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Thirty-four items you don’t want to forget during the design process!



Thirty-four items you don’t want to forget during the design process!

Thirty-four items you don’t want to forget during the design process for a better and more profitable facility.

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  1. Early in the design process determine the parking requirements of the town for self-storage. They can vary from a half dozen to 30 for the same size facility. In some cases, where very high parking is required, parking in half of the 24 isles may be accepted as parking.  You want at least a half dozen customer parking spaces next to the office outside of the fenced in security area.
  1. Provide a secure drop box for after hour payments. It’s been our number two request from tenants. If you remember prior to construction you can put it in the office wall. Otherwise, you can add a free-standing drop box.
  1. For protection, provide steel bollards at all building corners, entrance gates, and entrance/exit key pads. I recommend 6”- 8” steel bollards filled with concrete. Over the years this will save big bucks and a lot of aggravation. Make sure these are in your original bid package because the change order price of $900 each will kill you budget.
  1. Determine if you should put the outside lights on two circuits with timers so you can turn half the lights off after hours or at a certain time. You may also want the front entrance driveway, sign and parking lot lights on a third separate circuit, so you can leave them on all night. LED lights will cost a little more to buy but they will more than pay you back with reduced electric bills.
  1. Make sure all utilities are designed to include future phases and are clearly included in your bid request. Make sure your electrical/camera underground conduit system for phase two is brought to the limits of phase one so you do not have to tear up phase one. Make sure the pull cords are in.
  1. Have your engineer provide the largest driveway radius permitted at the street intersection for easy site entrance. A 25 to 45-foot radius is recommended. No matter how large you make them some drivers will still drive over the curb.
  1. Make sure there is room at the end of the buildings for vehicles to safely turn. Thirty feet of pavement is recommended minimum with 40 feet preferred, and much larger if you need large RV’s or tractor trailers to make the turn.
  1. Determine what percentage of climate control units to construct. We have constructed 15 – 20 percent and that has worked well for us in the northeast, but many areas like Florida build significantly more. Check to see what your competition has done. Learn more about climate control/humidity systems. Also, make sure the designer has experience designing self-storage heating & air conditioning & humidity systems. Self-storage systems are designed significantly different from then residential or typical commercial systems.
  1. Your office will be a major showcase for your facility and a is a key factor in the success of your facility. It should be located outside the gated area. Visit several other self-storage offices to help determine your office size and layout. We have found that having a large product sale area and large windows helps increase the overall acceptance of our facilities and increase our unit rentals. The offices in our self-storage facilities are about 1,100 square feet, including a single bathroom and a small utility/furnace room.

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A colorful bright large retail office and showroom will increase your rentals.  Remember the majority of the rentals are by the ladies. Believe it or not you are in the retail and fashion business and need to wow your customers.

  1. Typically an access gate has a security loop installed in the pavement that can detect a car, so the gate will not close on a car. Make sure it is clear who is responsible to provide and install the safety loop. Will it be installed under the pavement or will the pavement be saw cut and patched? It is a much nicer job if the safety loops are under the pavement and not saw cut into the pavement. The gate should also have a safety mechanism, so the gate cannot accidentally shut on a person that meet present building codes.
  1. It’s always a nice touch if the appropriate office doors are keyed alike.
  1. If you use propane, consider buying your propane tanks versus renting so when you buy propane you can get the best price on the open market.
  1. Put the fencing 30 feet or more off the pavement where snow will be plowed to leave room for snow.
  1. A 4-foot person gate in the security fence near the office comes in handy for many reasons.
  1. Typically the entrance/exit gate needs a clearance past the end of the gate of at least 1.5 times the gate opening. Be sure to check with your gate manufacturer and design accordingly. If you do not have the room you will need a lift gate.
  1. In Connecticut you are required to get a CT Department of Environmental Protection “General Permit for Storm Water Discharge Permit for Construction Activities”, if the development (all phases included) disturbs over 5 acres of land. This permit requires several best management practices be incorporated into the designs, including weekly inspections of the erosion control. Often, there are similar or other special regulations in many states. Make sure you have a complete list of all approvals required when you start your design, so you can plan accordingly.
  1. In many states, disturbance of wetlands may require a Federal Army Corps of Permit in addition to your local Wetlands Commission approval. Check with your soil scientist and engineer. An army Corps permit can add significant time and costs to your approval process.
  1. Don’t forget to have an electrical outlet installed at your sign for your holiday lights. Also, electrical outlets should be installed in the 1 or 2 units of the facility you will use. An outside water nozzle is recommended. Typically, no electricity or lights is provided in self-storage units. You may want to put electric plug in 2 or three 10 x 10 units, so you can rent to pharmaceutical reps who will need a fridge in their unit.
  1. If possible, place the larger units on the side of the building that do not have another building on the opposite side of the drive. This will make it easier for cars to access and be stored in these 10′ x 20′ or larger units. Nine-foot-wide doors are nice touch on 10’ x 20’ units for car storage.
  1. Include a bank of 5′ x 5′ x 4′ lockers in your climate control buildings. One is stacked above the other. They typically rent out and provide the highest rent per square foot. It is a good design practice to have several different sizes typically from 5’ x 5’ to 10 ‘x 30’.

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  1. Slat walls in the office are great to hang locks and other products. Built in shelving for certain products is a good idea as well. Make sure they are included in your construction specifications. Change orders are expensive.
  1. Review your landscaping plans. In addition to the various trees and bushes it is very beneficial to have a raised flowerbed or two for your clients to admire.
  1. Handicap access should be reviewed early on and included in your design. Self-storage units typically have a lip at the door to keep water out. A ramp design and special doors are required for handicap access. The good news is if the handicap units do not rent you can rent them out as regular units. Your Engineer, architect and building manufacture should able to help you out with the handicap requirements. You may also want to do an online search regarding the new HC regulations.
  1. Determine if there is any room for outside car storage or RV storage. Even a few spaces can help market the entire facility. Outside parking of vehicles should be clearly noted on the site plans and applications to the town. Typically, you will make more money with self-storage units than outside parking. Outside parking is provided if you have excess land.
  1. Some states require two bathrooms, male and female. You may be able to request a waiver from the state for just one bathroom. I got waivers for just one bathroom in my facilities and there are no problems. Access to the bathroom should not require a user to go behind the office rental counter and should be clearly marked.
  2. Most metal building manufacturers provide insulation in the non-climate control unit ceilings. This is a must because it helps prevent condensation and possible dripping onto the customer’s stuff. Double check to insure your building includes insulation in the non-climate control unit ceilings.
  1. Avoid sheetrock construction in storage units. Sheetrock attracts mold and is easily damaged.
  1. If you have a sidewalk directly abutting your office make sure the sidewalk elevation is coordinated with the building design. If the office is a metal building the sidewalk may need to be an inch lower than the office concrete floor to accommodate the metal lip that hangs over the concrete floor.  Even where the building is not metal it is a good idea for the sidewalk to be lower than the office floor by an inch.  Of course, the sidewalk should match the floor at the door for handicap access.
  1. Many building codes have recently changed or are about to change based upon what state you live in. Insulation requirements, fire walls, separation distances, climate control building design, multi-story design requirements, handicap requirements are just some of them. Make sure you enlist the help of a self-storage building code expert early on, so you are not surprised.
  1. Now is the time to determine your facility management software and gate control companies, website developer etc. Once construction starts you will be extremely busy.  Making sure they are compatible with each other is critical and a must.
  1. Provide a driveway entrance light at the street. It’s been our number one request from tenants.
  1. Make sure your camera/DVD system has enough capacity/ports for all phases. I recommend two large camera screens in your office. Safety/security is the second concern of most renters.  Meet with your security expert early on and show the camera locations on your site plan.
  1. There are significant differences between video camera systems. Purchase high definition systems. And confirm you can view the cameras from your home computer and cell phone. There should be 2 cameras in the office on the customer and on the manager.
  1. Several things can differ between building manufacturers. When you order a building, you should be aware of your door sizes and eve heights as both can have an impact on your facility.  I recommend minimum doors widths of 8’-8” feet wide and a minimum building eve height of 8’-4” and you should consider 9’ wide doors and 9’-4” eve heights.

If you want the whole scoop can buy the entire book at Amazon.com

https://www.amazon.com/Marc-Goodin/e/B0098B0A20

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Chapter 8 – 10 things to consider to find an A+ Site

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  1. Location, Location, Location. This is the single most crucial factor in the success of a self storage business. The majority of your rentals will come from drive-by traffic. Out of the way locations typically struggle to get customers compared to main street locations. The best properties are on a main road with an average daily traffic volume of at least 10,000 vehicles per day with a preferred average daily traffic volume of 20,000 plus vehicles per day or greater. These are often State roads. Of course, due consideration must be given to surrounding population and how much of the potential renters should be proportioned to existing or other planned self storage facilities nearby. Often you can get roadway traffic counts from The Department of Transportation.

Think retail. Would you put retail on a back road or behind another development? No and the same goes for new self-storage developments.

  1. Unmet Self-Storage Demand is just as important as location! For a quick first total demand review, you can use 8 square feet of self storage demand per person, in a 3-mile radius. To get the unmet demand the square footage of the existing and planned self storage facilities in the 3-mile radius will need to be deducted from the total demand. For rural areas with little competition you may draw from a larger area. For large metropolitan areas of high population, the demand area may be smaller. Higher population density is often better because it is easier to have better service and out market the competition and get more of your share of renters than find renters that do not exist.

Too many people tell me they are about to build self-storage on land they own or located because self storage is needed in the area.  And they are right about half the time. Not a good enough percentage to move forward with a multimillion dollar investment. In the end, new developers are going to need help to make the final decision. But you can rule out some properties with a bit of effort and determine which property in an area would be the best one to choose for a feasibility study.

First you need to determine the existing population.  The population can be provided by many realtors or is often provided with many property listings. There are also several on line programs that can provide the population.

The unknown is the demand of square foot of self-storage per person.  And there is not one size fits all locations correct answer since demand can and does vary from state to state and even area to area within a state. Demand in the end is not a square foot per person but rather a square foot/person where facilities reach equilibrium (90% -+ full) at acceptable rates.  In other words, demand cannot be determined in a vacuum and must be used in conjunction with a review of the existing market occupancy rates and prices.  Be careful not to assume full means there is a need for more facilities.  Full with a regular 10 x 10-unit renting for $70 is not a good sign while 10 x 10’ renting for $160 is a great sign.

For many urban areas where there are numerous self storage facilities to choose from the draw/competition area of 3-mile radius is commonly used.   And the demand of 8+_ sf per person can be used as a temporary starting point.

So, if the 3-mile population is 30,000 the total self-storage demand would be:

30,000 people x 8 sf/person = 240,000 sf of self-storage needed.

Next you need to determine the location, number and size of the existing self-storage in the 3-mile radius.  Most novices underestimate the number of nearby facilities.  You can use google earth pro or “google nearby” to help you find the 3-mile facilities. On google earth pro you can draw a 3-mile radius and visual search for the self storages.  For a given address on a google map you can enter self-storage in the nearby tab and it will show the nearby self storages. But it does not go over town lines, so it is tricky to get all the facilities. This is considerable work to make sure you get it right but can often give you a quick count.  You may be able get the existing square footages from the land records or scale from google earth pro, again a lot of work.  Or you could use a real rough estimate of 50,000 sf of self-storage for each facility with a square footage check as part two of your demand study.

So, if you had 3 existing self storages in the three-mile radius you could temporarily assume that: 3 facilities x 50,000 sf/each = 150,000 sf of the existing demand has been met.

The needed demand for this case would be:

The total demand of 240,000 sf – 150,000 sf existing = + 90,000 sf. demand needed.

You would also need to subtract the demand for any facilities under construction or in the approval process.

You can see a sample mini demand study at the Storage Authority News Room

The good news is there are programs that can quickly determine the population and the existing self storages and even the square footage of the facilities, so the existing and unmet self storage demand can be determined quickly as part of a preliminary study.

One developer who recently contacted me did his own demand calculations.  When I emailed him back our check of his findings with an online demand review he said “ Wow what you did in 10 minutes took me over 2 day to do by hand.”

Below is a screen shot of the Radius program we use to determine the existing self-storage demand & population.  It also does a ton more, from providing the existing self storage square footage, the names of your competition and the rates of your competition.

The program is available at : https://www.unionrealtime.com/radius.html

I suggest you set up a demo with James de Gorter the co founder of Union Real time. Here is a link to set up an appointment on his calendar  https://calendly.com/radiusteam/radiusdemo

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This location is a 3-mile radius review for one of the FL Kmart locations closing this year.  While it shows the existing self-storage is 7.36 sf per capitol (see bottom left hand side) the key is the fact that there is only 0.69 sf/person of climate control.  So, this is a great location to investigate further for a big box conversion to climate control self-storage.  If you want to learn more about this program or even conversions email me at marc@storageauthority.com

Of course, Storage Authority and our national brokers will help find and review your potential sites, saving you mega hours.  Better yet we will even help you determine the best areas to look for land in your neighborhood.

The occupancy of the existing facilities (and their rates) can tell you a good deal about the local market demand.  You should stop by a couple and call a couple to get their rates and see if they will tell you their occupancy even before you start looking for land.

In the end, there are many important factors in addition to demand so a feasibility study is highly recommended. For your planning purposes, each can cost $6,000 to $7,000.  If you need preliminary assistance with your initial investigations or need a recommendation for a feasibility expert email me at marc@storageAuthority.com and I would be happy to help.

  1. Dry flat usable land with no restrictions can typically support 10,000 to 15,000 square feet of 1 story self storage buildings per acre. I recommend you use 10,000 sf per acre before you have done your due diligence. I have not found many parcels without restrictions of one kind or another, so it is prudent to do significant due diligence to determine if a parcel of land is suitable for your needs and to determine a fair purchase price of the land.

The shape of the land, topography, wetlands, drainage, flood limits, neighbors, building design, and zoning requirements can have a significant impact on the final building square footage. Some towns, for example, only permit 50% impervious lot coverage for the buildings and pavement, other towns do not permit a new self storage within 3 miles of an existing facility. Regulated wetlands setbacks or wetland buffers often vary from 50 feet to 150 feet from the wetlands in many locations. On site storm drainage detention, if required can require a half acre or more land. High parking requirements in some towns can also limit the amount of buildings.  In other words, the regulations can significantly reduce the amount self storage permitted. Often self storage is not even permitted in residential zones and other zones.

  1. Typically, you will be looking for 4 to 5 acre or larger parcel of land with few constraints or unusual zoning restrictions for a 50,000 sf one story facility. Don’t overlook the importance of walking the entire property before you make an offer. Water, wetlands, watercourses, steep slopes, easements (overhead wires), abutting uses can sometimes be observed on a site walk.  If you have a civil engineer you are working with, ask him to walk the site with you. It will be well worth his fee, especially if you do not have experience with land development.
  1. Many self storage building manufacturers will provide a conceptual layout plan. This is a good preliminary start, but remember they often do not take into consideration all the land feature restrictions or zoning restrictions.
  1. Early on in the due diligence process you should have the wetlands delineated on the site. Of special concern are vernal pools, special breeding areas, that often require very large buffer areas. Endangered or threatened species should also be reviewed early on.
  1. Consider the limitations and cost of steep sloping land before making an offer. Because single story buildings are often long and because they are only 24 to 30 feet apart they require a relatively flat finish grade. Buildings can be stepped down, but only so much and this also adds to the cost. Filling or excavation on steep slopes can cost tens of thousands of dollars, sometimes more.
  1. Once you find a parcel that appears to meets your qualifications, I highly recommend you have a local engineer do a conceptual plan for you. Ask them specifically about all the utilities, including water, sewer, drainage, and storm water detention. Make sure they tell you about any zoning regulations that may be of concern.  Easy access and street views are two important items to attract more renters.

If you don’t have city sewer you will need extra land for a septic system.  If you do not have city water, you will need room for a well and significant building fire walls will be required that will add substantially to the project cost.

  1. Remember to review the local design and approval process in detail before determining the purchase option time frame. I recommend at least a 6 to 8-month option period to get your approvals, if possible. I also recommend that you include a 6-month extension clause, even if you have to pay to execute an extension.  To get the extension clause approved by the land owner you might have to agree to submit site plan application to the Town by a certain date to show you are moving swiftly forward with the project.
  1. The best sites do not always have a for sale sign on them. We are having great success finding off line parcels.  Fallen down signs, friend of a friend, word of mouth, or land record research have led to best parcels.  I knocked on doors. I called them and told them I was interested in buying their land and asked if we could meet.  If they ask the price you are willing to pay, ask if you can walk the property to help you determine the price.  It often takes two or three meetings of no’s to get to the yes. In all three cases, no one had to pay a realtor’s fee. And even better, they were purchased below market rates.

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5 acres were used on this 9-acre site.  The rest of the land was not usable.

Sample Self Storage Development Budget & Proforma

Chapter 7

Sample Development Budget & Proforma.

 You will do multiple budgets proformas for yourself along the way to a final one for your bank.  The first is one based on several assumptions and estimates so you can have some initial discussions with your banker.  The second, one after you have a site plan, so you can provide a proforma based upon your actual design plans, including the exact number and size of units to be rented to get an updated pre-approval.  And the final application with real construction cost from contractor bids and expenses from your feasibility report and other investigations, for the final loan approval.  Your loan request will include several items in addition to the proforma.  This information will help your banker make a positive decision on your application.  It will provide valuable information about yourself, your business plan and your expertise and an executive summary which help your banker quickly understand your project and find the major data they need without looking everywhere for it. It is one more item to let the bank know you are a professional day one.  Self storage is loan friendly because self storage loans have one of the lowest failure rates for real estate development. But part of loan decisions are based directly on you and how you present yourself, your project and your team.

There are no one size fits all standard construction cost, expenses or profits for self storage.  Typically, the first semi accurate development and operational cost and profits come after you have found land, obtained a conceptual plan and obtained a feasibility study by a self storage expert.  But it is important to understand the basic general magnitude of construction, operating expenses, rental rates and various financial information to determine if self-storage makes sense for you. The concept budget below is based upon assumed costs & expenses that may vary greatly.  Be cautious as it would be easy to tweak one or several factors to eliminate the profits or double them.  Many items and details are not included in this example such as carrying cost to get from empty to break even.

This is an example for educational purposes only and should not be used to make any final self-storage investments or development decisions.

 CONCEPT BUDGET & PERFORMA*

50,000 Square Foot New Single Story Construction   

TYPICAL LAND REQUIREMENTS*

Single Story Self Storage: Typically, 5 +_ usable acres when storm water detention is required and or subject to certain zoning restrictions.  Land requirements can vary on local zoning requirements and land quality.

Typical Construction Cost vary on many factors from design, amenities, locations, land quality and more and must be determined by actual construction bids.  Cost below have been assumed and will vary.

 PRELIMINARY DEVELOPMENT COST* – 50,000 SF Single Story

Land                                       $800,000 + –

Construction:                        $3,250,000 +_    $65/sf x 50,000 sf

Unusual land etc.**.                $0 if none

Unusual City regs. **              $0 if none

Soft cost                                  $400,000+_

Carrying costs                         $300,000+_

 Total                                        $4,750,000+_ Single story 1 phase

 

Phase 1 -25,000 sf                  $3,300,000+_  Note land/office/soft                                                                                                    carrying costs in phase 1

35% Bank

Loan  Equity                        $1,155,000 Phase 1 owners’ equity                                                                                              required

12.5%  SBA

Loan Equity                            $412,500 Phase 1 owners’ equity                                                                                              required

As you can see there is a vast difference in equity required between a traditional bank loan and a SBA loan.

Typically, when phase one occupancy reaches 70% it is time to get started on phase 2.  Most of the time you will use the same bank for both phases so you do not have to pay a prepayment penalty.  Often your equity in phase one will be enough for most if not all of the loan equity required for phase 2.  You should have these discussion with your bank when you apply for the phase one loan as this is not the case for every lender.

PRELIMINARY PERFORMA*

STORAGE RENTAL INCOME* FOR A 50,000 NET RENTABLE SPACE

Rental income varies upon many factors and are very dependent on location, unit mix, managers experience, marketing and several other factors.  The SSA reported the 2015 national average rental rate for Q4 2014 was $1.18/sf for a 10’ x 10’ non climate control unit and $1.51/sf for a 10’ x 10” climate control unit.  It is important to get data from your local area.

Typically, we consider 90% rented at premium rental rates full.  For this example, 90% Rented at an assumed average rate of $1.35/sf is used.

50,000 sf x .9 x $1.35/sf = $60,750 monthly income = $729,000 Annual income

 PRELIMINARY OPERATION COST*

Operation cost vary on many factors. Often, they range between $5 to $6 a sf.

Use $5.75/sf for this example.

Assume $5.75/sf x 50,000 sf = $287,500/ year or $23,958/month (Before Debt Service)

NET OPERATING INCOME* (Before Debt Service)

 $60,759 – $23,958 = $36,729/month = $441,504/Year (Before Debt Service)

 VALUE*

 Assume 5 Cap rate – $8,830,080

Assume 6% Cap Rate = $7,358,400

 DEBT SERVICE*

 Assume/use a 4,000,000 loan at 5.5%, 25-year amt. = $24,563 month (P & I)

CASH FLOW AFTER DEBT SERVICE*

 $36,729 – $24,563 = $12,166 per month = $145,992 Per year cash flow before taxes.

 Will this be your cash flow?  Of course not.  There are too many variables.  Your land could cost more or less.  You could put in more or less equity.  Your rental rates may be higher or lower. Your expenses could be more or less.  You could do more or less marketing and sales then the typical self storage.

The goal is to build a self storage that provides a six-figure income while you can still continue your career if you want to and down the road to have a retirement nest egg that many people could never even dream of.  Once you have found a property that meets your initial review and requirements you will get a 3rd party feasibility study that will not only provide you with a demand review but also all the above financial information above based upon data to your specific location and facility size.

Disclaimers:  This informational and example is for preliminary education and overview purposes only and should not be used for investment purposes.   This is an over simplified financial review.  Once a property is located a detailed feasibility study, site investigation, site designs, construction costs and regulatory investigation are required in order to determine the feasibility of a project and projected profits.

*Development cost can vary widely based upon location, zoning, standards, your experience and a variety of factors. You should consult with a local self storage expert for development cost in your area. This is an example and there is no representation these numbers will represent your development costs.  Industry rental rates, income & expense can and do vary upon many factors including, competition, local property taxes, location and owners experience.  Typical rent up periods for the industry are between 18 months and 3 years and can be longer.

 ** Unusual construction requirements such as ledge, significant cuts or fills, retaining walls, unusual zoning requirements, off-site improvements, local pricing etc. are not included and can significantly increase construction cost.

Multi story facility cost more and typically can’t be phased, so they require significantly more capitol and initial equity. This is why first time self storages developers typically build one story facilities.  Many multi story self storages will even have a higher price tag because they are often in areas of higher populations and are larger to offset the development cost per unit, to get better returns.

A word of caution, never develop a parcel of land simple because you own it or the purchase price is low.  It must have several important features including significant drive by traffic and enough unmet demand for self storage.

Now based upon your liquid assets you can start determine the best options for your needs and investigate land, design, regulatory and banking requirements in more detail.  At this point you are either ready to charge forward or realize you don’t have the capital required.  If you don’t have the capitol don’t give up.  Finding a more aggressive lender and or finding a partner with either the land equity or cash equity may be a great option.

Working with an experienced self storage development expert can also help reduce the construction cost, operational expenses and increases profits. You can look at building a smaller facility but they tend to be significantly less profitable and more of a hobby than a business.

 

If you want to learn more about how you can start your own Storage Authority self storage Franchise send me an email.  Marc@StorageAuthority.com

Chapter 6 The Five Most FAQ’s

Chapter 6

The Five Most Frequently Asked Questions

1 I don’t have any self storage experience; can I build a successful self storage business?

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Yes, you can.  In fact, the vast majority of the 50,000 self storage businesses in the USA are owned by individuals who only own one self storage facility.  They started out just like you with no self storage background.  With research and help along the way you can build a successful self storage business that will be more profitable than most other real estate businesses.

Many of the existing self storage were built when “build it and they will come” infancy period of self storage.  Now with all the competition and smart money you must be better prepared from day one.  You need 3 out 4 of the four things to develop a very successful self storage:

1 Time

2 Money

3 Self Storage Experience

4 Marketing & Sales Experience

Storage Authority obviously provides items 3 & 4 but you will be surprised how Storage Authority helps you with items 1 & 2 as well.

The three most common problems I have noticed for new developers is 1) to under estimate the costs (often by over looking some items), 2) under estimating the development and rent up time frames and 3) underestimate the importance of sales and marketing platforms online and off line,

  1. Why build a self storage vs. other business?

Self storage consistently has provided better returns on investment then the other types of real estate investments.  It requires fewer employees and significantly less maintenance, which means less headaches and work for you. (better lifestyle)

And best of all self storage produces one the most important things that many businesses never produce: a residual positive cash flow that can last a lifetime or even for generations.  And its fun!

  1.  How much money (equity) do I need to build a self storage? (How much will the bank loan me?)

I hate do give a dollar amount because there are so many factors not to mention size.  But I know that is what you are looking for.  So to start a self storage business (not a self storage hobby or side line) it is typically approx. $400,000 for an SBA bank loan and more for a conventional loan.

Typically, you will need 25% to 35% equity for a conventional bank loan.  There can be exceptions to both the low end and high end depending on the market, economy in your area, your business experience & credit rating, individual banks and other factors.  It is important to meet with your banker(s) early in the process.  You do not even need a piece of property or facility picked out to meet with a banker (or two) to get some preliminary banking input.

SBA loans are available for self storage and they typically require significantly lower equity often 15% of the total cost.

There are several specifics that must be considered to determine the best option.  And it is very important to realize not all loans are equal by a long shot.  Yes, interest rates and required equity are important there are several other equally import items and that is why you need a self storage expert help you with your loan package.

  1. How much does it cost to build a self storage?

There are three main areas of cost that should be considered.

The first is the pre construction costs (or pre loan costs).  These include feasibility study cost, land surveying engineering costs for site plans and regulatory approvals; bank fees for the loan application (loan application fee or points, appraisal fees etc.), soil testing fees and land option fees, architectural fees etc.

STORAGEFINAL2

While these fees are often considered part of your equity in the project you typically have to pay these fees out of pocket because a bank will not give you a loan without a Town approved project.  This is money at risk because there is no guarantee that the town or bank will approve your project.  So it is very important you do your due diligence regarding the “quality” of the land (wetlands – easements -zoning – other restrictions) and with the chances of approval with the Town before you spend large sums for final engineered site plans.  Often paying a local civil engineer to review the property and zoning regulations and provide you with a conceptual plan to review with the Town is money well spent.  Typically, this first group of fees are typically range from $75,000 to $200,000 if no major problems are incurred.

The second group of costs is the land and construction costs.  These costs can vary greatly depending on the price of the land, individual land improvements and size and type of self storage facility.  Land can vary from $50,000 and acre to several hundred thousand per acre depending on the location and amount of land.  Individual land improvements can vary greatly between sites.

I own 3 self storages and each had distinct special land improvement cost.  One site was relatively level with sand and gravel which had low site improvement cost.  A second self storage was on a sloped parcel which required an extra 3-4 feet of fill for half of the site. One property required $20,000 worth of soil testing for pollution and more for soil remediation required.

It is hard to give a specific cost for construction.  Recently many feasibility studies are using $60 per square foot for construction for typical single story metal self storage buildings, plus soft costs and the land. This preliminary construction cost by square foot estimates do not include the special land improvements or other unusual cost that may be encountered.  Multi buildings are typically higher than the cost of single story buildings.

The costs can be refined after you have a chosen a property and your local civil engineer has done a conceptual site plan.  And once a final detailed site plan is completed you can have a contractor(s) provide you a construction estimate for a more realistic cost

Early on in the process, as soon as you find a piece of property, I recommend you contact a building manufacturer to get input on the building design.  They can also give you a proposal to supply and construct building.  I use Trachte www.trachte.com because they make the process simple, and have a better product at a great price.

The third group of expenses is the costs during the rent up period before you break even.  Some banks will loan you some of the rent up cost but many (even most) do not.   If you did not include the office, maintenance equipment & supplies in your construction cost (which I recommend) don’t forget to include them here. You are going to open your new self storage business with your typical operational costs (loan – employees – utilities – taxes etc. outlined in your business plan) and limited rental income.  Every month you will have to put money into your business until you have enough rentals to pay all your bills.  This can take several months to two or three years depending on a lot of factors.  If you have done your due diligence and determined there is a need for the new storage facility, have a good location with suitable drive by traffic and are prepared to market the facility well you can significantly reduce the time to break even and make a profit. Hopefully you have worked with your bank to cover at least some of your start up costs in your loan package.

Typically, the second phase cost much less to build because you have already paid for the engineering, the property and don’t need new staff so the break even point comes faster.

Financing is one of the major issues for many businesses.  Banks typically require 30% down and SBA loans require 15% down.  So in many regions you can get started with $350K to $400K cash equity.  One option is to join forces with a local land owner as I did for my second facility.  The land and design cost may be enough to meet your equity investment in the project.  A good written partnership agreement is important.

A good feasibility study is a msut and should provide some preliminary cost until you have more detailed plans and actual bids.  If you need initial prices before than I recommend you contact a self storage feasibility consultant to review your circumstances and what size facility you plan to build.

  1.  How many square feet should I build?  (& How much land do I need)

First you need to determine how much self storage the existing population can support and how much self storage already exist.  You can do some preliminary calculations on your own.  The key is accurately calculating the square footage needed in your area and subtracting the existing square footage and any storage proposed or under construction. For many areas where there are numerous self storage facilities to choose from the draw area is typically a 3-mile radius and the demand is typically 5 to 8.3 sf per person.You can see a sample mini demand study at the Storage Authority News Room

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These factors do vary significantly from place to place. For rural areas and areas where there are no self storage facilities the draw area may be larger.  You can call a local self storage appraiser (make sure they have a background in self storage feasibility) and ask what numbers they use in your area. Your bank will typically require an appraisal of your project by their approved appraiser. Your bank may give you the names of their appraisers to contact for this local information.

If you are not confident of your calculations or simple want confirmation and some guidance you should get a feasibility study done by an expert.  Please understand a feasibility study is not the same as the appraisal required by your bank.  For your planning purposes each can cost $6,000 to $7,000.  If you want a feasibility study or preliminary assistance with preliminary development cost I recommend you contact Bob Cooper, 866-269-1311 http://www.selfstorage101.com

There are some business theories that should be observed when deciding how much storage to build.  One is having an exit stagey.  Typically, the highest prices for self storage sales go to facilities that are purchased by REITs or other large self storage operators.  Typically, they want facilities that are 40,000 to 50,000 sf and larger.

Also you don’t want to have a facility that is so small that it only proves self storage is a good fit for the area and attracts a larger self storage operator to make the majority of the profits after you did the hard work.  The exception to this is if you are considering your self storage business a side business that you built on land your already own and run out of your existing business office.

Self storage rent up is so much faster (and rents for more per sf) when you have an office with regular office hours.  To pay for a manager and make a good profit and pay for all your efforts and risks you can use a preliminary estimate of 40,000 sf (for all phases) until you have done all the due diligence for your specific project.

You do not have to build out the entire project in one phase and in fact phasing is highly recommended.   It will save you the added expenses of having a large supply of unrented units.  A 50,000 sf project could be built in two or maybe three phases depending on the storage needs of a specific area.

The amount of land you need is highly dependent on the local zoning regulations and specific land features.  Typically, you will need 4-5 acres for 50,000 square feet of single story buildings, less for multi story buildings. See Site Selection for more information regarding property requirements.

  1. What are some of the site plan design flaws you have seen?
  • No office.
  • No curb appeal.
  • Outdated technology.
  • No bollards at building corners
  • Led lights not used.
  • No product sales area in office or sales area too small.
  • No easy access to customer bathroom.
  • Customer has to go through the security gate to get to the office.
  • No 4-foot man gate to access the storage area without opening the main gate.
  • Access key pads not aligned up with gate.
  • Located in industrial park or other out of the way locations.
  • Space between buildings less than 24 feet.
  • Larger units (especially car storage units) not located to the outside of the project where there is not a second building to constraint the access drive for better access to the units.
  • Not enough landscaping provided. A lot of landscaping is a great marketing feature.
  • No windows or small windows in office.
  • None or not enough site lighting. A light at the site entrance is a nice touch.
  • Storage units not visible from the road.
  • No security measures.
  • Too many dead ends.
  • Loss of units due to poor layout.
  • No small units or no large units or not enough variety in unit sizes.
  • No locker (5’x 5’ x 4′) units provided.

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  • To meet town approval building some architectural features actually make metal building   more noticeable and unattractive.
  • Phasing not provided on the approved plans requiring applicant to return to the commission for approval.
  • Site signage not on the plans requiring the applicant to return to the commission for approval.
  • Driveway widths and or radius at the Town road are too small.  Minimum driveway entrance radius of 25 foot should be provided and a 45 feet radius is preferred.
  • Access for RV’s or large moving trucks not suitable, especially at the ends of the buildings.
  • Rental kiosk not provided in new construction.
  • Climate control not properly designed.

Self Storage Planning……… Chapter 4 & 5

Planning-SiteSelection-Design-Build

Your Self Storage

Planning – Site Selection – Design – Build

Over 150 proven ideas to save you time and money and make you a success!

By Marc Goodin

Chapter 4

Why New Construction Vs. Buying Existing Facilities.

     1.Be Closer to Home.  There Are Very Limited Quality Facilities Presently for        Sale.

  1. Better Locations. “Build It and They Will Come” is a thing of the past. NOW: “Build It in The Right Location and Market it and They Will Come”.
  2. Many Existing Facilities Are Over Priced Due to Bidding Wars and REITs Paying New Record Prices Every Month. As A Facility Owner I Get Unsolicited Request at Least Twice a Month to See If I Want to Sell from Buyers Who Have the Cash to Buy Now.  Buy at 4 Million Vs. Build $2 Million = More Equity and More Profits
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  3. New Facilities Can Be Developed for 1/3 The Equity Requirements of Buying.
  4. You Reap the Rewards of Your Efforts Vs. Paying A Premium for Others Efforts.
  5. You Can Build in Phases So You Can Start Off with Lower Equity Requirements.

 

Chapter 5 

 Why Self Storage Now? – The Top Seven Reasons

  1. There Has Never Been a Better Time to Get Started.
  2. Extremely Profitable – 30% Plus Returns Vs. 0-10% Returns for Other Real Estate Development Like Apartments or Hotels. Self Storage Not Only Provides Present Day Income but It Also Provides Retirement Income.
  3. Abundance of Financing Options with Equity Requirements as Low as 10%. And interest rates at all time lows.
  4. Significant New Construction Is Required to Meet Pent Up and Surging Demand.
  5. Owner Life Style – Replace Your Income with A Manger Driven Self Storage Business with Automation: Franchising; Kiosks; Web Based Automation.
  6. No Painting, No Backed Up Toilets, No Midnight Calls and Just a Couple of Employees.
  7. You Can Keep Your Present Job with A Manger Driven System.
  8. Storage Authority Franchising Is Not Only Ready To Help You Compete With The REITs And Big Boys But Will Help You Surpass Them. They Are Ready to Provide You the How to Knowledge and Help You Need Get Off to A Fast Start and Provide You the Systems and Experience That Will Make a Difference.

 

If you want to have the complete book as a reference you can order it now for just $9.99 at www.SelfStorageMarketing101.com 

Chapter 3 Start Today!

Chapter 3

Start Today!

Thirteen things you can to do this week to get off to a fast start.

  1. Do a personal review to make sure you have sufficient time, energy and money to get off to a great start. After you read this book you will have a much better idea of the time, money and work it takes to build a self storage.
  1. Join your local State Self Storage Association and attend meetings.
  1. Subscribe to one or two Self Storage trade magazines: www.insideselfstorage.com or www.ministoragemessenger.com.
  1. Read the Zoning and Wetland regulations from the Town(s) you may purchase land in. Often they can be found online for free. Meet with the Town Engineer and Planner to discuss the permitting process for a self storage facility, where in Town they are permitted and the zoning regulations on self storage development.

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  1. Find a commercial realtor to help you with your search for land.
  1. Meet with your banker and ask about self storage loans.
  1. Meet with a local civil engineer to get rough time frames and costs for site plan design and approvals.
  1. Stop at every self storage you pass by and talk to the owners. Let them know you are thinking about starting your own self storage. Some owners will be reluctant to say much but many will be happy to give you tons of useful information.
  1. Join our LinkedIn group “Marketing Self Storage” for great marketing ideas and a forum where you can ask any questions you may have. Feel free to ask any questions you have too.
  1. Order your free developers “getting started packet” from http://www.trachte.com a premier self storage building manufacturer.
  1. Start a business plan folder today. A lot of the information you accumulate over the next several weeks will be used to prepare your business plan.  Your business plan will help you understand the costs, planning, work and risks associated with your new project.  When you apply for your loan the submission of a well prepared business plan will let the bank know you understand the self storage business and are well prepared. This can often help the bank make a positive decision in less time and often with better terms.
  1. Check out the fastest and most profitable way to get started in self storage www.StorageAuthorityFranchise.com  Don’t forget to read the blog for tons of great info you will need to build & market your self storage.
  1. Email me at marc@storageauthority.com when you have 3 of the above items completed for a free 1/2-hour phone consultation for faster profits.

You be amazed how quickly you start learning valuable information.

For the three self storage facilities that I built and presently own it took aprox. 1.5 years from when I initially decided (before I found the land) to finish building a facility.  The longest period of time for me was making the decision to build.  The rest went by quickly.  After you make the concrete decision to build self storage you have to find a piece of land that fits your needs, and negotiate an option to buy. If you already have a piece of land under consideration you are already off to a fast start. Then, your engineer has to design the project and get approval from the local municipal boards. After the regulatory approvals you have to do more detailed designs. Next, you have to choose a contractor(s) and, of course, you than have to build the facility. The more realistic you are about your time schedule the better prepared you will be, and certainly it will be a lot less stressful.

Need help – send me an email marc@storageauthority.com

 

 

Chapter 2 Fun Self Storage Facts

Chapter 2     Fun Self Storage Facts

  • The self-storage industry over the past 35 years has been one of the most profitable and fastest growing business opportunities in the United States.
  • The self-storage industry in the United States grossed approximately 24 billion dollars in fiscal year 2013 and is projected to grow approximately 30 billion by year 2019. This is a projected increase in growth of one billion dollars per year for the next five years.
  • Self-Storage new construction is booming throughout the United States, with over $580M spent in 2014.
  • Key drivers impacting the explosive performance in self-storage include the fact that there is little need for tenant improvements or paying lease commissions, which results in a higher net rental income than other commercial alternatives. Low maintenance requirements also contribute to an increased bottom line in performance. Self-storage has a low level of revenue volatility meaning self-storage is generally consistent regardless of economic conditions.

There are over 50,000 self-storage facilities today in the US. Compared this to 1984 when there were 6,601 facilities. Owners who own just one facility comprise over 30,000 of the 50,000 plus self-storages in the U.S. today.  But the word is out and the large REITS and other wealthy organizations are pumping in millions and millions of dollars of smart money, buying recorded numbers of self storage facilities.

  • Increasing population, mobility and rising household formations, together with a limited pipeline, will keep self-storage conditions exceptionally tight.
  • Americans continue to store more stuff year after year. Approximately 9% of all American households currently rent a self-storage unit.
  • There are currently more self-storage facilities in the United States than there are McDonalds and Subways combined.
  • Some 68% of all self-storage renters live in a single-family household; 27% live in an apartment or condo.
  • Some 65% of all self-storage renters have a garage but still rent a unit; 47% have an attic in their home; and 33% have a basement.
  • The approximate self-storage demographic distribution of U.S. households are as follows: 32% urban, 52% suburban and 16% rural
  • The average revenue per square foot varies from facility to facility; however, here is the data for Q3 2014: $1.20 PSF for non-climate controlled 10′ x 10′ unit and $1.53 PSF for 10′ x 10′ climate controlled unit.
  • Some 47 percent of all self storage renters have an annual household income of less than $50,000 per year; 63% have an annual household income of less than $75,000 per year.Planning-SiteSelection-Design-Build
  • As the U.S. economy continues to build momentum, demand for self-storage facilities will continue to rise.

 

 

Chapter 1 Should You Take Control of Your Destiny with Self Storage

Your Self Storage

Planning – Site Selection – Design – Build

Over 150 proven ideas to save you time and money and make you a success!

By Marc Goodin

Chapter 1

Should You Take Control of Your Destiny with Self Storage?

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So you’re looking for something different?  Maybe you were like me and enjoyed a great career but after twenty-five years doing the same thing you thought it was time for a change.  As a civil engineer I worked with a lot of business owners and entrepreneurs but most of them did not have the life style, flexible work schedule and income I desired.

There was one guy who had both time and money and he owned self storage.  His visit to my office over 26 years ago changed my life.  Please let me share what I learned from that visit and later experienced firsthand to be true.

Why Start a Self Storage Business When I Already Owned a Very Successful Business?  (Civil Engineering Company in my case)

Be Your Own Boss:  And just as important for me – there are next to no employees compared to most businesses and no company politics to deal with everyday.

 Flexible Work Schedule:  I was able to keep working at my engineering business full time. Then one day I had replaced my engineering income and retired from engineering.  Now my managers run the day to day business for my 3 self storages while I take care of the big picture and work in the office now and then for the fun of it.

Control Your Own Future and Security:  Even as an owner of an engineering business I was trading dollars for hours.  And there were never enough hours in the day.  Self Storage provides a kind of residual income for life once you get it running on all cylinders.  And all along you are building equity so you can have retirement income when you’re ready!

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Growth Opportunity and Limited Risk:  I was willing to work hard but I did not want to risk everything I had already accomplished so I looked for a growing industry, with high profits and high success rates.  If you check out the self storage industry like I did you will find:

  • Self storage has higher long term return rates of all the major real estate categories including; Apartments, Office buildings, industrial, and retail and cost less to build.
  • “The Self Storage Industry has been one of the fastest growing sectors of the United States Commercial real estate industry for the period of the last 35 years.” Self Storage Association Fact Sheet
  • Self Storage is presently a $25 Billion a year business and projected to grow a whopping Billion dollars a year over the next five years.
  • Self Storage customers are located everywhere and more and more people are using self storage every year.  Self Storage renters are as follows:
    • 41% Long term residential customers
    • 32% Short term residential customers
    • 19% Commercial Customers
    • 4% Military Customers
    • 4% Other
  • Many self storages are under managed or poorly managed, including the REITs, allowing a knowledgeable owner to do better than the industry incredible returns. (Crush The Competition)
  • Building, owning and developing operational systems for my three self storage facilities has made a huge financial difference for my life.  Just as important the personal fulfillment, enjoyment and satisfaction has been very significant.

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What Are Your Next Steps?

Don’t take my word; check out the facts on your own.  Visit a half dozen self storages and see if you can talk to the owners.  This book will give you some more information and places to get additional information as well.

The Good, The Bad & The Ugly

The Ugly

Your success and your dreams are up to you.

We are ready to help but you have to make a decision to start and then pick up the phone and me (860-830-6764).

Unfortunately, we have to admit that perseverance is not the most human trait.  People often refuse the truth because it is inconvenient. Accepting average or status quo is the enemy of great success. Too many people have told me “I was going to build a self storage but you (or someone) beat me to it. There is always an excuse if you’re looking for one.

Don’t wait!  Get started today.  Action will give you the results and belief you need.

The Bad

Your success and your dreams are up to you.

I have so often heard people saying, “I understand” and then I see them doing the exact opposite of what they thought they had understood.  It is only when you put into practice what you have understood that you can really say that you truly understand.

Don’t wait! Get started today!  Actions will give you all the results and belief you need.

The entrepreneur, the professional, the self storage owner, the investor, you – anyone who wants to build a self storage facility and take control their destiny will value the ideas in this book.  It will provide a simple plan and required research that you can use to make your dreams come true; all you need do is make the choice to succeed.  In this book, there are over 150 practices that have been outlined to help you plan, design and build a better self storage facility and make more profits.

“Self storage is easy, does not take a lot of planning or time or out of pocket money and always makes money.” There is nothing further from the truth, but I hear this all the time. For a typical self storage facility of 50,000 square feet you may invest $400,000 or more of your own money, borrow over a million dollars from the bank, and will personally spend many hours learning and planning before you rent the first unit. But a properly planned, operated and funded self storage facility can be a very rewarding and profitable business.

As soon as your self storage business is under construction everyone is going to tell you “I was going to build a self storage” but I never got around to it.  You are taken the first step by reading this book.  The second step is to take action every day until your dream comes true. You Can Do It!

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Why do I mention Storage Authority in this book?

Throughout this book I am going to mention Storage Authority Franchising.  At first you may think my goal is to advertise my Self Storage Franchise company. But I hope you understand, what I have realized after helping others in the self storage business for many years. Plus there is tons of great free information on the Stoage Authority News Room Blog from how do a mini demand study to 150+ K Kamrts that are closing, maybe in your town, that would make a great self storage conversion project.  One out of a hundred people (or less) who read this book will start their own business.  While in many respects, self storage is easy it is not simple and getting more complex everyday with very little help out there to get you started.

If you are the one in a hundred that will start your own self storage business on your own you can skip the Storage Authority information.  Or better yet check out Storage Authority in detail and see how we are changing the self storage industry from customer guarantees, to apps, to reward programs, to internet platforms, to customer satisfaction, to sales and marketing and many other state of the art platforms so you do not get left behind and get crushed by the competition.  Either way I believe this book will help you save and or make tens of thousands or even more before you open your doors.  I know You will definitely get your moneys worth and will even use Storage Authority as your guide.

If you are not sure if you are the one in a hundred, then most likely you are not.  The good news is I have referenced Storage Authority so you can consider joining us and taking what I believe is the fastest way to oversized self storage profits.  Our time, expertise and experience becomes yours and together, your success can be just around the corner.

Chapter 2  Fun Self Storage Facts – coming next week

You can purchase this boo and other books by Marc Goodin at entire www.SelfStorageMarketing101.com