Category Archives: Target Market

Creating Wealth Through Self-Storage

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.

Do The REITs Control The Self-Storage Market?

 Issue 81 –  Public Storage opened this 12-story facility in the Bronx, NY in 2013.

Introduction...If you live in an urban area, you’ve probably noticed the 200,000 square foot to 300,000 square foot gigantic storage properties being built by one of the self-storage Real Estate Investment Trusts (REITs). You might even believe the REITs are taking over the self-storage market.

The market…Actually, the REITs account for just 13% of the 41,879 storage properties in the U.S. according to the 2017 Self-Storage Almanac.  The remaining top 100 owners account for another 11%.  This means 76% of the storage properties are held by smaller owners with the vast majority, mom & pops, owning only one.

What prevents the REITs from taking over the market?  The REITs business model based on their capitalization and high overhead costs mean they look for properties that are at least 80,000 square feet in urbanized area with a minimum population of 50,000.  The U.S. Census Bureau reports show that there are fewer than 500 of these markets in the U.S.  Many of these markets don’t have enough density to support the larger properties required to be economical.

However, there are 18,571 towns and villages with populations under 50,000 according to 2015   These markets are not suitable for the REITs, but the smaller operators with lower overhead thrive there.

In summary…These smaller secondary and tertiary population centers are where we target to both buy and build self-storage properties.  You might think that these markets are not profitable enough to meet our investment goals.  Not so!  Our goal is to accumulate at least 20 of these properties that could later be sold in bulk to a highly capitalized buyer.  One such owner I know did just that.

Another group that specialized in buying and building self-storage in these secondary and tertiary markets recently sold out for $200,000,000.  That should be enough.

If you are intrigued by this model, drop me a note at for more details.

How To Use Target Marketing

 Issue 72 – Let’s Find Our Target Market

Introduction…I’ve heard business owners say, “everyone will want my new product or service.”  Everyone is not a target market.  Everyone is like carpet bombing.  If you have the budget of Coca Cola, it might work. Otherwise we can be much more effective with a target.

Who is your target market?  Here are several questions to ask yourself:

  • Who is financially able to purchase my product or service
  • Who has a burning desire to purchase my product or service
  • Who can I attract affordably
  • Who do I want to do business with (not all customers are good fits)
  • What are the other interests of my target
  • Where can I find my target
  • How can I find my target within my budget
  • When is the best time to reach my target

What’s your target market area?

  1. Local
  2. Regional
  3. Statewide
  4. Nation
  5. International

We all have a tendency to want to cover a larger area, thinking that we now have more prospects.  Maybe.  But, if we can’t reach them it’s not very useful.  One company I worked with got stars in their eyes and went international way before they coud support it.  That decision hurt the company.

One of the most successful roofing companies in the Dallas area focuses on just two cities.  There are 34 cities in the DFW area.  But in the first 7 months of 2017, this roofing company did over 650 roofs by targeting  two cities.  They earned an estimated $5 million gross profit.  But, they dominated those cities and were everywhere.  This company became the company to call.

Next week…We will discuss this topic “How To Use Targeting Marketing” in our next newsletter.  We will discuss two examples of finding our target market and what comes next.

In Conclusion...Target marketing is much more effective and affordable than carpet bombing marketing.  Unless you have the budge of Coca Cola, we do much better knowing who are target is and how to attract them to business.