All Forum Posts by: Josh Anderson

@Tom Kaz SBA 504 loan should only require 15% down for you since they don't consider storage a special use so they should only hit you with 1 extra 5% requirement since you, as a new storage investor, are not an existing business.

Besides the usual operating expense numbers the existing owner might show, its important to know what additional expenses an appraiser may put on the property during the valuation process for financing since it affect your ability to borrow. In my experience, even if the current owner self manages the property an appraiser is going to put a management fee expense in the valuation. Plus I'm of the mind set even if you self manage you should be paying yourself for that time on top of the return the property provides. They'll also put in a reserve expense to budget for repairing large cap ex items that may need to be replaced in the future (paving, roofing, doors, etc). Below is my quick and dirty estimate of how I would value the property based on you above post. I might be off in my lawn/snow costs, utilities, etc since I don't know the specific area, but in my area this is roughly what a property of this size would look like.

Hello BiggerPockets,

I have a general question or brainstorming activity I would like to pose to the community. Shopko's closure announcement back in January will leave roughly 70 buildings vacant in just SD, MN, NE, ND, and IA towns with less than 50k population (48 buildings in towns with less than 5k population). Without the demand for climate storage and another big box stores, and with multi-family redevelopment of these buildings likely being too expensive to be profitable, does anybody have any ideas (or better yet examples) on how to take advantage of this large onslaught of vacant space?  I do not own any of these commercial retail spaces that are going to be vacant, I'm just trying to brainstorm any potential ways to capitalize on potential opportunities.

@Joshua Watts This a pretty delayed response to your post 4 months ago but what size of city is this property located in and what type of use are you planning to change the property too? 

I ask because in small town America there is a lot of vacant retail space coming available with the closures of KMart, Shopko. etc. I’m trying to figure out a way to make use of this space in cities/towns where a climate storage conversion or apartment conversion doesn’t make sense due to cost and demand. Love to hear your thoughts on potential small town uses for vacant retail space.

Jim Dunham and Associates usually has the most multifamily properties listed for sale (which are few because most get sold before they hit the MLS). Lloyd Companies is the major property manager in town with over 3,000 units under management.

The multi-family market in Sioux Falls is reaching the peak of it isn’t there already. Just like any market there will always be deals to find. Sioux Falls is a young city with a large percentage of existing multifamily properties built in the last 10 years. But the rent differential between existing and new properties is typically not enough to warrant large remodels of existing properties to increase rents. Vacancy will be the piece to watch in the next 12 month as the summer vacancy report showed 9.2% but large scale properties were not counted yet because they either weren’t  completed yet or just starting construction. My estimation is that in the next 12-18 month and vacancy will reach 15%.

Well done @Richard Bauerle. There is a small group of investors in Sioux Falls active on BP. They meet the third Saturday of every month to talk real estate. I’m a commercial lender at MetaBank and have a storage facility with another one in development. PM me if you’d Like to go to lunch sometime.

Hey @Steve Shaffer, I'd gladly take some time out of my wee to show you around. I'm a commercial lender with many multi-family properties financed, and I also have my own portfolio of storage facilities. I promise it won't be a pitch to get your business I just feel I have good amount of knowledge on the whole Sioux Falls market. PM if you would like to set something up. For REIA information, search "Sioux Falls Real Estate Investment Club" on facebook

@Paul Moore Hey Paul. Cost of storage obviously depends on the type of units and the cost of land and required zoning items. But just for example I’m about to break ground on a drive up access facility(steel frame and sides, asphalt between units, monolithic slab) and the all in cost for the facility is $42/sf of building area. On an appraisal I’ve read for a 3 story climate facility with $8/sf land cost the facility cost $80/sf of gross building area.

@Scott Meyers Thanks for the follow up. I have spent substantial time researching my market for storage facilities and I also have the luxury of working for a bank and can look at appraisals and feasibility studies as they come in. So I know according to those items that the appraisers and researchers think there is demand for climate storage in certain areas. The industrial parks are already overbuilt but they are all 3-5miles from a majority of the population, where I would look to do a building conversion only has 3-4 facilities in 3 miles radius, with all but one being unheated storage. I am actually looking at a building currently for sale that can be converted into 2 floors with a mezzanine system, so I am working on getting pricing for mezzanines and the unit material and install from DBCI, but I'll reach out to Mako, Rabco and Janus. Based on my rough number estimates I figure after conversion the building will be worth about $3million based on 10% vacancy 37% expense ratio and 8% cap rate. that would leave me about $900k above the current asking price to convert the existing 22,000sf 1 story building into a 44,000sf - 2 story building (25-30,000sf of rentable space)

Climate controlled storage is in short supply in my market area of Sioux Falls, SD. I am already a self storage operator with 177 units between 2 sites (small facilities with no onsite management) , but looking to redevelop an existing building or build a new facility for climate controlled self storage. A few redevelopment opportunities have come up, but without a contact in the climate storage field I haven't been able to accurately gauge the feasibility of aconversion. So, I'm looking for recommendations on companies that specialize in building conversion packages or ground up new construction climate facilities. Thanks in advance for any help and I'd be happy to talk with anyone who wants to learn more about my existing storage ventures. (one was existing purchase, other is a new construction project)