Storage unit

8 Replies

hey folks 

I'm new to jnvesting

Looking for some advice here.

Property is a 60 unit storage facilty on 3 acres .

Asking is $449,000

The seller is offering $90,000 VTB does anyone know if it's at possible to buy this property with no money down.

If the property has superior cap rate, I would justify the advantages to the owner of accepting a master lease over selling the property. This way you don't have to come up with any money down and can capture a portion of the net income from the property.

What's superior cap rate?

VTB is vendor take back. It's when the vendor assume a portion of the mortgage whether it be the first mortgage or second 

Mark,

We have purchased MANY Self Storage Facilities with little to $0 Money down, with the seller Carrying back a mortgage (VTB).  But you won't know until you ask him/her.... 

And just an opinion here, but a Master Lease is a VERY Bad idea.   If you don't have the deed, you're entire investment is at risk.  Even if you get in for $0 money, you'll have time invested, plus a fair amount of Money in marketing, maintenance, etc. and you don't know what could happen if the seller bails on his mortgage, gets sued, divorced, etc.  

On a more positive note, Here's how to value your deal: Apply a 9% cap rate to the 12 months trailing NOI, and see if that is anywhere near $449,000.

I would guess that of the 3 acres, 60 units are only taking up about .75 to 1 acre, so there is room to grow if the market has enough demand.  

And for that, you will have to give them SOME consideration for the 2 additional acres, even if the price doesn't work out to be a 9% cap rate on the trailing 12 months NOI.

Good Luck and keep us posted. 

Just thought it was a bit humorous seeing the three different definition questions in a row from three different investors.

@Bob Bowling I'm guessing a superior cap rate just means a good cap rate versus a poor one.  

Originally posted by @Chin P. :

Just thought it was a bit humorous seeing the three different definition questions in a row from three different investors.

@Bob Bowling I'm guessing a superior cap rate just means a good cap rate versus a poor one.  

 What's a poor cap rate?

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