All Forum Posts by: Tony Perrella

Quote from @Paul Moore:

Hi @Tony Perrella! You got some great responses above and hopefully you are making progress. Any updates you can share? 

RV and boat storage can have some upside in a couple of related different ways. First of all, some of them have vacant land that is currently unused and you can factor that in for potential future expansion. Second, depending on the location the land might have a higher eventual use. For example, if its in a great spot, you might want to add a 3-story climate controlled indoor storage facility on part of it. Or in extreme cases, you might want to repurpose it for other uses. 

You might learn a lot from AH Osborne, he is a pro. he has been on the BP podcast a few times. Good luck!

 Hi Paul great to hear from you. The deal that I was looking at fell through - the seller took it off the market/decided not to sell. I’m onto the next deal now underwriting a few local storage units local to the area here. I’ve learned a lot from this experience. Thank you for what you have taught me. 

I will submit an LOI on an RV and Boat Storage Property in the next few weeks. To complete by underwriting process, I need to understand better the loan terms I can get on this type of investment/property. What kind of a lender creates loans for this type of property? Do you have any other advice when approaching a lender? How should I go about finding a lender?

Quote from @Michael K Gallagher:

Hey @Tony Perrella first off I am not an expert in this asset class, but I do fancy myself a bit of an underwriting guru so I'll take a crack at this from that angle.  regardless of the asset, valuing a commercial property like this follows the same strategy as any other property.  We need to understand how much the property makes, ie what the income of the rentals biz is, and we need to understand the debts against the business.  Once we understand that operating income we simply need to understand what other such business sell for as a multiple of that operating income.  But beyond that I'd want to understand what the operating relationship between the property and the business is, because there is an instance where if they are not separate entities you could have the biz lease the land from the entity that owns the land and through that income increase the value of the land and refi it out. 

Michael thank you for your Reply - Let me further clarify my question.

Here is an article explaining a few different commercial real estate valuation methods. I wanted to bring this up so I know we are speaking the same language here. 

The "Cap Rate" approach, in this article calls this approach "income capitalization," is what I believe you are describing. I have been researching this on the side, and I discovered that "Cost per rentable square foot" is more commonly used In the self-storage evaluation business. I would guess this type of business is valued similarly, but I could be wrong.  

Another Evaluation method I have been researching is the cost approach, which is also detailed in the article. 

The three different valuation methods give me a vast range of possible prices for this property (1Mil - 6.5Mil specifically). 


I'd love to hear more about what you mean by "the operating relationship between the property and the business" because my interest is that typically when you buy a storage facility, you also inherit the business, customers, and existing leases that the previous owner has in place.  

Best,

Tony

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $210,000
Cash invested: $20,000

This property is a single-family home that I purchased as a personal residence. I rented out rooms in the property on Airb&B and paid the mortgage. Since I have moved out and am renting out the entire property as an air B&B. It is now a cash-flowing asset that I plan to hold for the foreseeable future.

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

seemed like a great way to enter the real estate market as a new investor.

I'm looking at a for-sale RV and Boat Storage property in South Carolina. What are the typical financing options for this kind of property? 

I've been looking into a for-sale RV and boat storage property/business. I'm very interested in this opportunity and would love to learn more. Specifically, I need to understand how to value this property type to determine if it's a good investment.

If you know an expert in this field, may I ask for your help in arranging a phone call or connecting us over email? Also, are there any books or other resources you can recommend to help me get started?

BHAG's! You have to be a particular type of person to want to have a BHAG. Many of those types of people are drawn to the Bigger Pockets Community. 

I'm not necessarily a lover of the BHAG, but I occasionally give myself one when I have the mental energy to pursue it seriously. 

I accomplished the first BHAG when I purchased my first SFH for a house hack. I was 23 Y/O and had 20K in the bank enough to buy my first house for 200K. That was about three years ago. I've been running an AirB&B in that property now for three years and have since accumulated another SFH close by and am running an additional airB&B there as well. Now that my AirB&B business is fully automated, I'm setting my eye on a new BHAG.

The BHAG I'm working on now concerns a Self Storage Facility. After researching this area and communicating with some brokers in the North/South Carolina area, I'm building out my BHAG. I'm Researching how to Evaluate the Purchase Price, how to add value to a facility, how to find private money, and many more topics regarding self-storage.  I aim to own a self-storage facility with multiple buildings and locations by march 2023. This will be accomplished through hard work, persistence, and dedication. 

If you have any advice or encouragement for me, I'd love to hear it! Please comment below! 

To continue the discussion on this thread.
I'm looking at purchasing a facility that is currently up and running. How are these types of properties valued? How do brokers typically come to a purchase price? 

I've tried to find comps for net rentable SQ feet, but I have difficulty finding comparable properties. Are there other methods for coming to a purchase price on this type of property? 

What Due Diligence is needed for this type of property that you typically wouldn't perform on a traditional self-storage deal? 

Any other advice you can provide is much appreciated.