I was thinking the other day, asking myself the question, “If I could only do one more type of self-storage deal, what would it be?”

I have been taught that it is the questions we ask ourselves that determine the quality of our lives.

It is also the questions we ask ourselves that determine the quality of our businesses.

Want a better life? Want a better business?

Ask different and better questions.

I would like to think that is where this question came from.

My wife might say it is just because I’m weird.

But the answer was right there…instantly.

What My Answer Was

Perhaps the question came from the fact I am doing fewer projects than I did in the past.

When I wrote the book Creating Wealth Through Self Storage, I was building a $60 million self-storage portfolio.

That portfolio developed in the form of two brands, which were both sold off during the height of the Low CAP rate days of 2018-2021.

Both to REITs and funds.

So, I am back at it, but at a slower pace in various partnerships, and I am not trying to build a brand anymore.

At least for the moment.

I am currently involved in expansions and Boat & RV development (with some self-storage in that project included).

What was interesting to me was that neither of those was my immediate answer to that question.

Now, I know everyone who is in the business will answer that question differently.

I also know there is no ”right” answer.

I further suspect that different answers are heavily filtered through individual past experiences.

And finally, there is something to be said for having a balanced and diverse approach to building a portfolio of projects, having various types of projects in various markets.

Now, with all that said (many of you can probably guess now), my answer was conversions.

If the Universe, or a Higher Power running the universe, told me I could only do one more deal, or only do one type of deal, you choose…I would choose conversions.

Why?

First off, because I have made more money doing conversions than perhaps any other type of project.

I like them because in many ways today, it is easier to do a deal on a vacant building than an existing self-storage project. It is easier to get longer due diligence time, and I am not having to deal with unreasonable CAP rates expectations from Sellers living the 2019 CAP rate reality.

I also do not usually negotiate against well-funded groups with more cash at a lower cost than I do.

Also, I can sure bring most conversions to market and start renting units much faster than I can ground up development or expansions (which is like mini-ground up development).

My re-development costs are usually one-third or more less per square foot than expansions or new development.

I can usually generate rental income in before I rent my first unit by leasing part of the building to a different type of user while I phase in my conversion of self-storage (I have done this on every conversion but one).

For the dollars spent and calories used up, I usually create more value because most conversions are all or mostly climate-controlled units, which generally get the highest rental rate in any given market.

Also, I personally like the idea of recycling an existing building instead of taking green fields and converting that to self-storage. (Just my personal preference, although it has never stopped me from ground up development).

(I wonder what that really says about me?)

Anyway, this is why I like conversions so much.

Cautions

Now, my wife tells me I see the world through rose-colored glasses.

I do.

Perhaps that can also be a strength, although it can cause some problems and create a short half-life of remembering those problems.

But just to be “realistic,” here are some cautions.

1. Make sure you have a higher contingency percentage in your re-development construction budget than other types of deals. One never knows what surprises may be in or behind walls, under buildings, or what may be required to be done by governmental regulatory agencies after initial approval has been granted. All of the above have happened to me.
2. Roofs can be a pain sometimes. It is a lot easier to deal with a metal standing seam roof or a metal screw-down roof, than most roof systems you will deal with in conversions.
3. It is harder to find suitable buildings in suitable locations. In most cases, it is easier to find raw land or existing self-storage projects with expansion land.
4. I am sure there are others, but I just can’t think of them now. I really like conversions!

 A further caution.

Just because I like them doesn’t mean conversions may be right for you.

I’m not sure why they may not be, but they may not be for you.

Anyway, I do a lot of “Thought Experiments” (I think I got that from Napolean Hill), and the most recent one I did was answering the question:

“If I Could Only Do One Type Of Self Storage Project It Would Be….”

Let us know your answer to that question.