Can anyone shed some light on the permanent financing options for self storage? Are the rates, terms etc similar to your typical investment residential or small multi fam perm financing options? 30y fixed, 70-80% LTV, 5-10y term, 20-30y amortization etc? Are there specific banks only the lend against self storage properties?
What do the leases look like for renting storage units? Terms etc? Can anyone share for example one of their current leases?
Finally, anyone successfully investing in self storage in Philadelphia, PA or nearby region? Would love to pick your brain.
Thanks!
Originally posted by
@Henry Clark:
@C, if you promise to buy me and my family dinner at Pappadeaux's next time I'm in DFW. Otherwise don't read the following: I'll trust you.
DFW being so big, pick the side you live near. Then look out 40 minutes.
1. Stay away from Climate controlled units. Leave this to the Big REITS and larger investors. Their SEO and leveraging is far greater than yours ever will be.
2. Deal- your looking for a property that has a large RV/Vehicle/Boat storage portion, or extra bare ground. This property will get valued with the parking lot/bare land price. You will convert it to storage and increase the revenue stream. Can't disregard the lost revenue of the Vehicle storage, but the original storage should have covered all ancillary costs and most of the land. Your new buildings should only take about a 35% occupancy for total cash flow break even. This might be 50% given the loss of the parking revenue.
DO NOT buy!!!! Use the following for discussion purposes only
Look at Loopnet for the Arlington Stor More property. No price given.
a. As you see in the picture there are three storage facilities right next to it. You have to answer the question, is there more capacity/market. Even if there is not, offer different products. Tell the other locations, you would like to buy them (price control, increase the prices after you buy them " you just made 30 % more the day you buy them").
b. There is extra land that goes with this property. Plus there is bare ground next to it.
c. Take an inventory of both sizes and numbers. Based on the pictures looks like mainly 10/15 ft units. "30" buildings could have some 20 splits. You might then build more 20's.
d. You might do vehicle ground storage.
e. Build larger storage bays with 12 wide versus 10 wide; 10 tall versus 8 tall; this will bring a different customer.
f. Build Contractor Incubator buildings 25wide by 50 deep. With 14 x 14 doors and a walk thru. You will get some race car guys.
g. Love the road, it has a middle turn lane, so you catch customers both ways.
h. See all of the Lakes around you. Offer the following product: 1. RV/Boat storage, 2. Cargo Container storage, 3. RV rec parking away from the storage. Make it top notch: a. water, sewer, dump station, wash station, tire covers, monthly check up service (tires, doors, plug in, propane tank fill, inside motion sensor alarm, etc). No one in Dallas or Fort Worth wants to drive their RV or Boat back to the city, even if they have the zoning. Make them a Brand name. Example: don't know your last name. Clemens- Bardswell; Clemens- Waxahachie; Clemens- Cedar Creek; Clemens- Tawakoni, etc for each lake. Why? So customers will have a preconceived quality of your product, also when you sell, it will bring more. REITS won't go after this market, until you build the brand, outside of the corporate think tank. They won't do the leg work. Locals won't think that big. Go with your location features, Lakes. Develop a cookie cutter Brand model, then its just work and financing after that. Hey, someone tell me there isn't already something in the area like this and I just wasted a lot of "ink".
Key is to offer more/"different" products than your other competition. Make your deal, don't chase the same deal everyone is looking for. "Clemens Lake Properties", sounds great. There are a lot of lakes around DFW.
Start small and make your Big mistakes early.