I thought I might take a few episodes and discuss what we and others are doing differently and adjusting in our acquisition and management practices, as we go deeper in self storage during COVID-19.

This week we will discuss acquisition, next week management.

I have received a few emails from you all with different questions about self storage in the age of COVID-19. Here is one in particular I received last week.

Hi Mark,

Hope you and your family are well. I have followed your blog for some time with great interest, and we have spoken by phone once or twice a few years ago.

The reason for my email is that my business partner and I have for a few months been in the process of acquiring a site for a new ground-up facility. We are past due diligence and have some money into the deal, which we believe is a good one. ███ ███████ did the feasibility study for us and according to ███, the project is a go. My question is, given the current market environment, do you think it is wise to continue with the project? We know that long term the business will continue to be great, but no one knows how long it will take for things to settle down.

Very interested in any feedback you may have. Thanks very much.

I didn’t respond immediately. Instead, I took a moment and really thought through what I should say. 

Here was my response.

You have just asked the multimillion-dollar question.

I can tell you what I am thinking today, and I reserve the right to change it tomorrow.

Here is what I would be focused on today if I was in your situation. First of all, how strong is the submarket? If there is, or was, strong demand, that is good. Next, I would be running my numbers with slower lease-up numbers and seeing how that looks. What does it look like if my concessions are more in the first few years?

Here is what I try to do, always have the long term goals win out over the short term goals. For example, I have a little money in the market. I am not a timer (no one is, I think), so I let my money ride this out because, in the long term, the market always goes up.

I also try never to let fear run my decisions. I know it is scary. If I had run different scenarios and it still works, I would pull the trigger no matter how scared I was (I hope I would). I know in the last Great Recession, occupancies dropped 6% to 8% on average for stabilized properties, and ones in lease-up slowed down in lease-up. If your project can withstand that and still looks good…at least I hope, I would pull the trigger.

However, if the numbers at a slower lease-up don’t look right, or I don’t have the funds to service debt if it takes an extra year to lease-up, I hope I would know when to walk.

But if it were me, I would try not to have my decision be made out of fear. Just a realization, I don’t have the funds to handle a slower lease-up.

All I know is in harder economic times, self storage is the asset class to invest in.

Good luck and let me know what you do.

I have become more bullish since I wrote that response because of what I see in our facilities.

We have one that has lost some occupancy, but overall so far, our projects are doing well. 

I am also seeing prices for self storage for sale coming down.

I think now is a time to seriously consider getting in self storage. 

Remember, one of the main drivers for self storage is transitions in customers lives. Both good times, bad times, and scary times cause transitions.

In the last “Great recession,” storage did much better than every other real estate segment (student housing and medical office also faired well). That is why it caught the eye of everyone and took off after it was over.

Thank goodness I was in self storage during that last downturn. It sure carried me. I went 18 months with no income from my real estate business.

I would strongly suggest now is the time to devise a strategy, perhaps different than you may have a few months ago, but design one for your entry into the self storage business soon.

Which leads me to tell you if you are reading this in early April, 2020, while we are deep in the grip of rising lines about COVID-19 in all the newscast, I am offering an online, virtual QuickStart Academy Boot Camp April 10th & 11th.

It is the same event I planned for live.

It will be online and have all the resources you would get at a live event. You are just at home rather than a hotel room.

If you realize that a “secure” job may not be as secure as you thought, or if you have been thinking about getting in self storage, but been too busy…this is for you.

The people who attend this event will own self storage this year if they choose to.

One of the big drivers I see is people wanting to take charge of their lives and create dependable cash flow and increased net worth at the same time. They want the experience of working for their own goals and dreams and not someone else’s. 

If this is you, depending on where you are in the country (I only have one person in the event from any particular area of the country or market place as to not create competition in the group), click here to learn more and register.

If you are reading this after the event, check CreatingWealthThroughSelfStorage.com and see when the next Boot Camp is.

Thanks, and stay healthy, well, and prosperous.

Click Here for the Live Event Information and Sign-up