Analyze My Deal - First Time Commercial Investment

[Karen Devlin]

I've been renting SFRs for about 15 years now and I'd like to step up to a larger commercial investment. I'm working with a local broker and he's presented me with this deal: 

Self-storage facility located in Oregon. Price is $1,315,000. 

I have $370K cash that I need to reinvest from a 1031 that I just completed. The plan is to use that plus $30K cash from savings as a down payment of $400K and finance the additional $915K @ 4.25 for 25 yrs. 

Here are the details: 

1-acre lot with approximately 19,000 sq ft across 8 steel buildings. 151 storage units total.

Built in 1986, new roofs and exterior paint in 2015

Includes office with bathroom/sink

On-site manager will likely stay on as an employee

Sale includes additional .22 acre lot. Opportunity to develop the lot to support 30 additional storage units (estimated cost $75K).

2018: NOI = $77,331.34

2019: NOI = $78,472.83

2020 to 7/31: NOI = $44,824.19

Storage rental rates are currently 10% below market value. Plan would be to develop additional lot with 30 storage units and bring rents up to market value starting with a 5% increase.

Thoughts on questions I should be asking? All advice is appreciated.