Self storage- Family Re-Union. Deal 14?

[Henry Clark]

Having our first family reunion near Dallas Texas.  My wife wanted to go antiquing so I dropped her in a town. Won’t give the specifics since I might see if my two Texas nieces wanted to do a storage deal here.  Sitting under a Pecan tree. Have a book to read while my wife is making the rounds. But thought I would look at self storage here.  Hard to turn your motor off.

Zoning good

2 acres for sale $300,000

Location.  Couldn’t be better

Texas has one of the highest property taxes. Recommend to do cargo containers

250 x $3,500 set in place $875,000

Grading and roads. $300,000

Electric $20,000

Fence gate- none. Nice location highly visible. Containers will create fence

Security system. $25,000

Website. $3,000

Say $1,600,000 total

99% occupied. 250 x $110= $24,750 x 12= $297,000.

Pro Con:     
A.  Can do year one write-off of everything except land.  Only 80% this year since sun setting.  Shouldn’t have to pay income taxes for 3 years.  Good for cash flow up front.

B.  Since containers are movable and personal property will be harder to finance with a bank.

C.  Risk.  Low since you can add containers as you need them.  Easy to resale.  And the land is still bare and easy to resale
D.  Market and competition. Need further research but looks good.  
E.  Little property taxes since containers aren’t real property.  

F.  Our financial targets are 8 to 12 year payback.  This would be in the 6 to 8 range.  Plus would be in stages since it will take a while to pull 250 together.  
G.  Management would be self service. 
H.  No state income tax.

Cash flow would be about $230,000 per year before management costs.  

Will need to discuss with my two nieces. About 27 and 29. Nurses. See if they want to do. They want to do REI just like everyone hesitant to jump off the cliff.


Start small and Make Your Big Mistakes Early.     

Only in America.  Happy July 4th.

[Andrew Nesbitt]

Quote from @Henry Clark:

@Bruce Lynn

Bring your own lawn chair. Let me know how many and when.  

All the big costs are covered. The niece will manage and my uncle/ her grandfather is 20 minutes away.  Add $12,000 per year.

Security. All covered in the security package.  Will wake her up at night. Police station is 1 mile away.  

 Never seen a self storage with no managers office.  So does this mean every time someone wants to rent, they have to wait 20 minutes for your uncle to drive up there and sign the rental contract on the hood of his Ford pickup(or whatever they drive in TX)?   

That would also make it a prime target for thieves if they know there is no managers office.  I know you said "everyone has a gun and the neighbor will watch it for 2 free units", but let me tell you, when you see 20 people per day moving things in and out of their storage units, it's pretty hard to tell who's a thief and who's a customer.    In fact, when someone does steal something, its unlikely it will be known until the renter reports it (Unless the thief is really messy and doesn't close the door on his way out)

You also need to check how much storage units are in the area already and see if there is even a demand.  When a market is oversaturated, you see them offer all kinds of deals like a unit that would normally rent for $100 would have an offer for like $30 per month for 3 or 6 months and then they hope you stay when the rates rise and not move to the next storage place offering a similar rate.