or the last 30 years that I have been in self-storage, the best time to get started in new self-storage development is always five years ago. This is because you would be open, occupied, and wealthy. Sure, some years you can make more and some less, depending on various factors, but waiting has never been a way to make more profits.

Presently, the economy is not running on all cylinders. Inflation is high, which means higher construction costs. Interest rates are reaching the highs of the 2008/2009 recession, and housing sales are suddenly at rock bottom. At a quick glance, you would think these are reasons to wait to build your self-storage, but they are the No. 1 reason to start as soon as possible.

We all know the stock market game is to buy low and sell high. Also, we know people often do the exact opposite. The same goes for self-storage. We now have the opportunity to “buy low” and be ready for the next self-storage boom on the horizon. It takes several months to find land, several months to get design plans and approvals, and several months for construction. Therefore, what is important is not where the economy is now but where it will be in two to three years.

Here are the top seven reasons why now is the best time to get into self-storage:


1
Timing the self-storage market (just like the stock market) is next to impossible, but if there were ever signs of a booming self-storage market coming, it is now!


2
New self-storage development is slowing. Because self-storage is a three-mile business, there is a first comer advantage for two reasons. Once a self-storage is full, it tends to stay full; good developers (and lenders) look at the needed demand and whether it is met. If demand is met, they tend to move on. If you wait, someone else may find and build on the great location near you.


3
New commercial development is almost non-existent compared to two years ago. This means land prices are not climbing like they were pre-COVID, and often you can negotiate much better land deals than in the past.


4
Self storage is one of the most loan-friendly real estate businesses. That means it is one of the few remaining commercial developments that can get a loan in good and bad times. Self-storage can be refinanced when interest rates come down. When I built my first two self-storages in the 2008/2009 recession, my interest rates were 8.5 percent. Currently, they are at 4 percent until renewal in 2028. Was I happy paying 8.5 percent interest rates? Of course not, but even at those rates it was not long before I was breaking even. I can tell you, by not waiting, I was much further ahead in the long run.


5
Expanding on No. 1, when interest rates do come down, I believe there will be a housing and economy boom, maybe unlike what we have seen in years. People moving is the largest segment of our renters. If this happens in two, three, or even four years, now is the time to start the process of finding land.


6
New technology has made self-storage operations a lot easier than in the past. We no longer must have messy on-site auctions. We can have our auctions online. The online auction provider and the legal notice provider all have API connections to our management program to keep things legal and much simpler. Our camera systems, like most systems, can be viewed from your phone or laptop and enable management to get notices when people are on site after hours. My favorite feature is that they can yell at intruders: “This facility is closed; please leave immediately. The police have been called and are on their way.”

Management reports can be as sophisticated as you desire. An aspect I like to review is a report that informs us when each staff member starts work. The variance report tells you every item that is not standard, such as charges deleted, discounted rental rates, waived fees, etc. You can use this report and other guides to help make sure there is no employee theft.

Technology provides many ways to rent in addition to your manager renting, such as a barcode on your front door, a kiosk, or your website. We are no longer limited to office hours for rentals, so we can rent more units with fewer related expenses. This empowers our manager with more time for marketing and cleaning, leading to more rentals at premium prices.


7
Self-storage is one of the greatest businesses in the world and it is typically the No. 1 or 2 real estate businesses every year. Self-storage has all the great aspects of a great real estate business, including depreciation, appreciation, amortization, and loan friendly. Self-storage takes next to no employees compared to most businesses. There are no late-night calls to repair the appliance or fix the clogged toilet. Eviction laws are simple and in favor of the self-storage owner, unlike residential properties. It is recession resistant compared to other real estate businesses. Few, if any businesses, allow you to raise your income 2 to 3 percent more than inflation.

That all being said, self-storage development is not simple and does take work and time. I like to say, “Where else can you become a multimillionaire in five years working 8 hours a week?”