271. Self Storage Research for Beginners (Do This BEFORE You Buy!) w/ Jonah Hall

Self Storage Income

AJ Osborne

Entrepreneurship, Education, Investing, Business, How To

4.9 • 591 Ratings

🗓️ 19 November 2024

⏱️ 51 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Listen to this episode BEFORE you buy a storage facility! Things have changed dramatically in the self storage industry, and some of the advice from even just a few years ago has become essentially obsolete. If you want to succeed in self-storage investing, you need to know what makes a good/bad investment in 2024. To help with your self storage research and analysis, Jonah Hall, President of Cedar Creek Capital, is on to share his EXPERT tips on analyzing a self storage facility and market.

First, we’re getting into exactly what changed in the industry over the past five years. Since the pandemic, self storage has NOT been the same. Because of that, beginners can get overly optimistic about their first self storage investment, leading them to buy deals that DON’T work out as well as they had hoped. How do you get around this and ensure you only buy facilities that will perform? Jonah shares his advice in this episode.

Plus, we’re touching on current cap rates, how unit size preferences are dramatically changing, and signs that a market is oversaturated with self storage. AJ and Jonah reveal the “indicators” they look at before investing in a market to know whether the area is worth it. New to self storage or ready to buy another facility? Don’t miss this episode!

What you’ll learn in today’s show:

Self storage research and analysis basics, plus the “indicators” to watch before you buy
How fluctuating rental rates could impact your investment—and why you can’t afford to get this wrong
The changing demand for different unit sizes (smaller units are selling out!)
Forecasting rental demand before you buy/build your next facility (and how we do it)
Current cap rates we’re seeing in today’s market and why they’re staying so low
Advice for beginners if you have zero self-storage experience but want to invest

Links:

📌 Make self storage management easier than EVER with our podcast sponsor Tenant Inc. - https://www.tenantinc.com/

🌳 Work with someone experienced in self storage loans with our sponsors at Live Oak Bank! https://www.liveoakbank.com/business-loans/self-storage/

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📖 Get AJ's new book that teaches you everything he knows about self-storage https://a.co/d/aRSKcSq

Transcript

Click on a timestamp to play from that location

0:00.0	Revenue is where you're going to either live or die.
0:03.6	It's affecting things so much more dramatically than people even give it credit for.
0:07.6	Even though the market is hard today and it looks bad, if you're going out and buying today,
0:13.3	it is the best time to be buying from purely an understanding of the market standpoint.
0:18.6	At what point will this not be reality anymore? Will the
0:22.2	market return to what it was three, four years ago at all? Welcome, everybody, to self-storage
0:34.1	income. And today, I'm lucky to have back with me, my partner and friend, Jonah.
0:39.3	How you doing, man? Doing excellent. Thanks for having me. I appreciate it.
0:42.6	Appreciate you being here. So we're talking about deal analysis. And this is a big topic,
0:48.9	obviously. But what we really want to break down here is I think some of the fundamentals, but also how things have changed.
0:58.2	Because over the last five years, I've seen the biggest change that I've ever seen in deal analysis.
1:05.7	I mean, it's not even close to the change that we saw 2006 to 2010, there wasn't that much of a change, right?
1:14.2	But 2018, 19, 22 today, wildly different. And so I want to look at in today's opportunities,
1:24.4	particularly, how are we analyzing these deals? And what are we looking for?
1:29.7	So right off the bat, let's look at, you know, what are some of the big changes that you've seen
1:35.6	in how you are looking and underwriting deals? Yeah, absolutely. I haven't, I can't, I wasn't even
1:43.0	underwriting deals in 06 to 10.
1:44.8	Yeah.
1:45.0	So I don't have that context. But 19. But I started at about 17, 18 and have been underwriting sense. So you saw that change in 19 to 21. Oh, yeah, obviously. Thankfully, we were already being really conservative with the underwriting. And so, you know, as things get worse or
2:01.5	things better or whatever, as long as you're underwriting things conservatively, you're kind of
2:05.9	golden. You're fine. A lot of people didn't. A lot of people change their underwriting method
2:10.8	with the times. But those times were, as we both know, not sustainable, not real. And so now people are hurting, unfortunately.
	...

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