Monthly Archives: August 2017

How To Make Money Off Our Junk

 Issue 74 – Safestore UK

Introduction…Investors in London’s premium real estate know their tenants are among the world’s wealthiest and most stable.  Schroder Plc has $3 billion worth of property with these most stable tenants.

But, in the era of Brexit, the market can change.  That’s one reason Schroder is the largest self-storage company in UK with 109 stores in 45 cities.

Demographic logic…What storage lacks in cachet, it makes up in demographic logic. Downsizing retirees and growing ranks of home renters in London are creating what Schroders and other real estate investors see as a Brexit-proof and recession-proof opportunity.

In the U.S., growth has been pretty amazing.  Today there are 54,000 self-storage facilities in the United States, which is 90% of the global storage industry.  Those sites hold 2.63 billion square feet.

Storage beats Hollywood…All that space is sold in small increments generating $32.7 billion in revenues.  Last year that was three times Hollywood’s box office gross.  In most cases, self-storage is far more profitable than other conventional real estate. As an example, in 2016 self-storage rented for 97 cents per square foot in Phoenix which was similar to the average one-bedroom apartment.  In larger cities, storage can rent for two to three times higher rates.

Growth factors…Americans are relentlesss at accumulating consumer goods.  From 1967 to 2017, expenditures for durable goods – like furniture, bikes, electronics, clothes, books – increased almost 20 times.  As a result, Americans have run out of room for their stuff.

The industry also thrives on disruption to our lives.  It serves as a temporary resting place for stuff of the dead, divorced, downsizes, and dislocated.

In conclusion..These trends are driving investments in a sector that most real-estate investors barely notice.  And in uncertain times, self-storage looks like a place to stash money.

The near term opportunities in self-storage are exciting.  Be sure to stay tuned.  If you are not a subscriber to this newsletter, do so in the upper right of this page or go to self-storageinsider.com for your FREE subscription.

Benefits Of Buying Self-Storage Now

 Issue 73 – Buying Self Storage Now

Introduction...Self-storage publicly real estate investment trusts (REITs) have been the best performing public asset class over the last 22 years. Investors have poured billions of dollars of new investment capital into storage REITs. The result has been a building and buying spree pushing storage property prices to historical levels.  That has changes and now you can benefit.

What’s the change? Property purchases are down by an annualized 70 percent for the top five self-storage REITs.  That compares to a high of $5 billion in purchases last year according to a second-quarter report by MJ Partners, a Chicago-based real estate brokerage and investment banking company.

The major acquisition drop-off is attributed to the surge of newly built self-storage facilities coming online across the company.

The buying spree of existing properties by the REITs have pushed up acquisition prices on all classes of properties.  While we don’t compete with them directly, their buying has given our sellers unrealistic pricing expectations.

The benefits of buying self-storage now

  • Now that the REITs have scaled back their acquisitions, the private equity companies will be the primary buyers, that’s us
  • The pull back of the flood of money from the REITs should dampen pricing of acquisitions
  • Some of the exuberance will go out of the market and we will go to more sustainable pricing
  • Many of our potential sellers will realize that their pricing expectations have been too high

In conclusion…We have been watching some nice self-storage properties that have been for sale over a year now.  it is our belief that many of these properties will be re-priced at levels that are more profitable to the buyers.  The near term opportunities will be exciting.  Be sure to stay tuned.  If you are not a subscriber to this newsletter, do so in the upper right of this page or go to self-storageinsider.com.

Source: Alexander Harris, “U.S. self-storage industry statistics,” SquareFoot Storage Beat, 15 August 2017

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.

Shipping Container Self-Storage

 Issue 71 – Shippping Container New Self-Storage

IntductionYou have probably heard that sea going shipping containers are being used to build houses.  And now apartments.  And now self-storage.

Beautiful shipping containers…The above architects’ rendering is to be a new 1,017 unit CubeSmart Self-Storage in Pearland, Texas.  The property will be 95,565 rental square feet on three stories.  It will also included 24-hour surveillance, electronic access control, climate control, and as customer service office.

Why shipping containers?…One estimate says the U.S. has over 30 million unused shipping containers sitting on the ground waiting for a second life.

The compelling benefits to the developer and owner are:

  • Construction costs reduced by up to 50%
  • Construction time reduced by six months
  • Occupancy to positive cash flow reduced by 45%
  • Sea going shipping containers are almost indestructible
  • You don’t have to worry about hail damage in Texas

From the investor/owner’s point of view…we get positive cash flow faster at a 50% reduced cost.  ROI can be greatly enhanced.

What you can do to participate in this better building model

If you own or have access to a tract of land that generally meets the following criteria, let’s talk now:

  1. 5,000 cars per day passing site
  2. $50,000 median household income
  3. Rental rates in the area around $1 psf
  4. Suitable zoning
  5. Viability from road or highway

In summary…Let’s build some highly profitable and beautiful container self-storage properties.  Send your inquiry to bill@billmoist.net.