Dayton OH Self Storage Deal

[Grant Smith]

Investment Info:

Other commercial investment investment.

Purchase price: $1,700,000
Cash invested: $700,000

40,000 sq. ft. self storage facility in Dayton, OH with significant value add opportunity. The business did not market itself, had significant deferred maintenance and was 30% below marker rates. Immediately occupied the asset and completed deferred maintenance while raising rents and turning units. Asset is now stable earning 20% CoC to investors.

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

Self Storage is a business that comes with a high barrier to entry. There are multiple opportunities for those who recognize the asset as not just a static piece of real estate but a business and run it accordingly.

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

Family member was selling the asset at a price I believed was too cheap relative to the gross potential.

How did you finance this deal?

40% down and 60% seller financed for 5-years. Once deferred maintenance is complete, we will refinance into long-term financing.

How did you add value to the deal?

Better than expected. Not only were we able to drive up rates 25% in year one, but we are able to push rates another 10% in year two, which has raised the asset value well about $3 million at the time of writing.

What was the outcome?

The outcome was significantly improved cash flow and forced appreciation.

Lessons learned? Challenges?

How to creatively finance a deal with a seller that meets their wants and needs. How to earn trust of existing management and persuade them to buy into the new mission of the company.

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

This was another deal negotiated completely off market.