Should I purchase these storage units?
I am looking at buying a 90 unit storage unit facility. It is fenced and does not have power/water to the property. I’ve seen the 2006 & 2007 taxes for the property. They claim the gross income appr. k (both years) They are asking 9k for it. I spoke with my lender. I have to come in w/ 30% for a commercial loan. I’m considering offering 5k, so I would bring ,500k via 1031 exchange. My loan amount would be 7,500. With a loan of 7.3% so payment of 50. So they average k a month. But taxes/insurance/other expense eat up about 0. Do you think it’s worth the hassle for 0 a month? The units are about 15 miles from my house. I currently work a full time job and not sure if I want to take this on. My job is flexible so I could leave during the day to meet people if needed. Any other investors opinion?
I have researched starting from scratch. 1 acre of land (the units sit on 1 acre) is appr. 0-160k, the units to be built are appr. k each (3 buildings) For a total of 5k. The units have the potential at full rental to make k.
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4 comments
michiganfutureinvestments on September 19, 2009 at 7:25 pm
Hi Swanky,
This could be a very good opportunity if handled correctly, I personally love storage units – no electricity, gas or upkeep – nice, however location is very important, is it close to an industrial area? You can advertise to the businesses that you have outside and inside storage – many businesses need more space, good luck
bobinn on September 19, 2009 at 7:25 pm
The one expense you did not list, was "on site management", meaning, someone to process rentals, provide on site monitering of the property to prevent theft and vandalism, and to collect the rental fees. The on site manager, also provides clean up and simple maintenance to the property. Since you work full time, you can be sure that if a customer goes to your storage facility, to rent a stall, can they wait for you to leave work and go to the facilty just to open a stall for them! A lot of sites like you are interested, have an on site residence manager. Meaning, you provide them with an apartment on site. You are now looking at a much heavier cost of operating the rental facility. I’d suggest, that for the monies you have available, build your own facility. Purchase a piece of land, contract a company to erect structures for you with the lockable doors, fences, and security features, that you seem to be willing to pay much more than their actual cost. With the funds you have available, contact a "franchise" rental chain, and see what they would do for you to help you set up such a facility. I’d bet they’d be very happy to help you. Also, check with either U-HAUL, RYDER, or one of the other rental moving van companies, they also have special programs to help business such as you want to get in to.
Jeanie on September 19, 2009 at 7:25 pm
I wouldn’t invest that much for such a small return. Why is it so expensive? If it is the land value maybe it could be put to better use.
Having said this my brother owns storage units and he thinks that is a great investment. I have thought about building some myself.
You might check land cost in your area and the cost to build new units. I think you might be able to build cheaper than buying these.
Sheila E on September 19, 2009 at 7:25 pm
If you profit 250 a month and you have the time for it eventually your storage units will be paid off and by then your property will have at least doubled as every ten years property doubles in cost so as long as you have the time even if you came out even and not profiting you will win in the end. But you will have to find time to run the business and you will have to be able to work also so you really need to look into how much time is needed and you would be committing yourself to one area for a length of time but i would not buy it if it is a thirty year loan it wouldn’t be worth it you really should have something pay for itself within 10 or 15 years that is your bottom line not the profit you are or aren’t making it is also realestate smarts which will profit you more so that is truly the key here.