Self Storage- Deal 22 $300k per acre and 2.4% Property Tax

One of my relatives called and said what do you think about this property.  3 acres for $9xx,xxx.  Property tax 2.4%.  Would be a $1.6mm Phase 1 project. Using their interest rate of 6.5% as the Cap rate would be a $2.6mm valuation based on NOI. Cap rate would be lower in this City area, making the valuation higher.

Key take aways:

1.  Price per acre doesn't matter.  Cost for Erected building and Concrete driveways the same as mine.

2.  High property taxes doesn't matter.

3.  Revenue trumps all wrongs.  A 10 x 20 outdoor, non-climate control runs $350 there.  Where I'm at it is $130 per month.  

4.  Market study great.  There is never enough Self Storage.

5. Financing. Wants to do a Cash deal, so poor COC. But they can always Cross Collateralize if they move to Phase 2 or start another location and use Debt.

I should move from Iowa/Nebraska to higher rent areas.  Less effort, same reward.

I had better get invited to their Thanksgiving in the future.

Start small and Make Your Big Mistakes Early.