The Investors Guide to Growing Wealth in Self Storage: The Step-By-Step Playbook for Turning a Real Estate Asset Into a Thriving Self Storage Business by Osborne AJ

Author:Osborne, AJ [Osborne, AJ]
Language: eng
Format: epub
Publisher: JamesBrennae Publishing
Published: 2020-07-04T16:00:00+00:00

A potential good deal with the kind of revenue potential you need will be charging less than market rates, underutilizing technology to reach customers, and leaving money on the table in other ways like poor collection processes. Red flags would be things like the competition is doing everything right but still has low occupancy—meaning the market may be saturated. I’ll cover how to evaluate the competition and the deal in the next chapter.

Other macroeconomic factors like population trends in the area can be important to know too—if lots of people are moving into the area, that can be good and bad. It’s good because there’s more tenants coming in. It’s bad because the population increase brings in other businesses to compete against you—possibly including the big boys in self storage, if the area will grow into a first-tier market anytime soon.

As you can see, the value is determined by the local environment. Saying it’s a 5 cap doesn’t tell you a thing about its potential or whether it’s underperforming right now.

From an investor’s perspective, the value in an asset is derived in just two ways:

•You can increase the return to shareholders.

•You can secure the return to shareholders .

What that means is you can either increase the return or make the return safer, more predictable. If revenues go up, that means it’s worth more. Or if the odds of losing the revenue go down, that means it’s worth more too—because now I know I’m going to get my money. That’s how you need to look at it.

Understanding if you can increase revenues and how secure those revenues are comes down to how well you evaluate the supply and demand in the market, as well as the offerings you’re bringing to the market.

MAKE SURE TO BUY THE ASSET ONLY

If you are inexperienced in the finance world, be careful to buy only assets—do not buy an LLC or S corporation that owns the asset. Keep what you buy separate from any organization so you are not taking on unknown liability.

HOW TO FIND DEALS

There are two kinds of deals:

1.Paid – You will pay top dollar for paid, on-market deals. I’ve never bought a deal on market. People who buy these deals many times are buying deals that others have turned down—they never see the ones I and others buy. If there’s a “for sale” sign, it’s not likely to be a good deal.

2.Earned – These are off-market deals and this is where the upside is. They also require more work and more know-how. You can also get off-market deals through a broker if they truly understand what you want, and you can still pay a broker to help you get off-market deals—and you should pay them. It’s worth it to have a great relationship with a broker who is paid but will find deals for you before they ever go on the market. A broker who knows what they are doing and can bring you deal flow will pay dividends to you forever. They

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