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  1. #1
    GA Guy is offline Junior Member
    Join Date
    May 2011
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    3

    Default Newbie trying to buy 1st.

    Hi All,

    I've been wanting to get into self storage for a while and might have found one I can get. It's only 100 units, not very visible (wider and lower in back), virtually empty (<10%) because of the owner preoccupied with his other business (small RE developer), no big trucks can navigate the narrow corners, and a nice new spiffy facility right next door.

    It sits on 1/2 acre with minimal road frontage on a suburban road with 23,000 passing each day. The owner is willing to finance purchase of $145,000. It is in fairly good condition with only a few bad locks/doors. There are only 2 sizes: 5x10 and 10x10.

    Help! I can't pay a full blown analysis. Where can I go to verify this is a good deal?

    GaGuy

  2. #2
    astro is offline Moderator
    Join Date
    Feb 2008
    Location
    Cashiers, NC
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    1,880

    Default Re: Newbie trying to buy 1st.

    Hey, GA Guy. Welcome to SST. Not being an owner, I would have to make a guess or two regarding your question. I am sure people with ownership experience will jump in here soon.

    So, I would think that as an owner, you would need to have an upside to an acquistion. Having read your post, I can't find one. 10% occupancy will not support a facility, and I would expect, not even handle the debt service.

    It is too small a place to build occupancy in and then sell to one of the big boys.

    I believe that you should keep looking.
    Bob Taylor (Astro)
    Blue Ridge Self Storage
    Cashiers, NC

    Disclaimer: What Gina said....'cause the the cheese fell of my cracker.

  3. #3
    Buffco is offline Junior Member
    Join Date
    Apr 2011
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    18

    Default Re: Newbie trying to buy 1st.

    I feel like I can help, as I just went through this myself.

    First, when you say there's a nice, new spiffy facility next door, is that facility a self-storage? If so, look elsewhere.

    Secondly, it's troubling that you are less than 10%. You're going to have to do some work to get occupancy rates back up, and that's where I fail right now. I don't have a marketing degree or expertise.

    However, it's easy to determine worth and you don't need a pro analysis. You can do it yourself. First you are going to have to determine what kind of occupancy you think you can get and maintain. That will tell the tale right there. Like my dad says, "The calculator doesn't lie". Figure out what the facility WILL make, not what it POTENTIALLY can make. This will be hard, because it has fallen so far in occupancy rates.

    Knowing what kind of monthly income you can expect will tell you how much you can pay a bank note each month. This will determine the selling price, not how much the seller thinks it is worth. He can think it is worth a billion dollars, but if it won't support it, it ain't worth it.

    Conversely, he could let you have it for 25,000 dollars, but if you can't rent any units, even THAT is too high.

    What kind of rental occupancy has this facility seen in the past? Are you confident that it was simply owner neglect that led to the decline?

  4. #4
    GA Guy is offline Junior Member
    Join Date
    May 2011
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    3

    Default Re: Newbie trying to buy 1st.

    Thanks for the insight. I was reminded that the current owner will supposedly delay repayment while the new owner ramps up occupancies.

    Yes, the facility next door is a self storage. It has a fence with controlled gate, vehicle parking, etc. I would guess 150 - 200 units. This self storage is unfenced/uncontrolled and has no on-site manager, but only a small office.

    I guess I need to at least contact the former owner before I were to go ahead. The current owner bought it at the RE nosedive about 2 years ago so he probably doesn't have good data. Also, the new facility was built within about the last 2 years roughly.

    Oh well, guess I'll have to keep looking. The rub is to find something that makes sense financially that I can also afford.

  5. #5
    Samantha@storsmart is offline Senior Member
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    Apr 2011
    Location
    Saint Joseph,MI
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    159

    Default Re: Newbie trying to buy 1st.

    Well obviously you are saying yourself that you don't really want to get into this, or you would have bought it and not asked for an opinion. I would suggest you keeep looking for another property.

  6. #6
    Lisa T's Avatar
    Lisa T is offline Senior Member
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    Jan 2008
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    Happy to be in Myrtle Beach, SC!!!
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    2,850

    Default Re: Newbie trying to buy 1st.

    Visit the facility next door and ask them what their occupancy is on the 5x10 and 10x10 units. If they will share that info with you, that will help you....if they are full or almost full, then there may be additional demand in your area for those smaller unit sizes.

    But it could be that their floor plan has more of the mid-large sized units, and the sizes you would have may be popular..so before giving up completely, see what you can find out from the facility next door.

    You won't have to worry so much about the big trucks getting around the property since you won't have big units, most people won't be wanting to drive a 26' U-Haul onto your property...though that will be some detriment, just not as much as if you had big units to fill.

  7. #7
    Buffco is offline Junior Member
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    Apr 2011
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    Default Re: Newbie trying to buy 1st.

    Here's a question to ask yourself. And be honest.

    If YOU were a storage customer, and you had a choice to store your valuables (or junk) in that facility or the new one right beside it, which one would you pick?

    I'm thinking you need to keep looking. There MAY be an opportunity there, but without looking I'm not sure what angle that would be.

    Also, another question. What would it cost to BUILD your own facility? If you're in an area where land is cheap.... Consider the coverage for the area currently before you build.

  8. #8
    GA Guy is offline Junior Member
    Join Date
    May 2011
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    Default Re: Newbie trying to buy 1st.

    Samantha, Yes, I actually would very much like to get this unit if it made sense financially, but I don't want to go in blind charging ahead. I want to make a smart decision, not necessarily perfect, just smart.

    I've only just bought my first rental home and I don't mind taking my time, but don't want to pass up a good deal either.

    I'm in Atlanta and there is little "cheap" land in close. Besides, I don't have the money or credit to build new.

    When I rented my own 2 storage units (still paying), I did go with one of the least expensive places which didn't have security or climate control. Maybe if I'd paid a lot more, I might have moved out by now.

    The rent on these seems to be about $45 and $58 as compared to $55 and $75 at the other place. I didn't think about checking on their occupancy.

    Being cash, credit, and time strapped, I don't want to go into something that is a marginal deal. I need to find something that is solid.

    Thank you everyone.

 

 
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