Self Storage Construction Contractors & Expansion

[Weina Shi]

Dear fellow investors,

Where do you find the contractors? I did some google search and reach out to some. Some of them do not do multi-level facilities and some only do large facilities. I have heard the steel material cost are up 60% vs pre-covid levels? Delivery times are 6-7 months plus 6 months of construction. Do you directly find a GC and have him bid out all the work. This facility is out of state so I will not be there for the construction except to have a family member check on it from time to time. Perhaps about 60% of the contractors / manufacturers are saying price will up and potentially will steady and will not go down and some smaller 40% are saying it might go down. I personally think it would be unlikely to go down. 

The existing facility is 25,000 sf and expansion (full potential) is 36,000 sf.

Here are my options:

- Begin construction right away after closing for the whole project - 36,000 sf (based on population there should be demand but no one knows for sure). Same loan for the existing facility and expansion.

- Being construction for half of the project as Phase I for 18,000. Not sure if it makes sense to do in pieces as it will take more time and effort and not cheaper. 

- Operate the existing facility for 2-6 months and reassess - will will require a new loan (rather than one big loan for the purchase and construction at closing). This is the safest bet.

- Use the funds for construction to buy another facility instead of expanding

I plan to do a shorter (3-yr) loan on the existing facility and refi in 3 years to get value out for a facility so I can get another facility using the funds.

Thanks!

Weina