Self Storage- Deal 1

[Henry Clark]

Well it is really hot outside and I'm tired of landscaping.  

Start Small and make your big mistakes Early.

Deal breakers- market, finance, zoning, footings, road type, water/sewer availability, Storm sewers, Storm retention ponds.  Everything else you can mess up and not get to hammered.

Some of these stories will be ambiguous because they are still "live" items.  I am intentionally not telling you all of the details and am obfuscating some of the detail, just telling you the Deal story.

Got a call on a $5mm property with 600 units.  They want to, have to sell.

One of the most "beautiful", if you can say that about storage properties, I have seen.  Had two high tech features, I have not seen anywhere before in self storage or heard about, that are high value add.  To late for my locations to install.

35% full after 2 years.  

Market analysis says the town should have 400 units.  They have 600, just themselves.

They built all 40 foot outside units, plus they have indoors.

Population is on the other side of town, towards the big REIT locations 5 miles away, in another town.

Ran my numbers, best I could do is $3mm; that's with me making some management adjustments , and paying for my efforts and risk beforehand:

a.  Get on Sparefoot. They are just using their road location and website.

b.  No 10 or 15's in the outdoor drive-up.  Chop some of the buildings into 25/15 depths.  Get more product offerings.  25's are great for cars and 15's are great since no one thinks they have that much stuff.

c. If we don't have 15's, then rent some 20's out at the 15 price.  Just tell them we are out of 15's.

d.  10's rent both Outside and Climate control 10's at two different prices.  If someone rents an outside 10, give them an inside for the lower price.  Do this till you fill up.  Then only rent CC 10's.

e.  They have some large open face buildings for RV storage.  Close and put doors.  Rent out for Contractor bays.  Quadruple the rent.

f.  Have some gravel vehicle parking.  Get rid of them and buy some cargo containers.  Again another product and price point.

g.  Go self service, get rid of the manager.

I didn't make an offer.  Wanted to go back and help them out, but a loosing battle.  Until you hit bottom, you won't change.

Best I can figure is this is a Money guy, who said hey, storage looks like a great investment.  

Remember the Deal breakers above (Market).