self storage units question

General Real Estate Investing
1

What kind of cash flow do you look to get from storage units?

I’m looking at a small one im my area - 14 units.

What kind of cash flow would you expect?

I think the owner is asking $65k.

2

Steve,

I am not a self storage owner, but have been studying it awhile. Since no one with experience is answering you, I will at least point you to some resources. Google self storage. There are self storage associations. I am trying to remember the exact site, but it is escaping me right now. One of them had a lot of information, including things like what kind of profits to expect and how to know what kind of property will do well in an area.

Good luck,

DB

3

Thanks for your help. I will check it out.

Supposedly all units are currently rented, so I know that’s taken care of - just not sure what to expect finance wise, as well as insurance, cash flow stuff. But I will look into it.

4

Stevie-O

Let me know a little more about the area and what the facility offers. I will try to help you out.

Richard Stephens

5

I think they are all just basic storage units, offering no heat.

11 10x15 units $60 month
3 5 x 10 units $29 month

Fully rented. concrete block construction, with concrete floors. It’s in a fairly rural part of Indiana, $64,900.

Edit: Just called the number and asked what the rents were when they have openings:

6

I do not know all of the details but from what I understand so far, it is overpriced by a couple thousand dollars. Of course what I feel it is worth is only based on my own system which does not include the market in the area it is located or other things like room to expand etc. etc. There are a 100 things that could make me change my thoughts on a property’s worth.

Anyways, It sounds like you should at least be able to pocket a little more than a hundred a month after debt service.

Richard Stephens

7

I will agree with that, I belive you should get atleast 500 a month cash flow or I would not touch it. Maybe even more. Good Luck…

8 
The bigger ones must be very proffitable. I can no longer keep track of all the ones going up here in California. There is one company here called Darrells storage that has giant waterfalls and ponds at all there stores like you would see in Vegas. Seems like any available land turns into a storage facility around here.
9

Self-Storage Investments are very profitable as long as it is done right.

Richard Stephens

10

Check the numbers and make sure your getting actual numbers and no pro forma (potential) numbers.

11

sales price @ $64,900

principle & interest @ 7% 30 year term = $431.78

insurance @ .3% = $ 16.23

taxes @ 1.3% = $ 70.31

                                                            $518.32 per month to own

11 units @ $60.00 = 660.00

3 units @ 87.00 = 87.00

                                                   $747.00 per month gross income

                                                           = 228.68 per month net income

                                                  2,744.16 per year net income

                  64,900 divided by 2,744.16 =  4.2% return

this does not look to good to me. I shoot for a minimum of 10% return. Preferable 15% due to it being real estate.

12

I’m listening to a self-storage teleconference as I type this. I agree that they are great investments if done correctly. It doesn’t sound too hard to make these work since the “human” factor, i.e., tenants, is removed. But how do you find investment-priced units? I can’t imagine that you’d find them like you find good house deals.