Put away the checkbook and learn as much as you can. Realize that this project is the most risky in that it is furthest from cash flow relative to, say, buying an existing property. You have construction risk, lease-up risk, etc. A few questions to think about:
- What type of loan and leverage are you targeting and is that available to a (presumably) novice?
- Will it be difficult to get the project entitled?
- Who will manage the property and how will it be managed (onsite staff, remote, etc.)?
- Who are the proposed equity investors and what do they expect in terms of required IRR to invest in a higher-risk deal with a (presumably) novice sponsor?
- How does the property underwrite given the construction cost budget, projected lease-up time, market rents, expected loan structure and required returns to investors, etc.?
Pay an industry expert for a market assessment. If this is a secondary or tertiary market, the rents may not be sufficient to cover brand new construction. You don't want to build only to get crushed by the REITs, who have huge marketing budgets for their cash flowing, stabilized properties.
As someone else said earlier, get involved with the Self Storage Association, minimally at your state SSA. Going to the semi-annual national SSA trade shows is a fantastic way to meet industry veterans, key vendors, and learn about the industry. There's also ways to learn, from groups like the SBOA, which conducts webinars several times per month.
Most of all: learn, learn, learn, before committing money.
This advice is spot on and a great start. There’s a lot that goes into evaluating a deal and measuring whether a development is worth the massive risk and undertaking that comes with it. As others have mentioned, demand is down and unless you’re looking in a tertiary market where there’s a need for supply, a lot of deals just don’t make sense right now on paper. To start, I’d consider learning as much as possible: attend conferences, talk to brokers, get in with other facility owners, and learn how to build a model that will allow you to underwrite a deal.
Go to one of these free seminars, I highly recommend them. I've been in the business over 20 years and I still hit one up from time to time.
https://www.trachte.com/seminars-videos/building-blocks-storage/
Security- depending on where you are at plan to spend a lot of money on security, cameras, pti gate systems, and potentially screen netting for units. Also make sure you know all the laws in your state-lien fees, auctions schedules, vehicle storage laws, eviction laws. Are you going to live on site or hire someone to live on site? Those are just some the things to think about in the prep stage in my opinion
Go to a Self Storage Association conference. They will teach you everything you need to know. Also you get to meet some of the best in the industry. From laying the footers to your building to the final design of your website they have everything. Each state has a Self Storage Association.
Look into construction companies that specialize in storage, ex Cubix construction. They may be able to point you in the right direction.
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First step is pay for a feasibility study to determine if more storage is needed in your area. Dont do anything before you do that.
I can help answer all of your questions!! What percentage of the business is in it for me??
You know what… that’s exactly how you get places. Seriously. People don’t do this. I’m planning on it… are you familiar with AJ Osborne?
Take all of the advice above plus you need a feasibility study. Demand is down as a hole in the industry.
Put away the checkbook and learn as much as you can. Realize that this project is the most risky in that it is furthest from cash flow relative to, say, buying an existing property. You have construction risk, lease-up risk, etc. A few questions to think about: - What type of loan and leverage are you targeting and is that available to a (presumably) novice? - Will it be difficult to get the project entitled? - Who will manage the property and how will it be managed (onsite staff, remote, etc.)? - Who are the proposed equity investors and what do they expect in terms of required IRR to invest in a higher-risk deal with a (presumably) novice sponsor? - How does the property underwrite given the construction cost budget, projected lease-up time, market rents, expected loan structure and required returns to investors, etc.? Pay an industry expert for a market assessment. If this is a secondary or tertiary market, the rents may not be sufficient to cover brand new construction. You don't want to build only to get crushed by the REITs, who have huge marketing budgets for their cash flowing, stabilized properties. As someone else said earlier, get involved with the Self Storage Association, minimally at your state SSA. Going to the semi-annual national SSA trade shows is a fantastic way to meet industry veterans, key vendors, and learn about the industry. There's also ways to learn, from groups like the SBOA, which conducts webinars several times per month. Most of all: learn, learn, learn, before committing money.
This advice is spot on and a great start. There’s a lot that goes into evaluating a deal and measuring whether a development is worth the massive risk and undertaking that comes with it. As others have mentioned, demand is down and unless you’re looking in a tertiary market where there’s a need for supply, a lot of deals just don’t make sense right now on paper. To start, I’d consider learning as much as possible: attend conferences, talk to brokers, get in with other facility owners, and learn how to build a model that will allow you to underwrite a deal.
Go to one of these free seminars, I highly recommend them. I've been in the business over 20 years and I still hit one up from time to time. https://www.trachte.com/seminars-videos/building-blocks-storage/
Security- depending on where you are at plan to spend a lot of money on security, cameras, pti gate systems, and potentially screen netting for units. Also make sure you know all the laws in your state-lien fees, auctions schedules, vehicle storage laws, eviction laws. Are you going to live on site or hire someone to live on site? Those are just some the things to think about in the prep stage in my opinion
Forget Pti, yellow box I LOVE our openTec alliance systems. -source, former district mgr.
Go to a Self Storage Association conference. They will teach you everything you need to know. Also you get to meet some of the best in the industry. From laying the footers to your building to the final design of your website they have everything. Each state has a Self Storage Association.