the community banks, savings and loans, and Credit Unions along with the SBA
• Hire an attorney to draft your purchase agreement and review closing docs including any operating agreements, LLC’s, and ALL partnership agreements.
• Once under contract, be certain to either hire out, or perform your own Thorough Due Diligence to verify the financials and the overall condition of the facility.
• You may also want to have a feasibility study done in turnaround facilities, and ALWAYS hire a consultant to perform one on a development site.
• Once closed, be certain to establish a Process Based Management System with defined Marketing plans, and best business practices focus on increasing income and reducing expenses. And Hire a GREAT manager! Spend the extra time interviewing, and compensate them well.

Then enjoy the benefits of investing in Real Estate WITHOUT all the hassles of Tenants, Toilets, and Trash!

To your success,

Scott Meyers