Day 27: How to Find Underserved Self Storage Markets Before Every Other Investor Does

Hey, welcome back to Storage 100. This is day 27, and I am Joe Downs with the Storage Mastermind. And in today's episode, we are going to be talking about how to find markets everyone else is missing. The real money in self-storage is made in the underserved areas where you can dominate. You don't want to be fighting for scraps in oversaturated markets. The big institutional players often overlook these opportunities, but that is where you build a massive advantage. You need to look past the obvious data points and start seeing the gaps in the market. This is how you stop competing on price and start owning the market. Today, I'm gonna show you the specific method to zero, zero in on these underserved areas. So let's dive in to the first step, which is the gap method. So the Goldilocks zone is the sweet spot where you find high demand but low competition. This is where you This is the— sorry, this is the market you want to be in. So we just talked about how the real money is made in underserved markets. So you want to be looking for a market that is not too hot, meaning oversaturated with institutional players, and not too cold, meaning no demand at all. You want it just right. And that means strong local economic drivers and population growth, but a lack of modern quality self-storage options. When you find that zone, You can charge premium rates because you can become the best option in town. This is the foundation for the next step, which is the specific method we use to quantify that zone. The GAP method is going to be your secret weapon for finding high-yield self-storage deals. So this method is all about identifying the difference between supply and demand in specific areas. So what is the Goldilocks zone and how are you going to quantify it? Well, First, you're looking for a significant gap where the current supply is not meeting the population's needs. Don't trust the radius necessarily. Sometimes a 3-mile radius circle around your property lies because of physical barriers like highways or rivers, and sometimes they can create pockets that competitors cannot easily reach. Look for 2 major competitors with a large distance between them, then find the residential clusters right in the middle. If it takes a customer more than 10 minutes to drive to an existing facility, you've found your gap. That gap is your opportunity to build a facility that will be full relatively quickly if there's enough supply there. These same principles are true for buying as well. So let's talk about how this gap method fits into your overall development strategy, which is all about the path of progress. After you have identified the gap in the market, the path of progress is the next step. This concept is about anticipating where the city is going to grow, not just where it is now. So we're going to use the gap method to find a need. Now, we use the path of progress to predict where that need will explode. And you're going to want to place your facility directly in the path of future development and population expansion. So look for new infrastructure projects like road widenings or new exits off highways. Follow the rooftops. If you see large tracts of lands being cleared for subdivisions, That's also a strong signal. If you build where the city's moving, your facility's value will appreciate faster than the competition. This strategy ensures that your underserved market today becomes a prime market tomorrow. But even in a great location, you need to protect your investment, and that's where the barriers to entry come in. You got to stop looking at barriers to entry as a problem and start seeing them as your greatest competitive advantage. We just talked about finding the path of progress, and that path often creates the very barriers that protect your investment. So think of a high barrier to entry as a moat around your facility. It protects your cash flow from the guy or the next guy who thinks he can just throw up a cheap metal building next door. Most investors run from difficulty. You should run towards it. If it takes you 2 years to get a permit, for instance, it's going to take your competitor 2 years as well. If you're already ahead of them, then they're probably going to bail on the process. That difficulty keeps a lot of amateurs out. You want to look for areas where zoning is tough or where the land is scarce. If it's easy to build, then everyone can do it, and then your margins get crushed by oversupply. The difficulty is your competitive edge. You want to be the one who solved the hard problem. All right, so now that you understand why the hard stuff is the good stuff, What are the specific actions you need to take next? So your mission today is to find the sleeper markets. Don't look for the top 50 MSAs where everyone's fighting. Look for the suburbs of the suburbs, the towns with 20,000 to 50,000 people, even smaller. Next, apply the gap method as we discussed earlier. Open Google Maps and find the 2 biggest facilities. Is there a 10-minute drive hole— drive time hole between them? That's your opportunity. Finally, check the Goldilocks data. Use tools like Radius to estimate supply. You want to be in that 4 to 6 square feet for suite, for a suite supply, 4 to 6 square feet per capita that you're supplying next. Under 7, basically. 4 to 6 is kind of a sweet spot. These 3 steps move you just from learning to actually doing. If you're ready to get into the game, you need to get out there and start making those calls today. Now, before we wrap up, I need you to do 3 things for me. Hit that like button so that we can outrank the competition for your algorithm, by the way. 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