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Build or buy? New to the business and would love input

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  • Build or buy? New to the business and would love input

    I live south of Austin, TX and I have been seeing new storage facilities being put up constantly. I am assuming this is because there is a demand for them. Because of this I have really become serious about saving money for a down payment to either purchase a pre existing vs building.

    So I am currently in the process of hording money to try and get into this world of self storage. I have been leaning towards buying an existing facility, as this would be my first adventure into this business and I would expect there to be a steep learning curve like most businesses, so having cash flow from day 1 and some semblance of structure already in place would help to prevent a failure.

    At the same time I know if your buying a stable running business, your going to pay a premium for that. Also it is possible that something is happening that I would not be aware of that could make it so that even though the business appears to be doing well. It is actually beginning to fail.

    Im just curious what anyone's input on this is?

    I am also interested if there are any suggestions on brokers to talk with about looking at preexisting facilities for sale?

  • #2
    Welcome to the forum. IMO, buying an existing facility means immediate returns and then do the upgrades to make it your own. Location, location, location.
    "Never let the inmates run the asylum!"

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    • #3
      Welcome, Adam!
      Just be aware-there has been overbuilding of self storages in some areas. I'd make myself a spreadsheet and input all of the facilities in your area (I'd start with 1/4 mile then work your way out)-then check their websites out and see who has units available. THEN I'd check the facilities out-are they gated? How do they look? Obvious security cameras? Are there any crime statics online for Austin? Check out the neighborhoods.
      That way you're coming into this with your eyes open and you'll know what to look for.
      90% of what you're stressing about now won't even be relevant in a year. Breathe easy. ~Wesley Snipes

      WA State

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      • #4
        Welcome! Building may be less expensive than buying an existing facility in many cases. However, it is also riskier because of course there is no proven track record.

        Regarding a broker, I'm sure you have a search set up on LoopNet. I would also join the Texas Self Storage Association and call them for a list of brokers in your area. And go to their meetings too - you never know, maybe you'll meet somebody looking to sell.

        This is a great industry and I'm sure you will be successful if you are persistent.

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        • #5
          Hire a consultant to do a feasibility study before putting any money into the business. I have built and bought, and there is no right or wrong way of doing it. I prefer to build but finding the ideal location can often mean buying an existing. Plus you need a lot more cash to build since the banks view it as a construction loan versus a business purchase.

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          • #6
            I am not an expert but have worked very good facilities and some very needy ones.
            I know the cost of roof repairs and fence and security needed improvements.
            If you are in my area, I will check out these new properties for free. LMK via email.

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