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Steve Cheslock
  • Specialist
  • Charleston SC
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Small Self Storage Deal - Thoughts/Feedback Appreciated

Steve Cheslock
  • Specialist
  • Charleston SC
Posted Jan 24 2020, 15:08

I'm looking at purchasing a small mom/pop storage facility with a ton of value add opportunity and a little stuck on what to tackle first.   Looking to purchase 1.85 total acres with 4 existing buildings up front.  I guesstimate roughly 1 acre of possible expansion land on the back end that is currently flat forest.  The current facility is at 0% occupancy due to mismanagement and total neglect.  The seller just wants out, and our initial talks have been around $40K for everything. I'd say the overall structures are in decent shape and the majority of the rehab will be around replacing the doors and the insides.    

4 Existing Buildings (A,B,C,D) of 6,673 sf non climate control (82 Units total)

  1. A and B: 44 Units (22 each building) of 6.5x6.5 sf (1859 Total SF)
  2. C: 20 Units of 10x12 sf (2400 Total SF)
  3. D: 16 Units 10x12 sf, 8 Units 9.5x6.5 sf (2414 Total SF)

This is in a small tertiary market (pop 14,000) with this facility on a major thoroughfare about 1/4 from a college (5,000 students).  There is some competition (40,000 sf) about 4 miles away, but in the corner of town surrounded by farm land.  Doing some initial research I'd say the average market rent per sf is $9.60 ($.80/mo).  

Some of my initial thoughts:

1. Unit Mix/Dimensions are a mess.  Ideally I'd like to make all the units in buildings A and B 5x5sf (instead of current 6.5x6.5), but existing building structure is solid and already fitted to these weird dimensions. Should I just bite the bullet and totally redo buildings A and B with the proper unit sizes or just go the cheaper route of just fixing the inside partitions and keep the weird dimensions.  *We plan to split the 10x12sf units in building D into 6x10sf units, which will add an additional 16 units.

2. Expansion, the back acre:  I know the goal is expansion so I'll need to clear the back acre.  My thought was to clear the back acre, cover it with gravel (or millings)  and offer machine/equipment storage until the proper time to build the expansion.  I got some initial estimates of around $60-75K to clear the land, top soil and cover it with gravel.  

I guess my main struggle is figuring out which path to take. *This project will be privately financed

1. Initially go cheap as possible.  Just acquire land and existing facilities, rehab them as cheap as possible (keep existing unit sizes), don't touch the back acre and bring project to stabilization.  At that point (around 12 months) take a look at options.  This would probably be around $100K give or take some.  

2. Raise enough to acquire land and existing facilities, rehab to fix dimensions and maximize efficiency of unit mix, clear away the back acre and bring the facility to stabilization (while adding machine/equipment storage).  This could push the project cost to roughly $200-$250K and adds time/risk and capital raising.  

Crunching the numbers I'd like to get it to 12-15K sf rentable as soon as possible because right now with only 6,600 sf a lot of the potential profit is being eaten away by the expenses.  Any thoughts, feedback or new ideas anyone has is greatly appreciated.  Thanks.  

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