By Peter Harris
Multifamily properties often steal the spotlight in the arena of commercial investing, but there’s a new star hitting the stage: RV and boat storage. Vehicle storage has been quietly working behind the scenes in the last several years, but it’s taking a leading and profitable role for savvy investors. Here’s why.
No. 1: It’s a Niche Market
There’s so much competition in commercial investing such as apartments/multihousing that it can be difficult to break into the market. However, because RV and boat storage is a niche market, there isn’t as much competition. Moreover, vehicle storage facilities are in high demand. According to a report by the Recreational Vehicle Industry Association, the third month into the coronavirus, RV sales hit an all-time high. Similarly, boat sales also skyrocketed.
As more and more Americans discovered that exploring the great outdoors was a safer form of travel, and perhaps more rewarding, sales of outdoor recreational vehicles remained strong throughout the pandemic and beyond. There was only one problem: All those new owners needed a place to store their recreational vehicles. Existing vehicle storage operators can’t meet the needs of this exploding preoccupation with outdoor recreation toys, so this is an industry ripe for investors and developers.
No. 2: High Profit Margins
Compared to single family home rentals, vehicle storage has higher profit margins. This is true for a couple reasons:
- With residential rentals, when someone moves out you must shampoo the carpet, paint walls, clean, maybe change an appliance or two and whatever else is needed. All of that to get ready for the next tenant. With a RV storage facility unit, all you need to do is sweep and spray for bugs.
- When a tenant moves out of a single-family home the occupancy rate is zero until a new tenant moves in. With an RV facility, you have hundreds of units, so you can have 10 of your customers move out and you’re still making money.
No. 3: They’re Pandemic-Resistant
Coronavirus restrictions spurred hundreds of thousands of many people to purchase recreational vehicles to travel safely and vacation comfortably with their families. This has increased demand for storage because many cities and neighborhoods have ordinances that prohibit parking RVs and boats in your yard or on the street. It’s a conundrum for vehicle owners, but for entrepreneurs, it’s a dream come true.
No. 4: Stable Income
RV and boat storage facilities have a more stable income than self-storage. You’ve probably seen the self-storage television series called Self-Storage Wars, where they auction off units that have been abandoned. That’s not likely to happen in vehicle storage facilities because people are storing high priced RVs, ATVs, jet skis and boats. They’re not going to abandon these expensive toys.
No. 5: Automation
In any commercial real estate investment, you will need to do marketing, maintenance and management. What’s great is you can completely automate all three of those using a software designed for specifically for storage facilities.
Benefits of Toy Storage
Vehicle storage produces good revenue and has a strong demand. Dealing with the tenants is typically much simpler than dealing with tenants of a multifamily property. Because they store valuable items, toy storage tenants are motivated to take care of the property and they are very motivated to pay a good value for that. Finally, the cost of cleaning and maintaining an apartment everytime there is tenant turnover can be pretty substantial. With RV and storage, all that is needed is to blow it out the cobwebs and it’s ready to go.
Peter Harris of Commercial Property Advisors is recognized as a leading commercial real estate investing mentor. Starting out professionally as an introverted engineer, he purchased his first apartment building in 2001. Others began asking Mr. Harris for investing guidance and thus began a lifelong passion for methodically teaching others how to invest in commercial real estate. Peter went on to become a best selling author, establish a successful popular commercial real estate YouTube channel and mentor people from all walks of life on commercial real estate and multifamily apartment investing.