How much square footage will I get out of this conversion?

There are so many moving parts when you are trying to purchase a property to convert. You have to make sure that you have the financing in place. You have to make sure that the financials will support that financing. Then you need to make sure that your vision can fit within the walls of the property that you have found? Is it big enough or possibly is it to big?

There are two rules of thumb that you can use to help you determine if there is enough rentable square footage to be profitable. The first rule tells you how much rentable square footage there actually is available in the property. The second rule tells you whether or not you can have a second story, effectively doubling your square footage.

When you are evaluating a property, assume that you can only use 75% of the square footage as rentable space. You need space for hallways, walls, elevators, an office, etc. Because of this, you cannot assume that you will be renting out the entire building. If you reduce your square footage by 25% you will be pretty close to accurate.

Next, in order to have multiple floors, you need to have a minimum of 19 foot ceilings. This is the lowest that they can be in order to add an additional floor. You will also need to make sure that there are some other structural features, but this is the first.

The amazing thing about putting in a second floor is that you double your square footage without doubling your costs. Your financial gain is substantial. You may have a slightly higher tax and utility bill, but your management costs will remain about the same. However, your rents will double. This means that your income and cash flow drastically increase.

When you have multiple floors, you do have to have sprinklers. This means that you will have to have water at the property. If there is no way to get water to the property, then this is not an option. The other thing that you need to take into consideration is how much it will cost to bring water to the property if it doesn’t already have water. You want to get a bid for how much the sprinklers will cost to make sure that it is actually cost effective to double your square footage. If you discover that the costs of putting in sprinklers outweighs the benefits of the additional cash flow, then this is obviously something you don’t want to do.

Don’t be afraid to really dream big when you are looking at a conversion. There are so many possibilities for converting properties into self-storage. This is a great way to get into self-storage when you are in a highly competitive market. As always, happy investing.