Investor · Wasilla Alaska · Member since 2014 · 123 posts · 55 votes
Hello, looking for advice on this deal.
I'm under contract on a 250 unit self storage business that is 60% occupied. Its in great shape, with all concrete drives in a non drive by location but with a in city limits location. The town is over built on storage units. I've found a second self storage business that isn't listed but for sale that is 15 older units in a great location with good drive by visibility. Its 100% occupied and slightly under market on rents. It should sell for around 60 to 70k. Asking price is 95k. if I buy it I'd like to think I could put up a sign and name it the same as the larger facilty and draw business to fill the vacant units. It cash flows barely at 95k but it is older with gravel and would need new doors at some point.
What should I give for the second location of 15 units?
Gave 346k for the business in Nov last year. I'm not sure what the normal is for the industry. My payment is 1800 a month. The occupancy has climbed since last November because of my new management. Prior years were at 55 to 60% occupancy. Cash flow is fa-nominal!
If the occupancy rate is sustainable that might be great but being new to the self storage industry as you mentioned, it may be beneficial to get as much information about both the national and local self storage industry in regards to what is 'normal'. Many of the publicly traded self storage companies such as Public Storage, usually have a yearly 'annual report' to investors which usually may have quite a bit of insightful information especially regarding the industry and financial performance which you may use for comparative purposes.
I am actively trying to expand in the same town and in near by towns. Biggest issue? Id say just learning the site link soft ware and figuring out a marketing technique. Those aren't issues im just very new to the self storage business. We had a break in attempt. Ive got 4 units in long term default that we are going to have to clean out. I own Multi family, duplexes and single family, also just went threw Mobile Home Park boot camp and Self Storage is my favorite as of right now.
We now are well over 75% occupancy every day it ticks up!
So Patrick, when someone defaults and no matter how hard you try to get in contact with them, you just can't.. what do you do?
Can you just sell their things or keep them? What's the law on that?
In our lease is states that if you default and don't return our certified letters, calls and news paper adds the contents become ours to do with as we please. My manager tested it in court and the judge ruled in our favor.
We give them a long time to reconcile. The previous owners were too flexible so we are trying to ease in to educating the tenants that they need to be closer to on time. My competition has late fees and is very strict. As am I when it comes to my rentals. But self storage is a little different and I think we actually are more inviting with our flexibility.
I asked because I've heard the stories of tenants who leave a car/trunk full of cash/(insert any "JACKPOT" item here) in the storage unit and disappear so the SS owner gets to keep it. Was just wondering how true those stories could be.
From what Ive seen and heard from other owners the Storage Wars TV show is a hoax. People rarely leave good stuff in there unit. Usually it is junk. I do have a unit now how ever that is full of construction tools and the guy only owes a few hundred bucks. My market is in a small Midwest town It may be different in other parts of the country. I am not eager to sell all of his stuff and make a profit on it. Id rather just get my rent owed.
My guess is that I will spend more in dump fees than I will make on selling items left behind. I would count on defaults being a cost not a added income.
Good to hear the Storage Biz is treating you well. Just to clarify, Each state has a specific lien law with regard to how you handle overlocks, and the sale of goods. Just because a judge ruled in your favor doesn't mean you don't have to STRICTLY adhere to your state's law as it pertains to late notices, Overlocking, Applying the lien, sending certified notices of liens, the timing and the # of notices, and ultimately, how to conduct the auction and notifying the owner of any overages. Failure to do so could wind up in a very hefty lawsuit. Just wanted to clarify for you, and others reading this post, that being able to lock out our customers for non payment, and then auctioning their contents after 90 days is much more favorable than evicting a tenant, we still have to abide by the law, or face a lawsuit for not complying with the state statutes or "illegal sale".
Good to hear the Storage Biz is treating you well. Just to clarify, Each state has a specific lien law with regard to how you handle overlocks, and the sale of goods. Just because a judge ruled in your favor doesn't mean you don't have to STRICTLY adhere to your state's law as it pertains to late notices, Overlocking, Applying the lien, sending certified notices of liens, the timing and the # of notices, and ultimately, how to conduct the auction and notifying the owner of any overages. Failure to do so could wind up in a very hefty lawsuit. Just wanted to clarify for you, and others reading this post, that being able to lock out our customers for non payment, and then auctioning their contents after 90 days is much more favorable than evicting a tenant, we still have to abide by the law, or face a lawsuit for not complying with the state statutes or "illegal sale".
Just a up date on the storage business. At acquisition we were 61% full and it is now over 91%! Couldn't be happier. Looking at a rate increase soon along with some facility upgrades, bollard covers and new security systems.
Just a up date on the storage business. At acquisition we were 61% full and it is now over 91%! Couldn't be happier. Looking at a rate increase soon along with some facility upgrades, bollard covers and new security systems.
So what is the yearly revenue and what exactly are the yearly taxes? Some storage facilities often have significant property tax liability based on sales and actual property value. What are you charging per unit?
Gross income is changing every month. Current gross income this month was aprox 12,500 (150,000 yearly). Taxes are 1779 monthly 21,350 yearly.
5x10 $35 plus tax
10x10 45
10x15 55
10x20 70
10x30 90
11x30 95
12x24 120
16x40 160 raising to 175
Interesting.. if this is the 250 unit storage facility, the $150,000 yearly revenue averages to about $600 per unit per year or $50 per unit per month. Is that normal for the 'industry'? Also, is the current monthly income in line with average prior year financials or somewhat of an unusual earning pattern based on something you did after purchasing? Not sure if you mentioned this before but what did you pay for the facility? Any net cash flow information?
Gave 346k for the business in Nov last year. I'm not sure what the normal is for the industry. My payment is 1800 a month. The occupancy has climbed since last November because of my new management. Prior years were at 55 to 60% occupancy. Cash flow is fa-nominal!
Gave 346k for the business in Nov last year. I'm not sure what the normal is for the industry. My payment is 1800 a month. The occupancy has climbed since last November because of my new management. Prior years were at 55 to 60% occupancy. Cash flow is fa-nominal!
If the occupancy rate is sustainable that might be great but being new to the self storage industry as you mentioned, it may be beneficial to get as much information about both the national and local self storage industry in regards to what is 'normal'. Many of the publicly traded self storage companies such as Public Storage, usually have a yearly 'annual report' to investors which usually may have quite a bit of insightful information especially regarding the industry and financial performance which you may use for comparative purposes.
I'm very fortunate to have landed that deal, It was the one in 10 Robert Kiosaki talks about. Look over 100 (now 250 in this market) make offers on 3 and buy one. Of the 10 deals you buy one of those is a hit out of the park deal. This was one of those 1 in 10. It is at 94% occupancy today. :) Thanks for the support!
Update here, just signed closing docs on the 15 unit in the good location today. Didn't think I was going to get a deal found and closed this year but came sliding in to home base just in time.
Also got him to carry the note at %4 fixed for 20 years with 18% down. Also got him to sign a subordinate position so I can refi 25k out and get all my money out for a infinite return after I raise rents and improve the buildings. It will be a great drive by location to complement the other facility.
The other facility is at %97 occupied and we just raised rents 6 to 10%. Construction on another building will start in February.
The facility came with a foundation already poured for a new building that they never built out because of occupancy. I am putting up that 3600 sq ft building. Also bought a competitor out in the same town and will re brand the site to match my current business.
Just now finishing up cleaning up the new property with new roll up doors, landscaping, and some paint. Raised the rent almost double the day I took it over. NOBODY moved out. Just raised rents again on re rents. Hard to say how many calls we are getting from the new location but it stands out for sure. I also bought a red Ford Truck and fully decal ed it out with our name Red Door Storage for a mobile advertising sign.
Atta boy! Hey, Could you do me a HUGE favor and message me off line with a picture of the Red Ford Truck. I'm doing a Video Blog Post on that same thing with Moving trucks, and just saw an episode of Junk Yard Empire, where the business owners painted an old ford and put it on 20 foot high stack of cement pillars since the city wouldn't allow a pole.....
I would also like to add the picture into our marketing session for our Self Storage Academy Workshop with your permission.