Any way you look at it, there are certain procedures that should be followed to ensure success in self-storage ownership. And most, if not all, of these procedures require professional assistance. It means assembling a team of experts who can help you thoroughly research the project to determine whether it is a viable plan. The two most revealing documents the new owner needs are a market analysis and a feasibility study.
The market analysis will reveal primarily demographic information about your market: the ages, gender, income and education of the people who live there; whether they reside in single- or multi-family residences; if they are renters or homeowners; the mix of residences and businesses; and other important information.
The feasibility study should be conducted by an independent third party. It will include information such as an analysis of the competition, a financial pro forma, a projected cost analysis and a suggested site layout. In the final analysis, this study will determine whether you should proceed with the project or abandon it. This type of research should be done prior to acquiring the property.
The Fundamentals
Site Selection. This is probably the most important decision you will make, so be sure you’ve done your research. This applies to purchasing new property as well as land you may already own. In both instances, the important question that needs to be answered is this: Is the site location suitable for self-storage?
Self-storage is a local, retail business limited to a very specific area surrounding a facility site. Customers will come from an area consisting of a certain radius or drive time from the site. Potential tenants will demand convenience, easy access and proximity to their homes or workplaces. If your facility is off the beaten path or removed from a major thoroughfare, customers will not seek you out; they will simply take their business elsewhere.
Financing. Unless you are independently wealthy, you’ll need money to finance the development of your facility. Normally, your best bet is to borrow from a local commercial lender. That’s because they probably know you and are familiar with the property you plan to develop. As a rule, expect a lender to loan up to 75 percent of the total appraised project cost, not including the cost of land; but that percentage may go higher depending on your financial strength.
Building Supplier. Manufacturers should be your No. 1 priority because they will not only provide high-quality designs and components, but will also offer professional sales consultants who can provide advice and guidance in every phase of the process. This includes such things as building design and materials, construction issues, unit size and mix, etc. You should view your sales consultant as an advisor on most decisions that arise.
Case in point: A couple who own a facility in Georgia had an engineer design their site layout and determined they could build 70,000 square feet of self-storage space on their property. Their building sales consultant showed them how to increase that amount to 100,000 square feet.
As the old adage goes, “They’ve been there, done that,” so use them. It means less hassle, more efficient procedures, and if anything goes wrong or you have a question there’s only one place to get answers. One final note: When purchasing buildings, look for the best warranties and you will find the best products.
Construction. Next, the facility site needs to be prepared for construction. This involves hiring a general contractor to handle grading, paving, landscaping, storm sewers and drainage systems, graveling, fencing, pouring concrete slabs and other land-related issues, prior to having building components delivered for erection.
A professional, certified construction crew will be needed to erect the building components on the foundation slabs. Ideally, your building manufacturer will offer crews. If so, the timing of building erection can coincide with the availability of the crew, the completion of the site preparation and the delivery of materials. Too often, it’s difficult to get the site completed, materials shipped and a construction crew available all at the same time.
You will soon learn that delays can affect anticipated opening dates, which translates to lost revenue. Obviously, the sooner you can get your facility operational, the sooner you can start making money. So it’s important that your building supplier provide an onsite supervisor and back-office project manager to make sure the project stays on schedule and is completed on time.
The information covered in this article is broad-stroking the process of getting started in the self-storage business. It covers only the basics—the bare facts. If you’re serious about self-storage, there is plenty more detailed information available. Ultimately, the more you know, the more you’ll understand, and the more successful you will be.
Terry Campbell is vice president of sales and marketing for BETCO Inc., a single-source manufacturer of metal self-storage buildings. For more information, call 800.654.7813; e-mail [email protected]; visit www.betcoinc.com.
