All Forum Posts by: Josh Anderson

Nice work Craig. What DT Sioux Falls building was the 112 year old grain elevator?

Investment Info:

Industrial commercial investment investment.

Purchase price: $525,000
Cash invested: $100,000

Turn around storage facility purchase. Currently 150 units, but will increase to 164 units by turning the existing unused office space into climate controlled units.

$525K purchase price with roughly $150K estimated renovation budget. Should be a roughly $850-900k value property once stabilized (based on 8% cap rate, a 15% vacancy factor and 45% expense ratio, both of which are high for the industry).

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

Upside potential with improved management. Very hard to find turn around properties in the upper midwest at a reasonable price.

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

Wholesaler posted for sale on Facebook. Originally listed for $700K, but it was too high based on the work needed to be done so I just sat back and waited to see if anyone else was going to buy it (which they didn't) and eventually the wholesaler got the current owner to come down significantly in price and I jumped on it.

How did you finance this deal?

20% down payment on the total cost (purchase and rehab) and once stabilized going to look at refinancing into a SBA 504 note and get down to 10-15% down into it. If stabilization goes really well and we are able to beat our conservative numbers we may look at trying to refinance based on the appraised value to pull all our cash out.

How did you add value to the deal?

We will look to add value via curb appeal and improved management practices.

What was the outcome?

TBD

Investment Info:

Industrial commercial investment investment.

Purchase price: $525,000
Cash invested: $100,000

Turn around storage facility purchase. Currently 150 units, but will increase to 164 units by turning the existing unused office space into climate controlled units. Also going to be adding exterior parking spaces as boats and RV's are common in the area with no fenced parking offered in town.

$525K purchase price with roughly $150K estimated renovation budget. Renovation to include all new Janus doors, fence repair, office conversion, wall unit adjustments, and 12 months of interest payments. Should be a roughly $850-900k value property once stabilized (based on 8% cap rate, a 15% vacancy factor and 45% expense ratio, both of which are high for the industry). Other facilities in town are 99% occupied with this property currently 45% because of how it looks. This facility should provide the best value in town once renovated as it will be the only facility with a fence, paved driveways, outdoor parking, and online rentals.

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

Upside potential with improved management. Very hard to find turn around properties in the upper midwest at a reasonable price.

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

Wholesaler posted for sale on Facebook. Originally listed for $700K, but it was too high based on the work needed to be done so I just sat back and waited to see if anyone else was going to buy it (which they didn't) and eventually the wholesaler got the current owner to come down significantly in price and I jumped on it.

How did you finance this deal?

20% down payment on the total cost (purchase and rehab) and once stabilized going to look at refinancing into a SBA 504 note and get down to 10-15% down into it. If stabilization goes really well and we are able to beat our conservative numbers we may look at trying to refinance based on the appraised value to pull all our cash out.

How did you add value to the deal?

We will look to add value via curb appeal and improved management practices.

What was the outcome?

TBD

@Prasad J. @Zach Quick.   Easy Storage Solutions and StoreEDGE are the 2 most used software platforms in the Self Storage space. Easy Storage is significantly cheaper at $60/month compared to $350-400/month for StorEDGE, but you get what you pay for as far as reports and functionality for StorEDGE. ESS is still a good product and provides everything you need for smaller facilities.

@Joel Miller @Seth Tandett With that size facility you are going to be best with easy storage solutions like Seth said. $60/month compared to about $350-400/month for StorEDGE or Sitelink. All 3 software platforms are actually owned by the same company as of earlier this year so the tech support and customer service should be the same across all 3.

If you want to be as hands off as possible you’ll want to look for a 150+ unit facility to be able to afford an onsite manager. I have a small facility that i bought out of state, but its only 77 units so I take all the calls. To take care of the site walks and overlooking late units I hired a local high school kid and pay him $50/trip to got the facility. He sends me pictures everytime he goes so I can confirm what he’s doing. Helps me maintain the property from far while giving him some easy money and learning about the industry.

@Jordan Brown Great work on this property purchase. A lot of new people will look at this and say "well I can't do that because I don't have a grandpa that has a property he wants to sell, blah blah blah...." Good on you for taking advantage of your situation, because in the end we all have distinct advantages we just have to take advantage of them.

Welcome @Alex Davidyuk  Good for you for being able to come out of school debt free. There are a good amount of Sioux Falls investors on here to connect with. Do you have a particular sector of the industry your interested in (buy and hold, flipping, single family, multi-family... etc)? No big deal if you don't, just starting is the biggest hurdle. My day job is a commercial banker but I personally focus on self-storage and mobile home parks. I'd be happy to go to lunch or coffee if you want to talk about those or how to go about financing a deal. Let me know

@Joe Splitrock Storage serves more than just the long term belongings hoard. It also plays an important part in temporary storage when people move from place to place. I do agree there is decreasing demand risk, but in larger metro cost of construction is driving people to smaller living quarters so demand should maintain. The "subscription" life style also plays into the storage model because its essential a subscription instead of owning/renting a larger living quarters. In Sioux Falls specifically, I would absolutely not want to own a facility down at the Tea exit for the reasons you mentioned, but I think facilities close to residential areas will maintain good occupancy numbers. 

@Johnny Horner Just like anything else in real estate is all about the terms of the deal. I own a 88 unit facility in a MN town of 4,700 people with flat population growth and have had no issues with filling units as they turn. Main difference from the Sioux Falls market I live in (250,000 MSA population) is that I got a 9.5% cap in MN compared to a 7.5% in Sioux Falls. If you are going to be buying in a small town you definitely have to get a higher cap rate than the larger markets to be rewarded for your risk.  You should also plan on owning it for longer because the buyer pool is much smaller in the small towns.