Value Add Self Storage Facility

[Deidra Swenson]

Investment Info:

Other commercial investment investment in New Richmond.

Purchase price: $425,000

Value add self storage facility with 65 units. There were a lot of operational improvements that we were able to make right away. We started a website and transitioned tenants into setting up auto pay through the website. Rates were below market rent, so we increased rents. There were multiple tenants delinquent, so we re-trained the tenants and enforced late fees. There was no marketing being done, so we started advertising. We improved occupancy.

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

We were looking to move on from single family residential investments and into commercial investing. I had been thinking about self storage for a few years and when we saw this deal we saw the potential and value. We could see operationally how improvements could be made right away.

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

MLS automatic search. We put an offer in right when it came on the market and had it under contract before anyone else looked at it.

How did you finance this deal?

Commercial loan

How did you add value to the deal?

Improved occupancy, reduced delinquencies and enforced late fees, added a website and marketed vacancies.

What was the outcome?

We purchased the facility at a 9 cap. In the first year applying the same cap rate we increased the value from $425,000 to $575,000. Now that we've dipped our toes into a smaller self storage deal we plan on pursuing larger self storage deals.

Lessons learned? Challenges?

This was our first self storage facility, so there was a learning curve on how to deal with tenants and how to operate the business efficiently and effectively. We had a lot of challenges the first couple months just tracking down people and getting the correct contact info. We learned that if we are firm with our policies and set expectations up front, we deal with a lot less issues.