All Forum Posts by: John Culotta

@Brandon Komp - I agree with @Taylor L. on checking out @AJ Osborne book "Growing Wealth in Self Storage". I'm almost done with it and it's a really good read! A couple of other good resources are found at the ISS insideselfstorage.com and they have a community of storage owners and managers at selfstoragetalk.com. Hope that helps!

Hey Matt - Congratulations on the facility! Hopefully you can update us on your experience, on ESS and if you go with DaVinci locks. All The Best!

@Tyler Casey Congratulations!! Sounds like a great opportunity, especially for your first facility. My wife and I are on the hunt for our first and would love some tips if you have a moment. Would love to know what kind of arrangement did you make with your partner besides the 50/50 equity split? Did you place the partnership under an LLC? Is the cash flow split also 50/50? Was the 85% LTV with a CU, local bank, SBA, etc.? Who's managing it or is it automated? Is there an exit strategy? Was this a value-add property? Would love to know a little more if possible. Thanks and Congrats again!!

Congrats on the concept and ingenuity. The only concern would be battery life and replacement along with cost. Maybe solar powered? Great innovators don't give up on data driven concepts. Still looking for my first storage facility and wanting to be fully automated, so I would look at a product like this. All the best!!

@Ron Flatt - A feasibility report is a good place to start. Be prepared to spend a few thousand dollars for a detailed in depth report. To just get an idea on what a report will include and get some basic data to start with I used SelfStorageNinjas (no affiliation) and it was free. Again, not an in depth report, but something to start with and combine it with your boots on the ground data, county traffic reports and city data (all free online). I did this to get some peace of mind about what direction to take, which actually led to walking away from a development deal. I would suggest reading everything you can from self storage pros like Mike Wagner, Scott Meyers & AJ Osborne. There's also a book by Marc Goodin that's helpful regarding planning, site selection, design and build info.

@Michael Wagner - I'm grateful for your insight. I don't want to force anything, but at the same time not sure if I'd be passing up on a smart (long term) business move. Plus, you make a good point, and I..."don't want to be the straw that breaks the camel's back!"

My goal is to also purchase existing value-add facilities and "force" appreciation. That biz plan, however, seems to be getting harder and harder from my not-so-experienced perspective :) It appears that so many people are jumping into this space and competition is greater with pricing becoming more and more northbound. I'm still learning and looking for the best deals. I'm sure you and @Scott Meyers have better resources and channels to finding those deals - Thanks again!

@Michael Wagner - great questions and I can see what your saying. The property is located just short of the exit, but takes only 2 right turns to be there with almost complete visibility of the property while turning. Not sure how full the competition is, but I've been to some of their sites and there are no vacancies on certain size units (the smaller ones). The feasibility report was a free one done by self storage ninjas. Here's an overview: 

TRADE AREA - 3 Mile Radius

• 12 traditional facilities
• 864,595 net rentable sq ft
• 41,175 sq ft climate-controlled
• 823,420 sq ft non-climate-controlled
• 21.2 sq ft per capita overall
• 1.0 sq ft per capita climate-controlled
• 20.2 sq ft per capita non-climate- controlled
• No boat and RV specialty facilities (although, all the facilities in the area have a portion of space designated for this and are usually maxed out)

DEMOGRAPHICS - 3 Mile Radius

• 40,786 population
• 2.0% one-year population growth
• 6.3% three-year population growth
• 12,869 households
• 37% renters
• 26% multi-family
• $44,627 median HH income
• $123,150 median house value ($267,836 county)

YELLOW LIGHT

Pros:
• Climate control likely
undersupplied
• Population growth is great
• Good number of renters good
for turnover and raising prices
• Opportunity for boat and RV
storage

Cons:
• Market may at equilibrium or
oversupplied with additional
development
• 2 facilities built in 2018 may still
be in lease-up (yellow dots)
• Low median house value and
household income - (This seems incorrect. The Median price for our county is: $267,836 according to realtor assoc.)

---------

I'm a strong believer in positioning and feel that being in the right place at the right time (no matter what national trends there are) is super important. Getting in front of progress (without overspending) is what I'm seeing in our situation.

I spoke with the owner of a large chain of 12 storage facilities and they have expanded current facilities for the growth. There are about 3 new unrelated facilities being built within a 3 to 10 mile radius.

Some other factors that I would think should be considered, but please correct me if I am wrong, would be:

• - Job growth: Over next ten years our city is predicted to be 49.4%, which is higher than the US avg of 33.5%
• - City & Surrounding Area Expansion: 22% year over year housing increase (the capital which is Boise saw only 10%)
• - High Visibility - from the freeway since it's up against it and at an exit. 
• - Traffic Count: 15k daily on main road near property and 190k daily on freeway just in front of property.
• - The city (5min away) redevelopment with new theatre, city walk, shops, outdoor skating, and more family friendly updates.
• - REIT's have purchased several facilities in the Boise metro (surrounding cities) area and are building (I wonder why??)
• - Property is part of the Boise Treasure Valley: One of the top 10 places to live in the US (forbes, money, yahoo, etc.)
• - Neighboring city Meridian was voted by Money Magazine as one of the best and fastest growing cities to live in the country with 32% job growth in the last decade with only 2.5% unemployment (national avg is 3.7%)
• - In 3 miles radius there are 3 new housing developments, 1 apartment development, 3 commercial (flex) and manufacturing facilities, with multiple farms for sale for development.

RECENT REALTOR ARTICLE - Demand for Ada County Homes Drives Prices to New Record
According to our friends over at Boise Regional Realtors®, heightened demand coupled with comparatively low inventory of homes continues to drive prices up across the valley. If you compare numbers year-over-year (November 2018 to November 2019) the number of homes pending or under contract jumped by a whopping 20.6%. And newly constructed homes make up an incredible 32.2% of the market share.

Treasure Valley Housing Markets

Average Sold Price (November 19, 2019 - December 19, 2019)

• Eagle: $589,229
• Boise: $385,624
• Meridian: $382,773
• Star: $415,417
• Garden City: $399,493
• Kuna: $328,184
• Middleton: $331,626
• Nampa: $280,043
• Caldwell: $267,836 (this is where the property is located)

All this to say that we've seen unprecedented population and job growth from the capital of Boise which is impacting (The ripple affect) all other small surrounding cities. Our home value in 3 years alone (Caldwell) has jumped from $145k to $240k and we live only 5 min from the site. We're an outdoor recreational state that is home to big companies like HP, Albertsons (2900 stores), BodyBuilding.com, ClickBank.com, TSheets.com, Micron, major hospitals, colleges (BSU) and more. All within a 30 min drive to the east.

I'm not greedy and don't need to hit a home run against the competition, which means I can have lower then average rental pricing to gain market share and still pay the bills. Be very social media friendly, place a freeway sign and self manage. I'm trying to think 5 to 10 years out with appreciation in mind to refi and/or sell. 

There are 2 facilities for sale in the area that are way over priced and they're not even fully (at least 80%) occupied or built. One site is 5acres, 40k sqft, in dense neighborhood about 10min south of freeway and they're asking $4.6mil. I'm looking at building 40k sqft with 3acres between $950k and $1mil (again, freeway access).

I've talked to a few realtors who are taking California cash from investors and buying whatever they can (at asking price or higher) because the investors want out of CA and the stock market and are willing to buy whatever they can in our valley to have more stable long terms returns. The bidding wars on housing in the treasure valley is also very common.

I know this is a lot to digest. I'm grateful for this forum which is so helpful for investors like us who are not super seasoned or experienced in this area - Thanks Again For The Input!

@Scott Meyers and @Michael Wagner - I really appreciate your comments here. Is the saying "location, location, location" still a factor today even with self storage in saturated markets? In other words, if I can acquire a prime freeway access property (190k daily traffic count) and build for less than acquiring a facility ($25 to $28sqft), with competition all over my 3 to 5 mile radius, although there are multiple new housing developments and apartments going up ->-> would you even consider it?

I Know there are a lot of factors to consider and a short feasibility study I received wouldn't support this project (except RV & vehicle storage as a better option according to report). After a lot of prayers and boots on the ground, I just keep gravitating towards it because of the LOCATION. I even have an appointment with the city to see about rezoning. The nearest competitor has terrible reviews, the visibility would be perfect for a freeway sign, the price of the land is reasonable for 3 acres plus a house. I also realize 2 to 3 years for at least 85% occupancy. I've prepared an LOI and want to pull the trigger, but nervous. Appreciate some wise, godly perspective - Thank You!

@Steve Cheslock - I'm not an owner, but had a few thoughts that would pertain to any property where more security is needed. Without knowing the NOI on this property and how much capEx you'd have for it, I agree with the pro's like @AJ Osborne, @Scott Meyers and the others who have suggested to add more lights, camera's and a security gate. Additionally, you could probably add the following items fairly cheap:

1. Signage & More Signage - "warning, 24hr video surveillance" "smile, your on camera", etc. 8 pack of decals on amazon for $8.00.

2. Fake Camera's - After placing a handful of GOOD ACTIVE security camera's in the vital area's, you could place fake dummy ones that match the real camera's and just install them all over the place. You can get a 4 pack on amazon for $19.99.

3. Barbed / Razor Wire - Since the property already has chain link, you could easily add the barbed wire on top as a DIY project for cheap. At walmart.com you can get 197' feet for under $40.

4. Ask the local PD to patrol the area more frequently. $0.00.

5. Give the owner of a local private security company free usage of a storage unit in exchange for their services.

6. A mean doberman always works too - just kidding :)

7. Electric fence? Not sure if it's allowed, just thinking out loud.

After the updates, some insurance companies may give you a little discount. The money you could save on insurance might help offset your capex a little. Hope this is helpful - Lights, Camera, Action!!

@Paul Moore - Thanks for the tips and advice. Radiusplus.com looks like a great resource :) I've also taken your suggestion about reaching out to @AJ Osborne. We've truly got a lot of work ahead of us and I would not have thought about the "square feet of self-storage per person" factor if it wasn't for you - Thanks again!