Monthly Archives: June 2017

New Source of Self-Storage Financing: Credit Unions

Issue 65- Boat RV Storage

Introduction… It seems were ever we go we find self-storage properties in large cities or small towns.   Self-storage units also represent an untapped lending niche for credit unions looking to expand their business lending portfolios. And credit units represent a new source of self-storage lending.

Why should any lender, including Credit Unions, consider self-storage.  Here is few stastics that tell us why we’d want to own or why a lender would want to lend:

  • The self-storage industry represents $37 billion in annual revenue
  • $16.1 billion in profit or a 43% profit margin
  • Self-storage businesses grew at a rate of 7.7% from 2012-2017
  • 3.6% future growth is projected in the near-term (2017-2022)
  • There are total of 58,000+ self-storage businesses in the country (roughly 85% of operators are mom-and-pop local operations as opposed to larger corporate or franchised outfits)

In addition, self-storage presents the following benefits to lenders and owners:

  1. Low fixed and variable costs
  2. Low break-even occupancy, generally around 50% with an average occupancy at 85%
  3. Among the lowest default rates of any type of real estate
  4. Not susceptible to economic down turns

In conclusion...The relative safety of owning or lending purchase money are why some lenders will make loans with 25-year terms as apposed to balloon notes as is generally available for commercial lending.

Where Can You Store Your Boat & RV?

Issue 64 – Boat & RV Storage..Where?

Introduction…In the United States 11,870,000 recreational boating vessels need storage.  Add to that number 8.900,000 recreation vehicles need storage. That totals 20,770,000 recreational items that need to be stored for the off-season.

RV And Boat Sales Growing Self-Storage Demand…RV The research, conducted by Dr. Richard Curtin, RV industry analyst and director of consumer surveys at the University of Michigan, reveals the number of RV-owning households has grown to a new peak of 8.9 million households, up from 7.9 million in 2005. According to the report, 8.5% of U.S. households now own RVs, up from 8.0% in 2005.  Annual U.S. recreational boat sales have averaged 550,000 per year since 1990.

So, where do the 20,770,000  households store their recreational vehicles and boats?  Most of the larger motorhomes, larger travel trailers, and boats can’t be stored in city residential areas.

The self-storage industry has recognized and met this demand.  Many properties have built larger storage units to accommodate the largest motor-coach.

What’s next..Currently, we are finalizing the purchase of a 60,000 square foot boat storage facility.  It seems adding recreational vehicles storage to our partners’ portfolios would be a logical path to take.

Free Stuff Makes Self-Storage More Profitable

Self-Storage Insider Issue No. 63

Introduction…Who doesn’t love free resources that will make your self-storage operation purr like a kitten and kick out gobs of cash? —that is, a no-brainer!

Here is a list of free marketing resources of which self-storage can take advantage:

  • Free Facebook marketing posting company advertisement to groups where people may need storage.  Examples include… Garage sales listings, antique sales listing, flea market listings, and dealers of household items
  • Email marketing to current and prospective tenants with Mail Chimp which is free
  • Ask for referrals from existing customer…one property had a drawing each month with a prize for those who made referrals
  • Sponsor a charity event one property held garage sales with those who participating making a charitable donation and promoted through local chamber of commerce and actually picked up additional tenants
  • Optimize website for local search improvement with long-tail keywords
  • insert promotions in monthly billing statements at little cost
  • Monthly print newsletter this one is not free, but can worth the investment
  • Add phone number and website on property sign or side of building

In conclusion...The best marketing strategy uses multiple strategies.  My experience after reviewing dozens of self-storage properties is most use one maybe two marketing approaches. One large property that had 500 vacancies was using only one strategy.  I love my competition.  It is soon easy to out produce them.

 

 

Houston’s Booming Growth Demands More Self-Storage

Houston Skyline As Population Booms

Introduction...Some may be surprised that people continue to flock to Houston after the oil price drop and now fluctuating around $50 per barrel.  After all, Houston is the energy capital of the world.

If you subscriber to our Oil And Gas Insider newsletter, you would have read that “Shale Expansion Dominates Competition,” where the drillers in North America plan a combined capital expenditure of $84 billion this year.  Click here If you want to know why the 32% increase in expenditures over the previous year.

Ok, back to Houston and self-storage... According to U-Haul, for the seventh year in a row, Houston ranked as the most popular drop-off location for one-way truck rentals.

Houston has had steady growth in recent years.  The U.S. Census Bureau reported that Houston’s population count went from just over 2 million in 2010 to 2.2 million in 2015. The increase in fracking has largely been responsible for bringing 500,000 jobs to the region.

The population growth has impacted self-storage industry where current occupancy in most facilities are more than 90% full.

The housing and construction growth has also brought construction contractors, landscapers, pressure washers, and people like that. They’re looking for a place to keep their materials and equipment.  So, self-storage is the obvious choice.

In summary...Where there is job growth and population growth, the demand of new and existing self-storage also grows.  Those are the areas we are buying or building self-storage.

Drop us a note if you are intrigued by self-storage investing and would like to know more.