This article takes the view of the consumer, "Why do so many people pay to store items they almost never use?". But in actuality, the interesting part of this is why is there so much supply of self-storage businesses?
The answer is: cash flow. Self-storage businesses are the almost perfect solution for someone with a good size (but not enormous) bucket of money that they want to put to work generating cashflow:
1. Cheap build out (cheap land, cheap facilities)
2. Almost entirely hands-off (no employees, automated entry)
3. Low liability (low risk of customers suing you)
4. Low overhead (just pay for taxes, electricity, minimal maintenance)
5. Reliable monthly cash flow
The abundant supply of these businesses, I suspect, tends to generate demand: it's easier to pay $80/month to store your junk than spend the time and emotional labor of picking through what you want to keep and what you want to get rid of. That ends up being captive long-term revenue.
You are missing the biggest benefit of a self storage business - the appreciation of the underlying real estate. When you dig into the financials of the major self storage businesses you'll see they are essentially REITs that have better cashflow. They can pick an up-and-coming area, do a minimal build-out with low annual overhead, and then down the road when the facility would be needing overhauls and maintenance the underlying property has typically appreciated so much that it dwarfs all other associated revenue streams and makes sense to sell and raze the existing structure. Great business model if you have a long enough timeline.
This is also why some startups trying to revolutionize the self storage model had extreme headwinds - if you are renting the underlying properties and trying to make the storage business profitable you are at an extreme disadvantage to the larger players who can subsidize operating costs with portfolio appreciation.
Yeah, came here to post something similar. I used to hang around in real estate circles, and two businesses come up often: Self storage and car wash. These are two things people just can't get enough of.
(Car wash usage doesn't go down even during a recession, apparently).
There's aesthetic reasons (I'm proud of my car, I like it to look nice), and practical reasons (Leaving mud, grit, salt etc, will wear and corrode my car faster).
Where I live, summer rain doesn't really clean the car (if that's what you care about), and in the winter you are shortening your cars life by years if you don't try and get the salt off regularly.
When I bought my 8 year old car, it was from the Midwest and the mechanic I asked to check it out said "Don't buy - it's got a good amount of rust because of the salt they use". I asked whether it means the car is less safe. He said "No, just more repairs and potentially costlier repairs. I said "Over the remaining life of the car, how much extra would it cost?" In today's dollars, the answer was $2000.
I bought the car. It easily lasted another 7 years before it died in a collision.
My car prior was a purely Midwest car, and I rarely washed it. It happily lasted 16 years. I passed it on to someone else, and he used it for a few more years.
I've always lived in the midwest. Every car I've ever owned has been a car from the midwest, and has been driven in the midwest.
The salt from the road is driven by car tires into a briny mist that coats everything. It blocks vision through windows. It accumulates in chunks that can be kicked (like mud also can, except corrosive). It wicks its way into tiny crevices and betwixt layers and infects every part of the car that can be infected, and once there it rots everything that it can rot.
And I don't mean just the bodywork; that part has been getting better with improved processes and paint.
But stamped control arms often rust away while the ball joints and bushings are still in good form. Electrical connections rot. Frames and frame-like components often have scaly holes in them. Every exposed engine part corrodes; uncoated steel turns black, red, or brown; galvanized and aluminum parts turn white and kind of fuzzy (and stuck). Our junkyards are full of rusted-out hulks of cars with drivetrains that still work properly, even if they're ugly.
Fixing things when they break is tedious and time-consuming, and the most-sane approach to any repair on a car that's more than a few years old is to go into it with an expectation everything that doesn't crumble from rust is instead frozen with rust.
The work itself unilaterally causes a person a learn new facets of their verbal and mechanical vocabulary that they never even knew possible, and is arduous in ways that would test the emotional stamina of a Buddhist monk.
With enough cleaning and care (and just rinsing things off by driving in the rain), a car that is from the midwest can be largely saved. Getting rid of all of the salt slows the process down very dramatically.
But a car that is regularly driven in the midwestern winter is in the midst of a fairly quick process of being returned to the earth.
It's just a fact that is plain and that we live with every day. We do work to prevent it; on a warm-ish day in January, cars will line up around the block to get into a car wash and have a chance to dry out before ice freezes every orifice closed.
But it's not fear, I don't think. Just as we accept the sun coming up every day and disappearing over the opposite horizon every night, we accept the rot as something that will inevitably consume the most expensive machine that we own and that this will happen on a schedule that we play very little part in controlling.
epochbtc · · focus · HN ↗
The answer is: cash flow. Self-storage businesses are the almost perfect solution for someone with a good size (but not enormous) bucket of money that they want to put to work generating cashflow:
1. Cheap build out (cheap land, cheap facilities) 2. Almost entirely hands-off (no employees, automated entry) 3. Low liability (low risk of customers suing you) 4. Low overhead (just pay for taxes, electricity, minimal maintenance) 5. Reliable monthly cash flow
The abundant supply of these businesses, I suspect, tends to generate demand: it's easier to pay $80/month to store your junk than spend the time and emotional labor of picking through what you want to keep and what you want to get rid of. That ends up being captive long-term revenue.
jboggan · · focus · HN ↗
This is also why some startups trying to revolutionize the self storage model had extreme headwinds - if you are renting the underlying properties and trying to make the storage business profitable you are at an extreme disadvantage to the larger players who can subsidize operating costs with portfolio appreciation.
BeetleB · · focus · HN ↗
(Car wash usage doesn't go down even during a recession, apparently).
encrypted_bird · · focus · HN ↗
dghlsakjg · · focus · HN ↗
Where I live, summer rain doesn't really clean the car (if that's what you care about), and in the winter you are shortening your cars life by years if you don't try and get the salt off regularly.
BeetleB · · focus · HN ↗
I bought the car. It easily lasted another 7 years before it died in a collision.
My car prior was a purely Midwest car, and I rarely washed it. It happily lasted 16 years. I passed it on to someone else, and he used it for a few more years.
I suspect the fear is overblown.
ssl-3 · · focus · HN ↗
The salt from the road is driven by car tires into a briny mist that coats everything. It blocks vision through windows. It accumulates in chunks that can be kicked (like mud also can, except corrosive). It wicks its way into tiny crevices and betwixt layers and infects every part of the car that can be infected, and once there it rots everything that it can rot.
And I don't mean just the bodywork; that part has been getting better with improved processes and paint.
But stamped control arms often rust away while the ball joints and bushings are still in good form. Electrical connections rot. Frames and frame-like components often have scaly holes in them. Every exposed engine part corrodes; uncoated steel turns black, red, or brown; galvanized and aluminum parts turn white and kind of fuzzy (and stuck). Our junkyards are full of rusted-out hulks of cars with drivetrains that still work properly, even if they're ugly.
Fixing things when they break is tedious and time-consuming, and the most-sane approach to any repair on a car that's more than a few years old is to go into it with an expectation everything that doesn't crumble from rust is instead frozen with rust.
The work itself unilaterally causes a person a learn new facets of their verbal and mechanical vocabulary that they never even knew possible, and is arduous in ways that would test the emotional stamina of a Buddhist monk.
With enough cleaning and care (and just rinsing things off by driving in the rain), a car that is from the midwest can be largely saved. Getting rid of all of the salt slows the process down very dramatically.
But a car that is regularly driven in the midwestern winter is in the midst of a fairly quick process of being returned to the earth.
It's just a fact that is plain and that we live with every day. We do work to prevent it; on a warm-ish day in January, cars will line up around the block to get into a car wash and have a chance to dry out before ice freezes every orifice closed.
But it's not fear, I don't think. Just as we accept the sun coming up every day and disappearing over the opposite horizon every night, we accept the rot as something that will inevitably consume the most expensive machine that we own and that this will happen on a schedule that we play very little part in controlling.