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Hey crew, it's us again. I see you getting all cozy as you settle in for another holiday season, Contrarian Thinking style🎁. If you didn't already know, you're our favorite. Without y'all, none of this is possible. That's what's on our minds this holiday season...along with copious amounts of eggnog and country Christmas music (eek). Glad I got that off my chest. Now, back to business.
Today in 10 minutes or less, you’ll get:
- Why empty parking lots are a beyond brilliant, non-Ponzi scheme
- What I look for before buying ANY business or piece of land
- How to be DTF (down to F-I-N-D a piece of land)
- An easy way to add 400% AYR to this biz model with one teeny tiny change
PARK THAT THOUGHT
Where DO All the Big Toys Go?
Ever since learning how one guy was making $20k a month painting lines on a parking lot, I’ve had parking on the brain.
But not just the ones outside your local Walmart. It really got me thinking.
How many people own RVs, boats, large recreational equipment, or otherwise bulky outdoor items?
Apparently, 11.84 million people own boats in the US, and another 11.3 million own RVs. That seems like an F-ton.
F-TON being, of course, the highly technical term for “a whole bunch”.
So I poured a glass of vino and hit up LoopNet for another round of my fave late-night game: “What Would Happen if I Bought This Business?”
Once I started my search, I found a decently sized boat storage space like these ones, out in Edgewater, Florida.
- The owner had it listed on LoopNet for $62,900
- Factor in the 50 spaces available at their current rate of $65/month and say you get it to a 50% occupancy rate
- You’re looking at $19.5k in yearly revenue
I’d also add that storage facilities see upwards of a 41 percent margin. Harrumph.
We’ve already written about purchasing land for campsites and parking spots in high-traffic cities. So why not buy land and rent space to all those RV, boat, recreational vehicle, and Seadoo people?
You’re definitely going to need a lawyer, some savvy real estate folks, and probably a friend in your back pocket who knows construction just in case.
And if you’re scratching your head and thinking:
Allow me to show you why this is one to watch.
Gary Wojtaszek, who’s best known for building data centers in his real estate portfolio, recently opened an RV and boat storage company when he sold his last data center.
After starting his new boat and RV storage company in August 2022, he acquired 10 locations in six weeks. WEEKS.
When all is said and done, he’ll have thrown about a third of a $BILLION$ toward this business model, with hopes of scaling to 400 locations with small business operators in the future.
HOW TO PLAY IT
Why is a Server Farm Real Estate Lover Getting into Boring Biz Buying?
Because he knows that local (i.e. drivable) distances and staycations become the #1 way to vacation during a recession.
RV sales were up 6% in 2020 (~430k units sold). People need somewhere to store them. Same goes for boats and any other leisurely equipment.
Extra Space Storage, a real estate investment company that moonlights in boat parking lots, has traded about $387 million in storage stock with many more millions to come.
Equally impressive, slightly smaller scale, is Onewater Maritime. They’ve traded about $82 million in stock and bought ~579k storage units worth $4 million in the last three years.
If I were going to turn my wine-induced internet rabbit hole into an actual business idea, here’s what I’d do:
- Evaluate your market with a fine-toothed comb and look for a good location
- Near, but not within, a large city (100,000 and larger). If you get too close, it’ll be too $$$. REMEMBER: you’re not necessarily looking for a year-round city population of 100,000. You’re looking for the HIGHEST population that city has during tourist season.
- If you want to increase occupancy for your storage space, search for places near lakes or other large bodies of water (for da boats) and campgrounds (for da RVs).
- Find a location with ~$70k in average household income. That number surprised me, too, but 61% of those who boat have an annual household income of $75K and below and the average RV owner has an income of about $68K.
- Check into areas with a high concentration of RVs and boats, or better yet, both within 1-10 miles of your facility. P.S. this one’s free, but the cheapest way to get this info is from open-source data for the state/city/county you’re looking to buy or build storage in. Here’s a map of the # of registered boats in Texas, by city, for example, from https://data.texas.gov.
2. Ask for the right numbers if you’re buying an existing facility
This one rings true if you’re going to purchase a storage lot that’s already been built. Here are the big ones to look for:
- Historical vacancy rates - You’ll want to know how much capacity the existing facility has and then cross-reference it with their vacancy rates to see how much usage they are getting for the amount of cash flow they currently have.
- Competitor rates - You’ll want to know how much your competitors are charging in your area and see how your new business compares. You’ll also get a clear idea of whether there’s an opportunity to increase prices.
- # of units available - Are you walking into a turnkey biz purchase? Or do you need to do any additional marketing to up the number of units that are being rented out?
Market evaluation is more of an art and less of a science. Once you have your market evaluation factors down, it’s time to evaluate.
3. Buy yourself a piece of land (but only if you wanna)
If you’re going the route of building out your storage space, the biggest time suck will be finding the right piece of land.
Your big hurdle is going to be navigating the zoning and city ordinances. This can be a real b*tch.
If the land is already zoned commercial, that’s probably your best bet, IMO. You can always attempt to change your zoning with the help of city officials, but that also means getting to cashflow is going to take a little longer.
But, if you’re into it, here’s where to look and what to do:
- Check out Zoning Point or search Google for the Assessor Office of the county you are looking to purchase or where you’re looking for zoning information. Make sure you know which county the land is in and the parcel number before your search.
- According to them, at least, Land.com is the BIG player to help you find your patch of land online. Try some of these search terms on LoopNet or some of the other sub-sites: “Commercial Land”, “Land”, or “Parking”. Sometimes, these spaces show up on sites like Zillow and Redfin, so you might consider searching and filtering for Lots/Land on your fave home finder application.
- Alternatively, find an existing land storage business and just buy it. ****Our fave recommendation, by the way. None of the above steps are negated by this step; you still need to evaluate your market and find land, just a big part of the work MAY have been done for you. (Be cautious: maybe they’re looking to sell their existing storage land because no one is using it!)
And now for the thing that nobody is talking about: on-site repairs
The annual maintenance that literally every. single. customer. will need each year but doesn’t want to have to deal with.
Say hello to your new revenue stream.
Let’s run some quick numbers, shall we?
JD is saying boaters will spend 5-10% of the boat’s value on ANNUAL repairs. Let’s call it 8%.
If your customer’s boat is $50k, you’re looking at an additional $4k in revenue from a single boat.
With storage rent of $780 per boat per year, say, you just 5X’ed your annual revenue per customer. If you’ve got 50 spots available to rent out each year and only sell 50% of them, you’re saying hello to six figures in revenue ($120k to be exact).
I’m not saying this is the only way to run a storage business, but if I could buy one of these bad boys, add it to my portfolio, find an operator, and add some on-site repairs, I’d do it. I bet it’d kinda be like a Jimmy Buffett song, hold the piña, add the profit.
Where there’s a will, there’s a way—right, fam?
Codie & Contrarian Crew
Written by Codie Sanchez, Edited by Rananda Rich and the Contrarian Team
CONTRARIAN EXTRAS
The Not So Boring Section:
🏪 Main Street looking better than Wall Street in 2023… own your destiny
🤖 Bored with chat about ChatGPT yet? Depends if your business will be disrupted by it…
💱 What the FTX… and why this disaster matters so much
In Case You Missed It...
I’m not lyin’ when I say the masterclass we hosted yesterday was off the chain.
Over 2,650 Contrarians joined us to hear us talk about the thing I love most: boring businesses and making deals (obvi).
2023 will be different in many ways, so I want all of you to be prepared for it and make some financial moves to get you set up.
If you couldn’t join us live, I got you. You can watch the recording for the next 48 hours right here. It’s about 75 minutes, so grab your fav caffeinated beverage, and your notepad, and jump in.
What Did You Think of This Week's Newsletter?
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Disclaimer – This is the “Be an adult” section. Everything mentioned above isn’t advice, just a recount of what I did. That said: This article is presented for informational purposes only. The opinions stated here are not intended to recommend any investment or provide tax advice. Neither are they an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Codie Ventures, LLC or its affiliates. All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. Day trading and investing do involve risk, so caution must always be utilized. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk. You are solely responsible for making your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. By reading/sharing this newsletter or consuming our content on our other channels, you are indicating your consent and agreement to our disclaimer.
