You can watch the FREE video of this presentation on our website: http://www.hasslefreecashflowinvesting.com/video/webinar-secrets-of-self-storage-investing/ There are a lot of ways to make money as a real estate investor. Whether you invest in houses, office buildings, apartments, or self-storage units, each property type has it’s strength’s and weaknesses. If you’ve ever considered investing in a self-storage property, you’ll know that the cashflow and profits can be quite impressive. In a sixty minute free webinar with David Campbell, professional real estate investor, and Jon England, CCIM SEC, you'll learn: 1) How to make money as a self-storage investor 2) The pros and cons of self-storage investing 3) Whether self-storage investing is right for you 4) The physical and intellectual components that make a successful self storage facility 5) How to evaluate a self storage facility’s finances, unit mix, and supply and demand to spot a “great deal” 6) And much more!

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Secrets of Self-Storage
Investing
David Campbell Jon England
Professional Investor SEC, CCIM

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Today’s VIPs
(very important points)
• A good investment is one that’s good for YOU
• Commercial real estate basics
• Why self-storage?
• Is self-storage investing right for you?
• Spotting a good deal
• Case studies

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David Campbell - Founder
Hassle-Free Cashflow Investing
Former high school band director
Self-made multi-millionaire
Real Estate investor / developer / broker
Financial educator / author / speaker
Houses, condo-conversion, multi-family, winery, resort, office,
retail, medical office, production home building
Faculty Member: Investor Summit at Sea with Robert Kiyosaki

4. Jon England, CCIM, SEC
• Investment Sale Broker since 2001
• Brokerage of 12 self storage facilities totaling 600,000 SF / 3,700 Units.
• CCIM Designation in 2006 (Certified Commercial Investment Member)
• Counselor in the Society of Exchange Counselors www.secounselors.com.
This is the most exclusive creative real estate organization in the world that holds invitation only
meetings to invest and market commercial real estate.
• Active investor and manager of several real estate partnerships.

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Disclaimer
This is NOT
legal, tax or investment advice.
No agency created.
Educational only. Consult your advisor.

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Profit
ROI =
(Money + Time + Hassle)
We all want more profit with less invested

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Cash Throw Off
from
Rental Income

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Equity growth
from loan amortization

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Tax savings
from depreciation

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Equity growth
from appreciation
(CAP Rate Compression)

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Equity growth
from rent increases
(income/CAP)

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Arbitrage
CAP Rate > Interest Rate
8% RETURN - 5% COS T of BORROWING = 3% PROFIT ON BANK’S MONEY

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Equity growth
from Lease Renewal
Longer term lease = lower CAP

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Equity growth
from increase in
tenant or property quality
Stronger tenant = lower CAP

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Forced Equity from
improved tenancy
or development
Higher NOI = Higher PRICE

16. Why Self Storage?

17. Why Self Storage?
According to the Self Storage Association Fact Sheet:
• One of the fastest growing commercial real estate sectors
• 49,940 “primary” self storage facilities in the US.
• Top 5 self storage companies* own and operate 9.8% of all
primary facilities.
*(Public Storage, Extra Space, Sovran, U-Store-It REITS and U-Haul / non REIT)

18. Why Self Storage?
According to the Self Storage Association Fact Sheet:
• 22,000 small business entrepreneurs who own and operate
just one facility.
• New construction is down
• Only 450 new facilities came on line in the US in 2010 and 2011.
• Development peak in 2004-2005 when 8,694 facilities were developed.

19. Why Self Storage?
According to the Self Storage Association Fact Sheet:
• It took the self storage industry more than 25 years to build
its first billion square feet. It added the second billion
square feet in just 8 years (1998-2005)
• Ten percent of US Households currently rent a self storage
unit, an increase from 6% of US Households in 1995.

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Self Storage
Advantages:
• Low Maintenance – (No Toilets)
• Steady Cash Flow
• Lower operating expenses
• Low loan default rates
• Month to Month leases
• Inflationary hedge
• High barriers of entry
• Multiple profit centers aside from renting units
• 3rd Party Management is available

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Self Storage Myths
E D
S T
BU
T H
• Passive Investment
MY
• If you build it – customers will come
• Location isn’t important
• A mom & pop can’t compete with the REITs.
• Why own a facility when I can make more
money at storage unit auctions?

22. Is Self Storage right for you?
• Do you currently own a bunch of residential, retail, or other
commercial real estate? Self Storage may an ideal way to
diversify your portfolio.
• Self Storage often said to be 20% business 80% real
estate. (This is not a NNN investment)
• Employees….
• Passive vs Active

23. Facility Types
Class A Properties
• 2000 to present.
• Mostly REIT and large company owned – especially in urban markets.
• Prime retail locations
• May include car washes and other retail oriented businesses as part of
their operation
• Offer multiple camera video surveillance and door alarm systems.
• Construction Materials:
• Brick
• Glass
• Single and multi-level properties

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Facility Types
Class A Properties

25. Facility Types
Class B Properties
• 1980s to 1990s
• Ownership combination of Mom & Pop and REITs.
• Seasoned Facilities – many are location driven
• Construction materials:
• include metal and block buildings
• chain link or other fencing
• May offer climate controlled units
• May include manager’s residence on site

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Facility Types
Class B Properties

27. Facility Types
Class C Properties
• 1960s to 1980s
• Mom & Pop. Largely rural and smaller facilities.
• Low cost provider of storage.
• Construction materials:
• metal/wood buildings
• swing doors
• no gate
• gravel driveways.
• Most will need to be converted or will eventually become obsolete

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Facility Types
Class C Properties

29. Self Storage Components
Unit Sizes
• 5x5
• 5x10
• 10x10
• 10x15
• 10x20
• 10x30
• Parking

30. Self Storage Components
Unit Mix is Key!!
• Does the facility have multiple unit sizes?
• How balanced is the mix?
• Are vacancies all one size?

31. Self Storage Components
Unit Type:
• Traditional Storage
• Climate Control Storage

32. Self Storage Components
Tenant Types
Residential
Commercial
Student
Military

33. Self Storage Components
General Trends
Majority of customers will be residential
Commercial tenants stay twice as residential
Most storage customers live/work within 5 miles
Strict HOA rules create demand for outside storage

34. Evaluating the Facility
• Size
• Unit Mix
• Location Location Location
• Traffic Counts
• Management (retail office vs residence)
• Signage / visibility
• Expansion Potential?
• Drainage
• Traffic Flow within the facility

35. Evaluating the Area
• 1-3-5 Miles Demographics
• Neighborhood trends
• Owner occupied housing vs apartment housing
• City Growth patterns
• Competition?
• Who are they?
• How far away?
• Is location better or worse than the subject?
• Prices of Units?
• Verify property tax and budget for any adjustments

36. Evaluating the Numbers
Gross Potential Rent
- (Vacancy Factor)
Gross Income
- (Expenses) – Should range between 30-45%
Net Operating Income (NOI)
NOI
CAP =
PRICE

37. Evaluating the Numbers
$185,000 (Gross Revenue)
- $74,000 (Expenses)
$111,000 NOI
8% Cap Rate = $1,387,500
10% Cap Rate = $1,110,000
12% Cap Rate = $925,000
NOI
CAP =
PRICE

38. CAP RATES VARY
www.HasslefreeCashflowInvesting.com
Releasing
Tenant & industry income potential Lease
strength Term
Financing Durability of Cost of
availability tenant
Income improvements
Property
attributes Demographics
for expenses Upside for releasing
potential

39. Evaluating the Expenses
Typical Self Storage Expenses:
• Property Taxes
• Insurance
• Payroll
• Off Site Management
• Utilities (phone/trash/gas/electric)
• Software
• Bank Fees
• Office Supplies
• Legal / Accounting
• Maintenance & Repair
• Snow / Lawn
• Advertising
• Website

40. Two Types of Self Storage Deals
Turn Key vs. Turn Around
Turn Key Facility
Class A or Class B
Little to no deferred maintenance
Minimal work required
Lower Cap Rate / Higher Price
REIT’s attracted to these especially in urban markets

41. Two Types of Self Storage Deals
Turn Key vs. Turn Around
Turn Around Facility
Class B and Class C
Low occupancy
Poor management
Significant deferred maintenance
High upside potential if “problem is solved”

42. Case Study #1 - Turn Key Deal
227 Turn Key Units
• built in 1998
• 34,000 SF
• Stable Occupancy 80%
• Motivated Seller
• No Website
• Not open Saturdays
• No rent raises in 7 years

43. Case Study #1 - Turn Key Deal
• Acquired using SBA 504
Financing
• New website and SEO
marketing program established
• Established New Saturday
Hours
• Raised Rents after six months
of ownership. Not a single
tenant complained.

44. Case Study #1 - Turn Key Deal
• Occupancy consistently
at 90%
• Increased the value
approximately $300,000

45. Case Study #2 – Turn Around Deal
350 Turn Around Units
• 80,000 SF
• Built in 1996
• 60% Occupancy
• Distressed Seller
• Poor Management
• Abandoned vehicles
• Poor reputation in the market.
• Gaps in perimeter fencing
• Broken security cameras
• Poor owner record keeping

46. Case Study #2 - Turn Around Deal
Solutions
Replaced Manager
Installed storage software
Implement security measures
Reconfigured Access Gate
Installed New Digital Signage
Fixed maintenance items

47. Case Study #1 – Turn Around Deal
• Occupancy trending up
• When stabilized $1M to
$1.5M increase in value

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Feel free to contact our
panelists with your questions
David Campbell Jon England
David@HasslefreeCashflowInvesting.com jengland@lee-associates.com

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SECRETS OF SELF
STORAGE INVESTING
By Jon S. England, CCIM SEC
Principal – Investment Brokerage
Lee & Associates
Phone: 913-890-2002
jengland@lee-associates.com
http://www.linkedin.com/in/jonengland

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Find more investor training
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