All Forum Posts by: Henry Clark

An erected unit usually runs around $3,200 per 10x15 10x20; Steel is going up. Add you per acre cost. Using a 2 acre site, Fence- $20,000, Auto gate $20,000, Road???- rock, concrete, asphalt, Security $10,000, Electric/lighting $8,000; Other $10,000; This is in the countryside so no engineering cost.

Below is a layout. Adjust to the shape and size of your property. This will help you determine the number of units. Get on sparefoot and look up your "drive up" prices. Not climate controlled.

This is an example, for discussion only.
	Layout Phase 1, 2 acres
	Assume the 4 acres is square.										Setbacks- front/side/rear													Assume roads are not allowed on this.
											Driveways- 25 foot
	295										Buildings-15/ 30/40 foot
590											Turnarounds- 50 foot



	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5
10
10						Entrance
10
10
10						Gate
10
10
10
10
10						Units							Splits											Splits												Splits											Splits
10				15		1					15					15						20						20							15					15						20						20
10						2
10						3
10						4
10						5
10						6
10						7
10						8
10						9
10						10
10						11
10						12
10						13
10						14
10						15
10						16
10						17
10						18
10						19
10						20
10						21
10						22
10						23
10						24
10						25
10						26
10						27
10						28
10						29
10						30
10						31
10						32
10						33
10						34
10						35
10						36
10						37
10						38
10						39
10						40
10						41
10
10
10
10
10
10
10
10

This is an example, for discussion only.

A. Project Cost estimate from ground up.
B. P/L revenue stream
C. Valuation Buy/Sell
Adjust all of the above to your local market and situation.

	A. Self Storage Project Worksheet
	Drive up Storage

		Notes:
Land	$200,000	4 acres at $50,000/acre
Survey	$7,000	Site, elevation and building layout
Fence	$30,000	Black chainlink
Gate system	$25,000	Automated rolling 20ft
Engineer		if needed; $30,000 to $60,000
Dirt work	$15,000	Slight roll, no dirt brought on site
Building demo		if needed, $15,000 to $60,000
Electrical- site	$7,000	building lighting and office if needed, LED.
Electric poles		if needed; $2,000 per pole. First is free if nearby.
Security	$10,000
Storm drains		if needed; $50,000 to $150,000
Water		if needed; $5,000 just plumbing
Water line		?? if an extension could be $10,000 up to $150,000
Fire Hydrant		if needed, $3,000
Sewer		if needed: $5,000 plumbing
Sewer Line		if needed; $10,000 up to ????

Buildings	$1,180,800	Phase 1 2 acres
Office		if needed, plain storage unit 20x30; $25,000 insulated.
Office setup		if needed, $5,000- computers, printers, HVAC, frig, cabinets, etc
Footings		if needed. ??????
Roads
Gravel		if needed, ?????
Asphalt		if needed, ?????
Concrete	$676,133	6 inch Cubic yards, framed, poured, sawn,
Retention Pond		if needed, part of dirt work cost, less land for buildings
Landscaping	$5,000	I like trees and bushes. Less sterile
Road Sign	$15,000	For highway 55mph billboard sign



Total	$2,170,933

4 Votes

@Account Closed

Look back over my posts. You responded to one of them with the same concern. I noted three locations within 30 miles of you that I would happily build self storage that are for sale on Loopnet. Also one of the locations was already cash flowing for the asking price, with the existing buildings even before you built storage. All of the above people would jump at a chance to have "free" land as a starting point on a Self Storage investment.

As mentioned above, Self Storage is a localized business. Your lucky, your in an area where there is more demand to build Self Storage. If your interested read my post Checklist 101 on Self storage, then I will work you through the numbers and thought process. There are two different markets and products, Large REIT and mom/pop. If you can find 4 large REITS side by side with 70% occupancy after 5 years; I would love to build between them all and would expect to have 90% occupancy. You have to understand the two different product offerings and business models.

With your background as a contractor, I would also do Contractor bays.

If your just yanking our chains, then you got me.

1 Vote

Cost approach- 22 units at $3,200 erected= $70,000 new; not including other costs.

Revenue- 10 x 15 in your "general" area $140 per unit. 22 x $140 x 90% occupancy x 12 months= $33,000/yr.

Or 22 x $140 x 50% occupancy x 12= $18,000

$18,000 revenue

$ 2,000 Property tax- change figure

$ 500 Insurance

$ 500 electricity

$ 1,000 Management

$ 1,000 Advertising- Sparefoot

$ 1,000 Other- mow/snow/etc.

$12,000 Net before depr/taxes. You adjust.

Lets say you do $9,000 cash per year. We prefer a 8 to 12 year payoff, principal/interest. Thus using 10 years- $90,000 valuation.

So you have a new value of $70,000 for the buildings, plus add land cost, prep, electric, etc. from a Cost standpoint.

Then a revenue approach of $90,000 at 50% occupancy.

You have a lot of upside potential with the 50% occupancy. Google self storage in the area and see if it is listed and your competition. Then do Sparefoot for the area. Confirm the rental rates. If it is not listed then that is easy to set up. Go see how your competition occupancy is.

Out of curiosity if you could let us know the Tiny house and RV lot rental prices.

3 Votes

Mainly do Self Storage, but we had 80 acres and decided now was the time to subdivide. Please review our Subdivision and see if you have any suggestions to have it get traction or to stabilize my expectations. Thanks.

Other than just googling the below. Please take a look how you would normally find it, in listings also. Thanks.

Country town, 4 lane road to the city, one mile to town, new high school, ymca, new stadium, craft beer, winery, top 100 pizzeria in the US, asking price is high for here, but normal for the region, covenants require minimum 2,000 sq ft, 5G internet, walk out terrain, 100 year oak trees, farm/creek behind each, streams/creeks, etc.

Glenwood, Iowa

Journeys End Subdivision.

0 Votes

Just keep doing the analysis and research. If not this property, then the next will work.

0 Votes

SBA:

a. Check if the SBA 504 investment qualifies first. Its my understanding your project has to be 51% owner occupied. We had to subdivide raw land off from an SBA 7 project, so we can do Contractor bays, which we will not be 51% of the user space.

b. Check on the SBA 30% down payment. They can go down to 10%. Find out why 30% and see if there is another SBA provider who will go down to 10%.

c. SBA is taking a long time right now. About 75% of their workforce has been moved to handle PPP filings. Business filings are on the back burner. You might need to put an "redeemable" Earnest money deposit down to hold the deal while you are doing due diligence and also "subject to" SBA financing.

Deal Structure:

I may be reading this wrong, so disregard if needed. Make sure there is enough Meat on the bone (small commercial lot) to go through with this, otherwise a good learning experience.

-Either the seller will be the SBA loan applicant and contribute 30% of the property as collateral? Which means you are a co-borrower and tied to this person's other debt loads, from a cash needs basis? Or you set up a JV or LLC and transfer the property to it, and the JV/LLC is the SBA applicant?

-Or they are going to contribute 30% collateral in cash (probably not).

- Make sure you both have the same endgame and timeline if you get the current owner involved. Define and document an "Out" strategy for both of you.

- Last year due to Covid the SBA was covering 6 months of their interest payments. If this is still happening make sure how and who gets credit for this. This should just be another covenant in the overall JV.

- Do due diligence on the property owner.

Go get them. I love Developing properties.

1 Vote

Stuck in bureaucracy.

Still waiting for the SBA to release the front 4 acres for the contractor development. Its part of the collateralization for the Storage buildings. With Covid, most of their people have been pulled off "business" loans and moved over to process PPP payments. Also they are not used to releasing collateral, normally there is not enough.

Option is to wait until they get to it and assume they will release. Due to the appraisal they have far more collateral than they need. Current interest rate is 2.66%, with 20 year fixed/amort with them.

Or my local bank who is processing this SBA loan has a new program of 5/10/15/20 year fixed rates. Normally they only do 5 year terms, with different amort periods. 15- 4.00%; 20- 4.22%.

Hate to give up 2.66% and take on 4.22%. Would be about $200,000 over the loan life. But I could start my project sooner.

I'm probably going to wait on the SBA loan. Juggling two Self Storage projects that are in the Build or Rent up phase (exposed). So I might hold off pulling the trigger on this Contractor bay project.

If I don't make the building order by about March and lock in a contractor, won't be able to do this year. All of the contractors are already booked through June, and metal looks like it will come under shortage from China suppliers due to Covid reduced shipments. Once the economy opens up, there will probably be a log jam at the west coast ports trying to unload. So tight supplies of rubber duckies or Steel will be prolonged into 2022. If someone knows someone at the government have them prioritize what comes into the country to help the economy.

2 Votes

@Daniel Eley

On the valuation note above. I have to apologize. I'm a retired CPA, Controller and CFO who doesn't get his math right all of the time. For example: I won't invest in a project unless $1 plus $1 = $3. Ha Ha.

Funny Math:

Self Storage is red hot now. 1 plus 1 = $3.

Also the value of all 14 acres, just the ground increased once you put a business on it. Plus you chopped it up to subdivide. Our latest 8 acre site we paid $25,000 per acre and appraised for a little above that. Now appraised $100,000 per acre two years later just because we developed part of it.

A 10x10 unit should rent for about the same as a 10x15; "IF" it has a concrete road in front of it.

RV storage rental of 10 x 40 at $300= $.75/sqft; is worth less than a 10 x 20 at $130= $.65/sqft. I will let you ponder that one.

Keep doing the math and research on deals. Vet this one out. Answer all of the questions on this property I mentioned. Pick 10 other properties and keep doing the math. Go to the classes or seminars.

1 Vote

@Nicholas Ludwiczak

If your going to get into Self Storage, this is a great deal.

The market sounds small for these two locations, thus there must be a lot of people living in the countryside.

Here is the approach I would take for a small market Self storage setup. Subject to zoning.

Use Cargo Containers. The risk of a small market is over building.

- Containers can be added in small increments.

- They can be sold or moved if the market is not there.

- They can be installed during the winter.

- No property taxes.

- Recommendation. Look at all small towns or road intersections. See if you can buy 1/2 to 1 acre size lots along the road. Lay two rows of rock about 4 inches off the ground and set the containers on top of them. Make sure the rock and the containers are level or the doors won't work right. Look for my post on Cargo Containers.

- Identify a looping road route and build along that route. Take a sandwich, apple, drink, and weed spray and do your loop once a week. See my self Service youtube on our website on setting up self service.

Managing- we use Webselfstorage. Have not compared, not saying its the best. $44.95 per month web based. Set everyone, even your house renters up on the system. Try or make them go to autopay. If they don't go to autopay, raise there rents $10. We have 800 customers and about 650 are on autopay. We don't send out invoices. Would not do manually or be in the business otherwise.

Great investment.

1 Vote

@Daniel Eley

Forgot.

During construction and rent up require an Interest only loan. No principal. Request either rent up to 65% occupancy or 18 months before switching to principal and interest.

Life insurance- Do a 5 year term $4,000,000 policy on yourself. During the development stage is the time your family is most at risk. A partially completed business is not worth much. Cancel when you are past the last phase. Won't cost that much.

1 Vote

All Forum Posts by: Henry Clark

Henry Clark has started 199 posts and replied 3845 times.

Post: Are you investing in self storage?

Post: Are you investing in self storage?

Post: Mixed use, self storage calculation information requested

Post: Help- Marketing New Subdivision

Post: I need help structuring a project

Post: I need help structuring a project

Post: Industrial/Flex Property- Day in the Life, Building a Flex Prop

Post: Self Storage Newbee - please help

Post: Making an offer on a self storage business

Post: Self Storage Newbee - please help

Henry Clark has started 199 posts and replied 3845 times.

Biggerpockets Logo Post: Are you investing in self storage?

Biggerpockets Logo Post: Are you investing in self storage?

Biggerpockets Logo Post: Mixed use, self storage calculation information requested

Biggerpockets Logo Post: Help- Marketing New Subdivision

Biggerpockets Logo Post: I need help structuring a project

Biggerpockets Logo Post: I need help structuring a project

Biggerpockets Logo Post: Industrial/Flex Property- Day in the Life, Building a Flex Prop

Biggerpockets Logo Post: Self Storage Newbee - please help

Biggerpockets Logo Post: Making an offer on a self storage business

Biggerpockets Logo Post: Self Storage Newbee - please help

Post: Are you investing in self storage?

Post: Are you investing in self storage?

Post: Mixed use, self storage calculation information requested

Post: Help- Marketing New Subdivision

Post: I need help structuring a project

Post: I need help structuring a project

Post: Industrial/Flex Property- Day in the Life, Building a Flex Prop

Post: Self Storage Newbee - please help

Post: Making an offer on a self storage business

Post: Self Storage Newbee - please help