Self storage deal analyzation- yet again asking for help

[Steven Cowles]

So I am analyzing my first deal and trying to come up with a good value for the property. Please help!

Asking price: $210,000

66 storage units

100% occupied currently

Generating $3,300 a month gross

Taxes: $4500 per year

Insurance: $1500 per year

Book keeping: $1200 per year

Does $210,000 sound like too high or too low? After I run all the numbers if I bought it at $200,000, it seems pretty solid being that it is netting around $30,000 a year (if my math is correct) but I have never done this before. Any help would be great.

[Michael Wagner]

You've gotten some good feedback here. I would suggest you'll probably end up with an NOI in the $22-$25K range rather than the $30K you proposed above. And YES you definitely need to know how your purchase would effect property taxes. If the assessed value is considerably lower than your purchase price, taxes will go up. One effective work around here is to use what is known as "Purchase Price Allocation" whereby you attribute a portion of the purchase price to NON-Real Property like customer list, seller good will etc...that can keep your property taxes in check.

I would suggest that this deal seems to be "solid" from a long term hold cash flow play if you are looking to buy ALL Cash.  If you are using debt to finance it, I suspect you will quickly be frustrated by the "hourly rate" you realize for your efforts.  And if you were to buy all cash, I would suggest that there are deals that can generate considerably more for you without a dramatic change in the efforts required of you.  Simply put, this deal only offers cash flow.  There's not a lot of equity to be created (unless there's more room to expand etc). I much prefer to be in a position where both cash flow and equity explosions are on the table.  That way only one of them has to come to fruition for the deal to be "satisfactory" and if both come to be, its icing on the cake.  Keep us all posted and reach out to me if you'd like.  I do a 2 hour zoom call every month on Storage.