For some people, self-storage is a place to stash their stuff. For others, it’s a retirement plan.
Looking for a low-maintenance and highly rewarding real estate investment, many with money to invest are turning to self-storage as a reliable cash-generating business in good times and bad.
What draws them in?
“It’s very recession-resistant,” said Scott Meyers, 54, founder and CEO of Kingdom Storage, a holding company for the business’ LLCs and partnerships, which total about 50.
“During the pandemic, businesses downsized, people downsized and put things in storage,” Meyers said. “The demand was there, and the rate followed along with them. People had to clear out their houses to build an office at home.”
Creating self-storage “masterminds”
Meyers (above) lives in Indianapolis, Indiana when he’s not circling the globe for quarterly mastermind gatherings related to self-storage or volunteering to help people in various ways. A recent project involved enabling Ugandans to secure a water supply.
The mastermind sessions focus on self-storage and cost $15,000 to attend. Many of the attendees hope to become investors and walk out of there with a share of a self-storage project.
Is it worth it?
“The investors are limited partners, thus they don’t make the decisions,” Meyers said. “They’re happy to invest $50,000 and somebody gives them a 22% return. Five to 10% is what investors own at the start – and they get to use others’ expertise.”
The mastermind gatherings started in 2013. Attendees share information about smart investing in self-storage facilities and making deals. About 60 people attend the sessions.
“When you look at the profitability when you get a self-storage facility running properly,” Meyers said, “$15,000 is a drop in the bucket for all you have learned, to earn hundreds of thousands, if not millions, from what you have learned and the connections you have made in the mastermind class.”
His company includes an educational component at selfstorageinveseting.com that has served about 4,000 people since opening in 2007.
Meyers also invests in projects, between $50,000 and $1 million or more in some of the same self-storage facilities that mastermind attendees purchase. He has invested in about 60 self-storage properties through the years.
“We also have private equity partners in the room who rise up to help us grow our businesses,” said Meyers.
Meyers, who has been a real estate investor since 1993, also is part of TriCore Investment Group, which has a $35 million fund with 16 self-storage properties.
‘I would love to do this full-time’
Mike and Jenny Terada of Grand Junction, Colorado (above), sought to be strong investors in self-storage and started attending the mastermind events.
“We signed up with Scott’s group in 2016 for self-storage investment training, which teaches us how to find, evaluate, analyze, acquire, manage, run and then sell storage facilities,” Mike Terada said.
They capped their search by becoming passive investors in the Ramsey Self-Storage Facility Project, a ground-up development in Minneapolis, Minnesota that opened in 2019.
The Teradas recently took a big step by raising $400,000 – and there’s one more $50,000 space they might fill – to purchase a commercial storage lot in Grand Junction.
“We purchased it with the help of Scott to raise funds.”
Meyers said the Teradas “have done a fantastic job. They mastered the art of underwriting. They didn’t just buy any old facility. They waited for the right project to come along, that it was right for them and checked all the boxes of what we were looking for.”
The Teradas’ next task is to get proper drainage for their new property and upgrade the electrical and security aspects. Their property is 3.5 acres and caters towards open-air storage for contractors.
Mike Terada works full time as a software engineer and Jenny is a dentist. Their goal is to build their retirement and accelerate the timetable for when they retire.
“I would love to be able to do this full time and quit my day job. That is one of the goals,” Terada said.
