Day 20: Population Growth: The #1 Self Storage Market Indicator Most Investors Ignore

Welcome back to day 20 of the Storage 100. I am Joe Downs with the Storage Mastermind. All right, so why are growth indicators important? Well, concept should be obvious, but let's talk about why. You need to know if your market is dying or thriving before you spend $1 on due diligence. So for this, we're going to look to the population growth indicator, which is a very important metric for long-term storage success. If the population isn't growing, there's a better chance your units will sit empty. It's that simple. Ideally, we're looking for a static— I'm sorry, we're not looking for a static population. We're looking for a population with a little momentum behind it. You know, a place where the U-Hauls are rolling in and out, right? Static or stable would be my plan B. It's okay, but you're going to place more of an emphasis on the facility itself and really dig a little deeper. For me, I'm okay with a stable market, but I really gotta love the facility. And it's all about how you buy it, right? If you buy it right in a stable market, maybe you're protected from future competition. Okay. Could be a very nice place to own a facility. Short of that, we want momentum. We want population growth. So I'd rather be, and I'm sure you would be, and that's why you're listening here, you'd rather be where people are going, not where they've been. So let's talk about where you can find this. Very important data and for free. Because you don't need to drop thousands of dollars on fancy data subscriptions to get the truth about the population of a market and the direction it's headed. So it's because the best data is actually public and it's free and it's just waiting for you to grab it. So the gold standard is census.gov. That's the best source of truth. But to be honest, it's very clunky and hard to navigate. Maybe if you create an AI agent, I'm sure it'd be a little easier. Short of that, my favorite would be, and our go-to is citydata.com, because it takes all the raw census data and turns it into really easy-to-read graphs. You can actually just spot trends very visually, very quickly. Pro tip, check the local economic development sites too. They're always bragging. There. It's their job to brag about all the new businesses, factories, hey, you know, whatever's coming to the area. So, or new housing developments coming down. That is what they do is to promote their area. So that's usually an awesome leading indicator for future growth. And then another pro tip too, look at U-Haul migration. If it costs a fortune to rent one-way truck into a city you're looking at, That is, that is, yeah. If it costs a fortune to rent to the city you're looking at, that's all right. I was trying about to say something negative as a positive. That is like pure unadulterated demand going on there, right? So that city's growing. All right. So, and you get why, right? Because it's not transient. It wouldn't cost a lot if the truck was coming back. So anyway, it means no one's moving out of that city. All right. You need, you gotta understand how the growth stacks up. against your new construction too. So let's say you find a market with 3% population growth, could be where it costs a lot to get a one-way U-Haul, right? And you think you've hit the jackpot, but you didn't check the supply pipeline. If the population's growing at 3%, which is super healthy, but developers are building new storage units at a 10% clip, 10% saturation clip, you're going to get crushed. Especially if you're not one of the public REITs where they don't worry about getting crushed because they got all the money in the world. The occupancy's going to crash on you because developers in that scenario are building faster than people are arriving. So eventually you'll be okay, but you got to survive that time. So you have to look at the velocity of supply right after you're looking at the velocity of demand. They have to go hand in hand. Golden rule, You need to calculate the units per household. So see if that math actually works. Don't fall in love with the demand side of the story without analyzing also the pipeline side of the story. You got to love both. All right. So how do you do that? Or what some steps you could take? Get over to citydata.com right now. Type in your target zip code. Do it on your own hometown. See what's going on just to get a feel for it. Look at the population chart for the last 10 years. Is that line going up or is it flatlining or worse, is it going down? This is going to be your first pass filter, right? Then check the median household income trend. Is it rising? Because growth without rising income is a recipe for low rents as well. So you want these 2 data points to kind of go hand in hand because they're going to tell you everything you need to know about the health of a market. All right. If you just checked your hometown and realized why the mall is empty, by the way, hit the like button for me. Tomorrow we're going to go deeper into the supply side and we're going to look for oversaturated markets before you waste your time. All right, quick one today, but an important one. Remember to subscribe to the Storage Mastermind so you can learn how to spot the next boomtown before the big REITs even get a whiff of it. And finally, share this episode with a friend who's thinking about investing in a ghost town. You know who they are. You're going to save them from a terrible mistake, and they will thank you later.