All Forum Posts by: Brandon M.

Since you are going to be a buyer you could always just enlist the services of an agent in your area. They will have MLS access and be willing to help you, and they are no cost to you since they will be paid from the seller's side at closing.

And of course I understand the difference between the business and the property, but one does not come without the other. I am buying both the property and the existing business and the clients that come with it. The property itself has very little appreciation potential, it is what it is, a block construction building with no room for expansion, etc. The appreciation potential is in the failing business being run in this property. TomAto tom-ah-to.

You never said what you would do with the information I have given, just lots of criticism. 

Would you walk? Would you make an offer? 

Yes, absolutely amazing.......you should get an award for that.....

My original posts were posted before I received any tax return info. Now that I have those I am seeing just how unsuccessful the business is as it currently exists. As stated originally, I am just asking for advice for those who have any, what approach would you use to put an accurate value on the property/business since the rent rolls don't really exist. 

And I only asked for tax returns because they told me the rent rolls are not up to date, I wanted to see SOME financial info. I do not want to try and value a property just based on someone's word. As I stated originally I could do my own math to determine what it SHOULD be making, but wanted to see what it was ACTUALLY making. 

And of course I don't expect to collect on any late rent, nor would I even try, but I would be cracking down and requiring all rents going forward to be on time, no more lax payment policies. 

As for the other uses, it literally is just 4 walls and a roof, directly behind a strip center so there are not a lot of other uses for the property. 

My goals: figure out what this property/business is truly worth. I have plenty of experience determining comps for residential properties, but this is a different asset type and does not have a lot of comps to use. There aren't a lot of great comps to value the asset itself, and there has not been a ton of information to be able to value from an income approach. 

I see this as a possible diamond in the rough with some ways to force appreciation/increase income (create website, add phone number and website to current sign, enforce accurate pay schedules, rent vacant units, increase rents). 

What I truly want to know: what would someone with more experience in the self storage space do? Would you offer the owners a low cash offer, knowing they want to retire and knowing the property loses money every year as it exists currently? Would you just walk away? 

Sorry, now that I have spoken my mind to someone who needs to stick to their rental properties in Hawaii, I have more info to provide in hopes of getting advice from those who would actually like to help. 

I received the 2009-2012 tax returns today, rents received have decreased every year and losses have increased. This property shows a tax loss every year, including $24k loss for 2012. Now of course you are going to try and show as many expenses as possible to not pay taxes, but that makes it more difficult for me to accurately value the property. 

The sellers even admit they are very lax about collecting rent, so who knows how many units are even current on their rents. Given the current occupied mix, the rents received SHOULD be $24,900 for the year, so they are likely collecting only 1/2 of what is owed. They also admit not doing a lot of advertising, they commute back and forth from 2 hours away and have other properties they deal with. They have even stated they just want to be rid of the property so they can retire and ride off into the sunset. 

I am not necessarily looking to Donald Trump someone, but I also don't want to overpay for something that is losing money every year. To be clear, the owners suggested 10% and 2 year balloon but I have NO interest in an owner financing structure like that. 

Not that property appraisers are too accurate but the value there shows $25k for land, $95k for the building, and replacement cost of $173k. The building is approximately 6300 sq ft, built in 1982. 

What would you offer this owner? Any advice would be appreciated. I admit I am a self storage rookie, which is why I have come looking for advice. 

@Account Closed -honestly at this point I would just appreciate you forget this post and go make comments on some other post. There are thousands of posts you can read/comment on if this irritates you so much. 

You think asking for rent rolls and tax returns for an income-producing property are unnecessary? What the heck would YOU ask for then Mr. Expert? 

I came on here asking for advice because the sellers do not keep good books and records. 

The owners have even admitted they do a poor job of managing this facility. They commute back and forth from 2 hours away, don't try to advertise at all, and don't even enforce actual due dates. There is no telling how many units are even paying current every month and how many are delinquent. 

The market CAP rate is tough to figure out, as the only other facilities that have sold recently are not of similar size/quality. The others that have sold were much larger, with a gate and an office. Mine is literally just a building with garage doors.

As I stated before, I can obviously do the calculations and figure out what the property SHOULD be bringing in based on unit mix and current rates, but I am just trying to figure out how to fully underwrite the property given the lack of actual information. Numbers don't lie, people do.

@Account Closed - If I seemed to have irritated you with my question, don't read/reply. I was simply looking for advice on a unique situation given there are no other "apples" to compare and there is very little financial information to do a true income approach calculation.

No, that one is not climate controlled, it just has a security gate and an office. The access is the same for both, but the visibility is much better for the other one (mine is tucked behind a strip center)

I am having trouble finding another apple to compare, that is my dilemma. The other buildings sold in the area recently were much larger units with gates, etc.

That is why I was trying to find another way to value since rent rolls were shaky at best. I am going to ask for account statements, that should at least help me see what income is coming in monthly.

Looking for advice for those who own self-storage facilities. I have come across a small facility for sale, the owners are looking to retire. It is a simple block construction building, no security gate, no office on site, just a building.

The problem I am running into is the owners don't keep good records, and don't have ANYTHING electronic. They don't even seem to have a current rent roll, so I am not even sure how they keep track of who is current and who is late. The best thing I can get so far are 2012 tax returns, but that still leaves 19 months of unknown income. They are very unorganized.

I still think the income potential of this facility is promising so I am not getting discouraged. I just need to figure out how to value the building without being able to confirm income. Obviously I can manually calculate what they SHOULD be getting based on unit mix and which ones are occupied. As is at the current rates if all were paid on time I would be making 15% cash on cash return. Their asking price is $23/sq ft, although I would try to get it for closer to $20/sq ft.

The "appreciation" potential I like is that rates are EXTREMELY low for the area ($45 for 10x10, unit across the street with gate and office charges $77), so I would certainly increase rates. They are also occupying 6 of the 9 vacant units themselves, so I would be able to rent those out as well.

My question: Other than rent rolls, how else would you verify value before purchasing?