Storage Deal (First Time Underwriting) @Henry Clark

[Jon Brys]

This is my first deal underwriting with some help from a friend in the BP community, he has more underwriting experience then I have but I am a beginner. 

We reviewed this deal from one of the major brokers as a potential value-added implementation, however this does not pan out with our current underwriting assumptions. Our goal is to meet a targeted return of 15%-20% AAR within 5-years, doubling our capital within the investment period, to propel us into a bigger deal. Market price was at 650K, the deal might only make sense to purchase at $438,782 (Including CAPEX/Repairs funds). See attached Excel summary sheet.

Investment Highlight

89% Physically Occupied

Supply Index in a 3-mile radius of 6.8 SF/Capita, 5-mile radius of 7.7 SF/Capita, and 10-mile radius of 8.3 SF/Capita

Additional Income generated from 4 mobile home lots and 1 mobile home (Not Verified, as thus not included in underwriting assumptions)

Key Underwriting Assumptions

Down Payment 25% of Purchase Price

Estimating a CAPEX/Repairs cost of $150,000

Estimating Operating Reserves of $10000

Stabilized Vacancy and Concessions/loss to lease at 10%

Using a cap rate of 7.23%

Key Demographic Data

Total Square Footage 21,130

Supply Index: 6.3

Population 3,338

1 Yr. Pop. Growth -0.8%

3 Yr. Pop. Growth 3.5%

Pop. Density (people per sq. mile) 118

Households 1,144

Households With Basements 11 1%

Renter Occupied 344 30%

Multi Family 388 34%

Average Household Income $81,235

Median Household Income $74,682

Per Capita Income $27,841

Median House Value $186,500

Household Size 2.9