Advice needed.

[michael6372]

Hello Everyone. There is a self storage facility near me(about 1 mile from my house) that's for sale. It has 60 units, all but 7 units rented, it's on a major highway(about 4 miles outside of town), has some room for outdoor storage, expansion etc. The owner also drives a truck over the road so I have not been able to contact him to get price etc. I have no experience in this industry but am eager to learn. I was just wondering if you could give me any advice or what to look for, questions to ask the current owner, financing options etc. to determine if this is a good deal or not(once I find out the price).

Any help is greatly appreciated!!

Thank you very much!!

Michael.

[AroundTheWorld]

Welcome to the forums!

I always like to start with the financials (and price...) If they don't make sense, no reason to waste your time digging any farther.

I'd want a profit loss. This year to date and last year. I'd also want to know the historical vacancy rate (maybe by month for the last 12 months).

If the price works out based on the financials, then it is time to dig a little deeper and get into the "real" due diligence. But don't do this pre-maturely. If the property is WAY overpriced, no reason to chase down answers to your other questions!

Once you get this info (the financials and price) , let us know!

[Doug]

Sonya you have a great point with the need to weed these "deals" out. There are thousands of facilities for sale around the country but not many are really good deals. However if you find that the asking price is too high don't stop there. Find out if the owner is willing to offer terms (ie. carry a note back or maybe carry back a 2nd position). Especially in the current markets you can offer anything you want. You will find that most prices are set too high. So consider offering what you believe would be fair. If they are advertising a 6% cap and you want a 9% then offer them a lower price (it will bring your cap rate up). Remember you are not likely to "find" a good deal.....you have to "make" it a good deal.

[Doug]

Michael you should also consider developing a storage facility from the ground up. That is where you will truely make money in self storage. Yes buying a existing one and raising rates, cutting costs and expanding could be profitable however there are limits to that profit. I know building from the ground up may seem intimidating if you've never done it before but with a little guidance it can be done.

[Raghu111]

am new to this kind of services, can you explain how can do this kind of business..

[aaronramsey17]

Thanks for the information. This is really informative I looking for.

[selfstorage]

Look for signs of mold in the units ceilings. Look at what the material of the units is made of. Ask for a spreadsheet of his past year of checkins and move outs and his current price list. Find out what his monthly net figures are, and talk to an accountant to make sure that his price makes sense against what you will likely earn.