Storage Auctions
The Storage Locker => General Storage Auction Talk => Topic started by: bwd111 on April 20, 2012, 05:21:37 PM
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Due to people way over bidding and making sure the storage companys are always in the plus year after year , now is the time to invest in certain storage companys. The companys have to be making huge profits and no loses. Why blow 1200.00 when I person could invest that in stock and make a profit?
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Yet in my area we have 1 facility up for sale and another that went under. Poor management I suspect.
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Due to people way over bidding and making sure the storage companys are always in the plus year after year , now is the time to invest in certain storage companys. The companys have to be making huge profits and no loses. Why blow 1200.00 when I person could invest that in stock and make a profit?
If you could buy stock in a storage company it might not be a bad idea. i mean look at what they charge a month on rent. A 10 x 20 can go for $100 to $150 month. Now as far as people over bidding this is what happens in Pa. Once a unit is 3 months behind it can be sold. So now the storage company is out $ 3 - 400. Say unit sells for $1000. They have to pay for advertising. It is around $100 each time x2 = $200. If they go with a auctioneer it is more money. Maybe as much as 25%. So the $1000 - $250 for the auctioneer leaves $750 - $450 in past rent leaves $300 - $200 in advertising = $100. Now for the kicker. Anything over al cost go to the owner of the locker.
Now if this locker only sold for $500 by the time you pay the auctioneer, advertising and look at the lost rent for 3 months you just lost money. Now look at it this way. 300 unit x a average of $100 come out to $30,000 a month. That is $360,000 a year. It would be sweet to have some land and build your own place.
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Publicly traded storage companies are treated as REITs as far as investing is concerned. A REIT is a Real Estate Investment Trust and covers companies like malls and apartment rental firms.
By definition, a REIT must pay out 90% of its earnings to shareholders in the form of dividends, so really you are investing more for dividend income than for share price growth.
Public Storage (PSA) currently trades around $140/share and pays an annual dividend of $4.40/share, paid quarterly. The truly impressive thing about Public Storage is the dividend growth, having doubled since 2009.
Frankly, Public Storage the stock has been on my radar much longer than storage auctions have and I'm glad this thread prompted me to look it up again. I won't financially be able to buy shares right now, but I will be adding it to my watch list.
The one thing I can say is that the auctions have such a small impact on the bottom line that it is almost meaningless. The true advantage is getting the space clear to have a new and, hopefully, paying tenant.
Please don't read this and go running to buy shares. If you're interested, great, but do your own research as this really is just a cursory 5-minute analysis.
That said, I'm glad this thread came along. It got my investing juices flowing again!
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One thing I've learned in the short time I've been doing this is that they facilities owners are the ones making the money. And I don't mean just the storage place, I mean the antique malls, the flea markets, those guys are making a killing! Makes me want to consider buying a facility instead of a unit lol.