Investing in storage units for my multifamily property

[Stephen Jones]

I own 16 multifamily units in Illinois with a sizable backyard. I am considering building 16 storage units for my tenants. In my area, multifamily properties that have storage units is very rare. Briefly, My idea is to build these units 10x10. I want to do this project right and not half ***, so by my calculations this is going to run me somewhere in the ballpark of 40,000$ w/ labor, materials, concrete, etc. I would in turn charge my tenants anywhere between 45-65$ to rent out their designated unit. Is this a good investment? Or should I focus more of my attention and money on accumulating more multifamily units? Thanks!

[Ashley Pimsner]

@Stephen Jones the way I look at it is how much does the extra locker storage increase your NOI and what is the cap rate for your building.

Let's say we split difference and you get $55×16=$880 a month or $10,560 a year then you would need ballpark 4 years to recoup 40k expenditure.

If your cap rate is 10 then it is a no brainer as you instantly add $105,600 to property value, if cap rate 5 then $52,800.

You need to also factor in vacancy and demand for the area, but this should give you a rough idea.

Lastly, you might want to canvas neighborhood and see if other people from adjacent buildings would be interested in extra storage.

Hope this helps.