Self Storage Deal 11- Just what you asked for.

[Henry Clark]

From a conversation I had with an individual looking to get into storage. Specifically RV/Boat storage.

Recommend you check out Loopnet ????????? Storage. Look at the RV/Boat facility for sale $945,000 in ???????????? where your at.
There is the 5 acre lot and then first right of refusal on another two acres. If you have already looked at it, lets look at it again with a different view.

If you have already analyzed this property what were your figures and what did you come up with? If you haven't analyzed lets do a cost build up.


Excel sheets not allowed to be attached. Just contact me.

Cost approach: Take my project cost estimation and update the data based on your local info: Example;
$250,000 5 acres level ground $50,000/acre
$ 60,000 5 acres rock fill $12,000 per acre, levelled
$ 40,000 5 acres fence
$ 25,000 Automated gate
$ 10,000 Saw something about electric fence
$ 30,000 55 LED lights and lighting; w/ poles
$ 30,000 Security system
$ 25,000 Office/bathroom/storage
$ 10,000 Misc equipment
$480,000 Rough dirty estimate

Revenue side:
30 ft space is $50 with prepaid 6 month lease required. Use this as the average with 235 spaces at 90% occupancy:
235 x $50 x 12 x .9= $126,900; validate against last 3 years, also current contracts. Challenge the rent rates with other places in the area.

Expenses:
Electric- LED, $1,500 per month est.
Property Tax- should be low since no structures $4,000/yr
Insurance- should be low since no structures $4,000/yr
Mowing/spraying/maint- you, zero.
Rock- $2,000 replacement per year

Expense estimate: $28,000

Revenue before income tax= Call it $100,000

Finance example:
SBA 20 year term
10% down= $95,000
Interest rate 3%; 20 years; $850,000
Do loan amort calc

Actually partner bank will do half of the above loan, with loan amort on 20 year with 10 year adjustment, then 5 year intervals.


Lets say $55,000 P/I per year for 20 years. Interest on the participating bank will probably go up at year 10.


Again all of these are quick numbers you need to validate:
A. You have $100,000 cash flow before taxes; with $55,000 P/I per year.
B. Your asset is basically non-depreciable, thus it keeps its physical value.
C. Revenue is 6 month leases paid up front.

Deal Points:
1. Do a Stupid Money test. Look at zoning in the general area and see how likely someone else could build this same property and take your business.
2. Talk with your Accountant. See if you can do an Asset purchase versus a business purchase. Break out all of the depreciable assets so you can do an early write off to get the tax advantage. Have the deal weigh higher towards the depreciable assets and away from the land.
3. Ask the owner that part of the price is a 5 year "Non Compete" agreement. Again talk with your accountant on how this can be written off and to quantify.
4. Check on flooding; ask the county emergency mgt and neighbors.
5. Go through all of the items on my 101 Checklist.
6. Again this is quick and dirty. There is a big gap between Cost and revenue. Validate this. If true, again do the Stupid money test, potentially you could build for cheaper.
7. Even if you can build, rent up phase for RV/Boat/vehicles is slower than Storage units, especially with existing competition. It might be worth $100,000 cash per year to pay for an existing revenue stream.
8. Don't get too greedy. If the Cash flow works, even if the cost build is a lot lower take it. Explain it to the person the price is high relative to the cost to build, and ask for $300,000 no interest payment in 5 years on the balance. See if this is allowed with the bank or SBA before you ask for.
9. See what the two acre sales lot is going for. Possibly put Storage on it. Because of your existing Boat and RV storage; see if the city/county will allow you to do Cargo Containers. These are cheaper, no property tax, and can be written off quickly for tax advantage. Recommend you stay away from traditional storage, there is a lot of competition in the area, unless your physical area has little.
10. See if zoned for storage units, both properties.
11. The two acres says something about sales. Don't buy that business if you want to be hands off; just the asset.
12. Negotiate for the name and web. This should help on google.
13. Don't see them on Sparefoot. The extra % occupancy will be pure profit. I would actually go with higher rates on Sparefoot than your street rate.


This is probably a faster deal than you would like to do. Deals die on the vine. See how long this has been listed on Loopnet. Probably the sales price is a little high compared to building it. Make them happy and yourselves, with the no interest loan facet. They aren't going to earn that much out in the market with the money now anyways.

Start small and make your Big Mistakes early.

Don't know why I did this one first, my brother and sister in law wanted me to check their area out.