Offering on a small Self Storage Facility
Happy 2020 to all!
I've run into a mom & pop storage facility and they are retired in upper 70's (age) and willing to sell, realizing they won't be around forever. Owner is getting older. He currently spends about 20 min/week just stopping by to check on things. I'm struggling putting a # together to offer - ideally 2-3 offers. One cash offer, one owner finance, and one traditional financing. Owner is open to owner finance if the down payment is substantial enough; again, older and want the money sooner rather than later.
-The property is on one of the top 5 busiest & well-known roads in the city, along with 8 other storage facilities (all bigger and more up to date) within 2 miles. 6 within 1 mile. It is 3 miles from my home.
-It is less than 1 acre with no room for expansion at all, unless you go vertical.
-Owner states he brings in b/w $36k-$40k per year or $3000-$3400/month.
-Some room to increase rents, but not much at all. Stated 75% of customers have been with him for 10+ years.
-Owner owes nothing on the property. Has had it for over 50 years.
-No website; no books; rent roll is a notepad; no signs; no advertising; can barely see it from the road, and still at 90% occupancy.
-43 Units and 9,165 sf
-Less than 1 Acre
-I know that this will not profit very much relative to other storage facilities, but $1000+ in cash flow/month sounds very appealing from that perspective.
-This would be my first storage facility offer.
-If I don't buy it, nothing will happen with this site per owner. Owner is not putting this "on the market". I saw him on a ladder and just pulled in and talked to him. As I was walking up before anything was said, he said "what, you want to buy the place?". He said he has no other discussions going about selling with anyone else.
Hurdles:
The trouble I'm having is valuing the future & potential of this property in order to come to an offer I can work with. I can't find any relevant trades within 30 miles in determining a fairly accurate cap rate to work with. This is about 30-45 minutes south of Atlanta.
Please pick this apart and share any/all thoughts. It is greatly appreciated!
Cheers!
Alan