Making an offer on a self storage business

[Nicholas Ludwiczak]

I have a self storage owner come to me with an off market deal for his 84 unit business with room to expand. It as has a newer model home onsite a business is renting as an office. His rates are well below market, even for the small town he is in. The only other operator within 3 miles would be $5 below the price I would move the rates to and he has been full for the past year.

Has anyone had experience taking over a self storage business and raising rates $5-20 per month? My rates would be at market but I don't want to have a bunch of people moving out at the beginning.

I am going to try getting the owner to finance 100% of the down payment on an 8 year note.

After accounting for all expenses including the note, it comes to about $500 in cash flow at 87.5% occupancy.

As I move purchase price and terms around as we negotiate, at what cash flow amount would you pass on the deal?