All Forum Posts by: Henry Clark

@Owen Schwaegerle

I actually did an analysis for someone in that area this past month.

Please read my Member Blog under Education on "site selection".

For a quick spin, do the following:

a.  Pull up "Sparefoot" and type in Perris, CA.

b.  Pull up google self storage, Perris, CA.

c.  Pull up Loopnet, CA

d.  Look at the 1057 W. 7th st. Perris, CA. $1,579,000  3.31 acres.  See if zoning its grandfathered in for RV's only or if you can build Self Storage units.

Normally I say start small and make your Big Mistakes Early, except in California most storage locations run $5 to $13mm per location.

Here is what I "see":

1.  Perris, CA has a population of 79,000 which means it has a market for 4,740 storage units.

2.  Sparefoot search, switch to distance.  Only shows 2 nonlisted storage locations. You would need to go see for yourself.  This means no one in Perris is using Sparefoot, which is great for you.  You will immediately be Number 1 on the internet if you use them.

3.  Google search for self Storage Perris, CA.  I see about 9 locations.  This "Astra" location is by itself in the city, which is good, it will pull the locals.  Its kind of a bad spot since it is out of the way.  Luckily the internet, they will come.  Plus no one is using Sparefoot in Perris, so you would be immediately ahead on Internet searches.  Also switch software to "Storedge" management software.  Not a recommendation.  Just know locally for me a "new" location used them and they are ranked high on Google almost immediately.

4.  Need your boots on the ground.  9 locations can't be eating up 4,740 units.  Thus there is a lot of unmet demand.  You need to spend a weekend there and count units and sizes.  You can do this through the internet google earth and through their fences.

Why?  Why look at this place.  Normally RV/Boat storage brings a lot less revenue than Storage.  Read my other posts or blogs.  Thus the property will be valued at RV/Boat storage value versus a converted Self Storage.

This is what I call a "Cherry" location.  Valued at a lower product usage.

Not recommending this place.  But work through this process.  Do it on some other small towns/Cities.  Its a little different in large cities, you have to be more strategic.  This and the blog answer your question on how to search.  The next question you need to cover is: A.  What is the market size and demand potential, B.  How to value.

Good luck.

@Kristian Conway

Around here $.85 to $1.00 per sq ft per month. NNN to be discussed by you.

Look up Kansas City Contractor garages and look at their set ups.

Contractors don't want top road frontage.  They prefer off the grid, but close to the neighborhoods.

Good luck.

Always make an offer if it has value. You said maybe $100,000.  Ask for:

a.  $60,000

b.  $40,000 and then $40,000 no interest in 5 years.

c.  $80,000 if they replace and update the elevator to your specs.  etc.

These are more deal versus finance approaches.  Buy the assets and peg a separate cost to the road, electric, plumbing, parking pads, security, etc.  Talk with your cpa.  Put as much value away from the land itself which can’t be depreciated.  Check on a non compete agreement.  Try to get as much early writeoff assets identified as possible. 

Back on the financing. If there is some fix up costs needed. Do a construction loan with a commercial bank to only charge interest only while fixing up the property.  Request xx months. Then role into an Sba loan with 20 year term to lock in interest rates.  This should put you in a positive cash flow. 

@Kristian Conway

Agree with above, to small to waste your time on storage.  Also the elevator would be the bottle neck.  You would need a whole new system, if you were basing your success on it and it would need to be a service elevator size.

Would recommend you look at the following mix:

Downstairs split into two 1,000 sq ft Contractor rentals.  (electrician, plumber, hvac, landscaping, etc).  We are looking at building these next in one of our storage locations.  They bring in more money per square foot than traditional storage, with less invest up front and ongoing.  If its a warehouse you should already have some bay/garage doors.  Just to rip out any excess material, then power wash.  Maybe a dividing wall and extra walk through door.  See if grandfathered in on sprinkler systems or don't need.  Also depends on outside parking and access.  To get a feel for the interest, you might "list" them on Loopnet or Craigslist and see what interest you get before you buy.  Or talk with a Commercial Real Estate person.

Upstairs- make two or three large loft, retro apartments.  Strip barebones and paint all piping and ceiling black.  Put in three shower/commode/sink/kitchen, etc units.

If this place has character and the right neighborhood.  I would also reach out to the local Micro brewery scene and see if someone is ready for the next size operation.

For $100,000 depending on location, there is a business model there waiting to be found.

I’ve given you our number.  

Are you able to run the analysis I showed above?  

 Really a profitability analysis

Shape of property, market pricing, land cost, how you park the vehicles (pull through, single or back to back), fencing/gate or not, etc. Your mix of 20/30/40 foot spaces.  Each one requires a wider driveway and a wider parking spot the bigger they are.  Example. You might get more rent for a 40 ft spot but make less money since you have more bare ground. 

Example:

We have exactly 2 acres:

40 acres= 1,320 ft x 1,320 ft = 1,742,400/40*2= 87,120 sq ft.  Total Sq ft.

Potential rent at 100%= $2,870 per month.

Is this good or bad?  Run your cost to buy and improve.  Then pull together your annual expenses.

What is your COC, Cap rate, or I use Payback period 8 to 12 years , versus a loan amort of 20 to 25 years.

Also depends on how you are parking.  If your Valet parking, then you can get 50% more spots, but you have to put the labor in.

Recommend you look macro at the deal:

Costs:  Use the below to see if you have any "Missing" costs you need to recognize.

$100,000  land cost

$   20,000 Fence

$  25,000  Automated Gate

$  25,000 Rock surface

$   7,000 Electric

$  7,000 Security

Expenses:

$????????  Property tax

$ ???????  Insurance

$  ??????? Electricity

$  ??????? Monthly management software

$  ???????  Lawn/Snow removal

So I can understand. Why do you want this number?  What do you plan to compare against.

Follow up to @MM on another post.

Here are the major considerations in sizing "Drive up" storage locations. Climate controlled is not part of this conversation, stay away from this, if you are a first time owner/developer.

1. Are you in a major Metro area, or small community? Zoning rules as far as the following requirements.

2. Set back rules- obvious impact. Impacts your rentable ground/units.

3. Storm retention pond required?- This will offset your revenue projections, available units and also cost estimates.

4. Shape of property; - Ranked: Rectangle, square, all others. I'm still learning 1st grade- A triangle 3 acres doesn't come close to a Square in units. Try for Rectangles. You have to give up turnarounds. A rectangle is your most efficient shape.

5. Are hard surfaced roads needed; Concrete or asphalt- Cost of entrances must be offset by units. The shape and layout, you want one road to service two sets of buildings on each side, to lower the road cost per unit.

6. Security- secured gate, security system, fencing, etc.- Your unit revenue and quantity has to be sufficient to offset the "costs" your putting in. If your in small town USA, no security systems- fences, gates, or cameras can be the norm. Example: A $25,000 gate system you need XXX units to offset.

7. Obvious. In drive up storage, you never want to build all of your units at once. I always use the following for my Phase 1; Enough units at 65% economic occupancy to cover all costs (land, fence, security, roads, dirt work, (bank note P/I on 20 year amort), plus Property Tax, Insurance, maintenance, electric, etc. Example: If I bought just enough ground, to assume 90% occupancy gets me to breakeven cashflow, then I would not do the project or that size of property at that land price.

Your Phase 2 will only take a 35% occupancy to get you to cash flow break even. This is the real money and also less exposure.

8. Do you plan to do Uhaul or other outside storage needs.

I generally will never touch a rectangle/square property unless it is at least 2 acres. Just not worth the effort. If I was starting off and wanting to "Learn" the business, I would do a smaller lot.

Any questions or expansions needed, please ask. This is the fun part. Later it is just $12 per hour work.

Seeped in.  They were fairly clean.  Just needed to wash out.

The floor boards were amazing.  I could tell which boards were the original treated Exotic wood ($800) per sheet and which were regular marine plywood.

4 floated for a week, luckily they were packed tightly.  Moved half of them to another town and are renting them.  The rest waiting to fill our regular units in case we want to move these last ones.  Power washed 3 times.