$295,000 Gross on Sale of Self-storage Held for Only 18 Months

[Tim Soto]

Hello BP, I just wanted to share a recent success story that’s been long over-due. This success story is a follow-up to a success story I posted about a self-storage investment property I acquired using a private lender. Here’s the thread for background information on the acquisitions https://www.biggerpockets.com/forums/223/topics/241832-successful-self-storage-closing-thanks-to-private-lenders.

Here's a quick summary: This self-storage property was an Bank REO in California. I was familiar with the area and knew that this was a great value-add opportunity. The property consisted of 100 units on 3.5 acres and was built in 2006. It was under-performing at 65% occupancy prior to possession, and had an NOI of $35k.I was willing to pay a 10% cap rate, so at $35,000 NOI, I would have paid up to $350k. I ended up closing at $325k because I was able to pay cash and close quick, using the private, and only $20,000 out of pocket costs (my deposit).

The property also had enough acreage for an additional 300 units, and I was able to recover those plans that had been previously submitted to the city, but expired. My plan was to eventually develop additional units on the property, since there was a lot of demand for the location, so I wasn’t really planning on selling the property, also because I acquired it at a good price and had stabilized it up to 85%-90% range within six months.

During that time, I kept in contact with the listing broker, who also represented me for this transaction. We discussed that if there was ever a motivated buyer out there, who was interested in this property, then I would consider selling for the right price. So, after a year later the broker approached me with an offer from a motivated buyer.

I ended up selling it for $620k. Not bad for a property I held for only 18 months. I did a 1031 exchange into a larger self-storage property and an under-performing 8-unit multifamily property in Phoenix, AZ at a great price, which I’ll discuss in my next success story.

This story is a great example of how important relationships are in this industry. I would’ve never been able to acquire the property for the price that I did, without the relationship I had with my private lender. I never would have sold the property for the price and speed, had I not kept a dialogue going with the broker. Most importantly, this helps my track record, being the first self-storage property that I’ve acquired, stabilized, and traded up on. Thanks for the opportunity to let me get my story out. I hope I was able to inspire some of you out there to continue to push through. Please feel free to leave some feedback. Thanks!