Self Storage question

[Mark Williams]

I'm looking at my first self-storage facility. 20,000 Square Feet, and they are asking 1.2M with a stated NOI of $82,000.

I'm probably looking at $300K for the down payment which I would have to raise. This place isn't making a ton of money and I've never dealt with other investors before. What kind of terms are people looking for when they invest in Self Storage? Will this place cover the debt service and pay back investors in the allotted time? Let's say I get 3 investors who come with $100,000 each to close on the property. How long are they typically interested in being in the property? 2 years, 5 years? $53,000 of that $82,000 goes to debt service, leaving $30K/year. At that rate, it takes 10 years to pay back the initial investment, and that is taking Zero out of the property for 10 years. I guess you could sell it after 5 years and payout the balances then... I am still not seeing where I could use any of this cashflow toward helping my bottom line. What am I missing?

[Mark Williams]

Don,

This area is really too small for the REIT's to come in, so the chances of that happening are really small. If I were looking in a bigger market that may be a concern, but in the sticks, I don't see Extra Space building across the road.