When I ask people why they are getting in the self storage business, I usually hear answers like:
“It is a good sector.”
“I hear it is doing well today.”
I often hear, “I thought about it a long time ago and wished I had then. Now I am ready”.
OK…. but not good enough.
Tony Robbins says that “the quality of your life is a function of the questions you ask yourself.”
What Is Your Why… Really?
If you are a small investor trying to alter your life and make something great possible for you and your family and you want to get into the self storage business and grow it because “… it’s a good sector to be in” …well you probably won’t be in the self storage business.
I know just a few things for sure. One of them is it is going to take ten times (sometimes 100 times) more time, energy, and resources to get in the self storage business (or any business for that matter) than you think.
It takes way more time and patience than it did even a few years ago to find good submarkets. Financing is still low on interest rates, but in many ways, harder to get today. Loans take longer.
You are going to get curveballs, surprises, and roadblocks thrown at you, and you are going to have to creatively solve them and go through whatever blocks arise to achieve your goals.
You are going to have to reach down in yourself and find answers and strengths you didn’t realize you had.
And if what is driving you is to get in the right sector or to do something you wish you had done a few years ago; well, it isn’t going to be getting easier. Forget it and go on to the next thing.
The self storage business will be something you almost got in once.
My coaching is to get to the real reason why the self storage business is pulling at you.
It’s Not The Money
Now the first or second place most people go is the money. You may think you want to be in the self storage business to make good money.
I will give you a hint; it’s not the money either.
There are a lot of ways to make money. Why self storage?
Look, when it gets hard out there, and it will, the money will not be a strong enough “why” to keep you moving forward when quitting would be easier.
Ok, if it’s not the money, what is it?
Well, what do you think the money will provide you and your family?
Dig deeper. Find out what is actually moving or pulling you.
For many, they realize they want to be their own boss and own their own business, and self storage combines and uses all their training and strengths.
For me, I realized in my 50’s the trust my father set up to handle his estate did not have near the net worth I thought it did. I had always believed my retirement was set up, and it was a rude awakening that what was in place wasn’t near enough to provide for how I wanted to live.
I had was focused on growing a real estate business, not creating a retirement or anything for the next generations.
I realized I wanted to leave a legacy for my grandkids they can either take over, or reap the fruits of after I am gone.
self storage for me became the way for my family’s well being in our old age or after my death.
There are a lot of things I will not do, but for my family and legacy I am creating, nothing will get in my way; no economic conditions, no strange seller, no partners, no market conditions, or no secure financing. I will do whatever it takes to plow through and set up the strategy we have in place, because it is the most important thing I can do with my time and energy today.
What is your why?
The Most Important Question You Can Ask
In my opinion, this is the most important thing you can create for yourself. It will keep you going when things get hard. Your strategy, your goals, your tactics are going to change and evolve, but your WHY will always be there, and that is what will not alter and keep you going.
When you get that, now you are ready to begin setting up your business strategy.
I think there are three parts to a business strategy.
The first is given your WHY, how many or how big do you need your self storage business to be? How much cash flow, or real estate value, or net worth are you wanting to create?
Are you getting in primary for the monthly cash flow? How much do you need?
Are you trying to create a specific portfolio size? A certain net worth?
I would start getting clear, or at least clearer on how many and how big you see yourself trying to create.
Is it just one facility (which is an excellent strategy by the way), or is it a bigger plan.
How much money and how many facilities do you need to fulfill own your WHY?
You don’t need to have the exact numbers at this moment to proceed on. But it is essential to be thinking about it, and as you learn more about the business, the numbers of how many, how big and where should the facilities be, will begin to clear up for you.
The second part of designing a business strategy for your self storage business is: What strengths, if any, are strengths needed to execute a self storage acquisition plan that you do not have?
Said another way, do you have all the money, knowledge, borrowing, and financial strength to get a loan, and the ability to run a self storage business?
Walkthrough every step you can think of it takes to find, buy, finance, and run a self storage facility.
Where are you strong, and where do you need help?
If you are interested in a “Business Strategy Worksheet” for self storage business that can help you, can click here.
It walks you through these questions and steps.
I was able to find and analyze the deals. I could not run the facilities or oversee the running of them; it is just not my strong suit. I didn’t have the money or the borrowing power to pull off the number of facilities I needed to create the income I wanted for my family and legacy.
So I organized myself in a way that gave me the Partners for the borrowing power and the running of the business, and Investors for the money needed for the portfolio size I needed.
Where will you need help and support? How will you get that help and support, vendors, partners, and/or investors?
The third part of a good Business Strategy is “what return does each facility have to generate to fulfill on your Business Strategy?”
I realize at first this may be hard to get exactly, but you should be able to get a good idea. Doing this makes analyzing the facilities you are going to look at very easy.
For example, if you want to own one facility debt-free when you leave your job in 10 years, and you need $250,000 per year to live on, that tells you what you need the facility you are going to buy to do.
You would pay the amount of money needed to be able to pay the debt off in 10 years with all the net cash flow each year, and that will be generating a net $250,000 plus cash flow in year ten.
Based on my goals and the way I had to organize based on my strength and weaknesses, I needed to (1) be able to generate an average of 11%, or 12% preferred cash-on-cash return in years 1-5, and (2) create enough value to be able to refinance by year 5 and pay the initial down payment back to the investors, plus any deferred preferred return.
Now life is simple.
I run each deal through the financial analysis program, and it determine what price I can pay to achieve the above goal to fulfill my business strategy.
When I get to that price, that, or close to that, is what I offer.
I need to run enough facilities through the formula and generate enough offer to get to the overall number I created in my Business Strategy.
The reason this is a critical first step is because you are going to see a lot of self storage facilities in a lot of places at all kinds of different price points and conditions.
Your Business Strategy will begin to inform you where to look, what to look for, and, most important, what you can pay to win at the game you created in the Business Strategy.
Now you are ready to begin looking.
I know your Business Strategy will evolve and change as you get in and begin to grow. Mine has.
For example, I now realize many of the opportunities in today’s market are in the secondary markets and around the MSA’s of larger markets. That is where we are focused so that I don’t have to compete head-on with the REITS, and larger players can pay a lot more than I can.
Initially, my Business Strategy had us focused in cities over 500,000 in population. That has changed as the market evolved.
But what doesn’t change is my WHY? Why I am building this business.
If you do this part of building a self storage business right, the rest follows much faster. I said in the book I wrote, “Creating Wealth through Self Storage”. …” My business transformed when I got clear on my business strategy.”
