Self-storage investing makes a lot of sense in this day and age. Decades of rampant consumerism has caused people to accumulate massive amounts of stuff, and now they need somewhere to put it all. As a self-storage investor, you’re tapping into this need. But while the self-storage industry is certainly a good one to get into, you can blow your chance if you don’t go about it the right way. Here are the four mistakes you should avoid at all costs when investing in self-storage.
Being too hands-off
Some people think that operating a self-storage facility would be an easy job. Once you’ve got the units in place, all you have to do is sit back and watch the money pour in. The reality is that a self-storage operation requires just as much management as any other business. Marketing, keeping financial records, and maintaining the facility will prove to be a full-time job.
Going too big
When it comes to self-storage facilities, bigger is definitely not always better. In determining the value of your property, the cash flow and occupancy mean more than the total size. It’s better to have a smaller facility that’s mostly full than a giant property with empty units.
Choosing a poor location
Some investors erroneously think that location doesn’t matter when it comes to self storage. In reality, visibility and convenience are just as important in this industry as in any other. Customers are more likely to choose the facility that they drive by on a regular basis. When developing your business plans, keep an eye out for a suitable location, preferably near a population center where traffic is heavy. “If you build it, they will come,” does not apply in this increasingly competitive industry.
Failing to do market research
The self-storage industry is booming, but you’re not the first person to catch on. More and more facilities are popping up as demand increases. Before considering building your own facility in a certain area, make sure the market isn’t already saturated. If somebody else has beaten you to it, you’re better off finding a different community to operate in.