Joe Downs explains which demographics drive self-storage profits. Target suburbs of 25,000 to 100,000 people where homeowners make up 60% of customers. Focus on areas with median age 33-45, where millennials and boomers in transition need storage most.
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Well, hello again. Welcome to day 23 of the Storage 100. We're gaining on it. I'm Joe Downs with the Storage Mastermind, and we're going to talk about the demographics today that predict success. And I'm going to shatter a few myths you probably believe about who actually rents self-storage. And you think you know your customer, but I promise you, the profile of the person who makes you rich is not the person you picture when you drive past your facility. We're gonna move past the simple idea of people need storage, and we're gonna get surgical about who those people are. This is gonna be about finding the golden demographic that guarantees high occupancy and a high lifetime value. Because you get it wrong, you're fighting for scraps. If you get it right, you own the market. So we're going to start by looking at the biggest misconception in the industry, the difference between homeowners and renters. I love this one. So one of the biggest myths in self-storage is that renters are your ideal customer because they live in small apartments and move all the time. And there's some truth in that, but there's also a lie in that. And the lie is what keeps you poor. We need to stop chasing the renter and start hunting the homeowner. The renter is high churn risk. They often move, and when they move, they often just throw their stuff away. They're short-term rental, um, quick hit, but they don't build your empire. The homeowner, however, is the diamond. They actually accumulate stuff. They refuse to throw away. They stay for years and they're the definition of a high lifetime value. So if you want sustainability, or sorry, if you want stability and long-term cash flow, not consistent turnover, you're going to want to mix, right? So Again, the myth is more renters, the better. And I'd say that's a myth. So what you wanna formulate, so what's the magic number? Well, look, it's always gonna depend on the market, but in most markets, you're gonna wanna see a 60/40 split, 60% homeowners for stability and 40% renters for demand. That ratio gives you the perfect mix of long-term cash flow and consistent unit turnover. All right, so now that we know who the ideal customer is, we need to figure out where they live. So you might think that more people equals more profit, but that is the density paradox and it could get you hurt. So since we just established who the ideal customer is, let's try to find the right battlefield. High-density urban markets, the ones with 100,000+ people, look like gold mines, but there actually could be a trap. That density attracts the REITs, Public, Extra Space, CubeSmart. You can't compete with their marketing budget. They will eat you alive. On the flip side, low-density rural markets, the 5,000-person towns, while they give you pricing power because you're the only game in the town, your growth can be capped. So the sweet spot, in our opinion, the gold mine for the independent operator is the suburban market with 25,000 to 100,000 people. This is it. There's enough demand there to fill your facility, but not enough density to attract the institutional sharks. The strategy is simple: don't fight the giants where they play. Or one of my favorite expressions: if you want to beat Tiger Woods at something, you can; just don't play him in golf. Find the markets they think are too small, but are actually perfect for you to dominate. So now that you know about avoiding the giants in high-density markets, let's talk about another secret ingredient, which is age. Storage demand is not driven totally by convenience. It's driven by crisis. So we call these the 4 Ds: death, divorce, downsizing, and dislocation. And these are the life events that force people to find storage fast. And they happen most often in one specific age bracket, And we call that the chaos zone. Your primary customer is the millennial. That's the 25 to 40-year-old who's moving for a job or living in an apartment, but they're making money, so they're accumulating stuff fast. They're in transition maybe, and they need your space and they need it right now. Don't forget about the boomers, the 60 to really 75-plus-year-olds. They're driving the death and the downsizing part of the 4 Ds. Demand, you know, when they're cleaning out homes and moving to smaller places. But you might want to focus your site on selection on— or your site selection on and your marketing on the markets where the median age is still though between 33 and 45, and that should capture both. This is the— that's the heart of the chaos zone. So if you're targeting people outside that range, you might be fighting an uphill battle. So how do you actually find people that— these people improve the markets work? Well, let's cover that. So now you know about the chaos zone, where the money is, but you need a tactical plan to locate it. So this is going to be your homework, your immediate action steps. It's completely free. You need to stop guessing and start using data to qualify your market. So first, check the renter percentage using a site like CityData. If the renter-occupied units are under 30%, you need to be extremely careful because that means people aren't moving enough to create demand. Second, confirm the median age. If it's 55+, maybe you should be looking at building boat and RV facilities, not small 5x5 units, because the demand profile is completely different in that market. And then third, open Google Maps and count the apartment complexes nearby. Most apartment density means more people in transition, which means more demand for your storage units. If your market doesn't hit these 3 numbers, you are setting yourself up for failure. All right, let's make sure you know how to stay connected and keep getting this kind of high-level insight now. So moment of truth. If you realize today that you've been targeting the wrong customers, the rich ones who don't need you, then hit the like button right now for me. Let us know this insight landed for you. And that's what the like button does. If you want to learn how to find the perfect tenant in any market, the one who pays on time and stays for years, then you need to subscribe. Don't, because then you won't miss day 24. Where I'm going to break down the difference between small town, suburban, and urban markets. And then finally, if you have a friend who's out there chasing deals in Beverly Hills because they think everyone needs storage, do, do them a favor and hit share, send them this episode. And when they stop wasting time and start making real money, they will thank you later.
