All Forum Posts by: Michael Wagner

 Any Update here?

 Hi Susan,

Storage can be a phenomenal investment. Storage facilities are valued based on NOI. That is to say that they are worth a multiple of the Income the generate. The multiple will be market specific but generally speaking class B and C storage facilities usually sell for 8-12 times the NOI (More for class Class A facilities in major cities). You might consider using the search feature on BP which will allow you to tap into the forums, blogs and conversations that already exist to increase your knowledge about self storage. Doing so will allow members to assist you without having to re-type that which has already been written:) From there you can reach out to this wonderful community with more specific questions that might be more readily answered.

Looks like it is overpriced by a bit.  As much as I love self storage, paying too much for it is not wise.   That being said, if there is huge upside then it may be worth pursuing.  And you can get a bank to play ball if you are persistent.  As an example.  I just paid $350K for facility that was more likely valued at $300K based on the trailing income.  It had an acre of empty land with it and was only 50% financially occupied.  With that, I put together a lending proposal for $300K and put in 90K Cash for downpayment and renovation expenses.  Based on the 40K in renovation and proposed management overhaul, the appraiser completed an "as stabilized" value.  We used the 40K to add a gravel parking lot and erect a fence and security gate.  Those improvements along with my experience in turning SS facilities around was enough to convince the bank to accept an "as stabilized" value.  That value was $550K.  Just closed am month ago but my plan is to have the income justify said valuation by this time next year.  Bring on the elbow grease!

Is there upside to the facility?  If the facility is full and no room to expand, I would robably pass on it.  But if you can realistically increase value to $500K or so with using primarily elbow grease then it might be a deal. 

Do you have experience "overhauling" real estate and or other businesses that you can lean on? 

Also,  a business plan is an absolute must when approaching banks with this type of deal.  Im talking 10-20 pages outlining every aspect of the market and the facility.

Hope that helps a little. 

 Wholesaling is a great way to build up some cash.  I've only wholesaled one deal and no longer do residential investing but its a great way to learn a market and build some cash and credibility. Realistically, you will need some cash to get into a "meaningful" storage facility.  Meaningful= lose your day job type of facility. But you certainly don't need $250K to buy and profit big time off storage.  I own two facilities.  The first I bought in 2011 for $350K including closing costs.  Got a mortgage and some private funds and my cash infusion was 40K.  That facility is now worth $1.4 Million and cash flows around $100K annually.  I closed on a second facility last week.  Purchase price was $350K plus $50K in repairs and upgrades and 20K in closing costs.  Total acquisition was $420K.  It appraised as is for $545K and breaks even from day one (about 50% financially occupied).  Of the $420K, I got a loan for $304K, brought in a minority partner for $80K in exchange for 19% equity and spent $36K of my own cash in exchange for the remaining 81% ownership. 

Please don't perceive this post as boastful...it is not meant to be.  Storage has truly changed my life. I've worked only 20 hours per week for the last year and have actually gotten to see my son (who turned one today) grow everyday... There is nothing special about me and I don't know any magic tricks...AND I'm not selling anything:).....Its just a very strong asset class and I encourage anyone who is interested to delve deeper!!! Best of luck as you forge your own path!  

@Matt Skinner , I think you will find what you are looking for in my blog which is linked below....

@Richelle T. , I'm guessing you saw @scott myers speak.  His products are worth your serious consideration.  I have two facilities.....bought one via an broker and one direct from a seller.  So the lesson is to pursue both avenues!  Good Luck!

Another idea here would be to consider a staged approach, You could increase the $30 to $40 and see how many move out.  Fill up any vacancies at $45.  Then raise the $35 to $45 and see how many move out, fill vacancies.  Then go back to folks that you raised to $40 and up them to $45.  This way you minimize empty units at any one time.  An empty unit is your biggest expense in the storage world.  Then every 4-6 months, you should up the rate $2-4 dollars.  Don't just stop at $45 because you think it is a good price.  Keep raising until the market tells you you are at the right price.

Check out my blog below for some introductory articles.

@Erik Peterson Storage is an awesome business.  Check out my blog for several introductory articles that might be helpful to you.  Should be linked below.

@Patrick H. ,

I have not been to any of the national shows but not for any good reason other than scheduling issues.  With a young son, I choose to stay as close to home as possible.  I go to as many of the State association meetings as I can and have been to other Industry meet-ups. 

You can't go wrong by getting out and meeting up with as many industry experts as possible.