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3 KPI’s For Analyzing Your Storage Facility Competition

StorageNerds | Storage Facility

 

In this episode, join host Stacy Rossetti as she delves into the essentials of understanding your storage facility competition. With storage facility competition heating up, it’s more important than ever to know how to analyze and outperform your rivals. Stacy breaks down the three critical KPIs that will give you an edge, sharing insights from her years of experience in the self-storage industry. Whether you’re new to storage investments or looking to refine your strategies, this episode is packed with valuable advice on competitive analysis. Tune in to learn how to stay ahead and make informed decisions for your storage business.

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3 KPI’s For Analyzing Your Storage Facility Competition

I teach people how to invest in self-storage. If you want to get into this industry and you don’t know what to do or how to do it, I am the person that’s going to help you to do that. Also, what I’m going to do is I’m going to go over your competitive analysis and how to look at competitors. I’m going to go over competitors. I’m going to show you how we do our competitive analysis and give you an idea of what you should be looking at when you have competitors.

When I teach on Wednesdays, I teach either finding them, funding them, running them, or deal analysis. This week is running them. It’s going to help a lot with finding them, but it’s also going to help you with running them. I was doing office hours for a student. I was talking to her and I think a question that everybody asks themselves when they’re looking at facilities is what if the market is oversaturated? Is there a possibility that there’s too much store? That’s what our conversation was. She’s looking for a facility to buy.

She’s telling me that wherever she looks, there’s always a lot of storage facilities. She’s scared that there are too many storage facilities and there’s not a lot of possibility of growing the facility. Has anybody ever thought that? Put this in the chat if you’ve thought this before. If you looked at the competition and said, “How do I know if it’s oversaturated or what if it’s oversaturated?” That’s what we’re going to talk about.

The truth of the matter is I got into storage investing in 2015. It was a long time ago, like 2015 or 2016, when I started getting into this. Those are the good old days. Back in the day, there was not a lot of competition. Maybe in the primary markets, you had competition. A lot of bigger players and stuff, but I was like you. I was trying to get into the game and I was in secondary to tertiary market. When you were thinking about storage, you weren’t thinking about marketing. You weren’t thinking about competitors as much as you are now.

What happened from 2015 to now is that the storage industry is super hot and everybody is getting into it or wants to get into it. A lot of storage facilities are being built. For some reason, a lot of people need storage. A lot of moving around, especially with COVID, people are moving from one place to the other. Storage became this super hot commodity and it boomed.

The storage industry is super hot. Everybody wants to get into it. Share on X

When I got started in 2015 to 2020, nobody was thinking about storage investing. Everybody was like, “I’m interested in storage,” but nobody was buying facilities except for the oldies in the industry. When you get into this industry, anybody before 2020 is considered old. You do have a lot of people who have owned facilities for a long time, but they weren’t active in the industry. There are a lot of mom-and-pops that maybe own 1 or 2 local facilities and stuff like this. In 2020, that became a real estate investing thing.

A lot of people started getting into it. Now you have all these players like you guys thinking about getting into storage on the tail end of the high. When I was owning facilities up until 2020, our marketing was making sure your sign was up. You do some things that are local for the community. Make sure your drive-bys are good, and make sure you’re getting calls. It wasn’t that difficult to get people to move in back in the day. Marketing was nothing but dumb.

Now, if you talk to somebody, maybe a bigger player that had 100,000 square feet or 50,000, they had to do some marketing. Before 2020, I talked to many owners and you still find this where they did not do any marketing at all. We still see this to this day. What we do is we’ve called almost every storage facility in the country and talked to a lot of owners over the past couple of years.

The way that it works right now is when you’re going into an industry, if you’re going to an area and you see that there are a lot of storage facilities, what you have to look for and what you want to analyze is how many storage facilities there are in the area. Keep a tally within, depending on if it’s a 1-mile, 3-mile, 5-mile radius, or even a 10-mile radius. It’s super tertiary. How many facilities are in that area? In the storage industry world, you think about radius and how many facilities are in that radius. What you do is look at the population of that radius. Your total square footage of all the storage facilities in that radius, plus the population of that radius. If you divide those out, you’ll get a number, which is called your net capita per square foot.

StorageNerds | Storage Facility
Storage Facility: In the storage industry, consider the radius around your facility and how many competitors are located within that area.

 

I’m going to show you how we do our competitive analysis so that you have an idea. Your total amount of storage within a certain radius of your facility and then the total population of that gets what’s called your net capita per square foot. Some people say that you should be between 6 and 8. That number to me is a bunch of BS. We don’t go by that number because the truth of the matter is the way that the world is working right now on the ownership side.

This is not pre-COVID, but after COVID. Is that what I call the best marketer wins? This is when marketing started to come into play because what happened during COVID was that we all had to become remote as owners. We all had to become online. We all had to have ways of doing what we call contactless, like reservations or moving people in without meeting them at all.

StorageNerds | Storage Facility
Storage Facility: The pandemic amplified the importance of marketing in the storage industry. As owners, we all had to shift to remote operations and embrace online strategies. This meant developing contactless solutions like online reservations and move-in processes to serve our customers safely.

 

For the most part, probably 80% of all storage facility owners were not contactless pre-COVID or pre-2020. During the COVID period, they struggled with bigger players, even REITs like CubeSmart and ExtraSpace, whatever they’re called. All of these players struggled during that time because you went in, you signed a contract, and then you went to your unit. This whole concept started happening during COVID. Now all these players that were not online did not have this contactless system, all had to create this or do this during those three couple of years that they owned this facility. They had to figure this out or what happened is they sold their facility.

I remember I talked to one owner and she was like, “This COVID screwed up my whole company. I cannot even meet people anymore. It’s all automated.” She owned this facility forever. That mindset happens a lot during COVID. I would see two different types of owners. The ones that could pivot. I don’t know if you guys remember during COVID, the pivot was a big word, especially in the real estate industry. I talked a lot about pivoting for those three years. You have to be able to be on top of it. Whatever the industry calls for is where you’re at.

A lot of owners who had owned their facilities for a long time couldn’t pivot because they had been stuck in their ways and stuff. They ended up selling. That’s how everything transformed with COVID. Luckily for us, we got started with StorEDGE in 2015, which is the property management software. Everybody talks about StorEDGE now, but in 2016 and 2017, StorEDGE only had three people working for it. It was pre-storable and it was super basic software.

You can think about how much StorEDGE has changed from 2015 until now. In ten years, I’ve seen these changes and it has become a massive enterprise because everything is done now online. They were one of the biggest software that grew from being like let me call you up and talk to you and ask you a question to I need to go through this process and it’s going to take like weeks and weeks and weeks to onboard and stuff. A lot of stuff happened during that time. We went through all those growing pains and we were very good at pivoting.

I picked StorEDGE and we were there with StorEDGE as it pivoted. We nested well with what the owners wanted. Owners either sold their facilities or pivoted and they went online and started to figure out online marketing. Also, this is when the SpareFoot was born. If you haven’t heard of it, SpareFoot is a marketing tool for owners. SpareFoot was owned by Storeable as well too. During this time, it was super small but started getting bigger and bigger.

As COVID started, everybody went on to SpareFoot because it is an online marketing tool for owners. I’m sure they made a lot of money off of us. They still do, but probably not as much anymore because of what’s happening now with all these different tools coming out to be good at managing your facilities online.

The whole point of all this rambling and what I’m going on is that right now if you want to be a successful storage facility owner, you must be good at online marketing. You have to understand. Our conversations internally are Google ads, Facebook ads, YouTube ads, SEO, and then how many move-ins, how many move-outs, what my net move-ins, what’s the price per conversion, how much are my conversions, and how much is all my marketing costing me to get a phone call coming in and somebody being converted?

If you want to be a successful storage facility owner, you must be good at online marketing. Share on X

Most people do not understand this right now if you’re a newbie. The truth of the matter is that if you want to get into this industry and you want to be successful in this industry, you have to learn about all that I said. The words that are coming out of my mouth, you have to be able to understand them and the concepts behind them. For the most part, most of the owners do not understand this.

When you are looking for facilities to buy and you’re doing your deal analysis or your competitive analysis, your competition analysis should include what marketing your competition is doing. This is like a brand-new concept that most people are not looking at. You’re looking at a deal and you’re going on Crexi or you’re calling owners the way that I teach or however you’re doing and you’re compiling all the numbers that you need to run deal analysis.

One of the things that you have to do is not just what’s the income or what’s the NOI. Every time I talk to somebody, “Is this the NOI? Is this the income?” They’re always thinking about that. The truth of the matter is that’s only half of what you should be looking at. What you honestly should be looking at is exactly what I said. In the radius of where your competition is, primary markets are 1 mile, secondary markets are 3 miles, and tertiary markets are 5 to 10 miles, depending on where you’re at. How many storage facilities are in that location and what’s the population of that radius? It is so that you can figure out what your net capital per square foot is.

The truth of the matter is a lot of storage facilities still are not even online or if they are online, that’s it. That’s all they’re doing. They got ESS or they got StorEDGE and they have this website that ESS and StorEDGE provide. That’s all the online presence that they have or maybe they have a Google presence, but the Google presence maybe sucks.

I talk about this a lot in my training and stuff. Your Google presence is one of the most important things that you could be doing to get customers. On top of what you’re doing, Google’s presence is number one. SEO is number two because your SEO is going to affect what your presence is going to be. The third is going to be your website. Fourth will be all the ads that you’re doing, either Google ads, Facebook ads, YouTube ads, or all this stuff.

One of the most important things you can do to get customers is to build a strong Google presence. Share on X

Now Apple is trying to compete with Google and they’re trying to create this presence as well too. We focus on our Apple presence as well because the iPhone uses Apple maps. Make sure that you’re looking at your Apple Maps versus your Google Maps. What do those two look like? Sometimes they’re the same. Sometimes they’re not, and trying to make sure that you’re set up on Apple and that your SEO is working also for that.

It doesn’t matter if you are in a tertiary, secondary, or primary market. This has to be done. If you’re sitting here and you’re thinking, “I will never do that. I will never be the person who manages online marketing. I will never be the person who understands conversions and understands how to do all that. That’s not my thing.” You’re either going to be not successful and you should not pursue this industry or you’re going to have to buy a facility where you can afford to hire somebody to manage that for you. Little tiny tertiary facilities will not do that.

I had somebody message me and he wants to buy a $200,000 facility. It was like 20 units for like $175,000. I told him not to buy that for sure. Those little tiny facilities, he was only going to make $800 a month. You got to be the person that’s doing everything in the facility like that. He said that’s not something that he’s going to be able to do. He has a full-time job and stuff. I was like, “Then you need to be looking at totally different facilities that are making more money and you can afford that.”

When you’re looking at deals and you’re doing your deal analysis, this is what you have to be thinking about. When I was talking to my student, she was like, “I’m nervous about how all the saturation. I feel like there are too many facilities.” When you’re looking at your competitors, when you’re looking at your deals, and you’re looking at whether or not you should be buying that, you don’t want to just go off of your net capital per square foot because you’re going to shoot yourself in the foot.

A lot of times it’s way over like 10, 12, 15, or whatever. What you want to do is look at your competitors and what kind of marketing they’re doing and analyze the competition’s marketing. We have the Deal Analyzer where you can keep track of some of the stuff that they’re doing. What you want to do for each facility is you want to keep track of do they have a Google business listing, how many stars they have on their Google business listing, and how many reviews they have on their Google business listing.

Are they posting on a regular basis their information? Google works off of how many updates there are. Google brings you closer to the top. It pushes your facility if you’re more engaged and doing a lot more updates on your business listing. That’s number one. You want to keep track of all the competition that you’re looking at. You want to keep track of each competitor. Not just their prices but also what their marketing is. Google Business Listings is number one.

StorageNerds | Storage Facility
Storage Facility: You want to keep track of each competitor, paying close attention not only to their prices but also to their marketing strategies.

 

Number two is going to be SEO. When you look at the competition, where is your competition? Which one of the competitors that you have are coming up on the first page? Which ones do you have? It is so that when you list out the facilities that your competitors, the Google business listing looks great and they’re on the first page. They also have a website and some Google ads. I’ll show you how you can figure this out, but those are the boxes you’re checking. It’s like, “Yes, they have a Google ad. Yes, they have a Google business listing. Yes, they have a website.”

Let’s say you’re in a 3-mile radius and you’re looking at all the storage facilities within 3 miles and there are 5 or 6 of them. Out of those 5 or 6, maybe 1 or 2 are going to be doing this. For me, competitors are those that are marketing the best. That’s what a true competitor is. If you have somebody who has been the cheapest in town for years and years, I can guarantee you his prices are low and he doesn’t have any vacancies anyway. He’s not a true competitor. You don’t want to be using his numbers or his prices.

True competitors are those that are innovative in their marketing strategies and stand out in the marketplace. Share on X

You want to be looking at the competitors that are doing the ads, doing the marketing, and their prices are higher. They have promos. Another thing that you look at is their promos. That’s another thing. What promos are they doing? For the competitors, you can have a spreadsheet. You can either use the Deal Analyzer for this, take notes, or you can use a spreadsheet where it’s like, “Here are all the dealings. Here are all the competitors. They have a Google Business listing. They have promos.”

Another thing I was going to say about the promo is the pricing. Another thing that you want to check is their pricing. Is the price just a flat rate? “All my 10s are always $45.” Whoever is managing this facility does not understand the concepts of marketing, yield management, and dynamic pricing. Those three things are the three most important things that you can know as a facility owner. I’ve talked about that several times. You can always go back to those episodes and stuff.

Those are the three main things. You want to keep track of that. You want to understand your competitors. You want to see what your competitors are doing because if you have 5, 6, or 10 competitors, all of a sudden, in your mind, just like my student, she was like, “I cannot buy a storage facility because there are too many storage facilities in the area.” The truth is may the best marketer win. That is how this game is played in the industry now.

May the best marketer win. That is how this game is played in the industry now. Share on X

I wish it was back in 2015 when I could put up a sign. That’s how I used to teach too. I was like, “It’s so easy,” because it was easy. It’s not easy anymore. You have to learn how to online market. You have to understand the strategies behind it. If you don’t, then you’re going to lose. Visually, you’re going to have a spreadsheet with all your competitors, not only their prices. You’re going to compare the prices, which is the way that we’ve been doing it up until now.

Now we need to start honing in on the marketing strategies that the competitors are doing. Do they have a Google business listing? Do they have any promos? What are their prices? Do they understand yield management? What happens in yield management or the way it works is if you’re 90% full, then your price is this. If you’re 85% full, your price is this. If you’re 80% full, your price is this. I’m talking about yield management. Based on your inventory, how much inventory you have is what your prices should be. It’s a percentage. It’s not a number.

That’s why when you go to CubeSmart and you look up in your area that you want a 10 by 10, it’s going to say $125.87 or something like this. They’re setting it up like we only have two left. Those two are super hot commodities right now. If I had twenty left, that would be a different price. That’s how it is. Johnson asked, “What are the three KPIs?” The three KPIs are going to be can they market? How do they market? All the different ways they can market. Do they understand new management? Do they understand dynamic pricing? That’s how it is.

The fourth thing I talk about is rent increases, which is not what we’re talking about. We’re talking about and looking at marketing. You can tell if they understand yield management and dynamic pricing by going to their website and looking at their prices. I’ll share mine with you. This is one of our facilities. Mission Self-Storage is our brand. I came to our make-in facility. You can see here that it’s $12.80. It’s normally $25.60, so 5 by 5s.

We have a promo First Three, which is the first three months for 50% off. We’ve got the 4th of July sale, which we’re going to change to the Christmas and July sale, and then it’s going to say get 50% off for the first three months. That’s the promo that we use. We tested the dollar move-in and the 50% off. It is for us. We noticed that people take this 50% off the first three months more than the dollar move-in, but you can see the price.

Now you’re looking at this and it’s like, “Why do they have such weird prices?” It’s something that I’m sure people are asking when they’re looking at websites, “Why is it always so weird? Why can’t it be like $30 or whatever?” This is because our numbers and our pricing are based on yield management, which creates what’s called dynamic pricing. When you look at something like this, we’re at a certain percentage fold. Once we get to another percentage, then that number will change. If we have the last two facilities or the last two units available, that’s at a different percentage.

StorageNerds | Storage Facility
Storage Facility: Our numbers and our pricing are based on yield management, which creates what’s called dynamic pricing.

 

If you were doing a competitive analysis on me, you’d be able to tell that I understand this. When you’re looking at the website, you can see there is a sale, there’s a promo, and there’s dynamic pricing. If I am buying a facility in Macon, this is a real competitor. They understand marketing. They understand what they’re doing. When you go to a website where it’s $50 for a 10 by 10, then you can say they don’t do it.

StorEdge is a software that allows you to do dynamic pricing. They allow you to do all different kinds of pricing sequences. You can have website prices, calling prices, promo, and all different kinds of pricing, and yield management is intertwined. Most of the other software does not allow that. You can set this up to be automatic but if you cannot, if you’re using ESS or whatever software that doesn’t allow dynamic pricing, then you have to manually do it. I had a student who bought a huge facility that had 630 doors and was using ESS.

After a while like halfway through, she switched over to StorEDGE because of that reason because she was manually having to go in and update prices on all her units. She had twenty different units. It was a lot of work. You have to think about that too when you’re getting out there and looking at facilities. It’s a lot of work to do the dynamic pricing. We have it all automated. It’s all automated through StorEDGE. We don’t even think about it.

In terms of the marketing, I wanted to make sure that you knew that you could look at this. You can go to my website at any time, Mission Self Storage. Play around with it and see what we’re doing. I love to look at other storage facility’s websites. What you do is you scroll down to the bottom and if you see Storeable, Hummingbird, or whatever they’re called, you’ll know that’s the generic website that everybody gives you. I’m not sure if we can find any of those anywhere.

Here are my competitors. I looked up make and storage and there’s CubeSmart and, Devon Storage. I know Devon Storage. I know CubeStore. I know what they’re doing. What’s Devon Storage? This is a storage facility. I need to make sure that I’m looking at their marketing because they are going to be a true marketing competitor. StorageMaster.biz is a good one here, FreeUp Storage. I need to be looking at these and see what they’re doing.

Another thing that I do is become a tenant in my competitors. Once I buy the facility, I become a tenant. I started getting all the emails and stuff, which is the secret. Don’t tell anybody I do this. I start getting all their emails and text messages and stuff. I started looking at what my competitors are doing, especially Devon Storage or FreeUp Storage. I get all their emails and I’m like, “That’s how they’re contacting people. That’s the promos that they’re doing,” and stuff like that.

Once you buy a facility, that is something that you can do too for a good competitor. I’m going to pull up this Deal Analyzer. This is our Deal Analyzer. You can go on to our website and you can buy this or anybody can do this. This is the best deal. I love this deal. For anybody who doesn’t know what they’re doing, get the Deal Analyzer. Come to the course and it’ll show you step-by-step how to fill it out. This is our competitors. This is the competitive analysis. Hopefully, one day we’ll be able to add a couple more things here.

You can see here that for this facility, there are seven competitors. We have their phone number, the website, if they’re full, and if they have any type of promo. She’s putting here, “Promo. None.” No website is here. Look at this. They don’t even have their Google business listing. All these facilities are here. This is how far away they are from us. This is their gated office square footed, then we do the price comparison. Everybody knows we need to do the price comparison.

Let’s start doing more of the marketing comparison. Eventually, once we have enough time, which is not this year for sure but maybe next year, we’ll be adding some more tabs here, which would say “Do they have a Google business listing? Do they also have a website? Do they have Google ads?” It is something I can tell her to add. I could put this here. If they have any ads, I’ll tell her to put this right here.

StorageNerds | Storage Facility
Storage Facility: Price comparison is a given, but let’s also delve deeper into comparing our marketing strategies.

 

Any promo. We started adding the promos. Essentially, I feel Google business listings, promos, ads, website, and SEO are the five big things. What I would do on my Deal Analyzer is use this space here to put all that information in so that you have it. Here is the total square feet. Do you see how she’s adding this up? She’s adding in all of the square footage for every property. Within a 6-mile radius, this is how much we have. We can look at something. We can figure out the net capita per square foot. We can do that by adding the square footage.

At the same time, we can keep notes here on all the different types of marketing that the owners are doing. I would say that these right here do not even have a Google business listing. To me, these are not even true competitors. This facility always has a waitlist. There are a lot of storage facilities you can see in this area. There’s like 15,000 people. That’s the population of this entire town. This is a very small town. There are quite a few storage facilities.

I’m going to go into my Google and then let’s look up Americus and see what we’re doing. Americus Georgia storage. Let’s see how we’re doing. You can see that sponsored is automated self-storage. Sponsored means that they’re doing a Google ad. The way that it works is if there’s more than one company doing a Google ad, they switch it up. I don’t see mine a lot, but I do see Ms. Lillian’s self-storage. This is our facility right here coming up. Storage Americus is coming up at the top, Outpost Storage, Store More Americus is coming up. This is SEO to get onto the first page. That is what you have to be working on.

Store More uses the U-Haul software. U-Haul has a software. That’s how it comes up. If you see it this way, that’s how it works. It’s very basic software, but a lot of owners that own one facility, use the U-Haul stuff because it gets marketed through U-Haul. Here’s ours, Ms. Lillian’s. Suburban storage comes up, Outpost. Here’s SpareFoot. I told you about the Spare Foot. Storage.com is owned by SpareFoot. It’s the same stuff.

You’ve got Storage Rentals of America is sponsoring an ad. You’ve got Cordell, which is farther away a little bit, is sponsoring an ad. It’s good to look at this stuff. Look at SelfStorage.com. We’ve got this coming up. It’s good to look at it. When you’re doing your competitive analysis, you’re filling out the Deal Analyzer, and you’re putting all the prices in, you need to make notes of what you’re seeing.

Georgia cold storage comes out. You want to make notes of what you’re seeing because if they’re coming up, especially if they’re a sponsored ad, then they know what they’re doing. That is what I’m thinking about for marketing. Eventually, we’ll update the Deal Analyzer with some of the more fields and stuff. For now, we squeeze it all in because we’ve been using Deal Analyzer for a couple of years now. The marketing portion and doing the marketing analysis like I’m talking about is a newer concept even for us. It’s for mom and pops and stuff. CubeSmart and Extra Space were all doing that.

The chips are an extra space. They have to compete with people like us now. They’re competitor and they’re our competitors. It’s not that you cannot beat them because I’m in secondary markets and we’re getting filled up in our secondary markets and stuff. It’s just a different type of game, but you want to make sure that you’re looking at who’s doing what type of marketing, how they’re marketing themselves, and how well they know.

Let me go back to this page. I want to look here and see. Let’s say that we click on Outpost Storage. They have their website. Here’s the Outpost Storage. This is indoor climate control. This is not competition. If it’s indoor climate control and we have outdoor climate control, that’s not competition. This website is the same website that everybody uses. Look at this, “Outpost Storage is powered by a Storeable.” That’s what I was talking about.

When you use ESS or StorEDGE, you’re going to get a website that looks like this. Everybody’s storage facility looks like this. This is not good SEO. This is not going to make it come up and stuff like this because if you have the same website for 5 or 10 facilities in the same area, Google ignores you. We were using StorEDGE. Once it started getting bigger and there were a lot more players, we ended up making our own website. We went away from using the Storeable.

We get a ridiculous amount of move-ins. We’re getting 20 to 30 move-ins a week, if not more. This is fun. I love talking about marketing. Ask any questions if you think of something too. Here’s ours. Let’s see what ours looks like. Here’s our Google business listing. I highly recommend looking at our Google business because they are amazing. We update our Google business listing every week. I have three people on my team who are managing my Google business listing.

Our phone person or our phone manager manages the Google business listing and has access to it because she’s the one who answers all of our reviews. We get a ridiculous amount of reviews for all of our facilities every day. She answers those. We have our Google ads person who manages our Google business listings. Those are all connected. We have our social media person who posts out. She manages them because she comes in and she create this stuff here, our products, and then our posts.

I highly recommend looking at our Google business listings. I’m very proud of them. The one thing that we need to work on and get better at is the SEO. It’s not hard. It’s just time-consuming. We have an in-house SEO person that does all of our SEO. We have a lot of facilities because we have sixteen facilities. It takes one week to do all the stuff for one company. I think it’s 40 hours of work for SEO to get it set up, to get it going, and to get it good. We’re monitoring it on a weekly basis to make sure everything is still up to date. Sixteen facilities are a lot.

StorageNerds | Storage Facility
Storage Facility: One area for improvement is SEO. While not necessarily difficult, it is a time investment.

 

“According to the city data, America has seen an 8% population decline.” Thank you for bringing that up. I appreciate it. There’s an 8% decline in America yet we’re full. I don’t know. You tell me. What do you think about that? What does everybody think about that? This is even what my student that I’m talking about said. She’s like, “People are moving out.” The truth is may the best marketer win. That’s the game. If you want to get into the storage industry, that is the game.

Even if it’s oversaturated, even if it’s a declining market, you can still be full. You can still make money. You could still do it. That facility is always full. We always have waitlists. We increase the rates. We increase the rates on all. We set it up automatically. If a vacancy comes up, it goes up to the next price. I cannot tell you to do things or not do it or do it. It’s your risk level.

StorageNerds | Storage Facility
Storage Facility: The storage industry can be a competitive game, even if it’s facing some saturation or decline. However, with the right strategies, you can still achieve occupancy and profitability.

 

The person I talked to is super conservative. She is thinking about oversaturation and declining markets and all this stuff. In the end, she hasn’t done any deal at all. I am like may the best marketer win. No matter which facility I get, I will make it successful because that’s how I am. It doesn’t matter. Give me a facility and I’ll make it successful. Where are you in that?

When I ask people to come into the coaching program, on a scale from 1 to 10, what is your risk level? Right now in the market, you should be an 8, 9, or 10. If you’re not in those three numbers, then it’s very hard for you to get a deal and do a deal and be successful at it. If you are anything below 8 right now, it was very hard to find a deal. That’s my thought process. That’s it. That’s my spiel for today.

You can go on to StacyRossetti.com. My course is there. My Deal Analyzer is there. The coaching programs are there. Turnkey Acquisitions are there. The bootcamps are there and anything that you need. Please make sure you register to get notified about the book. I keep saying it’s going to come out and we’re almost there. It looks like I’m awesome. I have so many facilities. I’m doing great and making it look so easy. The truth of the matter is it takes a long time for me to get anything done. Slow and steady wins the race.

It takes a long time to get anything done, but slow and steady wins the race. Share on X

My book, I’ve been working on for a long time. Anything that we do takes forever, but I keep moving forward. I do everything that I’m supposed to be doing in my human form. I’m never at a standstill on anything. “How do you know your risk level?” That’s a good question. Do you want income or cashflow right now from a storage facility? Especially anything less than $1 million, it is very hard to do that right now. You will be coming out of the pocket for most of your facilities. If you do not want to come out of pocket, your risk level is less than 8. You ask yourself, “How much am I willing to come out of pocket?”

We have a student who picked up a facility for $1.2 million and he got an order of finance for $200,000. The property was only 50% full. Once it’s full, it’s worth $2.5 million. He’s going to have to come out of pocket every month for a year to two years maybe. We don’t know how long it’s going to take. It’s been about eight months now. He’s still not getting filled up. He’s going to come out in another year. It’s two years at $5,000 a month. That’s $120,000 a month to stabilize this property. He’ll be able to sell it in five years once it’s stabilized for over $2 million if not $2.5 million. He has to come out of pocket $125,000 to make $1 million in five years. Is that something that is okay for you?

If that’s good or if that sounds amazing to you, then your risk level is going to be on the higher end. If you’re like, “I would never do a deal like that,” then your risk level is going to be on the lower end. It’s going to be harder for you to find a deal right now. Does that make sense? I talk about mismanaged facilities all the time. This is what we buy. We come out of pocket every single month for those facilities. We don’t do that anymore with all the facilities because they’re all pretty much stable. In the beginning, we were always coming out of pocket. Once that got stabilized, we’d take that money and put it into another facility.

Our cashflow is always to take care of facilities and stuff. In the end, we’ve got a lot of facilities that are making money and stuff, but it took a couple of years for us to get to that. If you want cashflow, your risk level is very low right now. If you are okay with not having cashflow, you’re on the upper end. Make sense? If you have a lower risk level, then you need to be looking for cashflowing properties. It’s not that they’re not out there. It’s just that they’re few and far between right now.

At the beginning of 2020, all these people started selling their properties because they had to become contacts list. They had been doing it for 10, 20, and 30 years and then they had to change. They had to go online and get their business listings. They had to get a website and do contact lists and reservations. They’re like, “I’m out.”

From 2020 on, all these owners were selling these properties. It was this perfect storm. All these owners were selling these facilities. Everyone is getting great deals on these facilities. They were purchasing them at lower cap rates, a little bit higher, but the interest rate was low. This is what happened from 2020 to 2022. It’s a perfect storm, but all those people didn’t realize that you have to work, do stuff, and figure stuff out to manage your properties. I thought that storage was like buying it and forgetting it. You make money. It’s a cash cow. That’s not the case.

StorageNerds | Storage Facility
Storage Facility: Some people underestimate the amount of work involved in managing properties. It requires dedication, problem-solving skills, and ongoing effort.

 

From 2023 on, all of a sudden, you see all these people that were buying these facilities from 2020 to 2023 selling the facilities. They’re having to sell them at higher prices. That’s what they owe. They bought it at a higher price because the interest rate was so low. That’s why it’s so many high prices. They put themselves in this bad position. That’s why the prices are so high. You don’t see a lot of people. You see some older owners now that are selling.

From 2015 to 2020, there was a ridiculous number of older owners that were selling. You don’t see that anymore. It’s not as much anymore. What that means is that the storage industry is changing. It’s becoming more normal. You’re not going to find diamonds in the roughs anymore. Those were the days. Now, there are too many bigger players. It’s becoming more commercialized now. You’re going to have a lot of competitors, higher prices, lower cap rates, and things. It’s not a bad time to buy. It’s a great time because the market is getting lower.

I talk about this quite often. There’s only a small window for you to get into storage because you cannot have a lot of storage. Storage is based on population. Once you get to that point, you’ll be over-saturated and nobody can make any money. It’s going to stop probably within five years. You’re not going to get into storage now. It’s going to be hard. It’s going to get harder every single year to be in storage.

StorageNerds | Storage Facility
Storage Facility: The longer you wait to enter the storage industry, the more challenging it might become. The market is constantly evolving, and competition is likely to intensify over time.

 

I appreciate you all hanging in. Noel says, “Small new construction and secondary markets.” Even in the secondary markets, all the bigger players are getting in. You saw CubeSmart coming into secondary markets. Next will be other bigger players in secondary markets. You have Monster and Ten Federal Stores, and all these bigger players, but they only do secondary markets. The tertiary markets are all that’s going to be left. A lot of those are declining markets that you saw. It’s a double-edged sword. Put some offers in now is what I’m saying. Get in now, but make sure you look at the marketing, not just the pricing, the price comparison. I appreciate you hanging out to the end. I will see you at the next session. Take care.

 

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