The Third Rule of Thumb and Your Competition! Who are they?

Who is your target audience? Where are they located? Now that you know who you are going to be renting to, you need to know who your competition is. How many other self-storage facilities are located within three miles of your location? How many of them are between you and your potential renters?

You want to make sure you are in the best location for your potential renters. If you are out located or out classed, you are going to have a hard time competing with the other self-storage facilities. The area that potential renters go to rent self-storage is very small, typically, no more than 3 miles.

Before you close on a property, you need to know who your competitors are and what amenities they offer and what kind of condition those properties are in. When you evaluate your competition, look at it from the viewpoint of a perspective tenant. What is important to your renter? If they are trying to decide between you and “Storing is Easy” how are you going to compare?

What amenities if any does your competition offer? Can they store their belongings in the same place as their boat or RV? Do they have video camera security? Do they offer easy access to the facility?

Is your facility easy to get in and out of? Most people don’t drive large moving trucks every day. They need to be able to easily get in and out of your facility. If those facilities have easier access than yours, they will go elsewhere.

After you compare your amenities, look at the condition of the other properties. If you are buying an existing facility, are they in better condition than your property or are they about the same? Which one looks better? If it isn’t yours, then the only reason they would choose your facility is if your rates are less. Don’t be forced to reduce your rates in order to get renters. Make sure that you can compete.

The next thing that you need to evaluate is the rents. The market will determine how much you can charge for rent. If every other property is still stuck in the dark ages on rents, then it will be difficult for you to charge modern rents to make your property cash flow. Typically, a climate controlled 10x10 needs to rent for at least $100 a month and a non-climate controlled needs to rent for at least $70 a month. When your competition is renting them for $50 to $60 a month, the market is too low, or the demand is too low and that isn’t something that you can fix. You cannot change what your competition is doing.

Look at what the competition is like in your three mile radius and then decide if you think that adding your facility would oversaturate the market or help bring it into balance. Make sure that you can cashflow with the current market rates and the current amenities that you will have to offer. As always, happy investing.