How did you discover self storage?
After managing rental stores with Nationsrent for 15 years, I was offered the position of Regional Director by the previous owner of the Alcatraz Storage Facilities located in the Indiana. So, my start in self-storage came from someone else already involved in it. I originally came on board as a manager (and investor) looking to learn the business from the ground floor. As I learned the business, I took on the responsibility of district manager over several facilities in Indiana. It wasn’t too many years after that the whole portfolio I was managing became available for sale. I started with the Brownsburg facility before it actually went back to the bank. After finding out how smoothly the purchase with Brownsburg went, I purchased the Ft. Wayne facility. The bank actually contacted me for the sale of the Muncie property. That sale was not a fast sale and took months of negotiations.
Did you do other types of real estate deals before, such as single family or apartments?
I had previously been in the rental equipment and sales business when I started to dabble with residential. After a few residential and a venture into multi family, I found the best commercial real estate to be self-storage, simply because it had tenants but they don’t live there. I did some single family rental homes but honestly, tired of it after a few years because of the tenants’ ridiculous requests and complaints. The same was true of an even shorter venture into multi family. Self storage allows a nice income with a low overhead and none of the crazy phone calls at 2:00 in the morning. A rental home needs maintenance and up keeping during and after a renter leaves.
How did self storage compare with other types of deals?
The self storage facilities were actually fairly easy to complete. The shift from residential to commercial was not as hard as I thought it would be. If you are a current investor then you would already know some of the laws and certainly most of the city/county requirements. Commercial has a few different rules and regulations on purchase but nothing that you can’t learn. With self storage, because there are more factors for a successful one than say a single family home, I have a 3 phase due diligence that I apply to any investment opportunity. Once you do the due diligence stages, it makes purchasing a facility much easier and, not only that, it was simple to apply the numbers, negotiate the price and get started.
What type of investor would do well in self storage?
I really think just about any type of investors would do well in self storage. Short term, as well as long term. I personally am a long term personality. I want to build and then add on to what I have built, all the while seeing the investment become a solid, reliable fixture in my portfolio. Many folks see the BIG price tag on a facility and then the fears of steep numbers, along with the insecurities, kick in. They start chanting phrases like, “I don’t have that kind of down payment”, “I don’t know anything about storage”, and “I’d never get my facility paid off if it is one million dollars”. Those are excuses to keep away from success as far as I’m concerned. Compared to any other commercial real estate, self storage is as affordable as any. The return is usually positive quickly. There is a reason this type of property has seen steady growth even when the market for residential and multi-family were hit by the decline in the economy.
What kind of opportunities are there in this niche?
There are opportunities everywhere. Many self storage owners have been in this for a while and many are looking to retire. Others may not have been mismanagement and other investors may have treated the rewards from their investment much like their personal bank. You can find facilities through numerous sources, online, private listing, foreclosures and well, just about anywhere. Anyway, there are a number of facilities for sale throughout the country. They vary in size from small mom and pop facilities to mega storage, and this is very beneficial for anyone looking to get into this business. You can choose a facility that is the right size for you and your comfort level. An 80 unit facility can add a nice residual income and allow you to position yourself to add more facilities. So yes, in self-storage, size is important but it needs to be the size that makes you comfortable.
Do you find that once investors enter the self storage arena they are hooked for life?
Yes, most self-storage operators I know feel very similar to how I feel; “Wow, why did it take me so long to find this niche?” or “If I’d have only known more about this industry I would’ve never done the residential headache”. I believe most people that start off on the path down to self storage usually stay there, happily. Self-storage is generally not considered your get rich quick with a flip property, although, there are some that do flip them and do that successfully. But, for me, it was the long term investments I was looking for, to retire nicely and live the dream.
What is the best way to get started in Self Storage?
Getting into the business is easy, just listen to me! No seriously, there are many avenues you could choose from to get your start in the self-storage business. As you, and most anyone, in the real estate investment world knows, you can find a lot of “experts” out there teaching one thing or another. Everyone has their own way of doing things and I think it’s extremely important that the future investor in self-storage do their own due diligence on the avenue they seek to learn the business. We all have different learning styles, but one of the most important things to look at is “Are they doing what they preach?”. I can’t vouch for anyone else in the industry, but my style of teaching is much different, because I am literally in the trenches, so to speak, daily in my facilities. There are also, a ton of resources and classes available on the internet but the number one thing they need is the desire to learn!
Do you have anything else you’d like to add.
The last thing I would add, other than check out our website at http://selfstoragefacilitymanagement.com/ and read about our online class: Self Storage Masters Workshop: The Extreme, is remember when you buy your facility, buy the facility realistically. Do not put yourself into any over leveraged situation. Learn the value of profit centers and the revenue streams they can bring to the facility and learn how to market, not just your facility but yourself. Invest with passion, do what you love and remember to live your dream!