All Forum Posts by: Kris Bennett

In your experience, what do sellers of property value the most when doing a deal? These items are what came to mind. If you want to add something to the list, please do. 

1. Certainty of closing

2. The buyer has the cash necessary to close and doesn't have to syndicate

3. Buyer's experience closing deals

4. Short due diligence period

5. Large earnest money deposit

6. Something else

John Lindsay from The Lindsay Self Storage Group is based in Durham. The Gorman Group with M&M comes through NC pretty often. The other brokers are based out of state. There will always be a few local brokers that list storage occasionally, but they won’t be the storage specialist type that I think you’re looking for. 

I’m happy to connect for a coffee and talk real estate and self-storage. I’m based in Charlotte. 

Thanks for the shoutout @Zach Quick

I should add, you should see a "Cost of Goods Sold" line item in the revenue. That's the boxes and packing items sold in the office. That should be offset by sales of those items and should be a net positive and add to Effective Gross Income. Also, there is no "loss to lease" in storage like there is in multifamily. Technically, it could be there if someone wanted to make a line item for it, but 99% of the time it doesn't exist. Usually, management fees range from 4-6% of Effective Gross Income. If they are charging tenant insurance you should see line items for that as well. If you don't there is some upside for you by charging customers for it.

Hi Justin. That's a good size portfolio. Here are a few things to consider:

Are the facilities located in suburban areas?

If so, how far away are the comps from each of these facilities? 

Are all the comps pushing 90% occupancy? 

What is the population density around each location? 

Can you build more storage at any of locations? 

Can your comps build more storage at their locations?

Can you ask to see the management summary that shows the economic occupancy and revenue trends monthly and year-to-date?

What are the 10x10s renting for? Above $1.00/sqft or below? Do they charge tenant insurance? 

Who is managing the portfolio? 

Who showed you the deal? A broker? 

There are a lot of questions to answer when looking at storage. I like multifamily and I started there, but now I focus on self-storage, and I'm happy to help however I can. 

However, you're right that at 90%+ physical occupancy and at least 85% economic you can push rents. There may be more upside, but it's hard to know from my perspective.

I hope these questions have given you some ideas as to what to look for. 

Hey Cliff, our company does development like this. I’m building a duplex for an investor out of CA, and I’m working on a few developments deals in Kannapolis, more duplexes and townhomes. Reach out if you want to chat. 

Hey Tyson, I'd look at the UDO for the municipality. That will tell you what type of construction the specific industrial zoning will allow. Once you have that list, go down it and see what might be the most profitable, or the one you're most interested in doing. Let's pretend it's storage. 

Self-storage costs about $20 - $25 per foot to build, maybe a little more depending on what you want to build. See how much square feet of storage you can fit on your parcel given the ordinances (setbacks, etc.). This is a rough estimate, so it's better to underestimate how much you can fit to see if the numbers work. 

Next look at the competition. 

Currently, there are 7 to 8 feet of storage per person available in the U.S. If the population within a 3 mile radius of your parcel is 10,000 people, that tells me the area can support roughly 70K to 80K of self-storage. That is not a hard number but a good place to start.

Next use the measuring tool on your local GIS, or maps application on your desktop, and measure the buildings of each facility within a 3 mile radius of your parcel. Then total the square feet (yes, I'm serious :)). It's tedious to do, but that will tell you the supply of storage. Search for all the facilities within a 3 mile radius of your site and call them to see if they have availability. If they're full, then demand might be a little higher than 70k to 80k sf. If they're not full, demand may be softer.

Now look at their rents for each size unit. Using that you can determine if the rents at your potential facility will be high enough to cover the cost of construction and turn a profit. 

Hope that makes sense. If you have a little cash to burn, I would recommend getting your parcel surveyed and having utilities located. Then work with an engineer or landscape architect familiar with storage to see what size facility is feasible. If I were to take a guess, I'd say you can fit about 25K to 30k sf. of storage on 3 acres, but that depends on the building requirements for storage of your municipality. 

I hope that helps!

PS--there are easier ways to figuring out the feasibility and supply-demand, but that's the DIY of doing it without paying a dime.

Hi Sean, I've used a few sources to find deals, closing on 5 deals in N.C. totaling close to $9M. I have one deal under contract now. I'm not sure specific names can be mentioned in the forums, but there is a property management software company that provides data on owners. Of course there is a cost, but it's worth it to find deals. Second, I direct mail to owners as well. Reach out if you have specific questions. 

I'd agree that a standing seam roof is worth the added cost. I've closed on a few storage deals that had screw down roofs and those typically present problems after several years. And since you own the land, $20 to $25 per foot sounds reasonable for grading and materials and construction. Best of luck. 

I agree with Neil, you should check the zoning for any land you're considering. If that passes, you'll want to check the comps for rents on the size of container you're considering offering. Realize the rents on containers might be less than rents on a traditional storage facility because of the perception of the public (it looks like crap to see a bunch of containers side by side, versus an actual storage facility). Alternatively, you could consider parking as that would be less costly than bringing in containers (as long as zoning allowed). If you sold the property with containers on it, don't expect to get the same price as a normal facility would command. Best of luck!