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Subject:  Re: Self Storage as an Investment Date:  5/20/2003  1:10 PM
Author:  SeattlePioneer Number:  108127 of 888229

<<Check the details of your area, the niche may or may not be filled.

The market for self-storage apparently is becoming saturated in many areas. GWM has kept his costs low and seems to be in a good position to weather competition. He has found a niche that works in his area. That's what successful real estate investing is all about. But tread carefully. There are few barriers to entry and overbuilding can occur. Check out this message board. There are several posts about some of the problems individual operators are having; also a lot of inquiries from people looking to get started.

Good post, FMO!

It's interesting to note your scepticism about real estate investing....

I'm certainly glad to hear about Golfwaymore's success in his storage business, and he obviously analyzed the business and his competition with care. He's also noted that he understands that new competition could change things, but that his current very high profits make this investment worthwhile even if the situation might change in the future.

That is certainly a reasonable business decision, in my view.

But your post illustrates the general risks of real estate investing, which involve building very durable structures in what can be a rapidly changing market. The classic syndrome is a spike in demand that greatly increases rents, which in turn sparks new construction and a resulting long term glut of supply and low rents.

It wouldn't surprise me to hear that Golfwaymore skims off those premium profits for a few years, and when competetors obviously begin building at a rate which would weaken rents, hear that Golfwaymore has sold off his properties while prices were still high.

This subject has been an interesting discussion of how business decisions are made.

Seattle Pioneer
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