Are you looking to get into the self storage industry? Are you thinking of expanding your portfolio and purchasing another facility or two? Here are 9 tips that you should take into consideration before making that purchase.
Experience. Are you looking for a total career change and thought that owning a self storage facility would be a good idea? Or, do you have experience managing and running a facility? The more experience you have, the more realistic your expectations will be and the better experience you will have.
Money. How much money do you have to put down on a purchase of a facility? Will you be able to qualify for a loan to buy the facility? How much money will you need to make from rental fees on a monthly basis to cover your expenses? Will the rent be enough to cover them?
Location. Is the location easily seen by drive-by traffic? Is there a lot of daily traffic? Is there easy access? Is it located on or near one or two important cross streets? What is the signage like? Is it easily seen and read from a distance – and from a moving vehicle?
Management. Will you hire a professional management firm to take care of the day-to-day business operations? Will you handle them yourself – or hire a manager who will work under your supervision? If the facility is fairly small, you might end up paying a significant amount of your income to the management firm. On the other hand, if you manage it yourself all of the hassles and headaches will be yours. And so will all of the income.
Competition. Check out the competition in the area. Are there a lot of other facilities? Are these facilities full to capacity or are the majority of the units vacant? If there is a lot of competition and the competition doesn’t have much business, purchasing a facility in that area will probably be an uphill battle to make ends meet.
Web site. Does the facility already have an Internet web site? More and more people use the Internet to find storage facilities. A web site makes it much easier for these potential customers to find out about your business. If the facility already has a website, you won’t have to pay for someone to create it.
Condition. What condition is the facility in? Is the fence in disrepair? Does it have security cameras and good night lighting? Is the office/showroom sparkling clean, well organized, and well stocked? Is there a manager’s apartment? What condition is it in?
Curb appeal. How does the facility look from the street? Is the paint peeling? Roof leaking? Tall weeds in flower and shrub beds and around the fence? Is the landscaping neat and well kept?
Neighborhood demographics. Is the facility in a low economic housing development? What is the household median income? What is the average size of home lots and size of homes in the area? What is the percentage of renters, homeowners, and commercial clients?
If you can honestly answer these questions, you can get a good idea of whether or not a specific facility would be a good purchase for you. If your answers are unsettling, you should think twice before making that purchase.
“Guides for Buying an Existing Self-Storage Facility: Aligning Your Investment Objectives with Market Opportunities.” Investment Real Estate. LLC.
“Buying or Selling.” Professional Self Storage Management LLC.