All Forum Posts by: Bill Snyder

 Yes. I agree with everything you said. I have always done (a wide variety of) everything on a self-financed and/or cash basis; which leaves me less than adept at a more "traditional" OPM type of structure, and with no real world experience with lending. With this, my desire to expand has outpaced my ability to self fund at this point. 

The local market is hot, and has seen an 80% turnover in ownership of self-storage facilities in the last two years, selling at substantial multiples of previous valuations. My valuation is just a conservative comp based on current sale prices of comparable facilities and not business cash flow. And yes, using it to reduce taxable income does me no favors at the moment, but was a necessary evil with the bought out prior partner. I do have month-to-month P&L's worked up that show increasing revenues (and I've got a solid recent rent-up history with the last expansion); although expenses are higher than normal, averaged out YTD, due to the last expansion and using cash flow to augment the equity injection and stay away from debt

What I am trying for is a total of $320k cash (with the ~$65k promissory note paid off as part of that, as any lender will want to be 1st lien), which is $255 cash to me. The $250k construction type loan would be future additional if market conditions warranted.

What is normal for this? Should I work up a packet with the basic financials and shotgun it out to multiple lenders all at once, or should I continue to work through lenders one-by-one?

 Hey Greg; in your experience, what is a "typical" rental increase, either year-over-year or by lease expiration?

So, I'm having some "difficulties" getting a cash out refi on a commercial self storage facility that I have owned for ~15 years. I've developed it from greenfield and, for all intents and purposes, it's been run as a side project/hobby business for most of that. It sat at about 8000rsf and was good enough to pay its expenses and put a little bit into pocket with little to no effort involved. 

In the last two-ish years, I've decided to pump it up and make it a "real" business; I've done an equity injection into it and more than doubled it's RSF in that time. First phase was an additonal 5100rsf which rented up and stabilized in 6 months; second phase was another 5100rsf and I just got occupancy in August on that. I am currently sitting at ~73% occupancy (normally I stabilize out at about 90+% with zero advertising/specials). Based on current comps, I have about a $1.1M valuation and I have a $65k promissory note from a partner buyout a couple years ago. No other debt.

YTD, I'm averaging $5500/month income on it with $3350/month expenses (of which $1250 is debt service). It's a long term asset play; I've got an approved site plan for an additional 8400rsf to fully build the site out and even if I fully finance that piece, my LTV is still really really low.

So; a couple of lenders I've been in discussions with balk at the cash flow. Historically it's been low as I've used it to generate losses to offset much greater cash flow operations I was involved in. I am now focused on this and it has a ton of upside via occupancy and rent increases, as well as future expansion.

What's the best narrative to pitch this to lenders? I am looking at a basic cash out refi of ~$320k with considerations on a $250k construction loan in the next 1-2 years. The refi is just to refill my market investment coffers, so it will still be available for use if need be, and the construction loan will only be tapped if the business is stabilized, market conditions support it, and I can't swing it out-of-pocket.

I'm of the opinion that it's a pretty safe bet all around and it seems that it's a pretty straight-forward no brainer to me. The lenders I've talked with are both local commercial CU operations, and they both have been pretty soft on the viability of this. Should I continue to try to talk and "convince" them; or should I just seek out a sluttier lender?? Does it seem really off base and I just can't see the forest through the trees??

This is interesting; Michigan is currently "medical marijuana" but is in transition to "recreational" due to the last election ballot. Right now, municipalities are opting in/out for licensing and issuing permits. I've currently got 20+ acres zoned I-2 that are (potentially) going to be within an "adult entertainment" zoning overlay (to allow for recreational use development). I am in a smaller sub-city that is full of older industrial blight and starved for development. 

There is huge potential upside, but it's not my area of expertise (and I have no interest in operating cana operations), but am looking at possible land lease/development deals. I just don't really know any connections in this arena.

I am currently pursuing something very similar to that "strategy"; I am currently developing a storage facility and will soon split off the property and place it in a holding company with some other properties and lease it back to the storage facility. 

My goal is not to "flip" as I am more of the buy, develop, hold type; but,  when I do go to sell,  I feel that I can attract a larger pool of potentials, and get a larger premium by being able to provide "staging" of the deal and finance their purchase of the operations with a clause to add it the land at some specified point in the future. 

For a situation like that, I would look into something like this:

https://www.trachte.com/produc...

Also; just search "self storage" on these forums, there are a ton of informational threads from people in your situation...

These are free; they are pretty basic, but interesting. I've been in self storage for 16+ years and I try to hit one up every now and then when they are close just to "update" myself on what may, or may not be changing...

https://www.trachte.com/seminars-videos/building-blocks-storage/

https://www.trachte.com/seminars-videos/

So; I'm looking at expansion of a current business model and am looking around locally for vacant/underutilized commercial properties. I have a certain size in mind, and a certain geographic area. Most of the possibilities do not meet my size requirements unless I "bundle" multiple adjacent properties. What are some general strategies for approaching these situations? They are all off market properties.

For example; Three adjacent properties that might meet my needs, A, B, and C. "C" is small, but desirable purely because it has road frontage. "A" is the bulk of what I want, empty lot, easily developable. "B" just connects the two. "A" is brownfield owned by an out of town investor, "B" is a small underutilized strip mall-ish property owned by a local realtor. "C" is a large empty lot owned by a local family type operation; well established, connected, and owns a lot of similar property.

In this example, I am looking for basic strategies to approach all three parties and get the best deal, without tipping my hand that I need to have all three to make it work. Do I need to make a deal on all three, closing simultaneously? Non disclosure agreements? Suppressed sale? Would I want to utilize an out of area realtor? Third party intermediary? 

This is an actual scenario, but I've identified several other opportunities that would require similar strategies.

Any input is appreciated.