Newbie Question on Self Storage ($250,000 to invest)

[Christopher Hall]

Hi everyone, I am making some general assumptions here to see if I'm in the ballpark or not. I'd appreciate any help.

• 1. As mentioned in the title, I have $250,000 to invest. I have a SFH rental, and it appreciates, but doesn't cashflow much. So selling that would be part of this $250,000.
• 2. I understand that there are potential self storage facilities that can return 20% cash on cash if improvements can be made. And often the improvements to be made are raising rents to market. I understand these facilities can be found in secondary and tertiary markets.
• 3. I would be aiming for $50,000 net return on this investment (after paying the debt).
• 4. Some math:
• - $250,000 should be able to buy a storage facility or facilities valued at $500,000.
• - 20% cash on cash on $250,000 investment would be my target of $50,000.

Will y'all point out my fallacies? I know this is generic and theoretical situation, but I'm trying to decide if I'm even close to enough to consider it a future option.

[Ronald Rohde]

I think you're missing a key ingredient: how much time do you have to earn your 20%? Self storage is a business, not just real estate. 

I think you can lever up to even $750k or $800k building, but who is going to do the renovation oversight? plans? permits? bids?