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Updated over 5 years ago,
Self Storage Deal Structure
I am new to real estate investing and working on putting together a deal with a partner. Since I have never worked with a partner before or owned self storage I would be interested in any advice.
The property is a small facility currently 28 units in a town with a 7,000 person population. Purchase price would be $150,000 and plan is to immediately build 1-2 more buildings on the property, stabilize and sell then 1031 into another property in 3-4 years.
There are a few zoning obstacles that will have to be overcome but we have a plan in place to work with a civil engineer with experience working with municipality to clear then up. Mostly set back issues, property needs to be subdivided and the property has two separate zoning classifications currently.
Structure of the deal would be me as boots on the ground running the facility, managing the expansions and marketing to keep people coming in. Partner would be providing capital and his experience as he owns other facility's. We have discussed the profits would be split 50:50 and he would also collect a 9% preferred return on his cash investment.
Does this sound like a good deal for somone just starting out? I do have alot of construction experience as I have worked as a project manager and estimator for large commercial general contractors for the past 12 years now.
I also have already received lots of advice that it is important to understand each other's roles and responsibilities as well as to seek out legal counsel.
Thank you!