Starting out
Tis a tad long:
My partner and I have decided to go into self storage. Trouble is, he's an electronics technician and I'm a chemist by trade. Were starting out with little to no knowledge of self storage and high hopes.
Our Goals:
-Find a piece of land suitable for self storage
-construct Self storage and RV storage onsite in phases until fully optimized
-integrate new technologies to allow minimal onsite staffing.
-in 2 years time have NOI of 80k+
-have enough income from self storage to quit our full time jobs. (80k)
---Small Steps towards a larger goal:
Several items need a well laid out plan, while a few seem to be form fitting no matter the business you start.
The form fitting items have already been taken care of.
-We have setup a LLC.
*Needed to setup a bank account in the business name.
-Established a bank account in the business name.
*The goal is to establish business credit, a credit line that can increased and utilized before the land is even purchased. By continually inserting money into this bank account and using a small LOC for small business starting expenses we will hopefully be able to increase the LOC when it is time for the larger expenses. It also allows to setup a working relationship with a small bank.
---Now for the guessing game. We have a general idea of how to accomplish our goals, but currently we don't know what we don't know. That is not a good situation to have, but not without its remedies.
-We know we need land that is cheap, highly visible, in demand area, and high traffic.
*possible remedy: Hire a buyers agent for the land, and perform a market feasibility study. The hope is to find a better deal on land (very important) and use the feasibility study to help solidify our position when it comes time for financing.
-Zoning, site assessment, and surveys.
*We haven't the foggiest clue where to begin here. Were strongly thinking of hiring a consultant for this phase through the first few months of operation. A consultant will probably be costly, but if the prevent one big mistake, they will have paid for themselves.
-Construction: At the bare minimum, in the beginning we will need a building, drive up path, auto-gate, kiosk, fence, security, drainage, lighting and probably a list of 10 other items I'm unaware of at the moment.
*Again were probably going to look at a consultant for this phase. Our extremely rough estimate on this cost is 160k-200k.
-Initial management: We both work full time on different schedules (days and swings). The hope is that the kiosk (aka Megan) will provide us the flexibility to initially manage the facility with less then 4 hours a day on site.
*This is a very wild guess and hope here. I know several Self storage facilities merely require a worker for unit clean out, kiosk stocking, and minor site cleanup. Were also strongly considering setting up a security system that can be remotely monitored from our houses. I live 1 hour from the proposed area and it will be nice to be able to casually check in.
-Financing: We think we need more startup cash. We understand that many business fail because they do not have the adequate fund to get them through the initial opening phases until the break even point.
*we both will have full time jobs and will not need any income from the business. That means every dime will go back into it. Were planning to have a very conservative 6-9 months hard cash in the bank assuming worst possible scenario (no units rented)
We also have a house flipping business on the side. We would like to push that until were ready to start the business. The hope is to provide start up capital and provide extra cash during initial operation. While we will still have money set aside for startup, we feel an extra source of money couldn't hurt.
We currently have approximately 90k equity combined in our houses. Assuming 90% refinancing, we will be able to tap into around 70k of that. We fully intend to do so.
We also know we need much more then that in financing to get started. Other then bank loans and hard money, I don't even know where to begin.
Okay....timeline (very loose)
-6 months sell house flip. Use money to hire consultant and perform feasbility study
-1 year purchase land, begin construction
-16 months First building complete, begin renting units and RV spots.
-2 years first building near 75% occupancy, begin building 2nd building
-3 years 95% occupied on facility.
I realize this is a huge mess of a post. My goal is to look back and see how I'm thinking now and I will be thinking then. I know I have some very inexperienced thought processes in here, but that is okay for now. The key is to learn from them.
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