When a tenant stops paying the rent, a landlord has to get the eviction process started by filing papers with the court. When one of Scott Meyers’s customers stops paying for their storage unit, Scott just puts a padlock on their unit, and then he can sell everything and recoup his costs if they can’t come up with the rent. Self-storage is a whole different ball game in real estate, and that’s why Scott’s been all-in for nearly thirty years.
Forget the picture of tin boxes on the edge of suburbia. Today’s self-storage units are bright and shiny, climate-controlled units in the middle of town next to churches and shopping malls. One in ten households rents a storage unit, and they’ve become so essential that they’re now considered a part of a city’s master plan. When the economy’s booming, self-storage units are in demand to handle all of the extra stuff people are buying. When the economy’s down, they’re still in demand as folks downsize apartments or move home briefly to make it through a rough patch.
For both banks and syndication partners, self-storage units are an attractive asset to have on the balance sheet. The depreciation rate on a self-storage unit is 20% greater than an apartment building, they cost less to build, and they can be rented for 10 cents more a foot. Self-storage facilities also have the lowest default rate of all commercial loans.
How much work is it to run a self-storage unit? For every hundred units, it’ll take 10 hours a week to keep it running. It’s not a set-it and forget-it kind of business, but it definitely only needs a light touch. Scott was dropping all kinds of gold nuggets of real estate wisdom today, so if you’d like more information on how to add self-storage facilities to your portfolio, make sure you check out his websites.
Watch and Learn:
Listen and learn:
- The easiest and fastest way to invest in self-storage is by buying an existing facility in a secondary market.
- The strength of the project matters more than the strength of the borrower in self-storage.
- Community banks, credit unions, and savings and loan institutions are better banks to work with on these projects.
- How an SBA loan can be used in self-storage projects.
- Marketing plays a big part in a self-storage facility’s success.
Mentioned in this episode:
- Joe McCall on Youtube
- Flip Empire: Single Family vs Multi-Family Debate
- The Complete Guide to Buying and Selling Apartment Buildings
- Passive Investing Storage
- Self Storage Investing
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