262 unit self-storage value add

[David Lilley]

Investment Info:

Other buy & hold investment in Caddo Mills.

Purchase price: $1,350,000
Cash invested: $500,000

Contributors:
Dane Ohlen

262 unit self-storage facility 21% occupied at acquisition. We will stabilize the occupancy over the course of two years and add RV and boat storage. Projected 19.7 IRR over 10 years.

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

Ability to quadruple NOI by increasing occupancy to market levels.

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

Industry contacts. Negotiated seller financing at 80% LTV 5% interest only for 2 years.

How did you finance this deal?

Seller financing at 80% LTV, 5% interest only for 2 years.

How did you add value to the deal?

Increasing occupancy

[David Lilley]

@Justin Pilotte all great questions. Due to the low occupancy, the seller knew that potential buyers would have an issue securing long-term permanent debt out of the gate. Knowing this, he was ready to offer seller financing.

I believe the market value for a stable property this size is close to $2mm.

We plan to refinance to long-term debt as soon as we get to approx. 90% occupancy. Shooting for 2 years or less.

The remainder of the capital raised will be for our reserves (property is currently in the red) and capex (adding covered RV storage, gate automation, surveillance, etc.).

@Cody Charfauros Caddo Mills is small but in the path of progress. Growth from Dallas is moving east down i-30 and east from Mckinney down Hwy 380. This property is right on Hwy 380 which is a very heavily trafficked route and in close proximity to Lake Lavon, demand for RV storage is very high, and there is a new multifamily building adjacent to us as well.