All Forum Posts by: Bill Snyder

So, just an update:

I closed on the loan yesterday! 

In talking with the lenders Commercial Loan Manager, the SNAFU in the process was that they used the same underwriter as an institution I was in-process with at the beginning of 2019, but pulled the plug on due to lack of progress and disagreement on the terms. 

So when the information on the new loan came in,the underwriters were "We've already reviewed this loan, and it doesn't work" while the financial institution was "This absolutely works, let's move forward". They finally just put their foot down and said "We are doing this!".

Lessons learned; stay engaged, know your numbers, ensure that the right people are getting the right information (and make sure it's the 'latest and greatest'), make sure key people believe in you and are on your side, and always be your own cheerleader. The process is not always a 'set it & forget it' thing.

The entire process from initial inquiry to check took just about an entire year, but I got what I wanted and I've set the framework for additional funding on a future construction loan, as well as a LOC on this, and another development.

 That's pretty much exactly what I am looking at doing. I'll probably do a large ~50'x420' open span instead of smaller buildings. It provides more flexibility and I can tailer the floor space to the tenants needs.

I very much appreciate your input. I tend to think the same way.

While I've got my costs pretty dialed in for the type of self storage development that I do, RV/boat/trailer is a niche I am not familiar with. At first blush, canopy storage is just a building with no walls, ergo, it is cheaper to develop (I know that probably doesn't hold true).

This development site would not be a good candidate for traditional storage development; it's 1) 1000' up the road from a site I am currently developing, 2) 2000' from a older, larger facility (that just recently sold and is undergoing an update), and 3) it's located on a secondary road with minimal traffic and no visibility.

But; it's 4ac, zoned I-2, and it's surrounded by ~20ac also zoned I-2 that a business partner owns. No debt on any of it.

RV/boat has the allure of being able to easily integrate into the existing business model (advertising/management software/employees/etc...), that type of storage has, typically, a larger customer draw radius, and low visibility can (in part) be mitigated via marketing.

If nothing else, the due diligence exercise educates me and the information can possibly be useful when evaluating other opportunities.

I know there are some advantages to stick construction, particularly in the up front capital costs, but I am a big fan of all steel construction. I feel that there is substantially more upside (if done correctly) all across the board. This is approaching it with a "buy and hold" mentality as opposed to a "fix and flip" one; that might change the calculation.

Yep; absolutely. I currently own/operate/develop a facility just up the road and just finished with a ~25% expansion in 3Q 2019. The new property is zoned I-2; so has right to use for self storage. The municipality has stated a policy of "no new self storage" in city council meetings (but nothing in any outputted statements or ordinances) and has recently approved an expansion of a separate facility. The recently updated Master Plan states: 

"Current site design requirements for industrial land uses will be reviewed and revised to ensure
adequate landscaping, façade appearance, screening of outdoor storage, and other design components
that will promote further industrial investment in the City."

This indicates a sensitivity to outdoor storage, but is not a significant change to any procedures.

All site plans, engineering, approvals, environmentals, feasibility, etc.. are part of the due diligence. I'm just opening discussions on costs/design considerations/amenities for budgetary purposes to see if this even makes sense financially.

I'm looking at developing ~20,000 sq.ft. of covered RV/Boat storage to augment an existing drive up self-storage facility. Anybody have any direct experience, or inputs into quality suppliers? I currently have recommendations for:

https://www.bajacarports.com/

https://www.makosteel.com/canopies

Anybody else I should be considering? My location is Michigan.

Any first hand insights into this particular storage niche would also be appreciated!

Why such a low occupancy? 

Lights. They are your #1 most effective deterrent.

Fencing would be a good #2, more so for the perceived value by the owner/tenant; it's actual effectiveness is pretty much nil unless you are spending big $$$ for steel bars all the way around. Chain link can be defeated with a small $5 pair of bolt cutters, in less than 30 seconds you can clip an opening large enough to drive a car through.

Cameras are a nice placebo, but they can be defeated just by wearing a hoodie or facemask. They are pretty much only good for viewing the "action" after the fact. 

An integrated security and alarm system can be more effective, but you are spending a lot of cost up front on systems, and a continuing drain for monitoring. It's effectiveness can be completely negated depending on response times.

I am in the middle of a commercial refi; $320k @4.5% fixed, 10yr term/15yr amort. There were no upfront costs until a signed OTL was returned, and then a .25% "commitment fee and costs for appraisals/environmental/other expenses incurred (and the lender kicks back 1% of all those closing costs at consummation).

Ha. Just got an email; the loan committee has approved the deal, I just need to update some occupancy information and they are supposed to send me an offer to lend, and we can then move forward with checking off the additional DD boxes.

I guess the best way to make progress is to get on here and vent...    ;)