Self Storage?

[mach9]

Anybody experienced in or familiar with the self storage business? I have a 4 acre parcel that I'm thinking might work well for self storage. Trying to find out how hard financing would be, and any other info. Supposedly, you can get more income per acre or square foot than even apartments. Thanks. GMJ

 

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[AroundTheWorld]

Anybody experienced in or familiar with the self storage business? I have a 4 acre parcel that I'm thinking might work well for self storage. Trying to find out how hard financing would be, and any other info. Supposedly, you can get more income per acre or square foot than even apartments. Thanks. GMJ

I develop self storage...

I recommend some prelim poking around first.. find out how other facilities in your area are doing. What is their occupancy rate? What is the unit mix? What are their rates? Are any of them expanding now? Do they have room to expand in the future?

Next... consider your property. Is it highly visible? Location is HUGE in self storage. Access? Zoning?

Next.. money and financing. As you put your deal together - you will be considering cost of construction, site prep, fencing, onsite signage... and you want some reserve cash to carry you during the lease up phase.

There are different options when it comes to financing. During your construction and lease up phase, you are likely to get a bit of a higher rate. Local banks are great for this. Do you own the land, or have a lien on it? If you own the land, financing ought to be pretty easy. You want to show 60 to 70 LTV and 1.25 to 1.3 DSCR. Once you are through the construction and lease up phase you can shop around for perm. financing. If you loan will be for 1 million or more, you have more options - and better rates... 6% plus or minus a hair.

www.selfstorageguide.com is a great resource.. they have a forum. Nice to have people there to answer questions like

"what do you do when someone kept a snake in the unit and it has 300 babies?" :smx3:

 

[Luke12321]

I have some interest in self-storage. I have a general question, how much land does a self-storage facility generally require to be profitable? What is the avg. number of units per facility? ( Just looking for very rough estimates here!)

 

[AroundTheWorld]

I have some interest in self-storage. I have a general question, how much land does a self-storage facility generally require to be profitable? What is the avg. number of units per facility? ( Just looking for very rough estimates here!)

This is a highly area specific question.

In my area we rent 10x20's for 60 a month. I'll bet that in CA or AZ it is a lot more than that!!! And of course, you can't compare land costs either.

You just have to work the numbers in your area.

What are average rents?
What is the price per acre in your area?


It makes more sense to look at square foot per facility - not number of units....

In a 5000 square foot building I can fit 50 10x10's but only 25 10x20's.... so saying "you can fit 50 units" is pointless.

I wouldn't do a self-storage on anything less than 2 acres. 4 to 5 is better. One of our facilities has 2 acres of useable space and we can fit approximately 38,000 square feet of storage space.

 

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[yveskleinsky]

I develop self storage...
"what do you do when someone kept a snake in the unit and it has 300 babies?" :smx3:

Upon opening the door to that discovery I would probably vomit, have a heart attack and then burn the place down. ...Maybe not in that order. Of course, I would expect my insurance company to understand that I have an unreasonable fear of snakes and unreasonable fears call for unreasonable measures. That would be my solution. May not work for you. :smxB:

 

[AroundTheWorld]

Upon opening the door to that discovery I would probably vomit, have a heart attack and then burn the place down. ...Maybe not in that order. Of course, I would expect my insurance company to understand that I have an unreasonable fear of snakes and unreasonable fears call for unreasonable measures. That would be my solution. May not work for you. :smxB:

ya.... snakes are not my favorite thing either. Can you imagine?

 

[mach9]

Run a hose from my car's exhaust pipe under the door, start the motor.......and wait.

 

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[yveskleinsky]

Maybe you could strap the exhast pipe to a mongoose and release both of them in there.

 

[AroundTheWorld]

If you are looking at purchasing self storage with lower occupancy and you want to increase your occupancy, what can you do?

As I've mentioned before, it is really an area specific thing so I've got questions rather than answers!!

:coffee: How is the location? Are you visible from a main road/highway?

In self storage - a MAJORITY of your clients are going to come from people driving by and seeing you. If you don't have a visible location you are going to need to spend a LOT more money on marketing and be prepared for a much LONGER lease up phase. Also, you will want to go to some more creative marketing techniques. Buy a moving trailer, put a sign on it (free use of trailer with signed lease) and drive it when you go to Wal-Mart, Home Depot, etc.

If you are visible - BANNERS are great. Put out a new banner offering some sort of special. People notice change.

:coffee: How is the signage on the property?

Again - if you are in a visible location, signage is key.

:coffee: How did the current customers hear about the facility? Sign on location? yellowpages?

This will help you understand what kind of location you've got and where you can focus your efforts.

:coffee:What condition is the property in? Are there weeds, etc? Is it fenced? lit?

If there is room for improvement here - it can make a big difference in getting new clients!

:coffee: Is there a good unit mix - or are they all one size? Is there room for expansion?

If there is only one unit size, it will take you longer to lease up. Diversity in unit size and you will not be turning away as many people - as you will meet the needs of more people. If there is not a very good unit mix, and you've got room for expansion - build some different sized units.

:coffee:How do the current prices compare to other facilities in the area?

During your lease up phase, you want your prices to be at the low end in the market. Once you have leased up, you can bump rent.