We get questions all the time about WHY self-storage…

First and foremost, we can tell you that we’ve tried other strategies and BY FAR we like this one the best, because it continues to bring the highest returns and it’s relatively problem-free!  

Truth is that there are a lot more reasons than we have room to go into right now in this article. So we’ve chosen 13 of the top questions we receive to answer here. Why 13? It’s a lucky number, isn’t it?

We did a series of videos about WHY self-storage… but they were kind of created for the other side of our business. That’s okay. We know you’ll get a lot out of them. Start with this one:

The short story is that returns are great and the opportunity for growth is even greater, because one thing’s for sure… people will ALWAYS need to store their stuff, and as long as they do we intend to be investing in self-storage properties. It’s just smart business.

Q: Why self-storage over other types real estate?

A: First, no one lives on premises. Yes, we have tenants, but they are not living on the property. They drive up, leave their stuff or pick up their stuff… and they’re gone. If they end up being not-great tenants who don’t pay their rent, well, eviction laws are pretty cut and dry. Maintenance is easy, no matter how many units you have, and there is TREMENDOUS demand nationwide for storage units!!

Q: How do you find properties?

A: We have a lot of ways to find our properties. Many come to us these days via referral, which is nice. But we also use:

  • Brokers
  • Websites
  • Internet searches
  • Yellow pages and newspapers
  • Mailers
  • Promoting ourselves and what we’re looking for

Q: How do you decide which properties you will buy?

A: We have criteria we follow. For example, the property must…

  • Be in an area with a population of 50K+ in 5-mile radius of the property
  • Have 10K+ cars per day in the area where property is located
  • Be in a stable growth (or stabilized) market
  • Be in an area where the median income is $35K to 50K+
  • Be in a low-crime area… and in a no-flood zone
  • Not be saturated, for example, less than 6 square feet per person

Q: What makes the best self-storage property investment?

A: Again, we have specific criteria. Once we’ve identified the right market(s), we have to look at the properties themselves very closely. But this part is fun and not too difficult. It’s just part of the due diligence process, and if you want to be successful investing in self-storage, here are the basics:

  • One that has 250 to 400+ units, with a good mix of unit sizes
  • Prove 40% to 60% occupancy – which give us more opportunity to add value
  • Properties that come in at or less than $25 per square foot
  • Properties with a fence and electronic access as well as security cameras
  • Not a lot of competition (typically 85% or less)

Q: How do you fund your deals?

A: Boy, we get this question A LOT! People think that they have to come up with every penny to do deals like we do, but that couldn’t be further from the truth. Sealing the deal really boils down to good communication skills and being flexible. If you can communicate what you seek, sellers often will work with you… as will investors. Seller financing is our favorite structure! Typically we get the seller to finance 75% of the deal at about 5.5% interest. Each deal is different, but this is a good standard. We get investors to fund the remaining down payment and offer a generous interest structure.

Q: What’s your secret to success? (We love this question!)

A: There is no “secret;” we simply use a multi-faceted approach that involves finding underperforming storage properties at a reasonable price and get the seller to work with us on financing the deal. We use online marketing tools once we have the property to get tenants in quickly. We partner with U-Haul and offer around-the-clock customer care with a call center approach and weekend hours. We’ve also developed excellent systems that work in all our properties. We even provide training videos for new property managers!!

Q: How do you raise private capital for your deals?

A: We could say refer to the last Q & A, but here’s the deal… you need to develop relationships with sellers and investors. That’s our tip of the day to you. If you think you can’t raise private capital for your deals or at least part of the deal you’d be wrong. That’s incorrect thinking. You absolutely can learn to raise the funds you need to back your deals. It takes putting your fears aside and talking to strangers (and people you’ve known over time). It boils down to your credibility as an investor, too.

For us, the credibility part is what we’ve been building over the past few years as we’ve been investing in self-storage properties. We’ve learned a lot and put our money where our mouths are. We’ve made mistakes and corrected our course. We know what we’re doing and we have plenty of social proof. That’s what you need to do, too. You build your credibility along with your relationships through networking, networking… and networking! And believe us when we say that there is ample opportunity for plenty of networking both in the real world and online. So get in there and start building friendships and relationships with investors and sellers!!

Q: What’s so great about this type of investment?

A: It’s pretty darned recession-proof! No matter what the economy is doing, if you own a self-storage     property and you provide a high level of customer care to your tenants… and you treat your staff right… you will do just fine.

Think about it… If the economy is down and people are losing their family homes they have to put all their “stuff” somewhere. If the economy is up, people tend to buy more stuff and have to put their old stuff somewhere… or they are in transition, moving and need to place their home goods in storage for a short term, which often turns into a year or more! (We target properties that are slightly smaller with lower occupancy rates… also known as the “mom and pops” facilities.)  

PLUS… your tenants pay for your investment while the property increases in value! In every market, rents will go up and so will the value of the property. So you earn money when you invest and when you sell.

Q: What is the typical CAP rate for the properties you buy?

A: Self-storage deals tend to offer higher cap rates (between 5% and 12%). Because we tend to buy at 40% or 50% occupancy, and we add to the value of the property right off the bat in various ways… getting that percentage bumped way up, the cap rate also gets bumps up! We have partnerships with U-Haul, we use clear signage and use online marketing strategies, so our facilities fill up fast.

BTW, here’s the formula to help you determine the CAP rate:

CAP rate = return a property generates = Net Operating Income / Purchase Price

Q: What drives tenants to the property?

A: We do!! We drive tenants to the property through smart online marketing strategies, referral programs that work really well, providing a very high level of customer care, partnering with U-Haul, using large and very clear signage that can be seen from a distance and making sure the facility is kept clean and safe at all times!

Q: Is it fun to invest in self-storage properties?

A: Heck, yeah. It’s fun! Plus, we get to help other people enjoy their life by showing them they can have the lifestyle they want. They get to spend more time with family, go on vacations, put your bill-paying woes to the side and have a more freedom-filled time on this planet!

You aren’t in the business alone. You have a team and you get to leverage that team to economies of scale. Everyone gets to utilize their best skill sets.

Q: Is this something YOU can do on your own?

A: You can do this yourself, but you have to know your skills and your limits. However, you can spread your risk by bringing on a team to help you run the property. It’s better to be the owner and hire the management. Like we say, “If it ain’t your genius it ain’t your job!” (Okay, we didn’t say it, but someone did and we like it.)

Q: What if you need extra help?

A: Great news! We’re here for you. If you have questions, we have answers. If you need us to work hand-in-hand with you, let’s talk. We are real live people who have been where you are standing right now, not knowing your way and needing some guidance. (If only we had people like us back when we were first starting out we would have been further faster!!)

If you’ve been thinking about getting involved in real estate investing, maybe you’ll join us and learn how to invest in self-storage properties THE RIGHT WAY. It can bring Ah-Mazing returns and there are lots of ways to bump up your income month after month.

We are so devoted to your success in using this strategy that we even created a Self-Storage Success Kit. If you’re REALLY serious about learning how to invest in self-storage, here’s something you’re going to want to watch:

 

Click Here to Register for this Free Webclass