110 Unit Storage Facility

[Dan Seavey]

i am prospecting a 110 unit storage facility here in Maine. The owner has it listed with partial owner financing, which is good for me as I am a young investor with little cash available. I am posting here to see if there are any experienced investors in the storage business that could give some insight on the deal. It is a 110 unit facility in a busy city right off of a main route. The road signage is shared on a business park, so it is not a large sign. There are temperature controlled units as well as 5 different sizes of units. The owner owns another business about 30 minutes away and bought this through a 1031 6 years ago. I am somewhat suspicious at the occupancy rate, as there is really only one other competitor (which their facility is much smaller) in the area. The town is approx. 17,000 and the facility is also in close proximity of 3 major Lakes and one small University. The broker has said that the owner does not put much effort into the business, hence the 65% occupancy rate. The owner is asking $650K. At 65% occupancy, with 10% down ($65,000 owner financed at closing - no cash out of pocket), and 90% mortgaged through SBA and bank ($585,000), $7,800/taxes, and $5,000 in misc. expenses/annually. This will be $4,300/Mo + taxes and utilities. I am seeking suggestions to make this deal work? The occupancy obviously needs to increase to make this work. I know the area and believe that it can be filled very quickly. Maybe a owner finance clause to keep expenses low at first until it is occupied? Thanks in advance.

Dan