All Forum Posts by: Adam Robinson

I lived in Tampa, great area, they have the "nature coast up north of Spring Hill, not sure how big a town you want, plenty of woods and awesome airboating swamp people up there, had many a good times on the rivers, to me the best undiscovered area in all of FL. Still have family there.

I live in Charlotte now and its great as well. the blue ridge mountains are beautiful. Charlotte and Raleigh are arguably both TOP 10 commercial real estate markets in the entire USA, and Charleston is close to that top 10 list.

Asheville, NC is one heck of a mountain town. picture cool nightspots, breweries and restaurants with hipsters in a great sized downtown, with views of mountains on all 4 sides. a little slice of paradise. lakes and waterfalls to swim in beat the beach any day for me.

The Charlotte, Greenville, SC, Asheville triangle to me is one of the best regions in the nation. still 3 hours to beach, but i'd rather swim in the mountain lakes.

Cheap housing, snows maybe 1 time a winter, mild winters, hot summers.

More food for thought on Self Storage, being more recession resistant than others:

4 D's. Death, Divorce, Dislocation, Density

Death - very unfortunate topic, but death creates heirs that will have a lot of items to sort through, so a good option is people clear a house asap to rent or sell, then grab a storage unit so they can "sift through" things slowly over time.. many times NEVER.. and pay the fee instead of being "inconvenienced" to have to go sort through their mothers precious china collection.

Same reason the rental increases for SS are crazy vs Apartments.. raise $150 storage rent by $9 a month = 6% rental increase. would you go rent a truck, take a full saturday in the 90 degree heat, hire movers, to move your crap down the street to save $9 a month? moving sucks so bad its ridiculous.

So once you have people IN your storage unit, they absorb rental increases better than any asset class for this reason, even better than MHP the previous undisputed chap of people being forced to absorb the highest rental increases.. (they say: "dont have the 5k to move my damn trailer, im screwed, ill just pay it", crowd).. the rents are much lower so the increases on an actual dollar value are so much less impactful that it makes no sense to move, and they take it.

Divorce

this creates ripple effects, but storage demand goes up with divorce sadly.

Dislocation 

this one is huge for recession proofing.. people lose houses to foreclosure, have to rent smaller homes, units etc, but love all their crap.. they say its temporary.. so they plop items into storage..

people up and move to new cities for any decent job opportunity when they are desperate in a recession.. more storage demand..

I initially had same thoughts you did regarding $100 a month storage is first thing struck from budget if recession hits... hell i am 100% personally against renting a storage unit, if i have that much crap shame on me.. BUT the other factors more than cancel this out.

foreclosures, downsizing homes, more divorce etc during recessions actually creates NET more demand.. you will have some saying i cant afford my storage unit and leaving, but you have MORE move ins from dislocation etc.

DENSITY

this plays on the trend of smaller units. in order to get more affordable rents, developers are producing smaller unit sizes.. thus where the hell you gonna put your mountain bike or kayak, or all the millenial faux outdoorsy crap.. all the millenials 25 green sweaters during the summer.

the trend is smaller units, less cluttered, and these urban storage units fit the bill well. so more density and smaller homes, will create more demand to store stuff from regular renters, than there used to be.

Another factor is in general, storage is more acceptable. the newer urban developments are safer, well lit, hell sometimes they have coffee shops below them and restaurants.. so they have become a bigger part of peoples lives.

they are more accepted. hell, when my wife suggest a few years back we should get a unit, i knew the tipping point had been reached. its become more "normal" for people to have storage unit.

If you look at the data, self storage weathered the great recession better than most any assets, MHP included which was #2. that is why financing has become much better on SS, and to the point BETTER than MHP for sure. 90% LTV!!! damn.

MHPs and SS are flat out cash cows if bought correctly. more so than the traditional asset classes of Multifamily, retail, office.

What i love about Self Storage is the rents per square foot are close to apartments, and it costs WAY less to buy these assets. One of the groups I know locally paid $28 a ft for a 1990s facility, and are going to be getting $10 in rent for the year..

Some of the more sophisticated Storage groups we work with, they build 5 story all climate controlled units in nice urban areas with a huge influx of small apartments all around them. 

As you will see trends in apartments are to have smaller units, those are win-win, as renter pays a lower rent overall, and the landlord gets a higher rent per sqft.

But this self storage facility gets same rents per sqft, but it costs HALF or less to build!!!!

Just let that soak in, as its the ONLY reasons you need to ponder self storage. 

let alone lending is actually better than all other asset classes now that banks have data showing lowest default during last recession. not to mention 90% LTV on SBA loans and they allow extra space or cubesmart to 3rd party manage for you!

You can then add uhaul and mandatory renters insurance, for next to NO out of pocket cost, to increase the value of facility by probably $1 million on an average sized facility.

MHPs are great assets, but the industry has its issues, financing is always a PITA.

More and more park owned homes, which makes them horizontal apartments that do not increase in value as much when you have to do major unit repairs and upgrades. owning the dirt and renting the pads not homes is IDEAL, but seems less and less how the assets are.. once you dig into that industry, it starts to have more discussions on how to get 21st century programs to get mobiles to fill your park.

MHP's returns are better than apartments for sure, but there are just more hoops and challenges for those, and thus that's why returns are higher. the demand will NEVER be satisfied for affordable rentals, EVER.

The way society is set-up with zoning and local government approvals, with not allowing "cheaper" or "smaller" units in their neighborhood, as to introduce "undesirables" into their city and thus decrease the property values.. its never going to change.

That's also why we are looking heavily and purchased B & C apartments, its the ONLY cheap housing left, and the demand is INCREDIBLE and guess what will happen if we have a soft recession... A class will get "reset" people will lose those and once a new basis is established with a new buyer.. then they can lower their rents.. thus finally a slight pressure on B & C rents, but not much.

There will always be a margin between A class and B class rents, but it will close. with mostly A rents going lower. people just cannot afford the insane rents on these new "luxury" units with "luxury" dog washing stations...

Honestly.. MHP are great since they all should raise their rents $200 tomorrow. the market rents for MHP are just too low.

Where you can find the disjoint in asset values vs returns that's where to really look.