All Forum Posts by: Joshua Watts

@Michael Ealy I am with you 25% expenses (not counting payment) is low. I took one more look at it and compared it to a 12 unit just up the road and a few places in Chattanooga I have. Looks like the place up the road (12 unit) that I just completed was around 30% but the remodel was not so large and I have older AC units, now the places in Chattanooga are in the mid to high 30's. I looked even harder and it looks like property taxes are getting me in chattanooga and much cheaper where this apartment is located.. As far as my property management team we just divide their pay over the amount of doors we have this also includes many self storage buildings. My maintenance guys just bills their hours to what job their working on. I with you 30-35ish% seems to be a good number and also works with self storage.  

@William Allen I just don't know about the repair cost cutting. I just can not see cutting anything. The place is pretty rough but I am just install builder grade stuff. I might just be guessing a little high on my cost because I did not get bid on everything only on the big stuff like sheetrock and AC. I wanted to be high (the budget) for the worst case and that way I can run my number on the high side to make sure it was worth doing.

@Ronak Shah good question. (his question is he knows I am in self storage why not just put my money there) I really like self storage but I love to follow the money. And in this case I just don't think I can beat the returns in relation to the risk I will be taken on this project. The apartment is paid off and I will be paying all cash for the repairs and after the project is complete (6 month) I have a bank lined up to give me a loan of $250,000.00 which is the cash I will have in it.

So other thoughts I had before starting, taking it a little deeper look is if I sold the place as is I am guessing I would have sold for $150,000.00. So in a nut shell I have $150,000.00 plus $250,000.00 into the apartment building for a total of $400,000.00. If the rents are at 750 to 800 I will gross $775 per unit*8 unit *12 months =$74,400*.90 vacancy/loss rent= 66,950.00 gross less the expenses of $19,000.00= 47,9500 net, at a 9% cap rate =$532,777.00. Keep in mind I will have right at $400,000.00 in the property or a 35% return on my investment. I like to look at cash flow per year which looks like this $66,950.00- 19,000.00 expenses-$20,400.00 (loan payment on $250,000.00)=$27,550.00 per year or $2,295.00 per month for my troubles. 

@William Allen The project is about 6800sq feet for each unit around 850sq feet. That would be around $36 per sq foot. Are you thinking that was high or low? I wish it was cheaper. But not sure how I could cut cost any more and get what I wanted. That is all new plumbing, ac and duct, bathroom showers, sink, kitchen, appliances, subfloor, flooring, new windows, outside siding, outside plywood, all new doors inside and out, gutters, and trees removal. 

Rents will be between $750 and $800 per month. Expensive should run about 25% of the rents or so. I would think repairs would be low because everything will be new. We have in house property management and should be able to manage this with no extra employees. 

@Account Closed Good question I have owned this place for 18ish years and have rented it out over those years but the rent have always been low and sometimes did not get the best of tenants. I have been upgrading a few of my places along with increasing the rent and upgrading the tenants. This is my last place to be upgraded. With that being said I purchased it for $135,000. My remodel budject is $250,000. 

My 2 cents is I shy away from canopy storage because one can get more income per sq foot on self storage and the cost of building is very close to the same. (not counting the land you have to have for turning the boats and RV's around) If your market can handle more supply one might get a better return just building self storage. But that was not your question..... You might want to call up BETCO to check their pricing.

I completed my strip mall conversion to self storage and now to my new project a full remodel of an 8 plex just outside Chattanooga TN. We plan on replacing just about everything. Here is a couple of pictures of the start of the project. We plan on keeping the same layout but just about everything else is being tore out.