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Thread: Thinking about trying to build/buy a storage facility

  1. #1
    ericgearhart is offline Junior Member
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    Default Thinking about trying to build/buy a storage facility

    Hi everyone

    So to keep the story short and sweet, my wife (who has been in the storage industry for over 12 years) and I are contemplating trying to go down the long and arduous path of building or buying and then running our own storage facility.

    When I say my wife has "been in the industry" that's a bit of an understatement.... at two different national storage companies, she has been a ridiculously awesome property manager... management at the last major storage chain she worked at would constantly move here around to different properties in California, because she would consistently bring the occupancy at the properties she managed above 95%. She'd "clean up" a property and get the delinquency down and occupancy up, and then boom they'd move her to a new property.

    At the company she's with now (another major national storage chain) she recently had the #7 property in the company... this is out of over 2,000 properties. Awards from the company she's at now literally cover her wall in her office. Management at this company has literally described her as a "ball of fire" (their words not mine)

    I work in the computer security industry, so the idea is I can get the gate system and computer that will monitor rentals and generally 'run the property' going (I was looking at Mini-Manager as a possible property management software solution), I can set up cameras, etc etc essentially cover all the technical "stuff" that comes up while she's the "manager" and runs everything storage related.

    All that being said, the main point of me posting this thread is this: is it completely ignorant and stupid to think that we'd be able to get into this industry, given that we don't have $100k in the bank and we don't own a piece of properly zoned land already? Are banks going to "work with us"? Has anyone else got any experience or advice they'd like to share?

    What do you guys/gals think?
    lady5563 likes this.

  2. #2
    Steve_hajewski is offline Senior Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Hi,

    Sounds like you have a few things going for you, as well as a few obstacles. But everyone has to start somewhere.

    So you've decided you want to own your own facility. We did a 28 minute video that talks about buying vs building a new facility. Check it out at Trachte.com. Which is better for you? It probably depends on what you can find for vacant land or existing facilities.

    In order to get financing, you'll need at minimum 10% down, and that's for an SBA loan. More typical banks like to see 25% down. Also keep in mind you'll need some cash to service the loan during the rent up period.

    As for all the software, gates, cameras, etc, you'll figure that out later. Your issue to start will be to find a location with unmet demand and affordable land. I would suggest you need to start with a smaller site to keep costs down. Get a small facility started with good cash flow then you can always expand or build a second site.

    Feel free to contact me with any questions about developing a site, and if you are looking for an easy way to run some preliminary numbers, check out the "Investment calculator" tool at trachte.com as well.

    Steve Hajewski
    Trachte Building Systems
    Marketing Manager
    badabean likes this.

  3. #3
    MZC&D is offline Senior Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Steve has some great points. The Main problem sounds like money. But if you can find a small property, or land and build a small property to start you might be able to do it. The biggest thing that some people forget about is your negative cash flow, while you are trying to rent the place up and get to making a profit you will still have to pay the mortgage among other things. Will this be a full time job for both of you, or will one or both of you keep full time jobs elsewhere? Another option to throw out there is the possibility of bringing in some partners. I don't usually like to recomend partners because there is always a chance of things going bad between partners, but if you can find the right partner it can be a good option. Possibly even short term partners, they are in on the initial investment and then you buy them out when you can afford to down the road.

  4. #4
    jsparkyii is online now Member
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    Default Re: Thinking about trying to build/buy a storage facility

    We looked into the SBA, and I must say it was very disappointing in how much in fees, variable interest rate and personal guaranties you had to give in to. They act like they are doing you a favor but in reality it was a bend over and take it in the rear type deal. It was so unappettizing that in the long run for us it was just easier to approach family and friends for the additional money needed to get to the 25% required by our local bank. Not sure if that really helps you but if you thought it was tough trying to find invester money vs. SBA I would recommend IM. Terms were much better this way.

  5. #5
    ericgearhart is offline Junior Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Thanks for the great replies everybody, instead of replying individually I'll just "shotgun blast" everybody on this reply

    Steve - thank you for your input and advice... it is looking more and more like we'll have to start small, and then hopefully build on our success (literally and figuratively!). Your seminars look interesting... if there's one near Virginia we might be interested in attending.

    MZ - "the plan" so to speak would be for me to continue working full time and making ends meet, while she manages the property. We'll have to have some bills 'go away' as it is right now (the $750 we pay a month for daycare for one needs to go away....) but once we get some bills paid off and our child gets to 1st grade we should be OK even without her income. Short term partners sounds like a great idea... we'd basically hook in some terms to the agreement with an investor where we can buy them out after our blood sweat and tears start paying off... that's a great idea

    jsparky - thanks, we were thinking we might go the "pursue an investor" route already, and the 10% to 25% down issue will force us to go that route

  6. #6
    Steve_hajewski is offline Senior Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Eric> We have one coming up in Philadelphia on Feb 7. I hope you can make it, as I do think you would get a lot out of it!

    Feel free to bring any potential business partners as well.

    Steve

  7. #7
    marcgoodin is offline Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Eric,

    At 100K your half way there to phase one of a pretty good size project. When I built my fist project 7 years ago I was in the same boat. I took on a 50% partner and have no complaints. We had frank discussions and also wrote up a detailed partnership agreement. Now I own three self storages. There is no free ride but self storage is a great business. You will have to take some risk - even remortgage your house - so be prepared to start your marketing now! I know that sounds premature but it is the key.

    One key is to be prepared for the banks. The more professional your presentations are the more they will believe you know what your doing. Everyone says they "wanted to build a self storage". Start your bank business plan outline while you look for land and a partner - you never know what or how things will work out but they always do if your are moving forward. My web site has a ton of free information about various aspects of building your own self storage in the FAQ section. www.selfstoragemarketing101.com

    To Success!
    Marc Goodin
    Self Storage Owner, Designer and Author
    Self Storage Planning - Design - Marketing Services for the small operator
    www.StorageProfits.com

  8. #8
    ericgearhart is offline Junior Member
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    Default Re: Thinking about trying to build/buy a storage facility

    Quote Originally Posted by marcgoodin View Post
    One key is to be prepared for the banks. The more professional your presentations are the more they will believe you know what your doing. Everyone says they "wanted to build a self storage". Start your bank business plan outline while you look for land and a partner - you never know what or how things will work out but they always do if your are moving forward. www.selfstoragemarketing101.com

    To Success!
    Thanks Marc I'm working on a business plan outline now... it's a bit daunting to try to develop but maybe if I take it in small chunks I'll be able to get a reasonably professional one developed...

 

 
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