Joe Downs shows how to find a profitable self-storage market in 30 minutes using four filters: at least 1% annual population growth, median household income above $50,000, less than 7-8 square feet of storage per person, and strong regulatory barriers. Use City-Data, Google Maps, and SpareFoot to screen three candidate towns for free.
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Hello, Storage Warriors! Welcome to day 17 of the Storage 100 series. I am still Joe Downs with the Storage Mastermind, and this is today's promise: I'm going to show you how to find your first profitable market in 30 minutes of your time. Forget the spreadsheets and the expensive software. We're going to cut right through the noise and focus on the only thing that matters— the market. If you Get the market right, everything else is just execution. If you get the market wrong, you might be dead before you start. This is not about finding a deal, it's about finding the right battlefield. So let's start with the fundamental truth of real estate investing. And pay close attention here because this is the most important concept in the entire section of the series. You can fix a bad property, but you cannot fix a bad market. Or said differently, a bad manager can and likely will perform just fine in a good market, but a great manager cannot overcome a bad market. Think about it. The market sets your ceiling. If you buy a B-grade property in an A-grade market, a place with growing population and rising incomes, you'll be anywhere from fine to thrilled, and it will be— it will probably be determined by your execution and not the type of facility. You can raise rents, you can fill units, and the general market growth trend does the heavy lifting for you from there on. But if you buy a perfect A-grade property in a D-grade market, a dying town with no jobs, you are almost guaranteed to lose. No amount of operational genius can overcome a market that is actively shrinking. The sequence is non-negotiable. I'm going to say it slowly: market first, property second, deal structure third. So how do we quickly identify those A-grade markets? It's through discipline and tools. In this case, a simple filter does the trick. For criteria. That's the number 4. 4, uh, let us— lets you screen the markets in, in like 5 minutes flat. So first, number 1, population growth. Is the market growing or shrinking? More people means more stuff. More stuff means more demand for storage. We want to see at least a 1% annual growth rate. Number 2, Income levels. Can people actually afford to store their stuff? If the median household income is under $50,000, you're going to struggle to push rents. Third, competition density. This is the supply side. The industry average is about 7 square feet of storage per person. I've seen it. I've seen articles where We say 8 now. I've seen more that are a little more aggressive. Let's say 7 to 8. If you see less than 7, you're likely undersupplied, which is a massive opportunity. And then finally, the 4th is regulatory environment. We love high barriers to entry. Not as much fun when you're building, but that's the point when you're buying. If it's hard to build new storage, That protects your investment from future competition. These 4 filters are your quick check system. But how do you get this data without spending a fortune, you ask? Well, you're in luck because you don't need to spend thousands on software to start. All the data you need to screen a market is available for free right now. For demographic— demographics like population growth and median household income, just go straight to City-Data or census.gov. This gives you the hard numbers you need for the first 2 criteria. For competition, just open Google Maps, search self-storage. You click on the— put an address in nearby where it says hotels, restaurants, or gas stations or whatever. Type in self-storage. You can visually assess the density of competitors in minutes. And then for pricing, sites like SpareFoot— you could obviously look at the competitors, or you could just go to SpareFoot. Which will give you a quick snapshot of what people are charging. The pro tip here is to follow the money. Check local economic development sites to see where new warehouses or highways are being built. That's where the future growth is going. Use these free tools to find your market. Then you can worry about the expensive software later. Instead, let's focus on this 30-minute process that separates the winners from the time wasters. So you start with the Google Maps flyover. If the map is covered in red dots, you really don't need to do anything else. That's probably saturated and you just saved yourself the next 25 minutes. Kill that deal. Next, you can check the census data. You need positive population growth and median household income over $50,000. It's not a hard and fast rule, but it's a good one. If the people are leaving or they can't afford to rent from you, You're building a business on quicksand. Finally, rate shop the competitors. If they're giving away the first month free or more, or renting 10 by 10 for under $100, that's a huge red flag. Low rates can mean weak demand, and you can't fix that. If it passes all 3, you move forward. If it fails one, you probably should move on to the next town. Don't fall in love with the bad deal is one of the sayings we have in our statement. But the first one is don't fall in love with a bad market. But what exactly are those red flags you need to watch out for? Well, the first is declining population. People are leaving. Your customer base is shrinking every single year. You can't outmanage a market where demand is literally disappearing. Second, Massive oversupply. If you see more than 10 square feet of storage per person, that market is probably saturated. There's exceptions to it that are geographical vacation areas, places like Florida where no one has a basement or an attic that falls outside of that 7 to 10 square foot range. But if you do see one over 10 square feet, Then, and the market is saturated. If you bought there, you'd be forced to drop your rates just to compete, and that would kill your returns. And then third, watch out for heavy development pipeline. Check the planning records with the county. If there's a 100,000 square foot facility about to be opened up down the street or within your little 3 to 5 mile trade market, that could be up to 1,000 new units hitting the market. It's probably going to make an impact. A cheap deal in a dying market is not a deal. It's a trap. Do not try to be the hero who fixes it. All right. We've covered a lot of ground today in maybe less than 10 minutes. Not sure. And as always, it's knowledge to action time. So your first step is to pick 3 potential markets that interest you. Make one of them your hometown. Why not? It's easy. Then run the 30-minute screen on just one of those markets using the free tools we discussed. Don't overthink it. Just execute the process just like I laid it out for you. All right. Here's why. Why you absolutely need to hit the like button today on this episode. It's because I just helped you realize you don't need to fly across the country to find a great market or a deal. Also, please subscribe and do recall that subscribing is for you so you don't miss out on tomorrow's session, the day after, the day after that, or more importantly, so that you don't miss any of the lives that I do, uh, where I'm gonna be bringing in some really cool guests that are industry vets, uh, who are with deep knowledge and, uh, we'll be recapping sessions and, and, and we'll also have the Q&A. So You want to subscribe for those reasons. And again, so you don't miss tomorrow where we're going to talk about the 3-mile radius rule and ponder the question, does it still work? All right. Oh, share this with that friend who is still scrolling Zillow looking for deals. You'll save them a ton of time. And of course, they will thank you later.
