All Forum Posts by: Michael Wagner

I think your first example is a fairly good estimation.  But this is of course going to vary.  As a starting point I use a 33% split across the board...33% for finding the deal, 33% for funding the deal and 33% for running the deal.  Of course if the "deal" one finds is a run of the mill listed property, that 33% could drop to 5-10% really easily.  But we deploy a low volume HIGH margin strategy so finding the deal is where the money is!  And similar adjustments could be made for the other two categories as well.  

To me, the best way to arrive at this is to divide up risks, roles and responsibilities and then reverse engineer the percentages that provide each partner with the fair compensation for their contributions.  Generally speaking a money partner will be happy in the 12-24% range depending on exposure and the security offered, etc.  So I'd personally start with that in mind and work backwards to find the proper terms.

I second everything that @Scott Krone said!

Here's two quick articles on finding storage deals from a blog hosted right here on BP:

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

Hope you find some value in them!

My first ever facility was in Syracuse.  Bought it ten years ago and sold a couple years back.  Still own 10% as part of the sale structure. Overall it was and is a GREAT investment.  

$50K is more than enough to get started in self storage.  I personally started with less than that ten years ago and have done nothing but storage since then. To me, its the most efficient way to build wealth and cash flow quickly.  Its not mailbox money though (at least not at first!) so you've got to get smart on it to decide if its right for you!

The 30 plus properties that I or my students own have all done very well this year!  Rents and occupancy are up.  As have been some record sales prices when we liquidated a few. 

Thanks for the shout out @Taylor L., And you make a good point. While the REITS are one potential exit strategy. There are plenty of non-REIT buyers who would be interested in the end product described above.

$40 per foot seems optimistic for a full gut job plus CC installation...but maybe its doable for a single story conversion.  Sounds like you could "afford" to spend a good bit more than that and still have it make sense with disposition comps like the one you shared.  My general desire is to double the project cost.  Of course you'll have to factor in carrying costs and negative cash flow for a good while. This is of a scope where a full fledged feasibility study would definitely be in order!

I recently did NON climate controlled conversion of a 45K square foot facility.  Netted 33,300 of rentable space because we did a drive aisle down the middle. Total cost was about $27 per square foot.  Building needed LOTS of work as we only paid $3.65 per foot for it. 

Your costs will be highly variable given the condition of the "shell" as well as how much electrical, security, fire suppression work is required by local codes.  That said, you can have a "conversion kit" installed for $6-8 per rentable square foot.

General rule of Thumb is that self storage makes great sense assuming the market needs it and you can charge rents in the range of 20-25% of total cost. So if you build out for a total of $40 per square foot, an annual gross rental rate of $8-10 per foot would likely pencil out nicely!

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