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19 Mar 2024

Housing Hacks for Self Storage Investing


James McLean

Union Realtime

Developers chase certain economic indicators such as “building permits,” “housing starts,” and “housing completions,” just to name a few that can be found on the Census.gov website. Slicing and dicing those numbers into various data points, the hope is that they can eventually key in on locations where all of the most celebrated indicators converge and they can then break ground with confidence.

As a Solopreneur, you want to be aware of the vast amount of data available in a public forum, but realistically it makes more sense to be able to generate your own data based on your localized needs and buy-box standards. While national housing trends are decent predictors, let’s look at a “for sale/sold” hack that can be used to generate possible investment locations based on “local selling and buying” demand.

Local selling and buying hack self storage rules of thumb: people that sell are moving into a new location which produces items that they might not want to unpack. They will need storage. People that buy new homes will need to store their items that they might not want to unpack or simply can’t make room for in their new homes.

Let’s see how we can compile our own data based on “selling and sold” and then do the math that should point us to a future location to either buy a facility and flip It, Or buy a facility and manage it. We are specifically looking for volatility within a housing market that is defined by the city or suburb of your choice. Volatility as defined by more houses being “sold” in a specific time frame versus houses that are ‘for sale’.

Step #1 Go to Redfin.com, start a free account.

Step #2 Pick a city that you want to explore. Example: “Macedonia, OH” You can choose a macro regional area that fits your investment criteria: points of interest, proximity to where you live, rate declines (see article Beyond Numbers) for instance. But, for this hack, it’s necessary to drill down to a suburban city location. Jump in and let’s gather real numbers which we can then analyze.

Step #3 Exploring Sales and Sold. “For sale” is the first part of the puzzle, “Sold” being the second part.

While on Redfin, choose a city and then pick the following criteria: under the ‘for sale’ tab:

✔ Coming Soon
✔ Active
✔ Under Contract

Redfin site

You’re looking for places where there is ‘selling action’ coupled with housing prices that meet your criteria (example: I want to invest in places where the houses are priced above $300k). You’re looking for cities where there is consistent selling at prices that fit your criteria. This is only the first half of the data set you’re looking for.

The second half is “Sold” Check: ✔ “Sold” ✔ compare last 1 year

Redfin site

What is the trend?

Put the two figures into - “For Sale” and “Sold” - into a spreadsheet - city by city; and see which suburb has an acceptable ratio of “For Sale” month by month versus “Sold” over the course of 1 year.

Volatility would be predicated by the fact that there are more homes being “Sold” within a time frame than there are homes ‘For Sale” at any given point. Baseline stagnant locations would be predicated by the fact that there are an equal number of homes “For Sale” and “Sold” within a time frame.

Example: I only want to invest in a suburb that has a ratio of 1 “For Sale” to 4 “Sold”. Maybe even going as low ast 1 “For Sale” for every 2 “Sold. I don’t want to invest in a location where the same number of homes being “Sold” is equal to the number of homes ‘For Sale” if my other data points don’t make sense either i.e. Rates, Saturation, New Facilities etc.

Doing the Math: I just picked Macedonia, OH as an example but the math works anywhere in the country.

For Sale Sold

The Math: 76 divided by 17 = 4.47 for every for sale home in the last 6 months, there have been 4.45 homes sold. Is that an acceptable number? You need to decide for yourself and add this to your other buy-box data points.

This hack is only a data subset, not the “Golden Bullet”. When picking suburbs for your initial search, you should cross-reference any existing facilities within a 10-15 minute drive time just to check on current supply as well. Also, are there any Points of Interest in that location that might cause the volatility to take on another dimension. Example: the homes being “Sold” might be 2nd homes, while the homes ‘For Sale” might be primary residences.

Key takeaway. Think: What criteria are you using when analyzing locations? Is it based on National Averages or Local Data? How can you combine the two and come up with a pragmatic reason to invest or not to invest? Plenty more on the subject, but this little ‘housing hack’ provides you with one more data point in your buy-box that will help you to make a solid decision.

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