Self Storage Deal 8- Hoss Cartwright, the Ponderosa rides again

Start Small and make your big mistakes Early.

Deal breakers- market, finance, zoning, footings, road type, water/sewer availability, Storm sewers, Storm retention ponds, over Analyzing, too Greedy. Everything else you can mess up and not get too hammered.

We ended up buying two, two acre parcels next to each other through two separate purchases.

Deal A:

When we first moved here the main restaurant was a gas station and restaurant out on the highway called the "Ponderosa". My reference to Hoss. It had to shut down because the water had too high a level of Nitrates. Thus not to many businesses could locate there. Sat there for about 10 years and was not used. Came up for sale. We liked it because it was away from the competition and our existing location. Helped us cover another customer base.

Unfortunately it still had the old building on it and the current owner thought it had "value". For me it looked like $20,000 of demolition. Luckily, I like driving a skidsteer and tore the building down, burned the pile and then broke the concrete up and had hauled off for about $2,000. Actually used the concrete on another property for erosion control and for a road entrance. Ended up paying about $30,000 more than I wanted; but it was close to home and had great traffic count. This was our second Storage location. The land cost $50,000 per acre. At the time, even though the numbers worked; I thought wow its high. Since then, we have looked at another place, where we could have paid $1mm per acre and still made the numbers work. Key- Its not about the cost, its not about the revenue; "Will it cash flow".

Deal B:

Sour grapes, but a good deal.

This two acres is next to the one above. It used to be an "Auction" house. The gentleman retired and did the neighborly thing and offered it to us. I didn't think it was worth too much since, "Our" water well was in the middle of his property, and cuts down building in the middle. His front entrance was only a 1/3 his, the rest was our second entrance. Being on a highway and the way the land fell off, he would have a hard time getting a second entrance or enlargement. The building was built in about 4 sections and limited usage. Plus it was built near the middle of the property. If you planned to build, you couldn't keep the existing building since it sat in the prime spot. His water was also high in Nitrates. Would cost about $20,000 to tear down the building. I offered $60,000; but he passed, he had a higher offer. Second person bought for $100,000 and then started playing around with the property, with no real immediate plans.

Luckily we have the same realtor, and he had heard from both of us about buying or selling with each other for "two years". I was pissed because this was the second time, this person had gotten into a deal and cost me more money or bought out from me. He does a lot of land sales and 1031 exchanges, so he is always "having" to buy land at certain times. After about two years, our realtor seeing our Storage business was really growing and the other person, didn't have plans anymore for the two acres. Called me into his office and "told" me, I was buying the land for this amount and he was not going to charge the seller commission. He said you only get to buy neighboring land, usually once in a life time, and you buy it when its available, no matter the price. We are good friends and neighbors. Do all of our real estate through them. Ended up buying for $105,000; plus the demo cost which wasn't much since I did it myself. Made it into RV/Vehicle/Boat storage. We just filled up the first two acres with storage, and guess what, we need to build more buildings on the second two acres.

Deal breakers-

Deal A- trust your numbers. Even though this was higher than I was used to paying for land, the numbers worked.

Deal B- swallow your pride or being pissed off and make the deal. This ground we needed for the future storage expansion. The first ground the 1031 guy bid me up on, we ended up paying $60,000 more than I wanted. We are now doing a Subdivision with that ground and selling the $7,000 per acre ground for $50,000 and higher per acre. If the numbers and plan works, do the deal.

Our son out mowing the lots.