Corona Virus Predictions

Hi! My name is Fernando Angelucci. I'm The Storage Stud. I've been getting questions recently on how the storage business would be affected during Corona Virus as well as post Corona virus. And that's a really great question. So there's a lot of things to take into account here. You know, one of the things that we always look at is that self storage services people in transition. And with the breakout of Corona Virus and the extended period that it's been kind of affecting the nation. We're going to see a lot of people in transition because of it. So one example is a good friend of mine, Scott, brought up, you know, a lot of people are now looking at moving out of densely populated, you know, urban cores, you know, downtown cities like ours in Chicago. And actually moving out to say an acreage that's 50 or a hundred miles out of the city center.

So someone like that, they may be moving from a smaller space, say 900 square foot condo to a larger space, maybe a 1500 or 2,400 square foot home. And those people are going to need storage. Even though they're going to a place that has larger space. One of the things to think about is, you know, the whole process, the logistics of selling your home and then buying a new home. Usually it's a lot easier to sell your existing home and then go make an offer on the new home that you'd like to live in. The reason why is when sellers are looking at prospective buyers on the properties, and I'm speaking from experience here because I'm also a licensed real estate agent. If that offer has a contingency that says I'm not able to buy your home until I sell my previous home, usually those offers will go to the bottom of the, bottom of the pile.

So what most people opt for and what a lot of real estate agents will advise their clients to do is actually sell their existing home first that accomplishes many things. Number one, it takes off, you know, your mortgage liability off of your credit. So you look better to your lenders. It also causes an issue of storage. So these people are going to have to store their goods somewhere temporarily, you know, maybe move in with some relatives or a friend or go into a hotel while they're searching for their next purchase. And so that's going to be an ideal customer that would use self storage. The second part of this is, we as humans, especially in the Western world, we tend to accumulate possessions and those possessions will usually expand to fill the space that we give them. So kind of like a gold fish. A goldfish will always grow so that it fits in its environment.

I've noticed kind of the same thing with, you know, people in the Western world. You move from 900 square foot condo to a 1500 square foot home. And all of a sudden within a year or two, that home is filled up. And then you go from a 1500 square foot home to a 2,400 square foot home. And then again in a year or two, all of a sudden now the attic and the basement and the garage are also filled to the brim and you're going to have to go use storage. So these are kind of two sides of the customer life cycle. You have the people in transition where they're gonna need storage services temporarily. And then later on, you're going to have more of a longer term client. That's going to use your storage facility as a way to augment their existing space. Cause you know, they really need that jet ski. Or they really want to, you know, have a full set of decorations for every holiday in the year. I mean, they just need a place to store that stuff. That's out of sight out of mind.

So that's one of the potential effects from Corona virus. Another thing is in the opposite direction, say you still want it stay in the urban core, but you want to downsize because maybe you were furloughed or let go, when you can no longer afford your rents or your mortgage payment. You're going to go ahead and go find some place that is a little bit more cozy, if you will. That will be able to support the financial needs that you have. You know, maybe all of a sudden your income drops in half because one of the partners in the household and one of the adults in the household can no longer afford. Or maybe you live on your own and your pay was cut in half. Or they cut your hours in half if you're an hourly worker.

So what you may opt to do is go from 1,200 square foot place down to a 700 square foot place, and then opt to pay for an additional 50 to a hundred square feet of storage that you use as kind of a closet, if you will. For example, I'm a millennial. I like to live near the action. I like to live downtown Chicago. And, and the prices here are not as affordable if I were to live, say in the suburbs or in the exurbs. So what a lot of people my age are doing nowadays is we're opting for a smaller living space. And then just getting some auxiliary storage on the side that we use as our seasonal closet. So for example, in the summer, I'll put all of my winter clothes into my storage unit and vice versa when the seasons reverse, or maybe I'm someone that likes to be very athletic and enjoys the outdoor activities. Maybe I have a kayak that doesn't fit in my tiny apartment. So I'm going to put that kayak in a storage facility. Or skis or snowboard, materials, things like that. And just go use that as a closet. So anytime I'm going on a trip to go do those things, I just stop at my storage facility first. Then I go to my final destination.

So that's another aspect of the effects of COVID or Corona Virus on, you know, the self storage industry today, but then also in the future. So we always will serve people in transition that just need a temporary place to put their stuff. Another effect that that we're seeing is there's kind of this shift in mentality of where people want to live. As I mentioned in the previous example, say you no longer like being, you know, really in close quarters with people and you just want to move somewhere that's farther away from people, but maybe you don't want to splurge for, you know, a large home. So maybe it's a combination of both of those previous examples where you're going to a smaller home that's farther away from the urban core. These are all the type of things that we need. Shifting over from the residential side to more of the commercial or the business side. A lot of businesses recently have been opting to go a hundred percent virtual. They don't want to have the office where you bring a bunch of people together that can possibly cause a, you know, a contagion to spread. So they're opting to get rid of their office lease or even sell their office buildings. If they own them. Allow all their employees to work remotely. But these companies still have things that they need to store.

Documents storage, especially in the financial or in the legal professions. And same thing in the medical professions. Say, it's, it's a company that had a flex space where half of of the building was office building. And then the other half was warehousing. They may opt to sell that building or terminate their lease and then use a self storage facility as an intermediary point or as a temporary storage. So for example, in one of our very first facilities that we purchased, there was a tortilla company and they made tortillas for tacos and burritos and all those things. And what they did was the production facility was in downtown Chicago, but they would ship their tortillas around the Midwest. So what they would do is for the ease of the semi-trucks to get to the materials that need to be shipped, they would actually first ship the tortillas from their production facility to our self storage facility, about an hour and a half outside of the city, that was closer to a lot of highways.

And then they would drop them off at the storage facility. And then once a week or twice a week, a semi truck would actually pull up into our facility and then unload those units of the tortillas, put them in the truck and then ship them to their final destination. So that's another example of how the storage climate is being affected in a positive way by Corona Virus. Just some, even some personal stories. You know, there's a lot of schools that have shut down. Both higher education, as well as the K through 12 schools. And they have moved most or all of their education online for the time being until it's safe to have people congregate again. So what a lot of these students that say we're living on campus are doing is now instead of hauling all of their stuff back to their home, which can be anywhere in the country or even in the world.

You know, we have a lot of international students that come in the United States for the education here. Those people are opting for storing their stuff in a storage facility for a few months, until this all blows over, as opposed to getting, you know, a full moving truck and going from New York to California or Chicago to Utah or whatever it is. I personally, when I went to school down at the university of Illinois, every summer, instead of, you know, hauling all my stuff back home to my parents' house and then doing it and bringing it all the way back down to university of Illinois again, the following semester, I'll just opt to use a storage facility near the campus. The reason why was a lot of those rental properties, they would actually have a nine month lease that coincided with the school year, which then allowed them throughout the summer to go through and rehab the properties and, you know, paint all the units and clean the carpet.

So they wouldn't even allow us to have overlapping leases that allow us to move from one apartment to the next apartment. So I would always just use a storage facility, just North of Champagne for that purposes. And I did that for five years, five summers in a row. I used that storage facility. So those are some examples of how, you know, we're being affected by Corona Virus to the storage industry. And it's all really good for us, believe it or not, you know, self storage is one of those asset types where there's not a lot of people using it at any given time. You know, you may have a 1000 unit facility, and that seems like a lot of doors, but if you're actually at the facility, you'll notice that not a lot of people are there at the same time.

You may have one, two or three people moving about in a 100,000 square foot facility or 130,000 square foot facility. And they may never even come in contact with each other, you know, let alone be in close enough quarters for, you know, a virus to spread. So we have been very fortunate in that fact. When I originally went into self storage investments, I didn't do it with this in mind, but this happens to be a plus of the way that self storage works. Another thing too is the storage industry is now moving into a more technologically savvy style of operating. There's a lot of, you know, for example, there are these kiosks that you can place. Where the kiosk will allow you to rent a unit. It will allow you to buy renter's insurance. It'll allow you to buy a lock.

It will give you codes to unlock all of the security doors to get to your unit. And you can do all of this without ever having to interact with a person physically. You can do this all on your own and all through your smartphone. So those are some cool things that have happened in the storage industry in the last five to 10 years. And even to the point where now there are contact less doors. There's a system from Janice, which is one of the major suppliers in the space. It's called the NOKE system. The N O K E system. And that allows you to even open your own unit door, just using your phone. It's battery operated. So you never even have to touch any of the surfaces in the self storage facility. So hope you enjoyed this video. My name is Fernando Angelucci. I'm The Storage Stud. If you'd like to learn more about self storage, buying self storage, investing in self storage, what have you feel free to visit us and drop us a line at our website. www.TheStorageStud.com
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Fernando O. Angelucci is Founder and President of Titan Wealth Group. He also leads the firm’s finance and acquisitions departments. Fernando Angelucci and Steven Wear founded Titan Wealth Group in 2015, and under his leadership, the firm’s revenue has grown over 100% year over year. Today,
Find out more at
https://www.TheStorageStud.com
http://titanwealthgroup.com/
Titan Wealth Group operates nationwide sourcing off market investment properties for Titan Wealth Group’s acquisition as well as servicing a network of thousands of active real estate investors world wide. Prior to founding Titan Wealth Group, Fernando worked for Dow Chemical, a Fortune 50 company, rolling out a flagship product estimated to gross $1B in global revenues.
With an engineering background, Fernando is able to approach real estate investing with a keen analytical mindset that allows Titan Wealth Group to identify opportunities and project accurate pictures of future performance.
Fernando graduated from the University of Illinois at Urbana-Champaign with a B.A. degree in Technical Systems Management.
Titan Wealth Group was founded in 2015 with the vision of gathering individual investors that have the means to invest but lack either the time to find high-yield investment opportunities or the access to these off-market deals. All too often, founders Fernando Angelucci & Steven Wear came across investors who had deployed their capital only to regret the lack of consistency or degree of returns their investments were producing. In response, Titan Wealth Group provides access to highly-vetted real estate secured investments and off-market acquisition opportunities primarily in the Greater Chicago MSA. Today, Titan Wealth Group not only assists individual investors but has grown to support the acquisition goals and capital deployment of investment groups, private equity firms, and real estate investment trusts (REITs).
As a facilitator of wealth growth, Titan Wealth Group believes that success is not limited to the sum of our efforts and is infinite with what can be accomplished through partnership.
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