In this fifth episode of the Self‑Storage 100 series, Joe Downs explains that self‑storage is not a monolithic asset class and breaks down the five primary facility types investors may encounter. He starts with traditional interior (hallway) storage, noting its versatility, higher construction and operating costs, and the premium potential of climate‑controlled units. He then contrasts drive‑up (outdoor) storage, highlighting its lower build cost, tenant convenience, and exposure to weather. Next, he discusses the strategic decision between single‑story and multi‑story construction, linking land cost to per‑square‑foot expense and tenant access. The fourth type is vehicle storage (RV, boat, etc.), presented as a high‑margin, land‑efficient niche driven by growing vehicle ownership and HOA restrictions. Finally, he describes hybrid facilities that combine multiple types to diversify revenue and mitigate risk. Throughout, Joe offers a decision framework—land price, demographics, climate, and competition—to help investors select the optimal mix for a given market. The episode ends with a call to action to subscribe, share, and attend upcoming live Q&A sessions, teasing a deeper dive into climate‑controlled storage’s profit impact.
Chapters
All right, welcome back to day 5 of the Self Storage 100 series. I am Joe Downs with the Self Storage Mastermind. All right, we've spent the last few days talking about why self-storage is a great investment. Now we need to talk about what you're actually investing in. You can't just say self-storage and assume it's all the same. So there's 5 main types of facilities, and understanding them is crucial for choosing the right investment, not just in your market, but Being able to have a conversation with it about other operators or sellers or really knowing the difference between what they cost to build or maintain and who the customers are for each one. So let's, each, we're going to dive in in a second, but each type has a different cost structure, tenant profile, revenue potential, and we're going to break down the 5 types so you can match the facility to your investment goals. And again, that sounds like you're diving in headfirst or building it, and that's all true. This is an important decision for that, but Also, when you're, when you're out there looking for value-add facilities, you got to know what you're buying. They behave differently, right? So let's start with the most common type. Most— the first type is traditional self-storage, often called interior or hallway storage. I don't know why it's called traditional. Maybe that's how this started. In my research, that's what I found. I mean, to me, traditional is the most common type, common, which is drive-up. But this is what we're going to call traditional. All right. So it's classic model where you have units inside the building accessed via interior hallways. So one of the advantages here is versatility. You can offer a mix of climate-controlled and non-climate-controlled units, which maximizes your, your revenue potential because there's units in the units on the indoors. They offer better weather protection and higher perceived value, letting you charge a premium. But remember, this type of construction has a higher construction cost than simple outdoor drive-up storage. So you have more maintenance with HVAC and lighting, and it requires a larger land footprint sometimes for the building itself. But this model works well in almost any market, and it's a higher capital expenditure to start with. So let's take a look at specific features that make some of these units even more valuable. Climate control facilities are a subset of traditional storage, but they deserve their own category, and we're going to cover them in a, in a future episode. Because of the cost and revenue implications. So climate control means maintaining a specific temperature and humidity range, protecting sensitive items like electronics, arts, documents. This protection is a premium service, and you can charge 20 to 40% more than for a non-climate unit. But this comes at a cost. Construction's about 30 to 40% higher, and operating costs are about 15 to 25% higher due to running HVAC systems. So When does it make sense? Well, you know, hot markets, humid markets like the Southeast, or in high-income urban areas where people have expensive items and limited space at home. It's a great way to boost your bottom line, but you must be in the right market to justify the expense. All right, let's move outside to the most convenient option for tenants. So covered indoor options, then you got drive-up storage, which is more considered more of an outdoor option. Not that it's uncovered, it's not, but it's outdoor because you drive your car right up to the door. It's the simplest and often the cheapest type of facility to build. The main benefit its convenience. Tenants can drive right up to their unit door, making loading and unloading heavy and bulky items incredibly easy. This saves time and makes for happier tenants, especially those in need of frequent access like your contractors or small business owners. Because you don't need interior hallways or HVAC, construction and maintenance costs are lower. However, these units are exposed to weather and generally command a lower rent per square foot than indoor units. And by weather, again, not that they're uncovered, but they're exposed to the heat and They're exposed to the, you know, extreme cold. So this model requires more land for the drive lanes. So it's best suited for more suburban and rural markets where the land's more affordable. All right, let's compare these facilities vertically versus horizontally. When you're deciding on a facility, you have to choose between single-story or multi-story construction, whether, well, you don't have to choose if you're evaluating value-add, but if you're, if you've got a piece of dirt, you gotta have a decision to make. And again, we're gonna cover more of this in the series, but single-story's cheaper to build around $40 to $60 per square foot. And maintenance is a little simpler. It offers the convenient drive-up access, which tenants love, but it also requires a lot of land to achieve the same rentable square footage. Many— I'm sorry, multi-story construction is much more expensive, more like $70 to $100 per square foot to build. However, it maximizes your rental space on a smaller footprint. So this is the only viable option for expensive land constrained in urban markets. The trade-off is less convenient access for tenants, who have to use the elevators and carts. The choice is simple. If the land is cheap, you build the single story. If the land's expensive, you gotta justify a case for it to go multi-story. But there's one more major type of storage we need to cover, and that's growing fast. And one of my favorite segments, we actually own a couple ourselves. So we've covered the different types of enclosed storage, but vehicle storage is a massive opportunity you can't ignore. So the boom in RV and boat ownership is off the charts the last 20 years, and there's a major supply and demand delta between number of new vehicles issued each year, issued, purchased, delivered to consumers each year versus new parking spots for those vehicles. I mean, it's a massive delta. Well, again, we'll talk about it later. You combine that with HOA restrictions, and then even if you don't have restrictions, parking these vehicles at your house is, you know, not only sometimes unsightly, but, you know, you're at the risk of theft. So it just creates a huge demand for offsite parking. You can charge premium rates for covered spaces, sometimes $150 to $300 a month with You know, very high occupancy. Key difference here is the space requirement though. You need about 12 to 14-foot-wide spaces and 30 to 45 feet long. You also need wide paved driveways for easy maneuvering, especially for the large RVs, right? But the best part is lower construction costs compared to building traditional units. You're maximizing revenue on land that might not be suitable for a multi-story building. So let's take a look at how the most successful operators combine these different types to create a hybrid facility. We've covered 5 distinct facility types, but the most successful operators rarely stick to one. We do the same at a few of our facilities. Hybrid facilities mix and match types to maximize revenue and reduce risk. Common combination is pairing premium climate control units with standard units to hit different price points. Another smart mix is traditional units with vehicle storage, capturing both residential and seasonal customers. This diversification is crucial because it protects you if one segment of the market softens. You also attract a much broader customer base from the residential users to commercial clients and vehicle owners. The goal is to optimize your land use and generate the highest possible revenue per acre. So this leads us directly to the big question: how do you choose the right mix for your market? So choosing the right facility type isn't about picking your favorite, though. It's about matching your market's needs with your financial capacity. So start with the land costs. If land's expensive, You, you got to have to build multi-story to make the numbers work if you can get the rental rate. If the land is cheap, I'd suggest single-story or drive-up. That's usually going to pencil better. Then you look at the demographics. High-income areas often demand climate control while areas near lakes scream for vehicle storage. Climate is also a factor, right? If you have extreme heat or humidity, climate control is essential. And then finally, you got to analyze your competition. You can't just copy them. You got to Look at them filling the gaps in the market by what they're offering and not offering. The best choice is always the one that maximizes revenue while minimizing risk. And often that means a smart hybrid facility. All right, so that's the 5 facility types of self-storage. And I say it that way, meaning self-storage, because we have a saying in our mastermind: self-storage is what brought you here, but it's all the derivatives and tangents to self-storage that makes this business so much fun. And that's a little teaser for much later in the season, in the series. But before you go, there's one important— or this one's important, I should say, because we're building momentum here. Day 5. We just covered 5 facility types. So that means we're 5 days into this 106-day journey. And I'm hoping you've given me 5 likes so far for all the knowledge building going on here. But subscribe so day hits— or day 6 hits your feed tomorrow. We're diving into climate control versus non-climate control and the profit implications, plus live sessions every 2 weeks. If you recall, if you've been listening so far, on Tuesdays or Thursday nights, and we're going to go deeper into, um, the, the section I just, uh, or recap the section I just— of the business that, that we've just gone through. And I'm gonna also, um, answer any questions you have. And we're gonna do that live. And by the way, if you have questions or ahas, drop them in the comments. But you're not— you're going to miss all this if you don't subscribe. So subscribe. By the way, I made a kind of a subtle pledge to myself. I haven't really announced this yet, but maybe you've picked up on it so far. I pledged to really me and you that I would give you a unique, a new and unique reason to share every episode. Right. And here's why sharing this today matters. Most people think storage is just storage, right? Self-storage is self-storage. They just think they're all the same. Well, now, you know, there's 5 distinct types with different economics. Not only just on the rental rates, but also on how they're built and constructed. So when you share this, you're actually going to educate your network and demonstrate that you understand some nuances in this business. And that matters. Share it with a comment, right? Hey, you know, either I didn't know about this or how cool is this, whatever. Because when you're evaluating deals later and you need either a second opinion or a partner, I talked about this earlier, your network is going to remember you as someone who actually studies this stuff. So sharing equals establishing expertise one episode at a time. It compounds. Tomorrow we're going to be talking about the single biggest profit lever in self-storage, and that's climate control. And you're going to learn why it can double your revenue, but also double your risk. So, okay, remember to subscribe for day 6 and all of the lives so you don't miss them and share this knowledge. Your network will thank you later.
