One small group is making a fortune in real estate investing by serving the American people and their tendency to store junk. These people are unlikely be found at REIA local seminars or meetings. They are most likely found on the course or aboard a cruiseship. They are experiencing quiet cash-flow growth while increasing their net wealth by investing in access self storage and ministorage. This is what prevents common real-estate investors from joining this exclusive club.
Reality is often distorted through perceptions. Self storage is no exception. Real estate investors are often misinformed about self-storage. A quiz will test your knowledge of self-storage.
Myth #1- Every corner has a self-storage unit. With all that competition, it’s impossible to make money.
Self storage has gone from being small garages in industrial areas, to multi-use facilities. The self-storage industry has seen a huge boom in the last 20 years. Self storage is all geared towards building or development. In the United States there are more than 45,000 facilities that provide over 6 cubic yards of storage space to each resident. Even in highly-populated markets, investors can realize amazing returns. A great way to achieve high returns is to purchase an existing facility at the correct price, based on actual earnings. You need to maximize cash flow through efficient operation of the business.
My first facility was in Florida’s overbuilt marketplace. Each facility met the minimum 75 percent occupancy rate. After only 18 months, the occupancy rates were at 92 percent and there was a monthly increase to cash flow of nearly $6,000. My competitors were still at 70-80% occupancy. Never allow anyone to convince or tell you that today’s market isn’t lucrative.
Myth #2- To make money, I need to build or buy a brand new facility.
Self storage buildings are considered affordable due to their simplicity, which is a simple metal building with doors. They may be less expensive than commercial buildings but there is more involved in building and developing self storage units. This can be a tedious process and take many months. This will leave you with an empty property and large amounts of debt. This can take many years and may not lead to financial success.
Smart investors will make a purchase of old, unmaintained facilities that are in dire need of minor repairs. These properties aren’t usually on the radar of big businesses and can often go for high prices. These facilities are often purchased with positive cashflow. Once the repairs have been completed, and the property is occupied professionally by a professional, the money will start to flow.