Self Storage Property Evaluation

[Brad P.]

Hello All-

I’ve been reading these forums for quite some time but just had the need to join recently:

I’m looking to buy my first commercial investment property and would like some advice or guidance on the deal I’ve been offered. Details below-

150 Self Storage Units on 1.5 acres with major highway exposure in North Houston, Texas.

Built in 2005, currently 87% leased out. Gross income of ~$8,000/month / $96k/year.

Property Taxes - $8,000/year

Insurance - $5,000/year

Utilities (Elec) – $1,000/year

Management Fee - ~$4,800/year (5%)

Potential Maintenance/Repairs - ~$6,720/year (7%)

I have financials for the past 1.5 years and everything appears to be very steady around the 85% mark. Not a lot of turn over although I have come to expect the worst. No major repairs or updating needed. Current rent levels are very low compared to other local units but I would not increase price on units that are grandfathered in to current prices.

The deal is offered to me for $600k. Hopefully I can get him down a little. 

Thoughts, suggestions? Things I should consider that I am missing?

[Mark Byrge]

It is certainly not a passive investment however with the right systems in place it IS quite lucrative. I currently own three facilities ranging from 60 units to 124 units and spend maybe 4-6 hours per week dealing with oversight total. I have a call center take care of the renting (along with online portal) and then have a local person who we’ve trained to handle clean outs and simple maintenance. It’s far better income and less hassle than the SFH’s we have. I’d definitely shop around for your insurance as it seems quite high (however I’m in Michigan and we don’t see hurricanes very often here!)
Good luck! I wish I had 10 more!