Purchasing a mismanaged (48% occupancy) self storage in Wichita

[Bill Zou]

Hey BP friends,

My partner and I have been looking for a value add self storage facility in Wichita and have been on the fence since there are multiple questionable variables that we're not too certain about so hoping to get some feedback and advice that can help us make a smart decision that we are in contract for.

Here's the breakdown:

- this is a 2 location property very close to Wichita state / Airport / surrounded by residential

- the area tends to be of lower income (market homes sub 80k compared to outer areas of Wichita that range from $200-$500K+

- has about 200 units (drive ups) in decent condition

- seller has 2 businesses and have been focused on the other primarily. mainly looking for an exit to fund other business ventures.

- spend $0 on marketing.

- priced slightly below replacement costs.

Things we are concerned about:

- location is not the best in town. concerned that it generally wont attract folks in the neighborhood, which negates the pro that this is centrally located around residential

- there are a lot of self storages in the east and southern parts of the city with more being built. not a whole lot more within the city though. I did some research with competitors and think occupancy is just hovering at 70-80% occupancy across the larger players.

- the whole "raising rents" concept may not work due to the community that it's serving (lower income)

- generally afraid of massive amounts of lay payments (which is part of the current problem)

Thanks for the help, all