Are storage units a good investment in the game of real estate? And how would
they compare to single-family homes for example? My name is Kris Krohn with
Limitless Wealth TV and today, we're going to explore the answer to that
question.
So recently, we got a fantastic comment from someone that said, "Steven, Kris,
single-family home versus self storage." Because you know what? We've heard this.
If you're in real estate at all, you can hear the dreams about, if you own the
storage unit and you've got hundreds of units and it turns into this really
great cash cow and it's a really popular idea especially with fifty thousand self
storage units around the United States. - I mean, the reality, Kris, is one in ten
families in America use self storage, I haven't done all the math but
that's a lot of people. - It's over a 200 billion dollar industry for
investing in that kind of real estate so it's totally noteworthy and absolutely
worth talking about today and I actually want to just pay props over to Peter
Harris with Commercial Property Advisors, he's got a great channel out there where
he's talking about and he's a huge proponent for this idea of, you should
get into self storage and today, we're really going to talk about, is it a good
idea, is it a bad idea. What do you think, Steven? - Well you know, there are a lot of
similarities with what we do, we do single-family residences bought below
the median, we do this entry level home market, this is where it kind of
our bread and butter has been over the last ten years and when I look at self
storage, there are some great similarities but there's also some wide
gaps that we want to talk about as well. Some of the similarities are the
marketplace, like we said before, one in ten Americans want and use
self storage. Well we know that 33% of Americans, you need a rental
property, right? And so, they can't buy, they can't qualify for a loan, whatever
the case is and so there's a large portion of the marketplace that needs
either the self storage or the rental market. This is a very good similarity.
- Well and there's some other great things about self storage. You're going to have
incremental vacancies, you're going to have low turnover, on average people will stay
in a unit for one two or three years, that's better than an average.. Yeah,
you've got some people that will rent a home and stay in it for multiple years
but sometimes they're going to vacate after just one year. So you've got a lot
and this is what we're looking for is, we want to compare as best as possible
apples to apples and that's a little challenging to do when you're comparing
residential real estate with commercial grade real estate because I would say
that even though this is a very viable approach in my life, I've heard that
there are fantastic ROI's in it.
There's couple of things that I would personally cautious against and to help
you understand that, I want to help you understand what Steven and I stand for
and the reason why we have our Limitless Wealth channel. It's because we're taking
a stand for the nobodies that want to become a somebodies because we're those
nobodies, we know what it is to not come from privileged homes, privileged
families, we didn't have anyone, you know, propping us up and really giving us a
certainly no silver spoon in life and the reality is, is that we are
freedom fighters for you, for every person out there that says, I want more
from life and obviously, the wealthy have something figured out but I don't know
what that is and this channel is dedicated towards helping you, any of you
that consider yourself a nobody, any of you that look at your bank account, you
say, wow I know I have self-worth but it's absolutely not reflecting on my
balance sheet and if you feel like there's more for your life and that's
why you're part of our channel, part of our tribe here, then we're here to let
you know, we're here to fight for you which means we've got a responsibility
to help you understand which investments are going to be harder and which
investments are going to be easier and right now, bottom line, if we talk
commercial, commercial will always have a higher barrier of entry and that just
means that it works less for the nobody's, the guys like you and I that
are trying to pull ourselves out of the mud and get somewhere with our lives.
- Yeah commercial is a wieder right, it's kind of like your old can class you
talk about often. Taking, - Are you trying to get back at me?
- I'm sorry. You know, you get in and the teacher says, I'm going to
fail you and good luck, right. That's kind of what commercial real estate is for
the average person, right. Even Grant Cardone talked about, you know, we did a
video, Kris, you did a video a while back were you kind of debunked a lot of
what Grant Cardone said. He said, "Hey get into multifamily. Give into these big
commercial properties because this is what I do."
And yeah, that sounds great but you're Grant Cardone and most of you, most of us
here aren't Grant Cardone yet, you know. And we don't have millions and
millions and millions of dollars to put down on a huge commercial property.
- Well, and Steven, we've got 18 year old's, we got 16 year old's, we got 25 year old's, we got 40 year
old's that are watching this channel. In fact, we got a lot of them, we had a lot
of the younger generation, they're actually following along and the
questions that I always get is, "When am I not too young to get started?" And the
reality is, we've seen people do some incredible and
exceptional things and so right now, if I had to tell you, "Hey, you
could only start with single-family real estate or it was going to be with self
storage." I'm going to hands down say family and the reason why is because it
is the most expensive commodity that the average American will ever deal with.
What I mean by that is, if you take a commodity like gum and if you were at
gum salesman, then you could sell lots of gum but you would be making pennies on
every transaction. You can sell one real estate deal and in one deal make more
money in a lifetime than you could ever selling gum because real estate is that
largest object that the average American wants to own in their life, it's part of
the American dream that is alive and is well and so, you know, on the other hand,
self storage, even though one in ten Americans use it, if you had to come up
with a much larger sum of money for let's say, something that had a hundred
units or five hundred units, then you know if you had to go through a period
of time where you're only 50% rented or 70% rented and if you weren't covering
the huge expense of that right up front, you could be in a world of hurt as
opposed to a single-family home. Guess what happens if it goes vacant? You've
got to come up with that mortgage. It's not insurmountable, there's a way for you
to be creative enough to solve that problem and so even for that reason
alone, even if I was looking at self storage for the beginner that had more
profit than our 15% 20% annual returns on our single families, I
probably still recommend the single-family just to make sure that
you're realistic enough so you don't get in over your head with too much. - So just
to be clear, this isn't a knock in comparing the self storage with the
single family residences. The reality is, they both produce a great ROI, they
both have wonderful track records, they both attract a large amount of
individuals as what you want a large market place so there's a huge market
for it. Really the biggest difference I
think that we're identifying is the self storage is maybe for someone
who is more of a veteran, more seasoned, has more assets to work with. The
single-family home is something that almost everybody can get started in. The
moment you turn 18 you can begin to qualify and get into single-family
residential real estate and there's a lot of things that
those of you that are younger and you're in your younger generations, that you can do
right now to start preparing yourself for that single-family residence. If you
want someday to get a self-storage, absolutely do it, get into that but
you're going to start most likely with single-family residential real estate.
- I want to throw one final idea for you as well. At some point, people believe that
if you do real estate long enough that you graduate to commercial real estate,
and this is a really interesting idea and there's some people that if you
believe that idea, like, well I just want to skip the baby steps and I want to go
right to commercial. I want to be clear, I've done commercial deals and I will
still base a lot of my portfolio in single-family homes. Not very different a
few years ago than Warren Buffett who went out and bought 40,000 single-family
homes with his major hedge fund and the reason why is because what you end up
getting is often, if you can take a big investment and break it down into a lot
of small investments, you can create greater security, you can create greater
liquidity, you can create even a greater track record and at the end of the day,
the real estate that we do, we're often humming at that 15, 20 plus percent
annualized return and anytime you can get your money earning over 10%, guys,
over a lifetime, you can turn that into millions of dollars. That's really what
we're doing and that's why we leverage real estate is because most investments
out there, they're only producing 3% 4% 5% maybe and so whether you're talking
about self storage, whether you're talking about real estate, 15% 20% looks
good to me all day long, it pays me lots of money. It's something
I'm indeed super grateful for and so at the end of the day, I don't complicate
life with doing things harder and you know what? You might come across a
self-storage deal, I might come across one even though I have not done one yet
where it meets all my criteria and the numbers look good and then there would
only be one reason why I would hold back, I have no track record with it but I
have a track record with thousands of single-family homes. So we hope that the
information we've provided today is helpful for you, useful and understanding.
Single-family homes, self storage, you finish the debate.
Thank you for watching today. Listen, if you are ready to actually take action and jump
into the game of real estate investing, click the link up here and let me and my
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