Hoping I can get some help analyzing a deal on storage units, since my niche has primarily been in smaller multi-family units. 2 questions:
1. How do you find out about an area you're unfamiliar with?
2. Wondering if I'm missing something from the analysis below. Let me know and thank you in advance!
283 Storage Unit Facility - residential area close to Oklahoma City.
almost 2 acres
Total Sqft: 26,400
Price per Sqft: $10.80
Price per Unit: $1,007.
44 10x 20
My thought on what Market rate rents would be:
5x10 - $55
10x10 - $80
10x 20 - $160
Property seems to be in excellent condition - on a scale of 1-10 it would be an 8. No leaks in the roof, paving is good, new paint, a few broken doors, fencing is in good condition.
Current Rent Roll: 134 units occupied
Expenses for 2019:
Total Expenses: $42,275
It seems like this is a no-brainer but I don't know if I'm missing something here. Let me know if there is anything I'm not thinking of. Thanks!
Hi @Spencer C. interesting deal for sure. I am no expert on storage but looking at your analysis a couple questions come to mind. Do you have the figures for the current rent roll ... that will help you come to the initial NOI. I see you have an idea on the market rents but assume it might take some time to stabilize and bring rents up to market. Are those market rent figures you show - monthly figures? Also, you should have something in expense for reserves (vacancy, repairs, capes) -some other folks here might be able to help with standard assumptions in your area. Is your plan to get it Seller finance or Conventional? What kind of downpayment? What are expected terms?
Hi @Spencer C.
Hard to form a true analysis on the deal you are presenting. There just isn't enough info. To answer your questions. If you want to find out about an area I would recommend talking with agents, property managers, and businesses in the area. What info are you looking for? That may help you determine who you need to talk to. One of the big questions I would have is why is the facility less than 50% occupied? Is there a demand issue, access issue, visibility problem, bad marketing, mismanagement? Also, what is the current NOI? You didn't list an actual purchase price but you have listed that you are purchasing at $10.8/sqft and the facility is 26,400sqft so I am assuming your purchase price is just south of $300k correct? Hard to give an opinion on expenses when I don't know how much activity/revenue is being generated each month. Your "thought" on market rents is listed in your post. How did you come up with these? Is this a guess or have you called around to other facilities in the area? You don't not want to guess what rents would be. You want some actual facts. What are the local facilities renting at? you have zero experience in storage what is your management plan? Storage is a great asset but is very much a business in comparison to MFs
Keeping things very basic. If you are purchasing for less than $300k, the facility is in good shape, and there is a heavy value add and with a total of 283 units. I would buy it. I am in the storage space though. If you want more help or info send me a DM. If you decide to walk away from this property send it my way 😀. If it fits my criteria and I can move forward I will give you a commission. Good luck. I hope my post will help you a bit.