How is a Boat and RV Self-Storage Feasibility Study Different than a Traditional Self-Storage Feasibility Study?
Across America, boat and RV self-storage is in high demand and short supply. If you are considering filling that demand, here are some tips to consider when doing your boat and RV self-storage feasibility study.
The (Not So Secret) Secret
Finding an area with sufficient demand is going to be much less of an issue than finding land where the county will let you build boat and RV self-storage. “There’s not enough RV space everywhere! Worry less about demand, and more about where to build one,” says Jamie Lindau, national sales manager at Trachte Building Systems.
The primary factor to consider when evaluating a target area’s suitability for boat and RV storage is zoning. Zoning is by far the most difficult factor to overcome and is the first checkbox to tick on every parcel you consider.
Where Should I Start my Search?
“The normal tendency for a traditional mini-storage facility is to have the highest population possible within a three-mile radius,” Lindau explains. “But if you do that, the land cost is such you can’t make the economic model work for boat and RV. That’s why these facilities are not built in the highest metro areas but a little bit outside because of the land cost scenario. You still want to be in the highest population possible, but you are never going to be in a place with a 100,000 population within three-miles because it would be too expensive.”
Because covenants and laws regulating parking your boat or RV in your driveway, on the street or in your yard are gaining enforcement in even the smallest towns, strict covenants will make a parcel even more attractive. The toughest part is finding that zone-able-for-boat-and-RV-storage land.
Bob Hayworth, chairman and founder of Baja Carports, suggests you start your search by, “Looking for properties near gated communities that prohibit parking on the side of the house or in the front of the home. Consider how far the nearest body of water with a boat ramp is. Where are the closest gas stations? Grocery stores? People want to gas up, stock up and go! Also, consider how far the nearest urban center is where parking is limited.”
Well Ok, but then which is better: a location close to a lake or close to a population center?
“Close to a lake because people leave the items there,” says Lindau. “For example, in Wisconsin, the rates close to the lake are cheaper for the people coming from Chicago – less than half-price. You see a lot of boats more than RV’s that are stored in the area they are playing in.”
Lindau elaborates with a crucial factor to consider in your site’s self-storage feasibility study. “The hard thing is for the demographics [analysis] you do not use the amount of population that is on the census, you use the population that is the highest during the tourist season. For instance, you might have an area with a 5,000 year-round population that jumps 40,000 during the summer so that is what you use in your feasibility study. This explains the weird, skewed numbers in resort areas - especially when you look at square footage rather than unit mix, because the unit size is so large. In this scenario, you might have 25 square feet per person rather than eight because it is a tourist area.”
Hayworth suggests either parcel could work. “Building near a lake that is popular among recreational vehicles and boaters, such as Lake Tahoe, California or Lake George, New York can be wise to rent to a target market attracted to the abundance of activities that doesn’t want to spend money on pricey hotels. On the flip side, building near a population center attracts tenants needing extra space to store their leisure toys.”
Although it is difficult to get a count of the number of boats and RV’s owned by the transient tourist population, you can use data mining to determine this at different levels. Use the state department of motor vehicles to discover the number of boats and RV’s for free. In some cities and counties, you may be able to get this at a more local level as well.
For a definitive count of boats and RV owners in your target area, companies like Database USA will run a free search and tell you the number of each group of vehicle owners in their system available for purchase as an email or mailing list. They can even give you the size of the boat owned! After you open, you may consider an email or direct mail marketing campaign to your target audience using this list.
Going the Distance
Your customers will drive farther for a fully enclosed or canopy facility than they will for a traditional self-storage unit (generally a maximum of 10 miles). Exactly how far is under debate.
“It’s really about how close in proximity an accessible main highway is to both the facility and the residents. People will drive fifty-plus miles, but no more than an hour, to park their recreational vehicles under well-kept canopies with 24-hour code accessibility and security,” says Hayworth.
Lindau limits the range to “twenty miles – they would rather be closer but they won’t go more than 20 miles. They want to drive one mile, but twenty miles is the farthest I’ve seen.”
Research Unusual Competition
When doing your boat and RV self-storage feasibility study, be aware of competitors that may not be self-storage facilities. In many parts of the country, you can drop off your boat or RV for the winter at the local fairgrounds.
Lindau explains how this affects his own facility. “Our fairgrounds allow people to drop off their RV in three days of fall, and you have to pick it up in a three-day window in the spring. They put them jammed in next to each other. They are really cheap and if you are close to one of those it could hurt you. It only costs $150 to store your vehicle for the winter but you can’t get at it. So accessibility is a big factor.”
Planning Rental Rates without Close Competitors
One question that immediately comes to mind is when doing your boat and RV self-storage feasibility study is, if there is no competition in your target area, particularly for canopy or fully enclosed, how do you set your rental rates for your market?
“Set the rental rates by looking at other facilities in similar locations,” advises Hayworth. “Will your facility offer services such as an RV wash bay, propane refill, electrical hook-ups, dump stations, security or an on-site manager that can be included in the rate? Being a member of a self-storage association can help with what is a fair and accurate rate to charge customers without overpricing them.”
When reviewing other facilities’ rental rents, take guidance from large, regular self-storage units. “Use competitors’ 10 x 30’ price as a baseline number,” says Lindau. “Yours will be the same square footage price even though it is a bigger, taller unit. That is where I would start from and then once you fill you can raise rates or build more units. That’s what I did, I took that rate, maybe even higher – you don’t go lower.”
Climate’s Impact on Boat and RV Unit Mix
At Trachte Building Systems, Lindau sees climate playing more of a role in a facility’s unit mix than the customer’s demographic make-up. “More people are ok with just a canopy if they just have rain and sun,” he says. “300 miles north of Mason-Dixon line I see very few canopies because you are missing all the people wanting full commercial-sized units or who want to protect their boat and RV from snow. The three-sided canopies are not often built because you don’t get much more rent for them than you do a regular canopy.”
“Climate really doesn’t play into our inquiries. We work nationwide,” Hayworth says of Baja Carports’ experience. “People really just want a place that’s secure and accessible to them – they don’t seem to care if its enclosed. If anything, they’re more worried about the sun then snow.”
Unit Mix Considerations
When building enclosed - “I would build 70-80% of the enclosed unit mix for Class B/C motorhomes and pull-behind campers, boats and commercial clients. These would be 12 x 30’ units to 12 x 40’ units, with 14’ high doors which can handle those,” says Lindau. “I would build 20% enclosed units for biggest Class A RV’s. That way I can see how they do and then I would build the rest after I know what has the most demand. What I don’t like to see is a unit mix with all of them in the largest size because you make so much less money per square foot.”
When building canopies – “Don’t be biased toward size of RV or boat at all,” says Hayworth. “Why turn away customers needing your storage facility? Be accommodating to all.”
Lindau describes a further scenario to consider, “A lot of people will take the outside parking, and you get more of the unusual, higher-end stuff going inside. Not always RV’s – a business might use it, I have a party bus service using two units, there are a lot of possibilities. When you do an enclosed boat and RV facility, it is actually a boat and RV and commercial facility. I see many customers looking for very large units across the country due to the number of facilities built with too many small units because there are too many accountants out there. You can look at the discounting and see what is happening.”
Build in Phases
Both experts agree building in phases is a great idea. “If you can, build in phases because you will verify that you are right with the unit mix you are doing and not risk so much. Because a lot of people who are jumping into boat and RV might not be rich, they are going to build in phases. First, because they are conservative. Second, because they are worried about the unit mix,” Lindau explains.
Hayworth agrees. “If you have an existing enclosed storage facility and have room for a row or two of covered RV’s build what you can afford. Always build what you can afford! Keep in mind, staging an RV and boat facility for construction while it’s occupied can be very tricky – it’s always best to do install at once. If you can’t and you can protect the parked recreational vehicles and have an access path for equipment then staging may work for you. One thing you don’t want to do is put out the existing paying tenants or make them move their RV’s.”
Lease-up projections for boat and RV are often faster than traditional self-storage because of pent-up demand in a market. Less competition and record boat and RV sales combine to make these facilities lease-up quicker. Currently, Lindau is seeing them lease-up about 20% faster than traditional self-storage.
Finish Your Homework
As with any self-storage feasibility study, make sure the numbers make sense for your long-term goals and the projections hit your desired return on investment because you are going to need twice as much land for a boat and RV facility to make the money you would in a traditional self-storage business. Take a close look at the standard research mandatory for every feasibility study and finish strong with a full seven years of annual projections, three years of net operating income by month and a sensitivity analysis to make sure your project has the strongest chance of success.