😲 This key insight I discovered completely shocked me.
Yesterday I was analyzing my self storage business rental business with my team. It is really helpful to have properties spread across different markets I’ve found.
✅ You lean on efficiency of scale immediately,
✅ You can test different strategies without having to be a Google Ads expert, and
✅ You obtain more exposure to more possible competitors immediately.
And what I’ve learned throughout my 20 years of investing is that location, location, location is true more than ever.
💪 The challenge in my experience is you have to extract why that location is special, which is really your secret sauce to investing.
🔄 That is how you turn a hobby into a business.
At one of my properties, we are running at 92% occupancy. This is about the national average so I can’t really complain. Collections are solid as well, which is economic occupancy.
However the key insight I discovered in doing my analysis completely shocked me.
🟢 In the self storage business, there’s a general rule that you want to own your 3 mile radius. I generally believe this.
But to get to 3 miles you have to first pass through the 1st mile radius and this is where most investors miss out on huge opportunities. You miss your best clients right under your nose.
For a stock price to hit its target, it first must pass through all the numbers on the way TO the target. It doesn’t get to skip numbers.
While knowing your clients is important, this actually was not the key insight.
I was setting up some spring drip advertising campaigns with my team when I discovered that we have pricing power within 1 mile of our facility.
✅ Our market rental rates are ABOVE the national average. Like 20% higher.
✅ Our paying client rental rates are ABOVE the nearby competitors. Like 20%+ higher.
✅ We are hyper local. We bring value to the market. We can charge MORE.
➡️ So we increased our base rents AGAIN by 5-12% because most of our unit sizes are 100% occupied. This also allowed us to execute rent increases again.
Knowing our pricing power allows us to run a profitable business.
Do you know your pricing power in your business?