All Forum Posts by: Christian Podedworny

Chris ,

  I like your thinking and I see you are creative. I asked the zoning and development staff in Waterbury about renting spaces for boats & RV’s and they said it would not be possible in a commercial zone however It would be allowed in an Industrial zone. I argued  and said that commercial businesses have shipping containers on their lots and they are storing items in them. They came out with a rebuttal says “a storage container can be used in a commercial zone because it classified as an accessory use for that given commercial business. They are not renting the container for their business therefore it is allowed since the business needs to use it for its own purpose.” 

Now I’m thinking of how to circumvent this issue.

Possibly creating a business that sells “shipping containers which are technically placed on the lot and then rent them out without specifying I am in the storage business “.
 

Minh,

 Thank you for adding this to the post. This is exactly what I am talking about and this can be done since Willowcreek is a fully functioning facility. Eventhough they charge $6.75 psf they do not have to worry about the costs that a traditional build would have. 

This is another facility in England which uses blue shipping containers in all of its facilities

http://www.dainton.com/self-st...

Self storage facility in London

https://londonselfstorage.com/...

 Michael,

.   There are facilities which recreated shipping containers to mirror traditional self storage buildings and they appear the same to the untrained eye. I see a large benefit through property tax savings and the ease of creating the facility without using a construction company or expensive architects. Do you think the cost savings would be significant if most of the work can be done in house?

 Jay,

  I had spoken to several zoning officials and planning mangers in waterbury Ct about creating a self storage facility and there was tremendous push back. They said self storage cannot be built in commercial zones but only in industrial zones . Then when I posed the question of renting "modular storage containers" they said that is not allowed and that a permanent structure can only be used for rental. Now the question to ask is ,"how do I rent a mobile storage unit by finding a loophole in the system?" After driving to several self storage facilities throughout New Haven and Waterbury Connecticut I saw mom and pop facilities renting storage containers to the public.

.  I believe stacking these containers inside warehouses is an option however the county might not allow that because it does not count as a permanent structure. 

John,

you make a valid point and this method would allow for quicker turn around time to market however this would not be perceived as industry standard. Customers who currently drive up storage units are use to the aesthetics and easy use of rollup doors compared to heavy metal swings out doors. I believe the type of storage units you mentioned would work well for contractors, businesses and people using the space for light equipment storage. Why not do both and see which units rent quicker and stay rented longer?

Ronald,

.  I believe you are correct however the structures would be taxable and this would be a fixed cause therefore holding the property for the long term would save a significant amount of money.

.    I do prefer the the look and feel of an actual structure compare to mobile containers.

     How can an investor leverage his/her time in creating a high cash flow passive Investment that can potentailly yield 30% + returns ?

.   After investing in several real estate courses, seminars  & books (airbnb rental, wholesaling, multi family and self storage) I have analyzed several strategies and found self storage has the preferred asset class with the least liabilities. 

I have been looking at several self storage properties and found large facilities 70,000 sq. ft. + trading In the 6- 6.5 % cap rate which shows how sought after this asset class has become in the last 5 years, therefore I see the opportunity has diminished  in getting a "deal". Even though it is a sellers market there are ways to capture strong cash flow through storage thinking outside the box. I have been researching self storage shipping container investors who had  created successful businesses and high returns on investment which has brought me to conclude the following potential project:

Shipping container self storage

1.Acquire a vacant industrial property for $110/sq ft. with 5,000 sq. ($550,000) which sits on a 4 acre paved site.The subject property has to have a full parking lot covering the entire lot which allows for shipping containers to be placed on site without any added site work.

2. The vacant industrial building will serve as the main self storage building with an onsite employee selling packaging materials , locks etc. This building will be converted to climate control and will yield a higher ROI compared to the shipping containers.'

3. Purchase 200 used shipping 40 ft.containers from a local port for $1,850 plus $400 delivery ($1,800 + 400 = $2,200)

.  (2,200 X 200 = $440,000)

4. Convert each 40ft shipping container into  x2. 8x20 spaces divided with a wall In the middle and  2 rolls up steel doors opposite sides. The doors can be purchased from Janus at $395. The total cost of the delivered container and the costs to convert each container into 2 rentable spaces is $3,900 (hire laborers to paint containers, install doors and install dividing wall)

.   200 x $3,900 =$780,000

5.  Allocate budget for security system, fencing ,signage and costs to convert existing industrial building to a climate controlled self storage building ($45 psf @ 5,000 sq ft. = $225,000) 

The 5,000 sq ft warehouse would yield 3,500 sq ft net rentable square feet (-30% of gross square footage for hallways and exits)

6. total costs :

.    Property purchase $550,000

.    Converting warehouse + miscellaneous costs. $225,000

.    Adding shipping Containers and converting to rentable units $780,000

.  total $1,555,000

Average rental rates :  $16 psf climate controlled units 

                                   $10 psf shipping container units  (8 x 20 ) ,($133.33 per unit)

 Pro forma:

  $ 16 x 3,500 sq. ft. x .90 % occupancy = $50,400 (yearly revenue minus vacancy)

  $10. x 64,000 sq ft.. x.90 % occupancy =$576,000 (".     ")

total revenue $626,400

       - all expenses (tax, marketing, property management etc)  (25%)

.       note ***.  Property taxes are not applied to the shipping containers because they are mobile

=$469,800 ROI

Cap rate=. 469,800/ 1,555,000   = 30.2 %

This is a quick project calculation which may not take into account a few small hidden costs however  the returns are attainable in the 30 % range. 

There are several aspects that have to be addresses which include : zoning , location , population , traffic count and household income. When I factored the rental amounts I allocated a low price per square foot on the shipping container units ($ 10 psf ) and I did not add  any additional revenue which can be attained through vehicle/RV/ boat storage. Please let me know your thoughts.

Update.

  I have not been on Biggerpockets for some time now due to the amount of work I have been putting towards this project. I have located a 2 acre parcel in Tampa and I have built many relationships with local Brokers, Bankers, General Contractors and Real estate agents. These past 2 months have been educational and eye opening. The relationships one builds with professionals gives you the confidence to move forward and keep going. I had many questions to ask,many meetings to go to and several  emails to send however it was well worth it . In this type of project there is no room for mistakes because the project is multi faceted and it's imperative to align all parties especially the local G.C and the modular container builder.

     Finding the vacant parcel was not difficult but finding the parcel which was in line with this project was. At this time I am negotiating  owner financing with the seller along with getting  preliminary approval from the zoning/planned development department for this project. If all goes well I be will closing on the lot in August 

       The original approach was to build 20 units however the land I am found can sustain 40 units ( 20 units per acre). . Since this will be the first project I will build in two phases. Phase one will include the first 16 units being built and then the remaining 24 units will follow. 

    Once the plans, rezoning and paperwork are carried out the initial phase of site clearing will begin and the horizontal construction will follow. This coming August I will be meeting with a company that has been building modular structures for the past 22 years and having them on my team will make the process stress free and smooth sailing. The shipping container/modular unit will measure 17' x 43' (731 sq. ft). This will be a medium sized 2 bedroom unit perfect for a small family. The modular builder will complete the first 16 units (total of 32 containers) in 2 months and then all units will be shipped to the port The port will load all 32 units on the container ship and the ship will arrive in Tampa  units within 6-7 weeks. Once the shipping container vessel docks in the port a local logistics company will be hired to deliver the containers to the job site where a crane will lift the containers and position them on the concrete slab. The container stacking and assembling process should take 2-3 days and then the connecting, welding and bolting will follow.

     I will provide more information soon and pictures will be added once we begin construction.