Any self storage investors here?

Question

Hey Guys,
I have a small commercial multi but my main focus has been res. property.  I have a question about self-storage and I have never done it before.  I have a line on a 42,000 s.f. commercial building in a densly populated area.  Scrappers did some serious damage to the building and I can pick it up for under $2.00 a square foot.  My analysis of repairs tells me I can have the entire thing rehabbed to a useable self-storage facility for under 400k.  I've done my analysis of the local market to determine there is a sustainable market for this facility where it is located.  The cashflow is also in order and the taxes are remarkably low - less than 5k per year.  I have a strategy for management as there is a retail space attached to the front of this building.

I guess my only questions going further are for experienced self-storage investors.  Any pitfalls I need to keep an eye out for?  Thanks.

Tim

J Scott · Answer

Try these...

http://www.selfstoragetalk.com/

http://www.insideselfstorage.com/

http://www.selfstorageeducation.com/

RK KLIEBENSTEIN · Answer

Self-storage is a little tricky.  In the past, it was such a great business, that it required very little attention.  True, compared to residential real estate, there are no leaky commodes or carpets to replace, but a 42000 ft sq store (note I used the word store, as this is becoming a retail play if done right) will have 370 or so spaces (the right unit mix is critical).  That means you are trying to keep 370 spaces full (I think of them as plates spinning in the air).  The typical self-storage customer thinks they are only going to rent for 60 days.  You have to keep the phone ringing and it is possible, in a well managed facility, that the rrental ates are adjustes EVERY DAY.  Fortunately we have software for that.  I do not know where you are located, but if you were to visit a Westy's near the City or a similar high volume, high profile, high profit self-storage store, you would see lots of activity.  I have seen thousands of facilities across the US with an under educated manager who watches Jerry Springer and reads People magazine all day and says "there is nothing to do".  It is a self-fulfilling prophecy, and it is all at the owners expense.  I could go on, but looking at industry trade magazines will lead you to understand how storage, done correctly, is not a passive investment.  That is one of the biggest mistakes most new owners make, is thinking this was a 'no brainer' no management business.
The feasibility study is your first major step.  Please let me know if I can help.
RK

Account Closed · Answer

thanks for the links, they are very helpful.

Max LaBoy · Answer

I have not invested on storage facilities yet, I have been doing wholesaling until now, because I dont want to deal with toilets or tenants.  I have discover that selft storage is the way to go.  Where are investing at,

Timothy W. · Answer

Thank you for the heads up.  I'd heard plenty of people say it was much more passive than residential REI, but if that's not the case it makes me wonder if I shouldn't stick to what I know.....

RK KLIEBENSTEIN · Answer

That is the name of my book.  I am the leading consultant to the self-storage industry, providing feasibility studies, financing, due diligence and general consulting.  If you would like to review your project, you can call me.

This is great business, but it is not for everyone.  It is NOT a passive real estate investment.  For those who have the right site and the right business plan, it is a FANTASTIC industry.  Thanks for thinking about self-storage.
RK

Howie NA · Answer

Those are very good links.  Ive been looking at them for a while now and there is still more info on there.  Thanks!

Timothy W. · Answer

Jason, 
Those links are awesome!  Thank you.  I think I may have found a way to fund the purchase of the building.  It can't get financing because it's an insurance nightmare right now.  Now, figuring out the rest.   :D

Account Closed · Answer

July 5, 2008

I love that BP forums share links!

Thanks for the info.

I am putting together my first commercial deal and it involves 5,000+s.f. and one of my options is to use it for storage.  The weblinks you provided are a wealth of information for me.

Any experience in storage of semi-trailers?  There is 2 acres on a state route that I'm researching the codes, rental income, etc.

Regards,

MJ Tukina · Answer

My aging parents own a small parcel of commercial property.

Approx 110X100 square feet.

It has 2 parcels and 2 buildings. They bought in the 70's and are still holding the property on 2 separate parcels (divorced now)

My Father says the depreciation is running out (they bought it in the 70's)

Since they own it free and clear, would it make sense for them to look into razing the buildings and building a self storage facility?

A similar raw piece of land of .67 acres is on the market for 750K within 1 mile, just BOMK BTW.

My father says he wants to sell when his tenant gives notice, but I think the taxes will eat up a lot of the profit.

What are the costs of razing and building and the income for self storage facilities?

Guess I need to see if there is any competition in the area.

Any self storage investors here?

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