Storage Deal (First Time Underwriting) @Henry Clark
This is my first deal underwriting with some help from a friend in the BP community, he has more underwriting experience then I have but I am a beginner.
We reviewed this deal from one of the major brokers as a potential value-added implementation, however this does not pan out with our current underwriting assumptions. Our goal is to meet a targeted return of 15%-20% AAR within 5-years, doubling our capital within the investment period, to propel us into a bigger deal. Market price was at 650K, the deal might only make sense to purchase at $438,782 (Including CAPEX/Repairs funds). See attached Excel summary sheet.
Investment Highlight
89% Physically Occupied
Supply Index in a 3-mile radius of 6.8 SF/Capita, 5-mile radius of 7.7 SF/Capita, and 10-mile radius of 8.3 SF/Capita
Additional Income generated from 4 mobile home lots and 1 mobile home (Not Verified, as thus not included in underwriting assumptions)
Key Underwriting Assumptions
Down Payment 25% of Purchase Price
Estimating a CAPEX/Repairs cost of $150,000
Estimating Operating Reserves of $10000
Stabilized Vacancy and Concessions/loss to lease at 10%
Using a cap rate of 7.23%
Key Demographic Data
Total Square Footage 21,130
Supply Index: 6.3
Population 3,338
1 Yr. Pop. Growth -0.8%
3 Yr. Pop. Growth 3.5%
Pop. Density (people per sq. mile) 118
Households 1,144
Households With Basements 11 1%
Renter Occupied 344 30%
Multi Family 388 34%
Average Household Income $81,235
Median Household Income $74,682
Per Capita Income $27,841
Median House Value $186,500
Household Size 2.9