To describe the self-storage real estate market as challenging is an understatement. Unless you’ve been in the real estate business for at least 25 years, these are uncharted waters, and even seasoned professionals who’ve been through a few cycles don’t see these times any easier.
The gap between the bid and the ask seems to be getting smaller, but we all need to realize that we’re playing by different rules, and these new rules will most likely be the blueprint for self-storage investing for many years to come.
Cost segregation is one way self-storage owners can benefit from the government, which is doing its part to help maximize the benefit of real estate investing. These changes have made cost-segregation studies more beneficial through increased tax deferment and the ability to carry net operating losses for up to five years.
As many industry professionals over the last year have indicated, self-storage continues to outperform other real estate asset classes. However, the banks and financial institutions are still reluctant to make loans to storage owners because they fall under the general real estate loan umbrella, which has some harsh critics.
Hopefully, this article will give you ideas on alterative ways to borrow money from Uncle Sam, as Goldman Sachs and other financial institutions have done through government bailouts.
Ben Vestal is the executive vice president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE; e-mail firstname.lastname@example.org.