I haven't been active on the BP forums yet but am a BP podcast ADDICT!
I figured I could post this here and would welcome any and all input!
There's a place I've been eyeballing for a few years now. It's a pole-building (we call them "shops") with office, living quarters and mechanic's bays with large roll-up doors (6 bays in total). It is 2.16 acres, completely fenced in.
Here's the basics:
- 2.16 acres zones light industrial
- 6 bay shop (pole building)
- Downstairs office, finished
- Upstairs apartment, just refinished, 2bed/1bath
- Overall building is 4,800 sq ft
- Built in '06
- Property is entirely fenced with barbed wire
- 15 gpm well with filtration system
- The shop area is heated with an oil burning furnace
- Asking $400,000
- This property is due to a divorce, liquidated the mechanic business the couple had in the building, wife wants to get rid of it
- Currently vacant, except for the lady's son who is currently living in the upstairs apartment
This looks like such a fantastic opportunity to start a small storage business. It sounds like the seller is somewhat motivated. My thoughts were, rent out the upstairs apartment, rent out each bay as covered storage for boats or rv's, rent out uncovered boat/rv storage on the remaining fenced-in land until I can get some storage buildings up.
There are no storage facilities in my (very) small town right now. Everyone has boats and rv's they need stored. Most of the storage business within the larger city down the road are all at max capacity and adding on additional units.
Would I start by doing a market analysis of the local storage businesses before I waste time analyzing this deal?
To be completely honest, I don't even know where to start with this. I'm excited to investigate this opportunity but I'm not sure what to do here.
Thank you for any help!
It sounds like you have many different things you can rent with this purchase. Everything in real estate about the leases or the licenses for people to use your land. Get the land get the control just like the founder of McDonalds did.
I'll have to watch the rest of that documentary! My wife and I began watching it, but I was tired and fell asleep halfway through.
Do either of you know where I would start as far as analyzing a storage business? I'll do a keyword search and see what comes up.
Thank you and have a good one!
You need to do a pro forma income statement to project an NOI. That'll tell you if the price is a good deal or not. Usually boat/RV storage doesn't yield like traditional units. Be careful of mechanic's shops. Some folks had the habit of dumping spent oil and other nasties down the drain. If there's contamination, no lender will touch it until it's cleaned up. And the environmental liability follows the new owner.
@Ken Jernigan thank you for the advice. I am currently looking into area storage prices. I did not think of the drainage from the mechanic. Very good point.
Have a good one
4,800 sf is quite small for storage. Your model would have to be based upon leasing up the site. Uncovered/unprotected outdoor storage is a completely different model than self storage. Different rates and terms. You would first have to determine the Income, and then the owner should be able to tell you the general expenses as as starting point. This will help you determine the NOI..
@Scott Krone I was thinking, possibly utilizing the existing building as boat or RV storage and renting out the upstairs 2bed/1bath (whole other issue there with an apartment inside a pole structure) for some instant revenue. Then, develop the rest of the land with storage units such as these from Miller Buildings.
One other idea I had was to buy 2 refrigerated "high cube" shipping containers for cold meat storage, rented out weekly. There a LOT of hunters around here always looking for cold storage. No one seems to have thought of this yet (or maybe they have and decided against it).
Like I said, maybe this isn't a good investment right now. I've just been very interested in this property for a while, believing it had some great potential. I've also been very interested in the self storage business.
Thank you for the input. I'm open to any other advice.
Have a good one
Edit: added cold storage idea
Self storage is a very demographic driven industry - specifically related to revenues. The first step is to really determine the level of demand and pricing associated with it. I can not speak to the costs associated (hard/construction and soft/operational - utilities) associated with cold storage. We do have a bootcamp webinar outlining the process if that interests you. PM me your email if it does.
@scott krone yes I'd be interested in that. I will PM you my email as soon as I'm off work. My phone is being quirky right now.