No matter where you live in the U.S., you’ve probably seen the eye-catching black and yellow climate-controlled storage buildings in growing metro areas. With over 195 self storage facilities across the U.S., Canada, and the U.K., StorageMart is one of the largest self storage operators in North America. Recently, Cris Burnam, President of StorageMart, penned an article for Forbes with advice for self storage real estate investors. Burnam’s main advice? Location is everything in self storage investing.
“When I am asked how my company chooses our facility sites, my favorite way to answer is, ‘I have to smell a McDonald’s.’” President of StorageMart
What business is McDonald’s in? If you said, “well obviously, McDonald’s is in the hamburger business,” you’re wrong - they’re actually primarily a real-estate company. And an extremely successful one at that. In fact, McDonald’s makes most of its revenue off purchasing and leasing real estate to franchisees, rather than from selling hamburgers. McDonald’s real secret sauce isn’t in their food - it’s in their brilliant real estate investing strategies. Burnam has a similar philosophy when building and expanding the StorageMart business: he uses the McDonald’s approach of putting property values first and thinking long-term when choosing a storage facility location.
As storage owners, you should always keep in mind that you’re a real estate investor first, and a self storage provider second. Your location is everything to the success of your business. Warren Buffett has long held this belief in real estate investing, as well - just check out this fantastic letter he wrote for the readers of Fortune. In his letter, Buffett explains what he’s learned from years of real estate investing and how he drowns out the noise of market pundits.
“With my two small [real estate] investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.”
In his Forbes article, Burnam also keeps things simple by suggesting self storage investors ask themselves the following questions when evaluating a new investment or facility location:
What is the market like?
What are rates and taxes like?
What’s the square footage per capita?
What is the competition like?
Whether you’re buying or building your first self storage property or acquiring another location, successful investors like Burnam and Buffett agree: keep it simple and be wary of property investments that promise quick profits. Focus on the future return of the asset, and not on past returns, and always put the value of the location first. With these strong principles for investing in property, you’ll be able to grow a successful “real estate” business no matter what kind of fluctuations happen with the economy, interest rates, or the stock market.
Thanks for reading! If you liked this blog post, you may also like: What does Warren Buffett think about self storage?, Will minimalism eventually rise up and kill self storage?, and How to succeed in an over-saturated self storage market.