Building Self Storage and maybe Boat and RV

[Ben McMahon]

Afternoon BP.  

I know there is a lot of info on here about storage, but an opportunity has landed in my lap, and I wanted to put it out there.  My brother has an off market purchase opportunity in a somewhat rural area.  He wants to build storage because there is none available.  if you call the local places, they are 100% full and there's a waiting list.  

The location is ideal.  Visible from a major highway, and near the intersection of another major highway.  5 acres for 400k.   the town is not large.  town is about 10k and county is about 50k.  The neighboring town and county are in the same boat, but bigger.  about 3 times the size.  Just trying to figure out the size of facility to build, and than back it in to make sure its worth it.  

I also think it might be worth Boat and Rv storage since its at such a good location from both north to south and east to west.  Thanks 

Ben

[James Siller]

I've been researching the same topic lately and can offer a few thoughts / things to chew on:

What are building restrictions? Drainage requirements - can you use all 5 acres or do you need detention? You're in CA, so flood plain might not be an issue like it is for us in TX... Fire prevention - required by local / county fire department? Water (if needed by fire dept)? When you said rural - how rural - I'm in the process of needing to provide adequate water supply for fire prevention in a rural area and it's added quite a bit to my budget. How are you planning on financing? Construction loan, rolled into a mini-perm, investors, Cash?? What's your criteria for assessing whether this project should go forward (ie. 2x equity multiplier, 20% IRR, C-C return of 20%??) Do you have referrals to good contractors who can do the work?

Since you are developing, can you float the deal for 1-2 years without cash flow?  Developments are notoriously slow to start, and getting permits can take much longer than expected.  Are there any other buildings in the pipeline that will be in direct competition with you?  How hard is it for other people to build there, ie what is the barrier to entry?  

One of the most difficult questions I'm coming across is what is the number for a saturated market and how to define with data.  Will your tenants be coming from single family homes, or is this more of a vacation spot, with potential seasonal rentals?  If SF homes are the case, are there more communities coming to your area, and potentially bringing more tenants?  Is your area growing? Do you think with fuel prices that fewer people will need places to store boats / RVs?

PM me if you need any more questions!  I may be able to provide you with some data that I've compiled, although it's from TX.

James