All Forum Posts by: George Fitz

Jeff Gorden, Bobby Loeffler, & Jake Becher are a few of names that comes to mind. 

Hi @Evelyne Ling I agree with Zack that you usually don't need a full inspection. I recommend roofing inspection, spot check a few empty units (especially with regards to the roll up doors), HVAC (if applicable) and drainage / asphalt. With that said, I once did a full inspection on a hybrid property that has self storage, 4 residential apartments, a commercial office space, and an industrial 4-bay shop. I paid $1675 for that inspection back in 2015. For the self storage part of the inspection, he primarily focused on the roofs, HVAC (in the climate controlled units), and the drainage and asphalt. I ended up getting about $22,000  in credits from the seller on that one, so money well spent.

@Charles Cooper Dylan is correct, it's a great area. He's also correct that we are usually not a stop on the way to Tahoe, since we are 30 minutes north of I-80. In terms of demographics, we skew older. There are lots of retirees up here, but still a good amount of families / working folks as well. Tourism is a big industry. GV and NC are old Gold Rush towns, with plenty of history and historical downtowns. It is also incredibly beautiful with losts of outdoor recreation opportunities. We typically see many people visiting from the Bay Area and Sacramento, but folks visit from all over. There definitely has been growth over the years, but I wouldn't say it is explosive or anything like that. We get excited when a new business opens and we are still hoping that one day they'll put in that elusive Trader Joe's in nearby Auburn :-)

The service sector is a large employer. Other employers include industrial, construction, still some mining and logging. We also have a healthy tech sector, with several broadcast technology companies located here. The Grass Valley Group was once the largest manufacturer of equipment for the TV/broadcast industries in the country. They were bought years ago and have a smaller office here now, but there are several other related companies located here. In general though, good well-paying jobs are hard to find around here. Some residents commute down to Roseville/Sacramento area (1 - 1:15 hours away). 

Like other parts of California, we have an affordable housing problem. There has been a push to build more affordable housing recently. We're starting to see some of that come online. While I mostly invest out of state, I have had rentals here before and there is a healthy rental market. It will also be interesting to see if we see any influx from Sac/Bay Area if more people begin permanently working from home. I have met a few folks from the Bay Area recently, who are working from home and living here now (with their retired parents).

Hopefully that helps. Feel free to hit me with more questions...

Hi @Elijah Miller On the surface this looks it could be a solid deal. But you will need a lot more info to make an informed decision. As for your first question, "what would you be looking for", here's some back of the napkin math: $1900/mo in revenue equals $22,800 annually. For sake of quick analysis, assume 30% goes to expenses which leaves you an NOI of $15,960. So if seller is asking $160k then that is a 10cap and probably not a bad price. Obviously the devil is in the details. You will need to ask for full P&L's if they have them. Also ask for tax return. If you decide to move forward I would ask for bank statements. Be sure to analyze all expenses and get an accurate picture as possible. Also, ask for rent roll and verify the monthly income. You should eventually walk the property and be sure what they say is rented appears rented (look for locks on units). Obviously you will also want to inspect the condition of the property and make notes of any deferred maintenance or future expenditures.

As to your second question, "Would this be a good group-venture and first real estate asset with the sole intention of investment?" Personally I'd say yes. I invest in residential and self storage, but much prefer self storage because there are so many ways to increase cashflow and force appreciation. I simply make more money on my storage vs my residential. It's just that the SS deals are hide to find because the secret has been out a while now. This one appears to be a decent deal and might have the potential for upside. Have you looked at their rates and compared to facilities nearby? Is there room to raise rents? If it's mostly full, is there room to expand and add more units? There are a host of other ways to add other revenue as well- too many to go over here. 

As for you financing question, someone mentioned the SBA. They finance self storage and have some really good deals in terms of LTV the last time I checked. Be sure to talk to an SBA lender who does self storage. Also, local banks generally like it a lot. Covid has made the lending markets a little volatile, but you shouldn't have trouble finding a lender. I'm refinancing a property right now with a local bank. It's going smooth so far.

I know others on this thread are talking about how running a SS property is work, and I agree it is. But just like everything else, if you put an efficient system in place then you reap the benefits and minimize your time spent. Most properties can be run with very little human interaction through automated processes. There's lots of good tech out there for SS. I also always have boots on the ground nearby, since I don't live near the properties I own. I pay part-time help to maintain properties and sometimes rent units (rentals can generally be done via an app or a phone center). I try to personally visit each property quarterly. I would say on average I spend about the same amount of time on my storage units as I do my apartments. Obviously the apartments keep me really busy during a move-in or move-out. Most of the time, I'm not involved whatsoever for a storage move-in or move-out. But I spend more time on the financials in SS versus apartments.

Keep us posted on where you end up with this and good luck!

Lots of good info above, the NYT article probably notwithstanding. Additionally below is a link to a summary from a call I was on the other day. There were some large operators on the call. It's a quick read that seemingly gives a good picture of where the industry is at the moment for those interested in a more detailed view: 

Argus call summary

Hi @Ari S. would you mind sharing the source of your data that shows people spending -50% less on self storage since quarantining (I didn't see anything regarding SS in the NYT article you linked)? I'm always trying to keep up on the state of things, and had not heard that. There's another thread or two on BP regarding self storage performance since the quarantine began. I think most of us in the industry are seeing pretty stable numbers so far in line with past performance. My numbers are actually up across the board, compared to the same period in 2019. But that doesn't mean it will continue so I'd be really interested to see the numbers you referenced in your original post. Thanks!

Hi Mindy, we are seeing similar. We've had less move-outs but also less new rentals, so occupancy has been pretty similar to past years. Being Spring, we are seeing more move-in's than move-outs, but like I mentioned, the volume of both are down. Thus far, we haven't seen an increase in past due rent. We do monthly anniversary billing so it's a very up-to-date picture of things. As of April 29 our rent collections are actually 10.5% higher than the same period in 2019. I have rural properties, and not a lot of folks are on auto-pay. Around 38%. Around 61.5% of our customers pay by credit card or bank draft. The rest do checks and cash.

At this point, I do not anticipate a whole lot of change to these numbers. As I mentioned above, we're in rural markets and while I know there have been some layoffs in the towns where we're located, I don't think they are as deep as in more populated areas. Out of curiosity, I'd be interested in hearing how properties in larger cities are faring. I have heard that Public Storage occupancy is down, but I'm not sure if that is related to Covid-19 or just a result of increased competition.

@Jonathan G. We actually saw an uptick in net rentals over the last two weeks of March and first week of April. But we're expecting to see more delinquent rent. At my largest property, rent due dates stagger, because they are set to be on the day the tenant moved in, rather than all at the beginning of the month. The last week of March saw a 13% increase in delinquent rent. We are also waiving all late fees as a courtesy. Normally late fees are an important revenue center for us. We should have better numbers on rent delinquencies soon. So far though, things have remained mostly stable.

I've never had to do Craigslist or a job board. I've inherited people from previous ownership, and also found people from existing contractors who decided they no longer wanted the job. I once found someone via a referral from a local attorney I was using. @Scott Meyers hosts several Self Storage Academies throughout the year. One time at one of his events they recommended attending a local church and finding people through the church community, which I thought was a great idea. 

1099 contract labor. I just do by the hour. I've paid between $20-$25/hr for maintenance tasks. Tenants can mostly rent units via the software now, but I do have a property where it doesn't make sense to put in the automation because of the property size. In that case, I give my guy the first month's rent for renting a unit.