First Self Storage Investment
Hi everyone,
I am hoping to use this as a deal diary for our first storage shed investment. In June of this year (2019) my dad and I purchased our first self storage facility in Gainesville Georgia. We've owned a few rental properties and a couple pieces of vacant land with the intention to build. We've always been interested in self storage, and the day I had to rent my first self storage unit, I was hooked...it was a painfully inefficient process and seemingly untouched by automation or technology. The worst part is this was a fairly large facility. First I had to call and the onsite manager was busy, so they had to return my call. Then I had to schedule a meeting between 9-5pm just to see a 5x10 box. Now the onsite manager was also busy, so there were only a few openings that week that I could meet her. I'm very busy during the day (full time corporate job) and had to take time away from work just to run this annoying errand. After arriving on time for my appointment, I had to wait in line for 20 minutes while the manager dealt with another tenants issue. Once I signed a million documents in person, I was shown the unit, given a code to the gate, and given a lock...an hour and a half of inefficiency and wasted time.
Fast forward two years and my dad and I are talking to a friend who just so happens to know someone looking to sell their 2 acre property off a highly traveled road with 88 storage units. They own another business in town and are looking to retire. They were ready to offload the property since it was really more of a distraction and nuisance for them. It wasn't ran properly and we saw huge upside potential. They had a tiny sign, no website, and only accepted cash or checks every month in person. Despite that they were roughly 60-65% occupied. The kicker...there was an entirely undeveloped (graded) acre next to the 88 units that we could expand on.
After a few months of DD, we purchased the property for $500k ($100k down, 20 yr am with a 5 year ARM and 10 yr balloon). We immediately transitioned tenants to our online portal/payment system and got updated lease agreements/emails/good contact information. We have 3-6 units that still havent paid (we are in our second month) and are likely going to auction. We have a fully operational website, with a call center since we dont have on site management and my dad and I have day jobs. We've had significant signup volume since the website has been gaining traffic (4 last week and 1 this week).
We're in the process of adding a large sign out front, updating the security cameras, replacing worn out latches and doors, and installing an automatic gate. Currently tenants have to manually unlock a padlock and open/close the gate which results in an open gate a lot of the time.
The bigger plan is to pave the acre of flat land adjacent to the storage units and expand the fence to offer boat/RV storage. We aren't far from a major lake and we've already had people ask if we offer this kind of storage. It's not an insignificant investment, but we think there is significant demand.
In general we look to automate processes, implement systems to quickly collect payment, increase marketing efforts to normalize occupancy to 80%, and to expand into boat/RV storage. There are numerous under performing storage facilities in our area which are likely run by baber boomers who are looking to exit and retire. If we can prove the concept here we hope to expand by acquiring nearby facilities and implement the same processes and marketing efforts, all unlocking hidden value.
I'll try to keep this updated weekly at a minimum, and will hopefully meet other storage facility owners in our North Georgia area, as well as lenders, vendors, lawyers and accountants! If nothing else it will be good to look back on years down the road.
Thanks for checking it out!