Self Storage - how does it work !!

[Tejas Shah]

Hi All,

I am trying to learn the ropes of self storage investing. I was wondering if anyone is willing to share their knowledge on what to look for in a self storage deal and also help understand how the underlying math work when analyzing a self storage deal. 

you can share links of reading material and i can read through to understand what to look for in self storage deal, but was hoping to see an actual calculator for self storage (similar to some calculators here on BP)

Would really appreciate some help !!

TJ

[Henry Clark]

All of the following you could get from reading my posts.

1.  How much money do you have?  How much collateral value do you have at 65%?

2.  What financing mechanism will you use?  SBA 10%, Conventional 25%, Conventional 40%?

3.  1 and 2 above determine your deal size.  If you have $100,000 and do a Conventional at 25%, then you can do a $400,000 deal.  You need to know this so you don't waste your time kicking tires that are to big for you.

4.  Normally I would recommend buying a small 25 to 100 unit location, developing your systems, and then growing.  Self storage is at such a premium, now I recommend you build and develop.  

5.  I have given advice on how to approach properties in New Jersey before.  There are many angles, so just because I throw out angles, they probably won't fit, but you have to use different angles.

Steps:

A.  Read my posts.

B.  As mentioned above read, go to, watch, join, etc Groups that have "Systems" to approach Self Storage investing.  If they don't have "Systems" don't go with them.

C.  Find my checklist, and use as your guide.

D.  Start Self Storage today.  Yes you want to do Self Storage, but I also want to make money. So here are some angles.  Go out on Loopnet and look up New Jersey properties that preferably are industrial.  Look for 2 to 10 acres to limit the search.  Can have buildings or not on them.  For now don't worry about zoning, this is an academic exercise.  Do 5 deal analysis, making this into a storage facility.  If it was me, I would sell my House, and pick a facility I could live at for $40,000 of the value.  My brother had marble counter tops, tile floor, new furniture, etc for $60,000 at his place.  Use your home equity of say $300,000 in the deal and start making money off it, plus expensing the majority of your living expenses.  If you don't want to live there, rent it out.  You get a free watch person and helper.

E.  Examples:  126 Lexington Street, Trenton, NJ;  903-907 Marne Hwy, Hainesport, NJ- actually this property was one I noted a while back;  The nastier the property the better.  The longer listed the better.  The more issues the better. These are just two examples, there are many properties you can analyze.

F.  But you run the numbers and it doesn't work.  Your assuming list price.  Want you to think it's a BUYER'S market.  Back into the number that works for you.  Talking a great deal.  Line up the top three properties your interested in and make them 3 day deals, subject to this, subject to that.  Who ever bites, that is your deal.  The others tell them the property won't work.  Try to get the property with the most, extra land.

There are many issues to go over with a property.  You have to develop your checklist and learn to go over them.  Zoning, EPA, New Fire systems required, not grandfathered in, setbacks, storm ponds, Variances/conditional use permitting, Competition, Customers, Market Analysis, etc.

Key point don't do Storage unless you plan to scale.  Too much to learn from a Commercial business standpoint.

Start small and Make Your Big Mistakes Early.

You're lucky you're on the East Coast. Although land prices are high, the rental rates are so high, it's hard not to make it work.