The quality of your life is a function of the questions you ask yourself.
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 wish I had then. Now I am ready”.
OK….but not good enough.
Your Why
If you are a small investor trying to alter your life and make something great become possible for you and your family that isn’t possible now, and you are going to go through all it takes to get in 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 10 times (sometimes 100 times) more time, engird, and resources to get in the self storage business (or any business for that matter) than you think.
You are going to get curve balls, surprises, and road blocks 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 a good sector or to do something you wish you had done a few years ago; well it is going to be easier to just forget it and go on to the next thing.
The self storage business will be something you almost got in once.
Your Real Why
My coaching is to get to the real reason why the self storage business is pulling at you. And I do believe you can create for yourself the self storage business is choosing you. It chose me! (I created that in my belief system and now for me it is true. That is how that works).
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 pull to keep you moving forward when quitting would be easier.
So why is it. What will the money you think is the answer give you and your family?
Dig deeper. Find out what is really moving or pulling you.
Let’s Go Deeper
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 came town my 50’s and realized 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 also 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 thing 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 market conditions, or no tight financing. I will do what ever 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?
In my opinion, this is the most important thing you can create for your self. 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.
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 certain portfolio size? A certain net worth?
I would start getting clear, or at least more clear on how many and how big you see yourself trying to create.
Is it just one facility (which is a great strategy by the way), or is it a bigger plan.
I decided that given what I I will deuces below in the strengths and weakness section, and because I wanted a fairly large monthly and net worth number, I was better owning a smaller part of a larger portfolio. The portfolio would be made up of facilities in many different markets to spread the risk over more markets.
I also didn’t need as much income now as opposed to later when I am retired or when I am not around to provide for my family.
So I organized in a way that gave me some income now, more later, and allowed me to get facilities in multiple markets.
How much money and how many facilities do you need to fulfill on your WHY?
It really isn’t critical you have the exact numbers at this moment to proceed on. But it is important 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 ability to run a self storage business?
Walk through every step you can think of it takes to find, buy, finance, and run a self storage facility.
I was able to find the deals, analyze the deals, run the facilities or oversee the running of them. I just didn’t have the money or the borrowing power to pull of 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 s good idea. 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 tell 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 in year ten.
Based on my goals and 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 off 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 if determine what price I can pay to achieve the above goal to fulfill on my business strategy.
When I get to that price, that, or close to that, is what I offer.
I just need to run enough facilities through the formula and generate enough offer to get to the over all 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 faculties, 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 your game you created in the Business Strategy.
Now you are ready to begin looking.
I know you 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 todays market are in the smaller towns in 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 who’s cost of capital is lower than mine is.
Originally, 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.”
