How to Purchase Underperforming Self Storage Facility

[Craig Garrow]

I have recently found a self storage facility that the owners are considering selling. It's 24 units - 16 10x10, and 8 5x10 on 2 acres of land in a good location. After speaking to the sellers, I've found that the facility is only about 65-70% occupied, bringing in $750/month.They've expressed an interest in offering owner financing for $55,000 with $15,000 down and at 6.5% interest over 15 years. Taxes are $2,200 per year and Insurance will run $350 per year. My partner is going to handle the lawn care and snow removal and I will handle the Marketing and Property Management. So, I'm interested because it's a good location and we have plenty of room to expand down the road. We have some access to private funds and I'm thinking of offering them $48,000 all cash, or a MLO with a 2 year option for their price of $55,000 so we could get in cheap and get the rents up where they need to be. What would you do?

[Scott Meyers]

See what I mean Craig..... 

Management - underwriting requires you to run a 5% line item expense - that's for MANAGEMENT, Payroll is a different line item, and that is what you pay the person to be in the office and lease units.  For a site this size, yes, someone will have to have a cell phone on their hip - the facility can't afford, nor does it need someone behind the counter full time. 

Many of our facilities in the past have been managed with a kiosk, and now, we are relying less on those, and creating a responsive website that allows for rentals via smart phone.    

Way too much here, but if you search around BP, and online, you'll see that I also run a Self Storage Education business with tons of resources and live training events when you're ready. 

Cheers,