1st Self Storage deal with Safe Harbor

[David Jones]

Investment Info:

Other buy & hold investment in Lincoln.

Purchase price: $500,000
Cash invested: $100,000

62 Unit Self Storage facility. Converted tenants to online payment platform, offered insurance, and raised rates.

What made you interested in investing in this type of deal?

The owner wanted cash for another deal. He was not actively managing the facility. He rarely raised rates.

How did you find this deal and how did you negotiate it?

A friend. He threw out a number and it made sense.

How did you finance this deal?

80/20 LTV. 3 member LLC put up our own cash for deposit and financed the rest.

How did you add value to the deal?

We built a web site, set up automatic payments, implemented late fees, raised rates. In the near term we will expand the sf. by 50%.

What was the outcome?

We only had a 8% drop in tenants leaving the first 3 months but replaced them with tenants at full market rate (20% - 25% higher). We also had a chance to test out new programable overlocks and a new tenant software platform. It went better than expected.

Lessons learned? Challenges?

Don't fear vacancy loss, it provides an opportunity to get someone in at the market rate. There is no suck thing as "fully automated". You will always have to deal with people at some level.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No agents, we worked direct with the owner.