Real Estate Investor · Delaware · Member since 2008 · 158 posts · 10 votes
I've heard that investing in Self-Storage is a great idea. I agree! It seems like a great business. I was wondering if anyone has had any experience in this area?
Self-storage facility. Ideas to make this workable for purchase with some cash flow? I live in a small poverty town in southwest New Mexico with storage units in high demand & all storage in town are rented/full.
List price is 69,900 for a 6 unit self-storage. All 6 units are 10x20, no utilities, drive-up, great location, high visibility, fully rented. Very basic facility and low maintenance, sound structure. 70x60 lot with limited space for adding more units. Rent delinquency at near-zero, long term tenants paying reliably.
Rents for comparable units are $75. The 6-unit for sale is at $55 and no increase in at least 6 years. Leases being drawn now for an increase to $65. Property manager (sellers winter in NM and summer elsewhere) expects current tenants will sign with the increase no problem. Four units at $65 on MTM leases and two units are rented to the city housing authority at $700 with annual leases.
Possible value adds could be fencing for security, cameras though historically no theft/break-ins, maybe add a few smaller sized units. Maybe end leases with the city and do MTM at $65 on all 6 for increased income. Realtor thinks rents could possibly be raised again in a year.
Mom&Pop Sellers bought it 6 yrs ago and are selling due to being ailing and elderly and expecting a good return on investment. Been listed for sale at least 3 months.I don't have comps anywhere near me but I found a similar facility for sale in West Virginia with crappy visibility and settlement issues for $4928 per unit--all unrented. My deal I'm crunching is $11,650 per unit-all rented. Feels like a steep price for tenancy and good visibility.
If an offer of 58k was accepted I'd break even on monthly rent, no cashflow. The goal is cashflow. How can I get some cashflow? How low would you offer?
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
4y
When I transitioned from single family residential to commercial real estate, I made a commitment to my family to stay in the multifamily arena for the rest of my life. I had spent years as a shiny object chaser and I had hit 50 and was ready to stay totally focused.
After writing a book on multifamily and then banging my head against the wall for years trying to find apartments that made sense, in frustration, my firm transitioned to start investing in SS and MH parks. We have been thrilled with the upside potential of self-storage and mobile home parks and we've never looked back.
The key is the number of mom-and-pop owner/operators in this space. 75% of self storage assets are owned by independent operators, and 2 out of every 3 of those, are owned by single-asset owners...typically mom-and-pops. These owners don't have the desire, knowledge, or resources to upgrade the facilities, increase income and maximize value. Let's face it, they don't have to. The market has given them massive appreciation over this last decade. By acquiring these mom-and-pop self storage assets, a professional operator can do a lot of magic to upgrade the facility and increase income. Many that we have invested in have gone up 50% or more in value within a few years. AJ Osborne did a fantastic BP podcast on self storage in July 2018 and I did a show on this topic in November 2021. Happy investing!
In addition to calling owners and sending out letters as recommended above, I wouldn't discount developing broker relationships in the market you are looking to purchase a self storage facility. My husband and I purchased our 158-unit self storage facility through a broker. We lost out on another facility that we bid on and the listing broker from that deal circled back around to us several weeks later, because he knew of another facility in the same market that was for sale (but not as widely publicized at the time for some reason). The numbers worked for us, and we are happy owners of it today. Not saying this will be the primary way to find good deals, but it can definitely be used in tandem with the other lead generation methods.
Faith Hill
Agreed! Brokers control a chunk of the deal flow. We've sourced recent off-market deals through broker relationships. It is a great way to build out a "passive" deal funnel.
Rental Property Investor · Weslaco, TX · Member since 2020 · 58 posts · 17 votes
3y
I am bringing this topic back as well. Thank you all for the great info and share if any updates in 2023 would apply. I am looking into this asset type as I transition from residential to commerical investing.
Rental Property Investor · Charlevoix, MI · Member since 2016 · 51 posts · 13 votes
3y
It is a great asset class. I own 10 facilities totaling 465 units. Used to own residential apartments and over the last couple years have been doing 1031 exchanges
It is a great asset class. I own 10 facilities totaling 465 units. Used to own residential apartments and over the last couple years have been doing 1031 exchanges
I am seriously looking into self storage, either buying one or building one. Trying to get a grasp on where to start or who to talk to that would be friendly to noobie. Have managed a few rental properties in the past and manage one now. Any links or help would be greatly appreciated.
Rental Property Investor · Charlevoix, MI · Member since 2016 · 51 posts · 13 votes
3y
@William Pickett as a beginner I would say start with buying one. Figure out your finances and what you can afford to buy. Get on google maps and search storage, call the owners of smaller facilities and introduce yourself and ask if they are interested in selling
Hello BP! As a part of outsourcing and choosing how to allocate my time, I need to hire someone to analyze smaller self-storage. If you have any experienced people, please share my contact info. It will be paid per project. Thanks in advance!
Hello BP! As a part of outsourcing and choosing how to allocate my time, I need to hire someone to analyze smaller self-storage. If you have any experienced people, please share my contact info. It will be paid per project. Thanks in advance!
Hi Denise I am a self storage specialist agent operating out of Philadelphia for 4 years. I have underwritten and brokered deals across the northeast. Please reach out and I can help you!
It is a great asset class. I own 10 facilities totaling 465 units. Used to own residential apartments and over the last couple years have been doing 1031 exchanges
Hi William- I am a self storage specialist agent and can hop on a call with you sometime to help you navigate the territory Iv grown to understand after 4 years in brokerage.
I am seriously looking into self storage, either buying one or building one. Trying to get a grasp on where to start or who to talk to that would be friendly to noobie. Have managed a few rental properties in the past and manage one now. Any links or help would be greatly appreciated.
Rental Property Investor · Lexington, KY · Member since 2017 · 56 posts · 22 votes
2y
Hi BP Team,
I was curious to know those of you who have hired consulting firms for a full self storage feasability study. There looks to be several options out there and I am looking for a trusted source to partner with on the study.