“Growing Wealth in Self-Storage” by AJ Osbourne is a how-to guide to make it big using self-storage as your wealth generator. Although it will take some money to get started, self-storage is a great way to grow your wealth. The difference between self-storage and most real estate investments is that self-storage is a business. The main goal of building wealth in self-storage is identifying underperforming self-storage facilities, buying them at a low price, and maximizing offerings to increase cash flow. I like this business model because it can be used for other businesses as well. If you use your business skills to evaluate someone’s else business, you may be able to envision revenue streams they may not taking advantage of. If you can identify new sources of income from standing businesses you can profit by buying them under market value. For example, if you see a restaurant and you may envision adding a gift shop to it, therefore increasing revenue. Basically, self-storage facilities can be “upgraded” with air conditioning/heating, RV parking, indoor/outdoor, retail sales, different size containers, cold storage, office spaces, and boat parking, to name a few. Another reason to invest in self-storage is that 70% of the facilities are run by mom-and-pop operators. This will allow almost anybody with the means to get into the game. With that, let’s get into my five takeaways.
1) Learn how to identify underperforming facilities. Start your investigative reporting by going shop by shop. See how many vacancies are available at each facility. How is the customer service? What amenities are being provided and what can you add? Can you expand the facility? These are just a few of the questions to ask.
2) Identify how many self-storage facilities are in a 3-5 mile radius. Self-storage is a hyper-local business. This means that most self-storage customers use facilities within 3-5 miles of their homes. If you see multiple facilities in a 3-mile radius, you may drive 10 miles away and there is nothing. There can be an opportunity there.
3) Use digital maps but also do your footwork. You can use google maps and other research online, however, many mom-and-pop facilities are not even online. You will have to go shop by shop, trying to find valuable information. If you find a place without an online presence, creating a website is a value add.
4) Change the customer type. The key is identifying facilitates with price-conscious tenants. Then, increase the structure, management, and amenities. Finally, search for customers with a quality (high-price) mindset. This will allow you to raise rates along with the quality of your facility. Think converting a Wal-Mart to a Target.
5) There are multiple ways to generate revenue at self-storage facilities. Not only can you charge more for different size configurations, but you can use add-ons like insurance as well. You can also add a retail space inside that sells boxes and tape. Adding boat storage, RV storage, cold storage, office space, and security for high-value items is also a way to diversify income.
Self-storage should be evaluated as a business and not only as real estate. You can increase the offerings to maximize revenue. Personally, I would consider buying one facility. I think owning one good facility, for your retirement timeframe, would be a great way to increase your income while not creating a ton of stress for yourself. By adding multiple revenue streams to your facility, you can ensure that you are up-to-date with the latest facilities. Buying a facility in a growing area is a must. Luckily for us, most military bases have a thriving community due to all the movement of personnel. For retirement purposes, I think this is a great way to diversify your income and also have real estate and a business in the small property. For younger people, there is a ton of money in self-storage, but doing proper research is where you make your money. Like almost all investments, you make your profit when you buy, not when you sell.
Would you be interested in owning a self-storage facility?
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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