All Forum Posts by: Daniel Lioz

Your situation is unique, it is being sold as new contraction cost, but it is not and you cannot price it as existing business because it has almost no cashflow at this time.  If you are planning to get financing for it, without cashflow you might have a large down payment for it probably, while at the same time you cannot get construction loans because it is already built.  Also double check their expenses, see what their taxes were and when it was assessed last time.  If it was build in 2019/2020, their taxes might be going up dramatically this year due to re-assessment and check if all permits were satisfied.  Ask them why they are selling so fast after building it.

If I was purchasing it, I would probably jump at anything that was just built and is being sold below cost of construction (though the tax benefits of someone who is building will be lost because it is already built), but I would do double or triple checks on taxes, permits, construction, future growth, current expenses and rent agreements (it is very good that they got to 43% of occupancy so fast), I would also look at growth potential (if there is land or additional revenues possible), depreciation, etc.  I would also try to get some part as owner financed, may be even for a year or two because if you assess it as pure business they are trying to sell future revenue potential (pro-forma), but you will be doing the leg work for it.  Just some of my thoughts.

@Joseph Cacciapaglia Thank you for such great detail!  I called a couple of places couple of weeks ago in the Austin area and they were quoting like $200 to $220 per square foot which I thought was ridiculous and more expensive then regular house.

Couple of more questions if you don't mind....since you purchased used containers, you were not concerned with what they might have carried in the past that might affect human occupancy or how did you mitigate that?

How and what are you doing for plumbing/water/waste and electricity? Are you connecting it to city utilities?  How much is that costing you and when will you do it?

Thank you again!

@Joseph Cacciapaglia

What is the cost of the Shipping Containers build outs per square foot?

What kind of items are you included in those costs and what size containers were your starting points and how many?

Thank you!

@Chip Stroz

At 40K net rentable space built in 2019, average construction for non-climate around $30/sq ft, climate controlled much more, that's about $1.2 mil just in construction (plus land), so your answer is yes, they are trying to re-coup their investment from about 2 years ago, but on the positive side, if at 43% occupancy they are already making money...breaking even, that's pretty good considering any other RE investment at less then 50% occupancy will not be cash-flowing....but again, that is if the numbers are right and there is room to grow it to >90% occupancy.

@Robert Armstrong have you considered buying it for the self storage price/purpose? if there is such a large acreage, expand the self storage area to a 100 or 300 units (if the business model is there based on the locations, may be add shipping containers, etc.), sub-divided it as two separate businesses and manage them as such. two different revenue streams.  there are very lenient eviction laws on SS, 30 days mostly, and since you said there is no contracts it might be easy enough to do.  Plus what is the cost of acreage in that area....60 acres for $400k seems like an awesome deal just for the land, not to mention developed land....at least to my area's standards :) 

Containers are considered equipment, so yo can look into financing it as equipment loan, my be 70% LTV or so. Some companies that sell the shipping containers, actually have an inhouse financing partner that they can finance them for you, the % and LTV varies.

 Wow....that is crazy compared to 80 to 120 that I saw last year.

@Chris Gossett thanks for the information on the build-outs!

In terms of same building, there are lots of retail and apartment same building mixes, you just might have to do some research on how to do it....may be deed the apartments over to a different entity, or may be create your own HOA and make them like condo's that you sub-lease....just some thoughts. That's what I like about RE, so many different ways of doing it. I heard of SS units converting into offices, but never to apartments....that what peaked my interest in your original post. Thank you again for the information!

@Chris Gossett I am intrigued on how you were able to convert some storage units into the apartments. Can you please describe on what you started with and how/how much it cost to convert those units into the apartments and what occupancy local laws you had to address? This sounds very interesting.

On the financing question that you had, have you ever considered separating the entities of SS from the Apartments and refinance just the apartments? 3 apartments will fall under SFH (4 or less) mortgage and you can probably get that at like 3% with 80 or 85% LTV refi or cash-out refi, plus the valuation by itself might be higher then just by having everything under SS/commercial umbrella....just a thought.

Originally posted by @Henry Clark:

None of these.  We had 50 at one time here and they were 100% rented.  Then a flood last year.  We moved 20 to another town and they are being rented.  We held these off the market while we rent out regular storage units on the other side.  Washed and power washed three times.  They are ready to rent and no worse for the wear.  There was actually 2 foot of water over them for 30 days, until the water was pumped out.

People actually prefer these to storage containers, as long as they know how to open and close.  They are harder than a roll down door to operate.

So did the containers stood up to being in/under water as they are advertised as water proof?