Public Storage

[Psychstache]

Hello there everyone,

I have been considering various possibilities for investment/business ownership and I keep being drawn to the idea of owning a storage unit place. Anyone have any experience in this area? I would love to hear about the positives and negatives of such a venture.


Thanks!

[gooki]

I'm interested as well.

Seems to be a good low maintenance investment provided there is sufficient demand.

[arebelspy]

This has been absolutely huge the past 4-5+ years.  It by well could provide some nice future returns as well.  The returns on storage REITs have been great.

The management is an issue - are you working the front yourself?  Hiring full time workers?  It comes with a full time job (or two or more), so you have to figure out how you'll handle that.

It's totally a thing where you need to know your local market.  The demand will vary by location, and where the storage unit is located specifically in a city is huge.  Location, location, location seems even more important to me in a situation like this.

I definitely like the possibilities of it.  The purchase will take a lot more research than one would think, IMO.  And it won't be passive.  But if you're willing to put some work on the front end and ongoing, I think it could generate good returns.

Owning a mobile home park (not the units themselves, but the land, and they rent that from you) is another good possibility, IMO.

[mugwump]

And if everyone turns into Mustachian minimalists, you can convert them to small living spaces. ;-)

[shadowmoss]

My parents managed mini warehouses for around 15 years, for several different companies.  Typically the company supplied an on-site apartment for them to live in.  They had weekend relief help so they could get away, or at least shut the door.  With 2 of them one of them could run to the bank to make the deposits while the other watched the office.  Ditto with other erands.  It can be done with one person, but gets old quickly.  Someone has to show the units to people who come in.  This can be done by having typical units close to the office so the office isn't closed very long while the unit is being looked at, but again, it is easier with 2 people.  Most places now have electronic gates and 24 hour access.  This is noise if you are living on-site.  Someone should live on-site for security reasons.  My parents were robbed, and had several units robbed, at one place even though there was a security system.  There is maintenance on the units, and liability concerns if people put things they shouldn't in the units, such as stolen items, flamable liquids and such.

It's not exactly 'passive' income.  It did give my parents something they could do together when my Dad couldn't do road construction work anymore, but they were young enough to still want to do something (and needed to financially).  Again, they were just managing the units, not owners.

[arebelspy]

Good info ShadowMoss.  I'm assuming most Mustachians would be looking at it from the owner POV.  I.e. the person hiring your parents.  What sort of hassles did they have to deal with?  Finding a reliable manager would be a major one, IMO.

Like I mentioned:

The management is an issue - are you working the front yourself?  Hiring full time workers?  It comes with a full time job (or two or more), so you have to figure out how you'll handle that.

[gooki]

Most of the smaller ones (sub 60 units) in my country appear self managed - i.e. no one on site unless a customer has arranged to look at a storage unit.

You also have the opportunity to buy single storage units and then leases them out, so the cash input in much lower.

[shadowmoss]

As far as hiring managers, it is a gig a lot of retired folks do.  Or, folks who are partially disabled.  Yes, finding reliable people to do this is difficult.  Some stories of the high-jinks some of the managers have done.  There are rules about what needs to happen to units that have been taken over due to not paying the rent.  As most folks know now, they are usually auctioned off.  Some managers were going through them first to grab anything they might want.  There is the bookkeeping aspect.  Some people are better at it than others.  This is not a high dollar job, but there are high-dollar expectations on ability to handle money and honesty.  It is a people job, you deal with the public in all their glory.  So, the owner is asking a fair amount of the managers and not paying a whole lot.

Finding too assistant managers, to take over the days the managers are off, is an even dicier deal.

This can be a perfect job for the right people.  Place to live, utilties paid, not a lot of stress when life is going as it should (no bodies/stolen vehicles, etc in the units).  Assistant managers have a low stress quiet place to hang for a weekend job, which is great for students.  However, it is good to look at it from this perspective going in as an owner, and not just the real estate and construction costs.

[Handlebar Harry]

I've been looking at self storage facilities too, and arebelspy is right - A lot of homework should be done. You're buying more of a "business" and I've been been told by other investors to use these (very conservative, IMO) indicators as guidelines when scoping out new self storage investment opportunities:

50,000 population within 3 miles of the facility.
Traffic count past facility of 25,000+ cars per day.
$50,000 median household income.
200 units and up. (helps lower the cost per unit)
Not greater than 6 square feet of storage space per person in the market.
Rental rates of around $1 per square foot on existing storage.