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Updated almost 3 years ago on . Most recent reply
Building Self Storage and maybe Boat and RV
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
Most Popular Reply
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
I live in a similar area. I think it's a great idea. Many storage units around here do a combination of storage units, covered RV/boat parking (typically roof and one sunny side walled off) and uncovered RV/boat parking. I'm always amazed that there is an almost endless supply of RV/boat owners willing to pay $50 for uncovered parking (basically a patch of gravel, not even pavement) or $125-$150 per month for a roof and one wall.
A friend of mine was looking for a storage unit recently and only opening was 25+ miles away from his hometown. It's getting insane out there!!
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
Hi @Ben McMahon. I think this is a potentially great idea. I’ve been amazed at how well self-storage facilities work in small or rural towns. The first thing I would do is to run an analysis with Radius Plus. This will give you a more detailed analysis of the competition in the area. I would hope to see mom and pop competition with poor marketing and about 7 square feet or less per person in a (say) 5-mile radius.
You’ll also want to be sure you’re in a visible site on a well-traveled road in a medium or better income area. Let us know what you decide!