Created $1M in value through Self Storage Investing

[Armaan Premjee]

Investment Info:

Other commercial investment investment.

Purchase price: $1,000,000
Cash invested: $200,000

78-unit climate controlled self storage facility that I bought for $1M.
Raised rents, improved occupancy and overall asset performance.
6 months later, I began expansion and spent $330k adding an additional 51 units.
Asset is now worth $2.3M.

What made you interested in investing in this type of deal?

Self Storage is a growing asset class. Lot of mom and pop owners charging under-market rents.

How did you find this deal and how did you negotiate it?

Found it off Crexi. I asked the broker what was lowest price selling was willing to accept and made an offer for that amount. They had it listed for $1.5M but the seller was willing to take $1M. He was a developer who built it to sell it.

How did you finance this deal?

Private lender @ 9% interest-only. It was cash-flow negative when I got the deal under contract. New construction with 30% occupancy. And being my first deal, a traditional lender was definitely not going to finance this. In 6 months, I refinanced out the private lender and got a bank to lend at 4.25% interest rate and pay $300k for the expansion.

How did you add value to the deal?

Raised rents, Improved the website and google my business page, added tenant insurance/protection plans to generate additional income. Implemented a call center.

What was the outcome?

$1M in value creation

Lessons learned? Challenges?

Always look at your competitors. If they're 100% full with a waiting list, it's a great sign. I implemented a referral program where I would pay neighboring facilities $75 per tenant they sent my way that moved in, and this helped tremendously with my lease-up.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dallas Capital Bank was awesome! They're the ones I refi'd with.

[Bonnie Griffin Kaake]

This looks like a great investment find. If you haven't done a cost segregation study on this property, you are leaving about $60K to $100K on the table in taxes that you don't have to pay. And, you can likely get this all for your extended 2021 taxes or your 2022 tax filing.