My First Self Storage Facility

[Steven May]

Investment Info:

Other buy & hold investment in Osage Beach.

Purchase price: $330,000
Cash invested: $50,000

Purchased my first self storage facility. Studied the asset class for months and loved the idea of no toilets, no hvac, and renting out metal boxes. Cold called a facility in a market we vacation at that I figured had high demand for storage. Met the owner and walked the facility, he gave us financials, and we agreed on the price. Went to a local bank who said we got do 15% down on a fixed rate for 5 years. Partnered with my cousin who has connections in this market and liked the asset. I am now an owner of a 106 unit self storage facility at Lake of the Ozarks. We have built a website, are raising rents, and are at 90% occupancy currently. This facility requires no on-site management as renters get a personal gate code and go store their items and lock their own units. Purchased at a true 10 cap and appraisal came in 70k over purchase price.

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

Low overhead. Low capex. No toilets. No Hvac. Evictions - dealing with peoples stuff instead of having to evict a family from a home.

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

Cold called the facility. Office lady literally gave me the owners cell phone number.

How did you finance this deal?

15% down commerical loan. 4.2% interest fixed for 5 years with option to extend. 50/50 on the down payment and equity with my partner.

How did you add value to the deal?

Raising rents. Building a website. Filling vacancies. Taking care of deferred maintenance.

What was the outcome?

Just took of ownership/management last week. Sellers have another facility we really hope to purchase as well.

Lessons learned? Challenges?

Learning to take over a mismanaged business. Tracking down non-paying clients. Learning the MO laws of getting a lien on a client's storage unit and auctioning off items.

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

I am a realtor. Our lender handled financing, title work, and even gave us a contract to use.