Investor Report: Self-Storage Facilities

It's not a high-glamour, high profile niche in real estate investing, but it could be one of the safer, cash-flow producers in tough economic times: We're talking about self-storage facilities for small-scale investors.

Yes, there are lots of them out there -- more than 52,000 nationwide. But the industry racks up $20 billion a year in sales and people always need a place to keep their extra "stuff."

Better yet, many centers generate positive cash flows even with unit vacancy rates above 30 percent, so small-scale local investors who have a knack for management and marketing can often do well - even in a down economy.

One investors strategy with self-storage is to buy existing facilities in the $2 million and up range that have significant potential for growth in value by boosting rental revenues and occupancy rates through intensive management oversight and modest fix-ups.

Here are 3 key elements of this approach:

1. Thoroughly research and understand the demand and current performance of self-storage facilities in your area. The storage business draws customers from a relatively small geographical radius of about four miles. Locations with large numbers of multifamily dwellings such as apartment buildings, condos and small houses tend to do best.

2. Since competition comes with the territory you've got to be prepared to out-market them with creative sales strategies and even out-manage them with personalized services.

3. Well-chosen, modest-cost improvements go a long way: lighting, cleanliness, security, and even asphalt paving.

The other good news is that once you win the client over they tend to be devoted tenants, and aren't going away. It is rare for a customer to move their belongings from one unit to another, so first impressions are everything!

For more information contact bill.swanson@cbshome.com or visit www.billswanson.com.