Investors looking to make an “easy buck” without huge risks should take a closer look at the mobile storage industry. Entry into the market offers high returns with limited risk. Year after year, the self-storage industry is rated as one of the safest industries across the market. It’s an industry that does well in good times and generates even higher returns in bad times.
Scale is Key
Investing in mobile storage requires carefully choosing your market and delivering the scope and size of services the market demands. The initial investment in mobile storage units, trucks, and property can be considerable. If you enter with too much inventory, you will be left with idle property that’s not generating revenue. Conversely, if you enter with too little, then you will be leaving money on the table.
And there is plenty of money on the table. The self-storage industry pulls in over $33 billion per year in revenue. This money is divided by nearly 54,000 self-storage facilities across the country. A simple average shows that to be $611,000 per self-storage facility. The reality is that the range is between $384,000 and $784,000 per facility depending on size, services, and location. Even when the cost of equipment, the price of land, and labor costs are factored in, it’s clear that there is plenty of profit to be made. Indeed, profit margins of 10% or greater are not uncommon.
There’s Plenty of Room to Grow
Americans are becoming increasingly mobile in the digital age. Each year, millions of Americans move across state lines, and many millions more move within their current geographic area. As people pack up and go forward towards their next opportunity, they are seeking safe and simple moving solutions to make their journey easier.
Mobile storage fills this need and has gained market acceptance from coast-to-coast. This means that barriers to consumer sentiment have already been torn down. For investors, it means that there are plenty of opportunities to take advantage of as the opening has been created.
Mom-and-Pop Stores are Competitive
Mom-and-pop stores within the retail sector are struggling against the big box stores. That’s not the case in the self-storage industry. In the realm of self-storage, the “big boys” only control 11.5% of the market. Only about 150 firms control 10 or more self-storage facilities. Roughly 4,000 firms operate between two and nine facilities. The remaining 27,000 facilities are operated by companies that have just one.
What’s making mom and pop even more competitive is the addition of mobile storage to their list of offerings. While mom and pops will have difficulty competing with companies that can carry cargo over long distances, they can compete quite effectively by focusing on the market within their geographic region.
The Proof is in the Pudding
The stock prices of Public Storage, Extra Space, and Sovran have risen between 30-140% since 2007. These increases reflect the real value of self-storage businesses and the opportunities the industry has to offer. These increases in company value are the result of good management, solid marketing, and perfect positioning. These are skills that everyone can master and use to build their own brand.
At the low end, investors can expect to experience 3-5% growth each year they are in operation. At the high end, the sky is truly limited only by the operator’s ability to gauge the market and scale their operations to satisfy the market’s needs today, tomorrow, and down the road. The question isn’t “Do you want to make money?” Rather, it’s “How much money do you want to make?”