How To Value MiniStorage Facilities?
I hear that mini storage facilities make money and that it isn't hard to obtain financing. Is that true or gossip??
I know you want 100% occupancy but what is the norm to expect? What do lenders want to see??????
Just got a heads up on a 216 unit, some climate controlled, next to lots of Class B apartments. Price is 695,000 with 70% occupancy on 3 acres. It says building size is 30,000 sq ft. I don't know if that is one building or ten.
Only other info I was given is that the highway it sits on is currently undergoing lane expansion and should take 6 months.
Can I have some feedback please????
Thanks,
Betsy
Betsy,
My answers are preceded with --
On 2004-11-14 11:55, BBCProperties wrote:
I hear that mini storage facilities make money and that it isn't hard to obtain financing. Is that true or gossip??
-- That CAN be true, and often is, but doesn't apply to every case.
I know you want 100% occupancy but what is the norm to expect? What do lenders want to see??????
-- I think lenders are looking for occupancy numbers in the 90's.
Just got a heads up on a 216 unit, some climate controlled, next to lots of Class B apartments. Price is 695,000 with 70% occupancy on 3 acres. It says building size is 30,000 sq ft. I don't know if that is one building or ten.
Only other info I was given is that the highway it sits on is currently undergoing lane expansion and should take 6 months.
Can I have some feedback please????
-- Since you don't provide any revenue or cost data, this analysis is not worth too much, but let's take a shot: in 2002 the average self-storage unit sold for $61.74 psf. You have 30,000 ft, it sounds like, so that would make the building worth $1.85M. BUT, before you get too excited, that is a very crude analysis, almost worthless.
Why? Well, for one thing, almost no one lives in an average market. So the average sales price probably doesn't apply to you. And second, your occupancy rates are way low. Good operators want to see rates in the 90's. Occupancy in the 70's (assuming the facility is not very new) mean that something is wrong. Either there are too many competitors, or not enough customers nearby. It's also possible that the current owner is charging too much.
You really need to dig into this business of rates and costs, as well as the competition, and get more info. This could be a good deal, but the low occupancy rate is a warning sign of other problems.
CT
[/quote]
CT
Thank you for taking the time to respond with great information. I'm going to delve into this further to see what I can find out.
Thanks,
Betsy