Owning or building a storage facility can be a major home run financially. However, you need to do your homework and understand the market and how to position yourself to succeed. If you’re going to build a brand-new facility you should get a copy of the 10-year growth plan for the city or county, a copy of the land-use plan, and a copy of road expansions. This will help you make good decisions when building a new facility.
In an older city or an area that has been developed for over 30 to 50 years you’ll find buildings that need to be re-purposed. Some of these older buildings will also have a freight elevator in them. This can be repurposed for storage; it is an easy task to do.
An excellent example is in downtown Detroit, Michigan, where they are going through a huge improvement zone. There’s a five-story building, at least 60-70 years old, with two freight elevators. The building was used for making cookies and cereals. It was purchased for under $900,000 and turned into a massive storage facility that could be sold after it was filled in our current market for over $30 million.
Often when you read articles about real estate or listen to a speaker, they’ll try to tell you it’s good everywhere. In storage that’s not necessarily true. There are some states in the United States that have very high taxes and very high crime rates so people in those areas are moving out to states with very low to no taxes and low crime rates. An example of this is Illinois, California, Oregon, New York, Washington State, Washington DC, and Connecticut. States that are experiencing migration like North Carolina, Colorado, Arizona, Texas, Tennessee, North Carolina, and of course Florida. It’s not to say that you would not be successful in the first-tier states, it just makes it more difficult with more regulation.
As was previously mentioned in our other articles, we have seen Lowe’s stores closing, Dick’s Sporting Goods, even Walmart’s are closing in some cities. Those are excellent buildings to repurpose and turn into storage. The great thing about a dead strip center or a dead center is it has a huge parking lot. With a fence you could put a canopy up and use it to store big RV buses. This is easy information to find out at a state level. You can market to boat owners, RV owners, snowmobile owners, or car collectors to store their toys. If the cost of land is cheap you can do a single story drive up subterranean for the first floor, the second floor is ground level and you can offer climate controlled to the subterranean level because it takes very little energy to cool or heat that area.
When looking at existing storage facilities that are on the market you will find some that are 25-100 units in a small country setting. Be careful with these as management becomes more of a challenge. You’re too small to have an office, you’re too small to hire a manager so you must do it off the phone by yourself, and many people don’t trust that kind of business. There’s an organization if you decide to enter this market called ISS that does an annual convention in Las Vegas, Nevada. We highly recommend that you join and go to their events. They have everything that you would need to refurbish, re-purpose, or maintain a quality facility.
The storage business is an awesome business. People have a lot of stuff, some almost hoarding, and they don’t want to get rid of anything, so they just put it in storage. This makes a huge opportunity for an investor to have a business with very little upkeep that generates a huge return.
Big picture takeaway points
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