It has been an interesting year for many of us small investors in the self-storage space.
I have definitely been involved in fewer deals. It is much harder to make them pencell out.
I also have some that I had to walk away from.
First, I am not sure what we are going to do because it is an Opportunity Zone deal where some of my sales proceeds went. But that is another episode.
Some Challenges
Perhaps the issue that has caused the most headaches for us and many I work with is not the high interest rates; it is the ever-evasive ability to lock in construction costs.
- Fabricators won’t lock in cost until fabrication has started.
- It occurs like many of the trades costs go nowhere but up.
- A year ago, I was paying $5.50 psf for concrete. I have recently seen it as high as $8.50 or more.
So, all of this makes deals we have closed on or under contract much slower.
Not to mention how much fun we are having with lenders.
As I work with people, for many, the biggest challenge I have is not all the “stuff” we are dealing with, it is what this “stuff” does to our mindset, our thinking.
In reality, rising costs, high interest rates, and tight lending are just rising costs, high interest rates, and tight lending. They are neither good nor bad.
The Context is Everything
I think I have learned over the years that the context, or let’s say, the worldview someone has, determines how the “stuff” occurs to a large degree.
I have also learned not to really listen to what people say they believe. I’m a positive person,” or “I see the glass half full.”
All one really has to do is watch how someone deals with “stuff” to see what the belief system is.
It can be especially humbling as I watch myself at times.
So, let’s use the “stuff” of 2023 to illustrate.
Let’s create context. I will not name it; let’s just call it Context A.
If context A is one’s worldview or context through which they see things, the stuff in 2023 would certainly be a problem and should definitely not be happening.
High interest rates and high construction costs are bad and are definitely not supposed to be happening.
If life, if people and the politicians were doing things right, this “stuff” would definitely not be happening.
Not only this, but these problems are experienced as personal. These things should not be happening, and because they are, I am personally offended.
Context A may sound like an extreme example.
But is it really?
Many people I deal with experience the “stuff” of 2023 in varying degrees within a context like this (myself included).
Let’s create Context B.
In this worldview, although there are some real issues to deal with, these tough issues are also a blessing.
The higher interest rates and construction costs have drastically reduced the number of buyers out there.
CAP rates are rising, and new products being brought on will certainly have less new space as competition.
Deals may be harder to do, and we may do less of them, but the ones we do will be killer.
This is a real opportunity to create some wealth.
The same “stuff” occurred. But the context in which they are viewed determines whether they are problems.
The context is decisive.
Now, most of us have a worldview somewhere between these two extreme contexts but lean more towards one or the other.
Both of them are valid. Both of them are “right.”
Neither one of them is “true.”
Being Human
Every now and then, it is appropriate to stop and marvel at the power of the human mind.
It is very powerful.
Sure, it is responsible for a lot of pain and suffering, but no one who really takes time to think about it can’t be impressed by the immune power of the mind.
In this example, the mind later creates the reality and experience we, as self-storage practitioners, had in 2023.
For some, it was bad, hard, and a pain in the butt that is now over.
For others, yes, it was challenging, but what an opportunity. They are very excited.
Most of us are somewhere in between.
I say all this because I am creating 2024, and I really had to look at what mindset I wanted to create.
I am aware I have a propensity to slide into cynicism about people, situations, and institutions.
This does not serve me as an entrepreneur, and I am creating a new context in which 2024 can unfold for me.
Yes, you may now realize it, but it is possible to create new worldviews.
There certainly is a pull from the habitual one we have lived in, but we are not stuck there.
I realized I slid towards sacristy, fear, and cynicism.
In 2024, I am creating something different.
What is your 2024 going to be like?
