Some real estate investors have made a lot of money by catering to Americans’ tendency to keep junk. These people won’t be at your local REIA meeting. You can meet them on the fairway, or aboard a cruise ship. They quietly enjoy growing their cash flow, and building wealth through the unexplored investment avenue of mini-storage or self storage. Why is it so difficult for the average real estate investor to join this elite group of investors? check my source.
Sometimes reality is distorted. Self storage is one example. There are many false perceptions that discourage investors from investing into self storage. These are just some of the misconceptions that you may have about self-storage.
Myth 1. There are self storage units available everywhere. I don’t have enough money to keep up with the rest of the competition.
Self-storage is a rapidly growing industry. This business has evolved from hidden garages within factories to multi-use facilities. Self-storage has become a multi-billion-dollar industry over the past 20 years. It is all about building and developing. The country has over 45,000 storage facilities, so every American has 6 feet. Even in highly saturated markets, investors can still make incredible returns. Finding the right facility is key. Also, make sure you are able to buy it at an affordable price. You can also increase your cash flow through efficient and effective management of the business.
My first facility was in Florida’s overbuilt areas. Each facility had an occupancy rate of at least 75 percent. In just 18 months, 92% of the facilities had an occupancy rate above 75 percent. Cash flow increased by nearly $6,000 per month. My competitors still operated in the 70-80% occupancy area. Do not be deceived by people who tell you that you cannot make money in today’s market.
Myth #2. You can make or buy another facility to make money.
Self storage buildings are made of metal and have doors so they seem relatively affordable to build. These buildings are generally less expensive than commercial buildings. There’s more to designing and building them than meets the eye. The process can take many months or even years and can be very tedious. It results in an empty facility with large debt servicing. A facility may not break even for many years. This is not the path to rapid success.
Smart investors will look to purchase older buildings that are in poor condition and need minimal repairs. These properties are not often visible to large companies and can be purchased at a very high price. These facilities enable you to start with positive cashflow, and then once repairs are made and the business is properly run, the money will begin rolling in.