All Forum Posts by: Henry Clark

This is an example, for discussion only.

Three primary valuation methods:
a. Comparison to past sales in the area.
b. Cost approach
c. Revenue stream



'A. Comparison to past sales in the area.
	Your probably not going through a Sales Broker and are making a private sale. You will do this on your own. Look at Loopnet for current and prior storage locations sold that are similar.

'B. Cost approach
	Calculate the cost to build. Keep in mind if this is an old property you may have refurbishment costs to upgrade.

'C. Revenue Stream
	Again, your probably an individual investor or owner, buying and selling so I am going to keep this simple. Forget time value of money, net present value, effective tax rate, etc.; these are important, but your not going to work through them.
	In our example we are showing Cash flow of $139,000. I use payback as my financial goal. So in the example on Phase 1, we have a payback of 14.0 years. This is outside of my target of 8 to 12 years. But I’m okay with that because the next phase will average it out. This concept also applies when your buying a location, if there is extra land and the market can take the extra units or do Vehicle storage, then you can use this to work your numbers.


Should you use a Sales Broker?
	Everything I have said above, says your not using one.

	If your selling how much of your personal wealth is tied into this location? How sharp are you with spreadsheets, cost/revenue analysis, market analysis, etc.

	Are you selling without a broker to avoid the commission? Because your selling to a friend? Know the market?

	How many potential buyers can you bring to the table at one time, to get the best price? What is the size of your location 25/50/100/200/400/etc. Drive up or controlled climate?

	'7% commission. Are you good enough and well rounded to accomplish the above.
	I’m not selling Sales Brokers, I hate paying commissions on something I built myself.
	On my small locations 50 to 150, I will probably sell myself since they are in small towns. I will probably sell to a local person. The larger city/larger locations, I will probably go through a broker, who can bring the most buyers to the table.


Terms- Buy or sell discussion points.
	Not going into depth on these. You should be able to find other discussions.
	a. Owner financing. Concerns- insurance, property tax, facilities upkeep, late payment recourse, etc.
	b. Scenario- They wanted $225k, I was only willing to go to $200k. The $225k was a number they had stuck in their head. Agreed to pay them $150k; and then $75k 5 years later with no interest. What advantage?
	c. Buy the business or the assets? Check with your tax guy. Why?
	d. If you buy the assets, talk with your tax guy on the following. Break out purchase price by asset type: a. security system, b. electric, c. Roads, d. fence, e. building, etc. Why?
	e. Slice a non compete agreement portion out of the Sales price. Why?
	f. 1031, both ways. You might ask for a $20,000 fee, to hold the property for a certain sales date. Just like a deposit. Why?

0 Votes

PL/Cash flow estimate

This is an example, for discussion only.
Adjust to local estimates

				Green change or fill in.
		Combination PL/Cash flow
		Intentionally leaving out Depreciation and Taxes
	Annual		Notes:
Revenue:
Gross	$354,240		@ 90%, after rent up period
Late fees	$0		as needed
		$354,240

Electricity	$2,400
Water	$400
Sewer	$300
Grass	$1,000
snow removal			as needed
manager			as needed, I do self service by phone; do you pay yourself.
maintenance	$3,000
Insurance	$3,000		Property/Liability
Property Tax	$25,000		use local
Loan P/I	$120,000		Get your bank to do 20 year amort, adjust based on how much equity you have to put in 10%/15/25/40/etc.
Depreciation			left blank for Cash analysis



Cash out		$155,100


Pre tax		$199,140

Tax		$59,742	as needed, adjust Loan P/I for Depreciation expense

Net cash		$139,398





		Payback:

Total Cost:		$2,170,933

Less Equity infusion:		$217,093		10/15/25/40%

Net loan position		$1,953,839

Annual cash flow		$139,398

Payback years:		14.0


Financial Objectives:
Change calc/terminology etc to your objectives. Example: cap rate, etc.

I normally shoot for an 8 to 12 year payback, with a 20 year loan amortization.
This is based on the location/deal on hand. Any improvements in performance on top of that will be gravy.
My 8 to 12 objective will be met once Phase 2 is completed, versus the 14.0 years shown above.

Phase 2 is where you make your real money. I always have phase 1 pay off
the land, fence, Electrical, sewer, grading, etc.

How many phases or units should you build to start?
You can always build more buildings. I always shoot for 65% occupancy covers all initial costs for Phase1.
In this example, I would probably only build the first 15/30/40 buildings.

0 Votes

Revenue calc and Concrete estimate;

Green change or fill in info

	Not using 10’s for ease, definitely put in.
	Rental Revenue:
# units	Unit Size	Rental rate	months	Gross
205	15	80	12	196800
164	20	100	12	196800
	10	60	12
				393600

		@ 90% occupancy		0.9

		@ 90% occupancy		354240




	Building installed cost
Units	Avg cost
205	3200			656000
164	3200			524800

		Average total cost		1180800



	Feet****************************************			Yards****************************************			Cubic Yards
Concrete Estimate at 6 inches:			6 inches
Turn around	275	50	0.5	91.67	16.67	.17	254.63
Turn around	275	50	0.5	91.67	16.67	.17	254.63
Entrance	25	50	0.5	8.33	16.67	.17	23.15
Driveways	410	25	0.5	136.67	8.33	.17	189.81
Driveways	410	25	0.5	136.67	8.33	.17	189.81
Driveways	410	25	0.5	136.67	8.33	.17	189.81
Driveways	410	25	0.5	136.67	8.33	.17	189.81
Driveways	410	25	0.5	136.67	8.33	.17	189.81

					Cubic yards roads		1481.48


			Get a local Quote:		Cost framed/poured/sawn		456.389452332657

					Driveway costs		$676,133

0 Votes

This is a little better.

0 Votes

Spreadsheet wouldn't post so below is the view.

Layout:

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
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10						Units							Splits											Splits												Splits											Splits
10				15		1					15					15						20						20							15					15						20						20
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0 Votes

At different times I have noted individuals looking for "that" template. Take the following concepts and adapt to your needs. Remember the next person, always makes it better.

Please take the attached as a template and not a specific project or valuation. Improve it and make it your own. This is geared to the individual investor and not corporate or multi state groups, who will have their own finance/procurement teams.

There are several tabs and concepts:

1. Cost projection, 2. Site layout, 3. Revenue projection, 4. PL/Cash flow projection, 5. Valuation/Brokers/Buy-Sell discussion points.

Well spreadsheet won't post. Will do images.

Note: This is written for an individual owner or investor. The Big organizations already have their templates and methods. And will be doing Climate controlled.
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

2 Votes

@Sarah. Recommend you don't rent out the back lot to "Non-tenants", unless it is massive. Do charge your tenants for their use. By having the back lot available for your potential building renters, you expand the number and type of building renters. Compare your "potential" warehouse renters versus their potential need for the lot storage. Example: If you plan to rent to a landscaper or plumber, they will want outside storage also. Just charge them more.

0 Votes

For financing purposes I always use 90% occupancy. Get interest only payment to 65% occupancy or 18 months.

Need to analyze your market before you use 90%. Idaho Falls should have about 3,400 unit market based on population. Metro 7,800. I would go count units and sizes for a couple weekends. Or more specifically check your specific area out.

I always use Sparefoot when analyzing a market to start with. Do Sparefoot, Idaho Falls. Select the 10 x15 size. Then switch to map setting. Look for the "holes" in the market compared to the population.

I note two things. Either most of the facilities up there don't use Sparefoot, or you have a big underserved market. Also I don't note any of the big REITS. If this is the case, you need to push hard the next 5 years and build about 10 locations of 300 each. Not a mega one. Check all of this with your feet on the ground. It looks like unusually fresh territory.

4 Votes

One key take away from all of the above. Most of the REITS and Sparefoot have to strong of an SEO presence for you to battle. And they have been in place longer. Also, even if you were the number 1 listing, your drowned out by the 6 to 10 pages of listings. Recommend you go with Map placement and youtube placements. These pictures standout from the 6 to 10 pages of listings.

I'm not a big online person. Just started about 4 months ago. One of you other Tech/Marketing people please jump into the discussion. Thanks.

0 Votes

All Forum Posts by: Henry Clark

Henry Clark has started 190 posts and replied 3624 times.

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Renting a back lot for commercial storage

Post: Storage unit vacancy rate

Post: Self Storage- Marketing New Location startup

Henry Clark has started 190 posts and replied 3624 times.

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Self storage- Valuation and Buy/Sell concepts

Biggerpockets Logo Post: Renting a back lot for commercial storage

Biggerpockets Logo Post: Storage unit vacancy rate

Biggerpockets Logo Post: Self Storage- Marketing New Location startup

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Self storage- Valuation and Buy/Sell concepts

Post: Renting a back lot for commercial storage

Post: Storage unit vacancy rate

Post: Self Storage- Marketing New Location startup