Monthly Archives: October 2017

Why Self-Storage Investors Are The Happiest

 Highlights From Annual TSSA Conference

Introduction…The 2017 Annual Texas Self-Storage Conference was an amazing event.  The content shared was first class and meeting the participants was a real joy.

Click here to watch the rest of the story.

 

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 statista.com   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 bill@billmoist.net for more details.

Why Self-storage is Safer Than Other Real Estate

Issue 80 – What Safety Means To Investors

Introduction… The Commercial Mortgage Backed Securities (CMBS) self-storage loans funded over the past 10 years have the lowest default rate of all property types at less than 1 percent.

This compares favorably to the 4.5 percent average delinquency rate for all commercial real estate and 3.9% delinquency rate for multi-family.

Why…why is self-storage 4.5 times better than other real estate?

This is counter-intuitive.

Click here to find out why…why is self-storage 4.5 times better than other real estate

If this intrigues you, how may I help you?  Bill@billmoist.net

Why We Love Self-Storage More Then McDonald’s

 Issue 79 – Storage is better than Big-Macs

Introduction…Turns out the only thing Americans may love more than Big Macs is hoarding.

There are more self-storage facilities in America than there are McDonald’s restaurants, according to a recent report from the commercial real estate publication REJournals. The U.S. has more than 4 times the number of self-storage facilities than McDonald’s. There are 58,000 self-storage facilities in America compared to only 14,146 McDonald’s restaurants at the end of 2016.

Finding a place for extra scrapbooks, holiday decorations, office records, boats and RVs isn’t exactly cheap either. The average American household is using about 18 square feet of storage at an average rental rate of $1.42 per square foot per month.

The industry makes more than $24 billion in revenue annually. Plus, state and property taxes get to scoop up about $3.25 billion.

Here are 4 reasons Why We Love Self-Storage More Than McDonald’s:

  1. We are a hyper-consumer nation consuming more than $14 billion in goods and services, much of which ends up in storage

  2. The psychology of self-storage is we have month to month leases with no end date so the renter thinks he will move out next month that never comes

  3. We are a nation on the move with 12% of the population moving each year

  4. When the economy is improving, we buy more stuff – when the economy is downsizing we store more stuff

Conclusion: So why are we building more storage facilities?  The population and the economy are growing.  But, more importantly, the trade area for storage is only 3-mile circle.  Take 18 square foot per household in an area and you can see the demand is great and growing.  And we have more room to grow as only 10% of the American households have discovered the joy of self-storage.

For more self-storage investor news, subscribe above.