Issue 86 – Why Use Self-Storage To Create Wealth
Introduction...The self-storage industry has experienced amazing growth. Currently, 1 in 11 families, up from 1 of 8 families in 1990, use self-storage. That means the number of families using self-storage has increased by 2,200,000 in a ten-year time frame.
Current owners…Property owners with just one property make up 63% of the total. These mom an pop’s normally rarely if ever raise rents and rarely make capital improvements that would allow further rent increases. This gives subsequent professional owners room for significant value add…or total revenue increase.
Owners with 10 or more facilities make up only 12% of the market. The rest, 25%, own 2 to 9 facilities.
The real estate investment trusts normally do not buy properties that are less than 50,000 square feet. If we can add some additional space to get the mom and pop’s over 50,000 square feet, we may be able to sell to the REITs who generally buy at the lowest cap rates (highest purchase price.)
Who are the customers?…Generally, 80% of our customers are residential an 20% are commercial. As a rule, 75% of our renters are within 3 miles radius of the property and another 15% drive from 3 to 5 miles to the property.
Conclusion…Self-storage is a growth industry. Not only are the number of U.S. households increasing, but the percentage of households using storage is increasing. And for the local buyers, like us, there is significant opportunity to raise rental income when we purchase properties owned by mom and pop’s
Source: Review of Creating Wealth Through Self-Storage by Mark Helm.