Barbara Streisand once said “people who need people, are the luckiest people in the world.” Do you agree that this is necessarily the case? Or do you think that in real estate people tend to only cause more problems? Your real estate build doesn’t NEED people to exist, but without people inside, you don’t get the rent! Want to know a little secret? There is ONE kind of real estate out there that CAN survive without occupants. Self Storage. One of the most unique facets of self storage is that humans are rarely on site and they have NOTHING to do with actual occupancy and getting rent.
The Trouble with People
People take a toll on resources! They need things like heating, air-conditioning, and electricity. There has to be working plumbing and there is always a toilet to fix. In a tenant-landlord situation, tenants are always needing things to be done and fixed, sometimes they are things they could do one their own like changing a lightbulb! There are no benefits to have someone living in your building except for the fact that if they are not there, you don’t get paid!
If you decide to eliminate the hassle of dealing with people you will have efficiently figured out how to eliminate the biggest drain on earnings and management. The costs you will be saving on are utility costs, repair costs, insurance savings, and the list goes on. In the world of self storage you don’t have to worry about upgrading appliances and the like in units and “tenants” don’t really care how “pretty” the inside of a unit is as long as their things are being kept safe and dry.
The economic impact
The lack of residential people is really what gives self storage facilities its highest selling point! Their low operating cost will allow you to keep a majority of the money coming in. Finding little ways to improve the property will raise the net worth and that will then increase your occupancy and rental rates.
When taking into consideration what kind of real estate you want to operate take into consideration if you want to deal with everything that comes with residential tenants vs ones that stop by only to drop off or retrieve their items.