Investment Info:
Other buy & hold investment.
Purchase price: $3,200,000
Cash invested: $5,000
Purchased self storage facility #3 - Big Oak Self Storage - just down the road from our other 2 facilities. 290 units of self storage - mixture of climate controlled, drive-up storage, RV & boat covered parking. Also included was a billboard & 2 retail buildings including 4 store fronts/offices. Cold called owner - direct to seller deal with no brokers. Purchased at a true 8.5 cap. We raised capital for the full down payment allowing us to take 80% equity with 10k out of pocket. Plan is to slowly raise rents, minimize expenses, and hold for the 5 year note unless a 4+ million offer comes in. 12 months interest only on the debt side was very beneficial on this one!
What made you interested in investing in this type of deal?
We like the self storage asset class. This is a A class asset down the road from our other 2 facilities.
How did you find this deal and how did you negotiate it?
Cold call - direct to seller. We negotiated down about 400k off of what the owner wanted. We purchased off of actual numbers while owner wanted a price that was based off of potential gross income.
How did you finance this deal?
20% down on a 5 year note with 25 year amortization with local bank. 12 months interest only as well.
How did you add value to the deal?
We kept the on-site manager and we will optimize financials during our hold period.
What was the outcome?
80% equity of a A class storage asset with 10k out of pocket with my partner.
Lessons learned? Challenges?
Clearly define inventory of personal and real property on the contract. Discuss equity and distributions with bank and private partners well in advance of going under contract.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
N/A
