How do you Know if this Building is Right for Your Conversion Project?

You found what appears to be the perfect property. It is in a great location; the numbers look good so now it is time to see if the project is even feasible. Now is the time to really look at your numbers to see if the configuration of the building works for you. Typically, you can assume that only 75% of your square footage is going to be rentable. Now that isn’t perfect, but it is close enough to estimate your numbers. So, if you are looking at a potential 100,000 square foot conversion property, only 75,000 square feet will be rentable self-storage space because you need walls, and hallways. You may want a small office and display area as well, but these should minimal. Now that you know how much you can rent, you can determine your potential net operating income.

When you are evaluating a building for a self-storage conversion, you also need to look at the height of the ceilings. If they are over 19 feet, then you can add a second floor and that doubles your square footage. 21-22 feet high ceilings are better because that way you aren’t at the minimum height requirements for a second floor. The more rentable square footage you have, the more profit you will have because your overhead will remain pretty fixed no matter what the size of your facility is. When you can double your income simply by being able to add a second floor, your numbers improve dramatically.

The next thing to look at is the walls. Are you going to be able to put your dream floor plan in the space that you have available to work with or are you going to have to change your floor plans? Sometimes bearing walls can prevent you from doing some of the things that you want to do with your self-storage property. The real question is are the changes something you can live with? In addition, when you are planning your building, you always want to put the smaller units on the upper floors farthest from the front door. The larger units should be placed in prime locations so that you can charge more for them.

The sprinkler system might be a deal breaker. At what square footage does your city require your building to be sprinkled? Depending on where you are in the country, you can budget about $2 a foot for sprinklers give or take. If you have to bring in a sprinkler system to your self-storage property, the first thing that you want to check is access. Does the building have access to water? If not, this might be a deal killer. It can be incredibly expensive to bring water to a property. You may find out that really inexpensive land becomes unaffordable with sprinklers.

Where you are going to put the doors and the elevators. For whatever reason, tenants don’t like self-storage facilities that are taller than 3 stories. The higher up you go in a building, the less you can rent your storage units for. In addition, elevators are very expensive. You don’t want to have to put in more than necessary. Your feasibility study will tell you what the right number of elevators is and the best places to put them.

If things are still looking good after you have checked all of this, then it is time to move forward with your feasibility study. Now it is time to start getting excited because you might have a great project. As always, happy investing.