Old Self Storage Building

[Lucas W Randol]

I am looking into buying a self storage facility as my first investment. I am looking at some input from others about this investment. This is going to sort of be a puking of my thoughts on this investments so apologies if it seems like a bit of a rambling. 

Owner is asking $185k (would consider owner financing) for a 30 unit facility.The facility is a large unit facility mostly for boat an RV storage with bays that are 11.5' x 60'. Currently has gravel (or mud in some places) and cattle panels for dividers but they don't go all the way to the ground so people can literally just crawl under the panels if they want. It is currently 100% occupied and she says she always has a waiting list for units. My intentions were to purchase the facility and do some very simple upgrades like fresh gravel and full metal dividers between units and raise rates from where they currently are at $65ish to $85-90. Perhaps more? There is some local competition of a much larger facility a few miles away but he is almost always full and is terrible about answering phone calls or returning phone calls so many people have a sour taste in their mouth from his management. 

The doors are pretty terrible. They are simple 2x4 framed doors with tin covering them with a 2x6 lock board to keep the doors shut. Wind over time damages the doors and they have to be repaired or replaced. The building is a wood framed pole building with all the supports set directly in the ground. My primary concern is if these supports weather another 20 years in the ground like they currently are. If not it will be an expensive undertaking to cut the supports off and pour concrete and remount the supports directly on concrete but this is a possibility. I also considered having roll up doors installed at which time each support could be set back onto concrete while pouring thresholds for the doors which would alleviate that future concern.

Currently has no lighting (not even electricity) ran to the facility so there are no utilities costs. I considered installing some solar powered LED lights around for lighting. Taxes are approximately $3k per year and other than repairs/insurance I'm not sure what other major expenses would be needed. Even at $185k this doesn't seem like a terrible deal. I can't say for sure what the insurance is on the place without talking to the owner a bit more but lets assume it was $3k like the taxes.  The investment still comes out at over a 9% cap rate with the current rates the owner is charging. I think I could raise rates from day 1 without even upgrading anything since for the size of the units I think they are asking far too little. But again my biggest concern is the structural integrity of those treated wood posts setting directly in the ground. 

One thought was to pour gravel from the start and upgrade units individually with metal walls as they became available and over a period of time perhaps 5 years? I could have all the units a bit more secure. On the other hand with the wooden lock boards on the doors there is really no security because the doors are so simple. So part of me thinks all of this needs done around the same time. That poses a problem however because this would be my first investment and honestly I don't have the funds to invest to upgrade the facility like that. It would probably take upwards of $100k to put doors and metal on every unit. Maybe even more. That would require saving nearly every dime from the facility for 5+ years to save up money needed for the upgrades. 

So with all that being said, what inputs and thoughts does anyone have on this investment? I would prefer to not bring in a partner but at the same time a partner with the funds to do the upgrades might allow the facility to be filled with over double the current rates. Hope this all makes sense but I will of course be monitoring this post so any additional info required I should be able to provide. Thanks for the input!