All Forum Posts by: Jason Sung

What's the potential upside? Is there any room to raise rates and gross income? Any space to add new units? Improve operations? 

The Storage Rebellion is the best place to learn about storage, IMO. Lots of other investors have started in storage the same way you are, and there are a ton of case studies amongst that group.

@Jake Flosi I recommend Finishing Touches remodeling http://www.finishingtouchesrem... Many of my clients have used them over the years. They are great at all rehabs big or small. But if your exit strategy is to buy and hold I would recommend having the PM your working with get quotes accordingly. They tend to be less expensive than Finishing Touches. Plus, if any issues after a tenant moves in with work done they will go back in and correct at their expense. 

I would suggest making a list of everything you know that needs addressed, and then meet with several different contractors and get their opinions on things, and add to your list after meeting with each contractor.

Thanks for the suggestion!

Hi Shannon,

You want to get a bid prior to getting the deal into the contract.  You need something accurate in your evaluation so you can structure the proper offer from the start.  Most likely your offer is going to be AS-IS so the seller will not negotiate any concessions while you are in contract.

Now if you do it after the fact and your bid comes in and high and you have to cancel.  You just wasted your time and everyone else's.  This is the incorrect way of doing it.  

Now the hard thing is to get a contractor to come out and bid the work on something you don't even own or have in the contract.  In my area it's so busy, contractors won't even waste their time on something like this unless they have a prior relationship with the buyer. 

The actual problem with rising interest rate is actually it took larger time to build equity. With interest rate of 2-3% your 1st payment is made into 50% interest and 50% principal. With interest rate of 7-8%,only 15-20% goes to principal. The equity curve is really bad seriously.

So folks that's buying on 2022 will have much much much longer ability to do meaningful refinance and having real estate transfer to wealth effect.

How to mitigate that risk :
1) buy cheaper property
2) have higher cash/down and reduce the LTV
3) keep paying / adding principal into the mortgage every month
4) It makes all sense to consider the IO options with longer 30/40 years mortgage. At the very least you will know you will not build equity, but it's very calculated risk.

Second issue with higher interest rate, the overall appreciation chart is also declining, if the past US residential grows by 15%-30% IRR depending on the area. Expect this to be cut in half.

@Jason Sung

Read all of my posts. Your just starting out. Virtually every question you will have is already posted. 

Simple answer to your question do both Sparefoot and google search.  Look on their maps for competitors.  Look on their maps for neighborhoods.  Wherever there is a black hole of storage but a lot of residential that’s a good spot to build or buy. 

@Aly W.

Middleton NJ, a lot of competition, but Storage is "Local".

Checkout Loopnet 2125 NJ 35 Holmdel, NJ   5.28 acres  $1.25mm.  Under Contract.  Use this as an example.  Or contact the realtor and ask if its in Play.  Check on water levels.

Everything is about Zoning.  Check that out first.  See if zoned correctly or you can get Special Use permit.

Then on/off access from NJ 35.

Don't do Climate control.  Do Drive up access.  Don't worry about the storage across NJ 35 from you.  They are climate controlled and multi story.  You will out compete them and the rest.

Checked out your Rental rates which are astronomical for storage.  Even without running the numbers this 5.28 at $1.25mm will be successful.  You can pay even more than the $1.25mm.  

Recommend you run the numbers.  Do the zoning and Market study on this property and about 5 other storage locations that are for sale, so you have the data, then jump in.  Bring your analysis back to Bigger Pockets and have people analyze it with you.

Normally, I say start Small, but in your market you have to go Big right off the bat.