Your self-storage conversion – watching your costs!

When you are evaluating a property for a self-storage conversion, you need to make sure that your conversion costs are not going to be higher than your purchase price. If they are going to be substantial, did you budget that much for them?

You may find a property that is so damaged, or possibly even condemned, that you are able to get it for less than the cost of the land. You may run into a situation where you are given the property but that doesn’t mean it is a good deal.

Before you are willing to take on a conversion project, you need to know what your rehab costs are going to be. If you get your land for free, but your rehab costs are going to be $250 a square foot, you may not be able to make your self-storage facility cash flow. It all depends on the rents in your area.

Make sure that you find out what your roofing expenses are going to be, find out what your structural expenses are going to be, find out what your electrical and possibly plumbing costs are going to be. Doors are expensive, how much are they going to be? You also need to budget for your engineering costs and permits and fees. Finally, you need to keep in mind that you are going to have holding costs while you are under construction and building up your occupancy levels.

If you don’t take all of the miscellaneous expenses into consideration, you may find that you are upside down in a property that you cannot make cash flow. Make sure that you get multiple bids and that you work with a good team so that you don’t miss anything before you close on the property. As always, happy investing.