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What questions should I be asking before purchasing?

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  • What questions should I be asking before purchasing?

    I am new to the industry but have an extensive real estate investment/development background. I came across a smaller older facility that has a good general location that I am interested in possibly buying. The place is not for sale, but the owner said he would consider selling so I would like to know what questions to ask other than the normal financial info?

    It is small but there is room to expand. Currently there are only a few older (1990s) buildings in good condition totaling about 10,000 sf and land to expand plus a warehouse.. Part of the property has car/boat/RV storage on gravel. Any info or suggestions is appreciated. Thanks in advance

  • #2
    Might want to consider that warehouse for indoor RV/trailer/boat storage. There will be others that will chime in about financial questions.

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    • #3
      If you're interested in a start-up project shoot me a PM

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      • #4
        Due diligence is so important.
        I do not know all of the answers but I know you should be looking for

        Monthly revenue
        Occupancy Rate
        Street rates
        Existing tenant rates

        Good luck and keep us posted.
        Don't put off until tomorrow, what you can do today.

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        • #5
          Make sure your zoning is correct for storage and outside storage plus any other requirements

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          • #6
            Do your own walkthrough. NEVER trust the owner to be telling you the truth. Get a copy of the walkthrough report for whatever tech he's using and then walk the entire property and make sure empty is empty and rented is rented.
            "The comeback is always stronger than the setback."
            Mom, Navy Vet, genealogist and voracious reader
            WA state

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            • #7
              Don't trust anyone. That is why due diligence is there to protect both Buyer and Seller. IMO here are just some of the things to look for:
              • 2-3 years of business tax returns
              • 2-3 years of additional financial data, credit card reports, bank statements to verify the financial data
              • Rent roll with copies of signed lease agreements. Look for any missing lease agreements.
              • Have the property surveyed.
              • Do a walkthrough to inspect the units, look for any damage, try to inspect doors that are not occupied. Look for any issues that may become your problem after closing, poor drainage, tree leaning toward a building, etc.
              • Have the roof inspected for damage and or leaks.
              • On the walkthrough notes any vacancies against the rent roll.
              • Ask what software they are using.
              These are just my initial items that popped up in my head when I saw your post. I'm sure folks will chime in with more.

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              • #8
                You could also hire some of the experts that do due diligence studies. Since you are new to the industry, the investment could prevent you from coming in on the wrong foot. You could learn from that study enough to start doing yourself on your next one.
                Terry Campbell
                General Manager - Self-Storage lending division
                Live Oak Bank
                704-437-4322
                [email protected]
                www.liveoakbank.com

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                • #9
                  Check ALL of your roofs!!!
                  Don't put off until tomorrow, what you can do today.

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