buying a 40 small storage unit opportunity

I ran across a 40 small rental storage unit facility for sale at a fair price I think. Its listed at 110k. Currently its half rented with no advertising or anything of that nature. I was just curious as to who have had any experience on this forum with this type of investmestment and if its worth it? Are they really that profitable? Any opinions experience etc would be greatly appreciated.

Did the owner state the income for the current 50% occupied level?

Prices will very greatly by location. Also, did the owner boost the rentals with a big starting promo? Will they all leave after 3 months?

Does the owner own the land and buildings free and clear?

Here's the material cost of seven large units.

It looks like a pole barn was quoted. (Treated posts). Who knows if it's actually divided inside.

Having just built a pole barn, expect to double that cost for a slab (expensive) and labor.. Never mind running power, permits, or property costs. I'd say out the door, you're looking at $30k easy, without the land.. Assuming you live somewhere with cheap labor.

$110k sounds like a deal to me, I'd want to see the opened books - see what the cash flow is. Also expect to spent quite a bit of time managing that number of units.

You'll need good ways of dealing with deadbeats, since people will worry more about paying their mortgage/gas bill/etc than paying you if times are rough. And, once you've sold their crap to pay for months of back rent, you'll need to prevent them from kicking your ass.

I had a storage unit for about a year. The on-site manager was six-foot-five, probably 350 lbs. He kept two very large dogs in his office. Emulating that model is probably a good idea.

The price instinctively sounds like a hell of a deal. Which is why you should be extremely cautious.

gdrum said: I thought it was 40, just read the add again its 30 units....this place is 20 minutes from my house(indianapolis) so I figured this would be a deal...ill have to research all of the questions mannyv asked as those all are very good. http://www.weichert.com/search/realestate/PropertyListing.aspx?P=17934428&cityid=2083&q=atlanta+in&pg=3 There is a link to the add.

thanks

imho, I wouldnt have posted the link. a bunch of fwf guys will just take it from under you now.

but you quoted it for him in your reply? that's nice.

Perhaps you should rethink the whole thing anyways. Confusing 30 units for 40 units is a pretty big red flag. I wouldn't worry about others snatching it from you. Every business has its pitfalls and I doubt many of the armchair arbitragers would want to be managing an operation this size. In fact, have you figured how much gas you will spend each month running back and forth? Buying a business like this really has to be complementary to whatever you are currently doing to be worthwhile.

gdrum said: delzy said: Perhaps you should rethink the whole thing anyways. Confusing 30 units for 40 units is a pretty big red flag. I wouldn't worry about others snatching it from you. Every business has its pitfalls and I doubt many of the armchair arbitragers would want to be managing an operation this size. In fact, have you figured how much gas you will spend each month running back and forth? Buying a business like this really has to be complimentary to whatever you are currently doing to be worthwhile.

The unit is no more then 12-15 miles from my house. If gas is the only worry any business situation in this era I probably shouldnt be doing business at all. Besides I paid 2.77 this morning and personally I think thats cheap.
So what would you think your monthly fuel expense will be next year in travel related to this business if you buy it? And couldn't you say the same about any of the business cost factors? If you think $2.77 is cheap, you don't have a very long memory.

I know someone that built a mini storage. Getting the occupancy rates up takes time, people pay late or not at all, theft, calls all hours of the night, and I was shocked at the property tax on the bldgs. Liens and auctions.....

swandown said: gdrum said: lol nobody is going to steal a storage building from the middle of a bean field on here 90% of fwf are east and west coast individuals

and if you have ever worked with weichert.com its like alcatraz trying to find the location and phone number of the listing agent
I just put in an offer of $95K.

damn you beat me to it

gdrum said: I drive passed it everyday on the way to work. I would incorporate it with my monthly budget as I already spend it now. Being its only 30 units and its not fenced in etc...I doubt the amount of time I actually need to be there is minimal once advertised properly and its rented out. Its not even in the yellow pages that would be an easy start. Setup a P.O. Box and probably stop by couple times a week, or as matters arise. Gas would be the least of my worries, I need to figure out the repair costs of the doors, roof, possibly fencing it off so can offer trailer storage, and other expenses that would be more detrimental to the operation. I figured there might be a few on here who are currently into this in a larger scale that could share ideas and tidbits as to yes this is great to start on a small scale or no its a waste of time.

Better include cost of fencing in your cost model, unless you want to self-insure (and be sued constantly.) Firebrick between each unit is a thought as well. How secure are the walls and doors? There IS a reason that the self-storage units I have seen were built from concrete block or pre-stressed concrete walls, THINK INSURANCE FIRES of people storing their "possessions."

Also, since its near Kokomo, I would think that every time another plant closes, the insurance cost would go up. The economics in that entire area would make me run from ANY investment there. I only go through there once a month or so, and IMO, its depressing, but then, slum-lording is not my cup-of-tea.

gdrum said: I thought it was 40, just read the add again its 30 units....this place is 20 minutes from my house(indianapolis) so I figured this would be a deal...ill have to research all of the questions mannyv asked as those all are very good. http://www.weichert.com/search/realestate/PropertyListing.aspx?P=17934428&cityid=2083&q=atlanta+in&pg=3 There is a link to the add.

thanks

Translation: I am selling a 40 unit storage facility. Here is the direct link. Please buy it.

Are you an investor for the business, the property, or both?

What do you know about this business?? Have you seen the tax returns?

Have you talked to people in the business regarding the margins, ins/out etc.

Are you going to service debt or all cash??

Who is going to work this or is it going to be automated?

Do you just need a tax write off?

You do know that after 6months to a year, most people stop paying realizing that their sofa is not that important as the latest gas bill?

You are aware the barrier to enter this business is low.

FYI, i thought this business was just a way to get tax write offs to facilitate the holding of land until business/commerce expands into an area. Maybe i am wrong.

mannyv said: Actually, one question I'd ask the owner is if it's mainly business customers or retail. The description says "mini warehouse", which leads me to believe it's the former.

If so, there's probably a lot less aggravation than if it was a consumer/retail operation.

The lack of a fence is troublesome, but if they've been around for a while then maybe it's fine. A fence would mean that you need to be called for customers to get in. The lack of security, though, is pretty weird.

Does it include the land? If not, how much is the lease?

One growth path may be to rent out empty bays as small business shops. There are a bunch of those here. They're cheap, great places for businesses to start. You'd need to wire for utilities (electric, water) though.

As a note, it sounds like the office is $66k extra (CAN BE BOUGHT WITH OFFICE BLDG NEXT DOOR FOR $166,900 bldg 30 x 60).

You could rent out the bays as housing for illegal aliens, too, and am betting in that area the demand for that would be lots higher than boiler-houses for small business start-ups. We are talking a section of the country that is not far behind Flint and Detroit in terms of plants closings and layoffs, so there is already PLENTY of office-space available. Delco would LOVE to rent a few million sf.

Bearsrock:

You might be right on. The owner would want to check local competition.

Mickie3 said: You could rent out the bays as housing for illegal aliens, too, and am betting in that area the demand for that would be lots higher than boiler-houses for small business start-ups.

<shrug> Don't hear you doing anything useful except threadcrapping. Maybe he should offer $85k and see what happens? Or are you thinking of scaring the OP off?

Mickie3 said: mannyv said: Mickie3 said: You could rent out the bays as housing for illegal aliens, too, and am betting in that area the demand for that would be lots higher than boiler-houses for small business start-ups.

<shrug> Don't hear you doing anything useful except threadcrapping. Maybe he should offer $85k and see what happens? Or are you thinking of scaring the OP off?


Or maybe, just maybe, I happen to know a lot more about the area in question than you do????

I would ask someone who was thinking of buying in any area that I would personally question if they knew what they were REALLY getting into. There are many more ways to invest your money wisely than tossing it down a sewer, which is what I see this as being. If that constitutes "scaring the OP off" in your mind, so be it. Just because a property is cheap doesn't mean its a deal, however, if you think it does, invest your life savings in Detroit, lots of CHEAP property there.

Are you the person who has this piece of property for sale? Is that why you seem to want them to make an offer with lots of questions still unanswered?

What I find funny is how many realitors lately do not return phone calls or emails. You would think in this era they would be bugging you, yet I consistantly find people who just blow me off and leave these questions unanswered. I part out cars on eBay for a hobby, I figured if this was a good profitable investment I could benefit both avenues for the future.

taxmantoo said: I know of one instance where two large garage units were rented out to a customer who paid twelve months upfront, then was never heard from again. When the owner finally seized the units, he found that both of them were full of 55 gallon barrels of hazardous waste. The cleanup bill was six digits.

This is actually an issue OP should worry about. What if the current owner is selling the property cheap because he just discovered something like this in one or more of the units? Once you take ownership of a property, you are responsible for all environmental issues. You can always sue the previous owners if it was actually their problem, but that only works if you can find them. Or there may have been a flood or pest infestation that most customers haven't discovered yet. This is definitely something you want to look at from all the angles, and find out what kinds of insurance you can get, and how much it costs.

this is what I have learned as a result of litigating numerous business opportunity sales gone wrong:

if you don't know anything about the business... you will only make money by accident.