Welcome to our first article addressing why self-storage investing is a “dime”!
To start out, I cannot even begin to tell you how life changing it is to not have to deal with just those two things. When I first began investing in real estate, I thought rental properties were the best! I bought houses and apartment buildings, fixed them up to code and moved people right in! It wasn’t until the rental market tanked and I sat down and went over some figures that I came to a huge realization. This applied mainly to those who moved out of my rental properties over the years.
The Great Exodus
It was never a great feeling to lose a tenant. The money we lost from evictions, unexpected move-outs, and the number of people we had in collections due to not paying back rent was staggering. It had literally drained our bank accounts. So in this case, the obvious deficit was in rental payments. But the hidden costs were what were most painful! When I was done with my calculations, the cost virtually doubled! What were those hidden costs that drove my dreams into the ground?
The Hidden Costs of Tenant Move-Outs
Let’s go with best case scenario first. As soon as a tenant moved out, I went to work preparing it for the next move-in. There was no time to waste! The very first thing I needed to look for was any obvious damage or health and safety issues. These would be identifying any holes in the walls, broken window and door locks, damaged appliances, working fire and carbon monoxide detectors, etc. Once all of those were identified and addressed we would move onto the cleaning of the property and inspecting the heat, plumbing, and electricity.
So with just those minor repairs, we are not only losing the rent from a tenant, but also losing whatever those repairs are costing! Now, what about if it wasn’t a smooth transition from one tenant to the next? What if we had to evict someone because of the damage they were doing to the property, which was not uncommon?
The Eviction Costs
When you tell someone they are being evicted, it is RARELY well received. This will typically result in your property being disrespected. When the tenants are finally gone, you will, no doubt, be left with a much bigger mess to clean up then with your typical tenant move-out. Rugs will have to be replaced. Often times, so will doors and locks, kitchen cabinets and appliances, toilets, and any other furnishings you may have provided initially. PLUS, the cost to remove off those things and whatever else was left behind.
These major renovations are where we were losing our biggest chunk of profit! There had to be a better property investment out there!
Self-Storage to the Rescue
Making an investment in self-storage was not something I had ever contemplated until the collapse of my real estate venture after the events on 9/11. I knew I had to make a change. If my life kept following the path it was on, I was going to be bankrupt and living with my in-laws! I knew that my passion lived in real estate, but I was clearly in the wrong type. I wanted something with low-risk, high cash flow, and none of the hassle of tenants, toilets, or trash.
Self-storage gave me just that! These facilities are easy to attain and maintain! And if you are having a hard time with someone renting out your space, eviction is so much easier. It can even be profitable! Be sure to check out next weeks article to see what I mean!