Self Storage Case Study # 2 - Introduction Only
Its been a long time since I've posted anything to this blog and since my wife has heard enough about this deal over the last 6 months, I thought I would force someone else to listen to me. I can't stop talking/typing when I get this excited about a deal!!!:)
Mini Storage Project #2
Overview of Property: 117 Storage Units (roughly 12,500) square feet plus one rentable office and 2 small apartments. Good Location on major thoroughfare through rural town on the border of suburbia. Tertiary market at best but just 15 minutes from home. Comes with additional one acre of land to expand upon as appropriate. Currently 100% full physically but only 57% financially occupied (meaning almost half the units are not performing). Breaks even at day of closing given my purchase price, expenses and initial debt load. Current rents are 10-15% below market rate.
Purchase Price: $350,000
Closing Costs: $20,000
Project cost: $410,000
Source of funds: $304,000 first mortgage, $80,000 contribution by equity partner in exchange for 19% ownership: My contribution of signing for the loan and $26,000 out of pocket earns me 81% ownership and all cash flow (Investor will receive preferred rate of return on $80,000 which is included in debt service below instead of percentage of cash flow)
Financial Projections: As is Year 1 Year 2 Year 3
INCOME: 57.60% ramp up 88.00% 5% rent inc.
Gross Revenue $89,550.00 $88,350.00 $88,350.00 $92,767.50
Collected Rent $51,600.00 $57,137.00 $77,748.00 $81,635.40
Retail Profits $600.00 $600.00 $600.00 $600.00
Late Fees $300.00 $600.00 $600.00 $600.00
TOTAL INCOME $52,500.00 $58,337.00 $78,948.00 $82,835.40
TOTAL EXPENSES: $17,476.00 $27,085.00 $27,035.00 $27,035.00
Net Operating Income $35,024.00 $31,252.00 $51,913.00 $55,800.40
Projected Value after Year 3: $613,800 based on a CAP rate of 9%.
Only thing left to do is make reality match these numbers!!!! Wish me luck and check back for updates along the way. We will close later this month and plan to hit the ground at a full SPRINT!!!!
I hope this humble little blog of mine inspires someone to consider self storage investing. Without exaggeration, it has changed my life beyond what I can explain here!