I have noticed an interesting thing as I have coached and consulted people over the years getting into the self storage business.
Usually, someone early in their self storage journey is attracted to the business because of the anticipation of the freedom running their own business offers and the cash flow these projects can spin-off.
But some, and mostly when they start, this is not always on their radar or part of their business strategy, get motivated by the value or money they can create by developing or doing their value-add play.
I know two, in particular, I have worked with over the past two years that pivoted to altering their business strategy to sell the projects after they hit or get close to stabilization.One person in particular, as they got close to the period where they just run a project that is stabilized, and all the additional value has been created and the only upside was the running of the project and keeping income growing over expenses bolted out of the deal.
The prospect of running a facility didn’t seem anywhere near as exciting as creating the wealth the birthing of the projected creates.
He wakes up every day as a developer.
For this person, creating wealth is where the juice is for him.
He has also been in a market where rents dropped significantly with oversupply, and I am sure that also plays a part. But the reality is this person is a developer.
Most other people I work with sweat, worry, pray and move as fast as they can through the value-add and construction portion of the deal; then they lease-up ops, and they can finally get to running the facility or multiple projects in a portfolio, and arrive to the place that was their goal all along.
The value add or coming out of the ground is a necessary part of the deal to get to the place where they can finally have a project to run.
They wake up every day as operators.
I am highlighting this distinction because as you begin to design your self storage business strategy, really look and see if you can determine if you are a developer or operator.
Don’t just assume because self storage can generate great cash flow; this is what attracts you or that being an operator will be fulfilling for you.
Perhaps it is some combination of developer and operator.
I am creating this episode now, especially for the people attending the next live virtual boot camp coming up on Nov. 11th & 12th, 2022. Think through this as best you can, knowing what you know about yourself and self storage at this moment.
Many can’t truly know until they create their first or second project, but I bet if you have some self-awareness, you can get close.
So the question is, in the self storage space, are you a “developer” or an “operator?”
Perhaps both.
