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COMMON MYTHS ABOUT SELF-STORAGE INVESTING BUSTED Presented by Stuart Simonsen
SELF-STORAGE INDUSTRY
MAKING THE INVESTMENT With more and more people looking to become investors in recent years, there have been even more misconceptions than before that are keeping people from trying it out or going too big. It’s important to not let these get in the way of what could be a successful investment.
MYTH #1 IT’S EASY BUSINESS elf-storage requires many operational responsibilities. If you’re looking to be successful, it takes excellent management. Responsibilities of an investor include increasing rent prices to compete with nearby competitors, keep the facility and grounds maintained, having detailed and organized financial records, and most importantly maintaining legal requirements.
MYTH #2 BIGGER IS BETTER In self-storage investments, bigger down not always mean better––or more profits. A common myth is that if a facility is large, then it’s worth more. This is usually untrue and many factors such as property valuation, cash flow, operating revenue, and occupancy will determine the pricing of a facility for sale. Although there is some added value in larger numbers of units and square footage, its the high occupancy rates and positive financials that will determine value.
MYTH #3 LOCATION DOESN’T MATTER Much like more traditional real estate, when it comes to self-storage, location is everything. The value of the investment heavily depends on location. For example, if a facility is located in has low residential and employment turnover rates, then they are less likely to perform well than those in proximity to areas with people moving in and out. Great areas will have university dormitories, military-housing developments, or multi-family apartments. It’s also important to consider the visibility and accessibility of the location.
SELF-STORAGE INVESTMENTS AREN’T RISKY STRENGTH-BASED In the early days, there wasn’t much risk. Today, the industry has more competition and is growing, so investors should enter the industry more carefully. There need to be multiple analyses to determine if a new development or acquisition is a good investment. It’s essential to do thorough research and examination before making your investment.