Learn me self storage business

Anyone ever owned self storage units for rent?

I want to learn some of the basics of the business. Models that work, pitfalls, costs, ROI, etc.

Thanks!

Following with interest.

I'm going to install a set of automatic doors in one this morning. We have done 5 of them for this guy. He builds one every year and a half. Always just outside the high rent district, always fancy building, always clean.

This is one of his, and I'm pretty sure he makes a killing at it.

Also interested. The owner of the place I rented the moving truck from last year said they basically print money.

The the initial buy in was a bit over a million for his but after that they're pretty cheap to run.

I just read an article about a real estate investor who has been very successful. He had a large number of properties in various areas of the commercial market, but made sure to have a large percentage of his portfolio dedicated to relatively mundane holdings like storage facilities due to their strong cash flow.

Like anything else, buying existing facilities when they're cheap (due to foreclosure, divorce, retirement, etc) and then tweaking them to appeal to a broader base seems like the key. Clean, secure, and relatively easy to get to seem critical from a storage user's perspective. Having a web presence that allows simple electronic reservations and payment would be nice too.

In reply to SVreX:

I seriously looked into this about 5 years ago. In rural IL at that time it didn't make sense, unless possibly you already owned the ground. Even then what I discovered is that many facilities had vacancies and were running specials. The other concern is the present trend, especially among younger people, to minimalize.

If you can find a location where boat/RV/etc. storage is in higher demand, then you'd likely have a pretty steady market. Or someplace like here that's a military town(or college) would work, although the market may already be saturated there.

There's one of those fancy places down here too. I'd never seen anything like it before. No idea what their rates are though.

My city has become the closet for the city of Decatur, GA. They built two gigantic new storage facilities in the last year. It finally hit us that while people want to live in the quaint little city housing that's being built, they have no place to put their crap in these junior McTownhouses. Enter the storage unit mega facility. Seems like a great way to make money if you have the startup capital and live close enough to keep an eye on it.

For the year and a half that my house was on the market my former El Camino project car and all of my tools & parts were stashed away in a rather unique storage facility about 20 minutes from here one town over. It was nice because the units had power, some had water, and it was pretty much a given that people were going to use them as a garage-away-from-home and would store and work on their vehicles in them. The unit next to mine had a small bathroom and obviously water, and the guy ran an auto detailing business out of the unit. Rent was not too bad IIRC for the smaller unit I had, and the units were typically all rented from what I could tell.

A slightly more specialized place like that might not be bad if the market for standard storage places was already saturated. Find a place with lots of smaller homes/apartments where people would be short on garage space and put it on the edge of an industrial area.

I'm moving to a town with projected growth rates of about 50% in the next 5 years. There is a shortage of storage facilities.

I am imagining a storage facility with a few end units combined to make a shop for myself.

A Garage Majal WITH a revenue stream!

Slefain, where in Atlanta are you? I'm typically in Midtown, but family in Avondale Estates...

SVRex, I had a friend open up a storage business lately, catering more to the commercial/construction crowd - they deliver boxes to a site, and the customer rents them for $xxx a month on site, or pays $xxx+y for the box to be stored indoors at the Facility. I spoke to him the other day, and they're sold out of all their units, and putting together a new shipment of boxes so they can continue to distribute.

In reply to classicJackets:

On-site conex construction storage is more about the trucking than the real estate. I'm not interested in managing a trucking fleet.

I'm referring to things like U-Store-It spaces. I'm looking for a low profile real estate investment.

Around me, the trend has been to convert old supermarkets into storage units. I've never been inside one, so I'm not sure with what they do to divide up the space, but I am very familiar with the infrastructure of a supermarket (did engineering for them in a past life), so I can imagine one would work well as a storage space. The existing MEP systems would be under-stressed. Probably the most expensive change would be re-working the fire protection piping.

In reply to Ian F:

I just helped a friend move his stuff into a storage unit that's inside a former big box store. They used sheet metal walls and metal mesh ceilings combined with the usual roll up storage unit doors to divide out the spaces. It's actually quite nice, and the rent isn't bad. A 10x15 is $90/mo and it's all climate controlled - heated in the winter and air conditioned quite well in the summer. I have no idea how they make money given the hvac costs must be incredible. The common areas are large (hallways all around the rows of units) so you end up with a $5/sf or less rate all in. Utilities other than hvac are probably low but I imagine the hvac costs alone are in the dollar a square foot range.

The last month has me looking for a spot to work on the truck. One guy here in town inherited a bunch of property in a ranch community. He sold off all the corrals and lined the place with 20 and 40 foot shipping containers. Put a 110v, 220v service and water at many of them, the others are just storage. He rents the 20s for 450.00 and the 40s go for 800.00. He allows working on cars and artists like the set up. If you do a lot of grinding and welding he asks for a donation to the electric bill. The place is kept clean and orderly, you get one warning then your E36 M3 is on the street.

there are probably (40) 20 footers and (20) 40 footers plus there is a storage lot for boats, cars and RVs.

He just sits back and counts money on the first of every month.

In reply to MulletTruck:

$800 per month??

That's really high.

I can't do that. This is a solidly suburban area. They would freak at a bunch of used conexes.

However, IanF is pretty close to my idea. I can't afford a supermarket, but I can afford a tired old warehouse or mechanic shop in a good location. It's not that hard to replace the skin and make it look brand-shiny new.

The highest costs in building storage spaces is the Sitework, grading, utilities, and infrastructure. All those would already be complete in an existing space.

HOAs and city ordinances have pretty much dictated that if you live in the big town near me you might be able to park a boat or a camper at your house, but certainly not one of each and only if your neighbors don't complain. Similarly doing even an oil change in your driveway is going to be frowned upon.

That has created niches for two distinctly different types of storage units. The first is the 15x30-40 with high doors and often in a drive through configuration for boats and campers and the like. They tend to be built in multiples of 3, two drive through and one shorter single door in the center, with the space at the back of the center one a trio of half baths, one for each unit. Though rent for @350/mo and often have detailing shops, window tint guys, and hobby mechanics in them, and usually are slightly heated. Some have their own meters and are offered with heat and ac, and they get @500/mo with 6-month+ waiting lists.

The other type is more subtle and tends to be a block of 6-10 units roughly car sized. The one builder does three on each side, with regular garage doors on the ends, and the two that face the street are a little shorter but have windows facing the street. In between the front two units is a bathroom with a door that opens towards the street so from the road it looks like any house in the neighborhood. Those units typically have power and good lighting, with sheet rock walls and painted floors and go for @$200/mo to the hot rod and Harley crowd. It's kind of a thing for replacing the worst house on the block with something that looks like a nice house but puts $ in someone's pocket.

I'd be interested in a breakdown of costs and plans too. I think it is an interesting model.

In reply to dculberson:

It's possible, but it depends some on how the HVAC system was originally designed. After employee salaries, electricity is the most expensive operating cost for a supermarket, so the HVAC systems tend to be very efficient for the building size.

Mullet - $800/mo for a 40' container? That sounds insane.

Every truly wealthy man that I know owns at least one

In reply to pilotbraden:

I suppose it would be wrong for me to turn that around and think that if I owned at least one, I'd be a truly wealthy man, wouldn't it?

This really doesn't contribute much to the topic, but while driving through northern Wisconsin, I always feel that the only two sources of income are Walmart cashier or owner of storage facility. I've not seen anything else that seems to happen there...

Joking aside, I think its rocky enough there that most of the houses are built on slabs, so no basement for junk storage, so many self storage facilities.

SVreX wrote: In reply to pilotbraden: I suppose it would be wrong for me to turn that around and think that if I owned at least one, I'd be a truly wealthy man, wouldn't it?

Maybe it means he couldn't be your friend anymore.

With the containers there is 10 feet wide for the length of the container that is yours to do with what you want, just cant build anything so its good for storage of cars, boats trailers etc. The couple people I talked to with the 40s sub rent the spots to others for boats and RVs and such. Brings down the cost of the container.

Ian F wrote: Mullet - $800/mo for a 40' container? That sounds insane.

In reply to MulletTruck:

No there's not. Containers are 8' wide. Wider would be a DOT problem.

I can BUY a decent used container for $2500. I rent fully equipped office containers (with AC, electric, finished walls and floors) for about $800.

It's high.

I have a client who does it, wants out. Brutal. Some of the contract issues are insane.

In reply to Ricky Spanish:

Can you give me an example?

Yes the container is 8 feet wide, the 10 feet next to it is what people rent out.

I agree its a little on the high side but in this area finding a place that has hook ups and allows 24 hour access to store and work on projects is hard.

SVreX wrote: In reply to MulletTruck: No there's not. Containers are 8' wide. Wider would be a DOT problem. I can BUY a decent used container for $2500. I rent fully equipped office containers (with AC, electric, finished walls and floors) for about $800. It's high.