5 Dangers That Will Kill Your Self-Storage Business!

The self-storage industry may be one of the most stable commercial industries in the market, but even self-storage can fail if you don’t manage it correctly. While there are many great opportunities, there are also some things that you just can’t overcome. Here are 5 dangers that you must watch out for, or your self-storage project might not be successful.

Incorrect Pricing Expectations for your Units: Many times, you or the seller, price your units with your hearts instead of with facts. You must research your market to find out exactly what a self-storage unit of that size, in that location, will rent for. You cannot compare it to properties that are downtown when you are in the suburbs. You need to stay within 3-5 miles of your property. If you are hard to access or in a terrible location, then you may not be able to charge as much.

If you anticipate that you are going to be able to charge more for a property than you actually can, your estimated gross income will be too high. This will change all of your estimated numbers. This could have devastating consequences when it comes to your bottom line.

Oversaturation: Oversaturation can really kill your occupancy levels. You may look at a self-storage property that is grossly under occupied and think, wow, I can do better marketing and get this property where it needs to be. However, if the market is oversaturated, a 30% or 40% occupancy level may be the highest that the market can bear. Make sure that you get a feasibility study done to find out whether or not the market is oversaturated or if you found a diamond in the rough.

Location: Location, Location, Location applies to self-storage just as much as it does to residential. When you are interested in investing in a facility or building a self-storage facility, you want to do your homework. You need to research how many properties are within a 3 mile radius. If there aren’t any, then you can go out to a 5 mile radius. You also need to evaluate whether or not there is a chance that someone could build a self-storage facility between you and your potential renters. You do not want to get out located. There is no reason for someone to drive past one facility to get to yours. Unless you have a different type of self-storage available for them to rent or much lower prices, they are going to rent close to home.

Bad Employees: Sadly, there is always a bad apple in any industry including self-storage. There is a chance that if you don’t do your research, you could end up with a bad manager. If you have a bad manager, you may end up with low occupancy rates. There is too much talent out there to settle for someone who isn’t willing to give you the reports that you need or meet your occupancy goals. If you are not satisfied with the results you are getting, you need to make a change. Whether that is in your employees, or your systems is up to you to decide but don’t expect different results when you are doing the same thing.

Advertising: Finally, you need to make sure that you are marketing. If you are not marketing, then you are not in business. If you are not on the first page of Google, you are not in business. If you don’t know how to get on the front page of Google, hire someone who does. If you don’t know where to market or how to get renters, find someone who does.

Online advertising is one of the most important things that you will do. In order to make a good first impression make sure that you don’t have any page errors and that your information on your online listing is correct. You don’t want to advertise a wrong phone number.

Look at what the competition is doing and do it better. Make your site as friendly as possible because if it isn’t friendly, they are going to go to the next self-storage facility.

While these may seem like simple little things, they can make or break your business. Self-storage is a business. You need to treat it like a business. Make sure that when you buy a property you know your numbers inside and out. Make sure that you have good managers. You want to make money. You don’t want to be the newest motivated seller. When you avoid these simple pitfalls, you can find great opportunities and make them into great investments. As always, happy investing.