All Forum Posts by: Scott Meyers

Yes, What are you looking for specifically?

Craig, 

Remember, you still need to apply a CURRENT market valuation to the property to make sure you are buying it right - because when it comes time to sell, this is what any buyer will do - they add back all the management fees, unless you plan to manage it for them for free?  Get it?  So don't discount them in your valuation, or you'll shortchange your internal profits on your exit strategy.  

As for the actual management, 5% of Gross is what the banks will apply and gets it through underwriting.   But if you want to reduce your taxable income on the Self-Storage Facility, then pay your management company somewhere around 7-8%. 

Cheers,  

Hey Tom, 

Ditto to all the above, and while we're talking about the P & L you received from the seller, if he didn't include the Management (5% of Gross) AND the payroll to run the facility, you need to add that back in.  

Also, if he isn't including those figures, chances are, he didn't include, or understated his Maintenance and repair, Lawn and landscaping, pest control... all because "I do it myself". 

This can add up quickly, and as you know, when applying a cap rate, it can drive down the value exponentially - so make sure your P & L doesn't have any gaps, and if so, you need to apply some industry averages or determine what those costs will be going forward. 

A kiosk doesn't make sense at this property due both the size and the nature of the business. You're looking at approx $15,000 for the kiosk and $250/month for the maintenance fee. The reduction in management hours and ROI on the expense for a facility this size wouldn't be there.

I would definitely deploy a responsive website from Storedge or The Storage Group that allows someone to rent a unit and pay online through their laptop or smartphone would be a big benefit. 

Keep us posted.  

Craig, 

More Factors here than what you have listed, but for a QUICK Evaluation in Self-Storage: 

1. We value commercial RE based on NOI and Cap Rate

2.  Industry Norms for Storage:  Expense Ratio of 30-35%, so 35% of $13680 is $4,788

3. Your APPROXIMATE Annual NOI would be $8,892

4.  Apply a Conservative Market Cap Rate of 10%, and Your ESTIMATED Value would be $88,920. 

Now, this does not take into consideration the current occupancy, Deferred maintenance, Age of the property, amount of land, upside, supply index of the market, and getting the ACTUAL Expenses, rather than using an industry average of 35% as I just did in our little exercise.  etc. - All factors that will determine the value to you, and the value to a potential buyer upon your exit. 

I'm Sure many others will weigh in on this as well, but on the surface, it looks like you may have a potential deal on your hands.  

Hi Ronak, 

Yes, we have Quite a bit of experience with this. The ROI is great if you can displace enough payroll dollars to offset the cost of the Kiosk and the $250 Maintenance fee. The "sweet spot" is usually a facility with 200+ units, with a manager currently working 30 - 40 hours. If you can reduce the hours per week that a manager would keep, by approximately 10-15 hours per week, it makes sense.

Open Tech Alliance is great to work with.  THey will consult with you regarding the size of your facility and the demographic of the market to determine the probability of success at your site.   

Furthermore, a responsive website with the ability for a client to rent a unit online may be another solution.  It mimics most of the functions that are performed by the kiosk, and the customer can rent a unit from their smart phone, and move in whenever is convenient.   TheStorageGroup.com and Storedge.com are a couple of folks to check out. 

Cheers, 

Okay, I'll add my $.02 in Bullet form: 

1. Get an LLC - the last thing you want is to lose everything you own from some bonehead tenant and his attorney who feel they can get something for nothing. Liability is limited to that company (the llc which holds the rental) should they "win" a claim. DO IT NOW!

2.  STOP trying to sidestep the attorneys - the investing landscape is littered with broke people from the BiggerPocket Tribe who feel they can do anything without paying for professional help.  Continue to Treat this as a hobby, and you'll eventually regret it.  If you want to own a business, then it's time to put your big boy pants on and become a business owner, and stop listening to others on this forum who are rookies at best.  

3. Before I sold my 400 rentals, we held each house, apartment, etc. in a separate LLC. No bank screamed foul, and I didn't have to file separate Tax Returns, or have any insurance or other issues people claimed above. They all fed into my S-Corp, which is the active Management company (see somebody's post above).

Not ranting, just giving you a professional push to hire an attorney to give you the framework that fits your situation.  

Out.....

Shellie, 

We LOVE Self-Storage and we LOVE the Raleigh-Durham NC market! 

Currently, we don't have any students or associates actively working your area, but hope to focus more in your area in the very near future.   

Once your activity ramps up, shoot me a message if you find anything interesting that you may want to partner on, or wholesale to us. 

Cheers,

We have a relationship with InfoUSA whereby we give them the SIC Codes we're looking for (4225 for Self Storage) and a few others, along with the zip code, county, etc. that we want to farm.  

Shoot them a credit card, and they send an Excel file.  Then, we have about 3-4 letters that we rotate in and out of the mailings (we split test A LOT).  

We'll  do the mail merge with Microsoft word, print them out, hand sign them, then hand stamp and hand write the address on a # 11 envelope and send them off.  By the way, I don't do this, our Virtual Assistants handle all our Tedious marketing tasks.  Not my pay grade. 

Our response rates are around 4-5%, which is almost double the normal response on blind mailings from the big mailhouses that send these out with metered mail, and machine generated addressees...... 

Problem is, you can't specify that you want only 30,000 - 50,000 sf - SIC data isn't that specific as you requested. 

Either way, it's still well worth it and is still our #1 strategy for sourcing deals before they go to market. 

Cheers! 

That's Great Stuff Charlie! 

Self Storage Actually started out as a land bank, until it became the largest and most profitable sector of commercial fort the past 20 years. 

That said, we are ALWAYS looking for other ways to generate returns on the land we are considering for development, and now you have given me more options on ways to monetize them if storage isn't a fit. 

Cheers!