All Forum Posts by: Corey Herr

Hello @John Pelaez.  If you are this new to the basics I would suggest a lot of reading.  There is a wealth of knowledge out there.  I would also recommend if you want a really good crash course, look into @Scott Meyers Storage Academy.  I attended the three day event in Indy last fall. It really gives you the tools you need to be able to do this, but of course it isn't required, I don't regret it though.  We still have not managed to buy or build a facility yet, but it will happen!  We have had communication with owners about selling but the ask prices have been too high so far. 

I did not, but i should have.  I talked to person who bought it for more than i had it contracted for before i backed out.  it seems legit, did exactly what i thought.  i messed up.  haven't seen another deal since that was in my price range.

I miss typed... he accepts cash and CHECKS.  People just mail checks to a PO box.

@Jeremiah H.

Storage is fairly cheap in this part of the country, small rural towns.  Prices range from $25 for 5'X10' to $75 for a 10'X40'.  That is why the 65 unit facility is relatively cheap compared to something similar say in California.  I think there would have to be a price increase under new ownership to closer match the more expensive competition in the area. Current competitors are anywhere from 10-40% more expensive depending on unit size.

@Hai Loc

I'm not trying to over look things on purpose... current owner is a traveling salesman.  He operates through phone and e-mail and occasionally will meet a new tenant on a Saturday.  I plan to operate the business similarly, keeping my standard day job.  People can show up onsite and call the number, I can have forms on site and they can pick a unit an mail me the contract and payment.  That is how it is currently operated.  I would like to potentially implement a website and electronic payment as options. There is a local guy who handles lawn, snow, and unit clean up who has a check mailed to him once work is completed.  After meeting with him tonight for more talk, he mentioned that the going rate to pay a property manager for the part time work this property would require would be around 15% gross income, that would handle tenant related things.

@Scott Meyers

Thanks that tip on calculating business value Scott!

@Hai Loc

with expenses being super low, under $6k per year, the cap rate is upwards of 14% net... how is this bad?

Everything is self managed, which I would be doing as well while keeping my 8-5 job.

Yes he manages it all himself.  He does a great job of keeping it looking nice.  He just has a local guy do snow plowing and mowing.  Same guy also comes and empties delinquent units and gets them ready for next person... pays him $20 here, $40 dollars there.  Total expenses appear to be under $6k per year.  He says he is a traveling business man and handles everything off site by phone and email.

Attempting to purchase a storage unit this week.  Small town, about 4,000 people, traffic less than 4,600 per day.  Three competitors in the immediate area.  Every place is 90%+ plus filled.  I saw two facilities with 100 units each that had only four at one and nine at the other that were empty. The storage unit for sale is cheaper price than competition, some sizes by 10% and some sizes by 40% cheaper.

The unit for sale is 65+ units, i counted only 4 units that were not filled, two units double locked.  It is that full and the guy doesn't advertise, except sometimes on CL, it doesn't even show up on google maps when searching, not in the phone book either.  He only accepts cash, no website or credit cards.  Building is all steel and was built in 2005.  It still looks brand new and property in general is amazing looking.  To my knowledge it is generating between $2,500 and $3,000 per month.  Local taxes are $2,500 per year.  Setup is similar to competition, no security gates.  Only one of the competitors has an office, this one does not.  Competition are all located on opposite corners of the town and the owner claims there is a good relationship between all of them.

Asking price is $210,000.... $18/sqft, so am I missing something or is the deal of a lifetime?  I know small town rural facilities can be dangerous but like I said, this unit and all competitors are all full... not to mention if I raised rents to be closer to competition but still left them cheaper, that would increase the cap rate even more (14%+)!

Financially, I just happen to have 20% down payment... it will be hard but I can scrape it up.  This unit is not being advertised well at all, I heard about it through word of mouth so I assume I better jump on it while i can.