All Forum Posts by: Michael Wagner

Quote from @Taylor L.:

@Michael Wagner's Storage Rebellion. Great group of folks with a lot of real world experience. Most focus on buying existing facilities with the potential to add new square footage. That way you have cash flow in place on day 1, with strong value add potential. 

 Thanks for spreading the word!  We do love our Storage!

Quote from @Sonny Dhillon:

Quote from @Michael Wagner:

Originally posted by @Matthew Rembish:

@Michael Wagner

Wow, thank you so much for your input. I subscribed to your blog and just read a few of your articles; great stuff! If you ever have some time, I'd love to ask you more questions on the phone or possibly PM. Whatever would work for you. Thanks!

 Happy to answer a few questions for you.  In the spirit of full disclosure, I do want to tell you that I offer formal consulting to folks at an hourly rate.  As part of that though, I am happy to provide you with 30 minutes or so over the phone for FREE. I promise to use NONE of that time to sell my consulting services.  My only goal would be to purge as much self storage information to you as possible in hopes of getting you started on the right foot.  IF you decide more services would be beneficial in the future, great! If not, that is also totally cool.  

PM for a phone number if you want to chat.

Mike

 hi Mike,

I'm also thinking of getting into self storage , more of toward building one because I'm in California and the one's that come on sale are at 4-5 cap and I can't seem to make any sense to purchase those and wanted to get more information how would I go about building , I do have the basic knowledge but would like to see if you have experience in it and can provide some consulting.   

Hey Sonny, Building is definitely a viable option. Though it might not be my first choice even when you have limited local options. I personally would rather by existing and operate remotely as there is less exposure to this strategy as compared to building ground up. That's not to say developing is a bad play. You just want to make sure your exploring all options before deciding on your best path forward. Happy to connect. Shoot me a DM and we can see what makes sense.

Look up at Kavi Bajaj from Cornerstone Lending.  Super good guy and knowledgable beyond belief.

I absolutely love storage! Its all we do.  I'll shoot you an invite to connect.

I would encourage to explore how small facilities perform relatively to some larger ones.  Generally speaking you need to be at 12-15Kdquare feet to tap into the economies of scale that make storage so great.  Being this small, you will fall short.  All that said, I'd go metal kit!  And I'd encourage you to have 10 x 10 and 10 x 20 at a minimum!

Only real way to do it is to look at comparables....but those are hard to come buy given the highly LOCAL nature of storage...ie- you can't take one from too far away and rarely do multiple sell close enough to one another to be overly revealing. That said, the size and condition of the facility as well as the size and health of the market will come into play. You could be as low as a 5 CAP in a bustling and healthy primary market for a class A facility. In smaller cities the top notch properties will be in the 6 range. Class B-C tend to trade around 7-8 and the ugliest and neglected properties in the smaller town might trade in the 10-15 range. OF course cap rates FALL apart when you are looking at a property that is very low occupancy. And please know ALL of this is an oversimplification.

Self storage playbook podcast

Investment Info:

Other commercial investment investment in Bloomfield.

Purchase price: $360,000
Cash invested: $26,000
Sale price: $1,325,000

Bloomfield Mini Storage was approximately 15K square feet with about 1600 of office space ad the remaining being typical drive up access self storage units.

What made you interested in investing in this type of deal?

I was attracted to this one because it was storage and it was close to home! This property was located about 15 minutes form my house (7 miles) and it was part of a direct mail campaign that I was working. The letters got returned to me and though it took longer than I care to admit, I finally realized that if I couldn't get my letters delivered, neither could any other investors. So while out on a long run, I decided to stop in.

How did you find this deal and how did you negotiate it?

I found this property on 2 acres with 4 buildings which was approximately 13,500 feet of storage and 1,600 feet of office / apartment space in front. At the time it was 100% physically occupied, however, financially it was only at 57% and there was a new facility just down the road.

How did you finance this deal?

I purchased for $350,000; added a fence and new lot for $50,000; our closing costs totaled $20,000 for a total cost of the initial project coming to $420,000. I also had a minority partner investing $80,000; I borrowed $315,000 from the bank and I personally put in $26,000.

How did you add value to the deal?

After cleaning out the many (40 plus) abandoned units, we raised rates incrementally and filled to capacity. Once full we added 3,200 sq. feet in November 2015 and an additional 2,600 sq. feet and converted the 2 apartments in front to heated storage in November 2016. After refinancing in November 2016 for $600,000 and paying off the invested partner I funded the third and final round of expansion.

What was the outcome?

Having added over 8000 square feet of storage, filling to capacity and raising rents by 40% or so over what they were when we purchased, I was able to sell the property in April of 2019 for $1.325 million.

Both can be great but I would argue that Self storage beats MHP's!  The income to expense ratio is lower, there's no tenants to deal with and so "evictions" aren't needed are two big reasons but there are many more.  Alex Pardo hosted a Self Storage vs. Mobile Home Debate for charity a few months back on his FlipEmpire podcast that you might valuable!

Originally posted by @Jay Hinrichs:

GREAT JOB  pulling the trigger in 2011 for many investors is going to create some very nice wealth.  

Thanks...and yes we've definitely been riding a nice wave.  Which might lead some to believe that "its too late" to get into the storage game.  I firmly believe that savvy investors don't allow the "market" to dictate IF they invest but instead to color HOW they invest.  As the markets have tightened up in recent years (the proverbial "experts" have been saying we were past peak since 2017;)....we've had to adjust but are still finding tons of opportunity.  I'll be posting several other more recent acquisitions with comparable (and in some cases, more impressive) profits over the next several weeks. We're currently awaiting the closing of another 7 figure sale that we bought just 36 months ago.  And have also transitioned into some conversion projects as I see that as a way around the "everything with a garage door is over-priced" situation that we find ourselves in today.