As self storage continues to grow as an industry, you may be thinking about starting a self storage business, or expanding your existing one with new facilities. Rather than build from scratch, it can make a lot of sense to purchase an older storage facility.
Do Your Due Diligence
Before you purchase any property or business, make sure you know everything you can about it. How out of date is the facility? Is it so old that it’s just rows of outdoor sheds? Or, is it maybe twenty years old, with indoor units and multiple stores? Will you have to bulldoze everything there and start from scratch, or can you easily upgrade what’s there?
You should already be familiar with what building laws in your state require, but if not, now’s the time to make sure you do. The Buildings Guide listing of building codes by state is a good place to start. You may also want to hire a consultant to make sure you know everything you need to.
Chances are, you won’t be looking at a property where you have to start from scratch, but older facilities will likely need some updates.
Possible areas that may need improvement include electrical systems, plumbing, climate control, and security. Your state’s laws may have changed since the facility was last upgraded. The wiring may be old and faulty, or simply out of date. The same goes for the plumbing, and you’ll want to make sure that rain water drains away from the buildings rather than pooling near them. To protect against pests, you’ll want cracks in the walls and around faucets sealed.
The climate controlled units may need more modern HVAC systems, or the facility may not come with climate control at all, and you’ll need to provide it.
As for security, you’ll want to make sure the facility has a high, stone or concrete wall, coded access with newer access panels, modern, high definition cameras, motion detecting lights, and alarms. You should also consider having units individually alarmed, which will let you and, if you have hired one, your security monitoring company know exactly which unit has been breached in case of theft.
You’ll also want to make sure the buildings themselves are up to state codes. In California, that means earthquake resistant. In other states, that may mean something else, but the point of these codes is safety.
Weighing the Pros and Cons
For your business, this will get into numbers that will be specific to your situation. Basically, you’ll want to calculate approximately how much upgrades will cost, and weigh that against how you can expect the business to perform.
Keep in mind that a more modern facility will attract more customers, and can demand higher prices. Of course, you still need to be competitive, but you should be able to charge a little more and still fill more units than before bringing the facility up to current standards.
Once you have the numbers, you should know if it makes sense to purchase, upgrade, and run the particular facility. If it looks promising, make your offer. If not, look for another location.
Finally, we recommend doing your best to keep all your facilities up to date. You don’t want to fall behind your competitors and lose tenants. Keep abreast of current building laws, the latest security equipment, and so on, and your facilities should keep doing well.