We all want more money. We want to make more of it so we can spend it on all the things that we want and/or need. We want it so that when we retire we can do as we wish and not worry about paying bills. So how do we earn more money? Well—we could get lucky and win the lottery, be a famous actor or athlete that makes millions, or make some stellar investments—like in the self storage industry.
For a number of years now the self storage industry has been one of the most reliable investments in real estate. People and businesses have really taken to self storage in recent years making use of it for small businesses and to help create more space at home.
Whatever the reason people are using self storage making it a good business to be in. With an overwhelming majority of the 50,000 self storage facilities in the United States owner by single facility or small business owners the door is open for people to walk through.
However, there are barriers—especially depending on the market you try to enter. For example, many lenders are still stingy when it comes to approving loans for new construction. That is an issue practically nationwide, but particular markets can have issues all their own.
In Los Angeles there is definitely plenty of demand for self storage, but there is a shortage of available self storage space to go with a lack of lending.
“Construction lending is still speculative development,” Marc Boorstein, principal of MJ Partners Real Estate Services said. “There are some smaller regional banks making loans, but there is not one dominant lender for self-storage.”
That doesn’t mean that transactions can’t take place. Storage Etc. recently purchased three facilities from American Mini Storage for $16.4 million after some hotly contested bidding.
“There were over 25 offers from coast to coast,” Boorstein said.
Not every market is as jam-packed as the Los Angles one. For some, to become more appealing to tenants and potential buyers they find a way to stand out from the rest.
Take the Proguard Self Storage in Houston’s Musuem District. The facility recently added a some units that are specific to storing wine. Along with being climate controlled they will come with special locks to help keep expensive collections safe.
“Three-facility portfolio in L.A. area sells for $16.4 million.” Sparefoot Storage Blog; 23 July 2014.
“Proguard Self Storage Offers Armed, Temperature-Controlled Houston Wine Storage at New Facility.” PRNewswire; 23 July 2014.