203. The Bubble has Popped - Self Storage Market Update
Self Storage Income
AJ Osborne
4.9 • 591 Ratings
🗓️ 4 July 2023
⏱️ 42 minutes
🧾️ Download transcript
Summary
The economy is slowing down, and it's impacting Self Storage directly. We're seeing incomes fall, occupancy drop, and normally "busy" seasons are slow instead.
This is a result of the Self Storage bubble. It's similar to the housing bubble that popped in 2008, except now it's popped for Self Storage. The rates we can charge are dropping, along with new customers and income. We talked about this in-depth last year: https://youtu.be/Sm0pZsLkxoo
So now what? What happens to all the facilities out there that were bought during the previous bull market?
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Transcript
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| 0:00.0 | I know my friends that are big developers and these are big developers that are in. |
| 0:05.3 | We're talking Orange County, California, and the banks are making them put 60% down. |
| 0:11.9 | That's wild. |
| 0:13.1 | Think about that when you're talking about a return on capital 30% versus 60% down. |
| 0:19.5 | Your returns start to really get diminished |
| 0:22.5 | when you have to put that much capital down. |
| 0:23.9 | Yeah. |
| 0:24.9 | You lose the benefit of debt leverage. |
| 0:26.9 | Yep. |
| 0:27.9 | Yeah. |
| 0:28.9 | The reason being is we said there's a bubble. |
| 0:31.1 | And when this bubble pops, markets like the Boise area, |
| 0:36.3 | which is our backyard, the Phoenix area, Nashville and others is going to be hit hard. |
| 0:41.3 | One of the best ways to optimize management and to increase the value of your self-storage facility is through property management. |
| 0:49.3 | And that means you're going to need really good property management software to extract the maximum amount of value |
| 0:55.5 | and deploy the maximum amount of value at your storage facility. |
| 0:59.2 | That's where Tenet Inc. comes in. |
| 1:00.4 | These guys have a huge amount of tools at your fingertips that you guys can deploy. |
| 1:05.0 | Again, this is Tenant Inc. Check them out. |
| 1:06.9 | Link is in the show notes welcome everybody to self storage income and Connor we're |
| 1:19.5 | starting the morning off today with this podcast dude bright and early my mind may |
| 1:24.6 | or may not be working well I've got the energy drink here to assist. |
... |
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