Price of Land? No! We have had multiple franchise owners find land for what I would consider half our price goal. We are seeing more and more lowball offers getting accepted. Even if you saved $500,000 on the land cost that is around $3,000 interest a month saved when financed. But certainly not enough to make or break a site. And certainly, no reason to pay less for an inferior location.
Loan Interest rate? No! I built my first self storage in 2008 with an 8.5 percent interest rate. Was I happy? Of course not. But in the end, interest rates came down and I refinanced. Now I am so happy I was not one of the ones who said they would wait out the rates and then never built.
And if you have studied self storage at all one of the best times for self storage rates and profits for self storage was right after rates came down. Now is the time to start so you can be open by the time rates come down.
No Competition? No! That rarely exists.
The best designs? No! But good designs and a good development team are very important.
There are a dozen important items required for new self-storage development but none more important than your ability and willingness to be in the hospitality, service, and sales & marketing business!
You can literally double your profits by building vs. buying an existing self storage.
I read on one of the Radius team member’s social posts you need to be able to charge $1.7 per square foot to build with today’s development costs. That rental rate is higher rates than what presently exists in over half the US. That means you will typically need to charge more than your competition.
A lot of people may think that providing over-the-top/remarkable service and then knowing how to market your business and then knowing how to close the sale is simple. If it was so simple, why don’t 95% of the self-storages not even get close to good sales and marketing? You have to remember most of your competition has a mortgage of less than half what you will have. They are making a ton of money so they would rather have the free time than implement an ongoing superior sales and marketing plan. Also don’t forget you will be in the same boat down the road when inflation brings the cost of new construction to double what it is today.
I recently reviewed a P & L for the proposed location with a franchisee. The existing competition rates ranged from $1.20 to $1.50 per sf and he asked if I thought he could get $1.70/sf.
Storage Authority has bidding and Construction experience to help you go around the minefields.
The first step was to visit the competition to determine their real rates, how full they are, and most importantly are they real competition. There are a lot of facilities you and I would never rent in for one reason or another if we had a better choice. And our hospitality sales and marketing will crush good facilities where the managers don’t even show a unit to a prospect, never mind call a prospect by name and ask them if they want to rent.
My answer to our franchisee was it is possible if you are willing to learn and follow our system and put in the time. That sounded like a quick yes to them until I explained they would personally have to provide 8 hours a week of sales & marketing. And proceeded to tell them what I did when I opened my self-storage during the great recession of 2008.
We did not have kiosks or online rentals back then, but I did have an after-hours sign on the door that read: If you want to rent after hours call now and I will be there in 5 minutes. If you have the right attitude and you’re willing to learn, do the work, and yes even put a sign on the door to call you can charge 20 even 30% more than the competition.
You might think it’s tough now, but I also had steel prices increase significantly just before I bought my buildings. Not only did we have high interest rates, but most banks were also NOT loaning a penny. So, you can imagine the terms were rough. There was even a clause that said if I refinanced, I had to pay them all the profits they would have made. It was a huge prepayment penalty, but the bottom line is I got to retire when I turned 50 because of my self-storage income so who really cares?
If you’re into marketing and understand the value of being the Ritz vs. Motel 6, I would love to hear from you.
You can do it!
Do you want to have a 15-minute call to learn how Storage Authority helps improve the systems, sales, marketing, and profits at your existing facility? If you are building from the ground up let’s also review how we help you find land and get your facility designed, approved, and built.
Please send me an email or call me – no appointment is needed:
marc@StorageAuthorityFranchise.com or 860-830-6764
Get more information on Storage Authority Franchise at www.storageauthorityfranchise.com/opportunity3
[Marc Goodin is the President of Storage Authority Franchising (www.StorageAuthorityFranchise.com) owning 3 self-storages he designed, built, and manages. He has been helping others in the self-storage industry for over 30 years and can be reached at marc@StorageAuthority.com or directly at 860-830-6764 to answer your franchising, development, marketing, sales, and operations questions. His best-selling self-storage books are available on Amazon.]
