Does anyone have experience in starting a self storage business? My partners have done a fair amount of due diligence, but have not yet purchased the land for it. Any feedback from experienced investors may be helpful as we are first timers to the self storage industry. Thank you!
What exactly are you looking for? Self-storage can be a great investment, but there are many factors to consider when starting up a facility. Is there something specific you need help on?
Good question MCD because I don’t know what I don’t know. I feel like I have a good idea of what self storage building company to go with and what the mixture of units will be, but my biggest questions are about the operations of the business. We plan on paying someone to manage the rental of units, do the maintenance, and the bookkeeping, but will need to keep an eye on them. We plan on putting a lot of emphasis on the marketing until we get the units rented and then we will just keep an ad in the Yellow Pages.
My biggest problem is finding the properly zoned land that doesn’t cost too much so our payback period won’t be so slow. I’m sure we will find the land eventually. I have heard that the payback can be as quick as 2 – 5 years, but our problem is expensive land costs. We have a lender that is interested, but maybe not enough reserves yet. It will probably take a year to actually be open for business, but we don’t want to make any big mistakes. The vacancy rate for the area is only 5% so we feel it will be a successful venture if we don’t botch the initial year. What am I missing? Thank you!
Well you seem to be on the right track. Your unit mix is determined by the market, and if you’ve done your homework, you should be fine there. Having it managed by a third party is a popular choice in the industry and can be of value to you when done right.
As far as land acquisition goes, that will be one of the toughest aspects. If you think your market will take to it, you may want to consider finding smaller pieces of land and build vertical (multi-story). Also, it may be more cost effective to find a conversion property (existing building worthy of being converted to self-storage).
As far as marketing goes, get in the yellow-pages early, run rent-up specials, and price yourself below the competition by a few bucks.
There are many factors still involved which are specific to your market. What is the competition like; are there multi-story facilities in the market? Climate control? Up-scale facilities? Types of security offered? Good location? Size of facilities?
Other factors to consider; is this something you’d like to operate strictly as a cash cow; or operate it for 3-5 years, and flip it; or take the land through the approval process and flip the land with plans?
Even when you plan your move, you may often face situations, where you feel bound to dispatch some of your belongings to a self storage center till a later point in time. It is a common problem, thanks to limitations of space in large cities. Like every problem in today’s world, it also has quick workaround; namely, self storage companies.
I have been doing a bit of due diligence also. You may locate some ideas/assistance by joining a Self Storage Association; there are usually such groups in most all states. A lot of the state groups are also affiliate members of the national association. You can locate the group in your state via Google; if there isn’t a group in your state you’d be able to locate people in the industry in your state that would be glad to help you start such a group. Hope this is helpful. :beer