Posted by Carlos on September 27, 2004 at 18:29:05:
Fair question. There may be other ways, but I’ve just walked in the front door and talked with the person behind the desk. Just make out like you’re a potential customer, and ask about their rates and the type of storage facilities they have (which is all stuff you need to know anyhow), and somewhere in there slide an occupancy question. You might ask about current occupancy, and then say “I bet that’s been going up over the last few years, huh?”, or something to that effect. Just keep it low key and casual.
A lot of folks are happy to talk about the business, although every now and then you run into one who isn’t. Just wish them good day and move on to the next one.
Storage Unit Condo Invest,ment - Posted by Fun Bob
Posted by Fun Bob on September 24, 2004 at 08:14:07:
I am thinking of investing some cash in one or more 240 sq ft storage units that are for sale. These units are part of 3 large building(new) that offer many different sizes, starting at the 240 size. They are in a great suburban area.
So the price asking is $18g and they have a property tax of $516 and an association fee of 21/month. Local rents are 200/month. The CAP RATE is 9%
SO does this investment make sense? I like the simplicity of it. AS rents rise will the value correspondingly rise too? They seem a little over priced to me.
This TYPE of investment(individual storage units for sale) seems new to me. Anyone else familiar with these? Thanks in advance.
Re: Storage Unit Condo Invest,ment - Posted by Carlos
Posted by Carlos on September 24, 2004 at 13:52:19:
I didn’t know these were being sold as condos, that’s interesting. Who handles the management/sales functions, and how are they paid? I would think that would have to come out of your $200/month, wouldn’t it? (thus lowering your cap rate)
Have you checked to see what the competition nearby is? Find out their occupancy rates, they should be up over 90%. If not, the market may be saturated.
Overall, this doesn’t sound like a great investment, although it might be an OK one. Exiting something like this could be tricky, as I’m not sure the market for this type of product is very large.
How to find occupancy rates for existing competing self storage units? Do you call the owners up and say, “Can you tell me what your past three years vacacny rates are?” I don’t mean to be sarcastic, I just have a similar need and was wondering as to obtain this information.
Re: Storage Unit Condo Invest,ment - Posted by fun bob
Posted by fun bob on September 24, 2004 at 16:41:49:
You raise some good question Carlos. Thanks for the input. Yea, marketing and vacancy could eat into the cap rate. I would manage them myself.
Ultimately I wonder what price these codos could fetch over time. I guess I’ll mull it over some more.
Re: Storage Unit Condo Invest,ment - Posted by ray@lcorn
Posted by ray@lcorn on September 28, 2004 at 09:53:11:
Dano,
Carlos’ post back to you is exactly how to gauge current market conditions.
I have a habit of asking owners of any type of business how things are going. You just never know what the answers will be, and often a casual conversation can be a tipoff to opportunities.
I’m not even looking for self-storage projects, but I had occasion to be in a local self-storage facility over this past weekend. While I was doing my business I made conversation with the owner and asked “Y’all stay pretty full?” (southern accent not required, but helpful;-) He said no, they were about half full.
That surprised me because I thought this market was pretty healthy. That made me curious, so I made a couple of calls when I got home and found there were major vacancies at two other large properties. Seems the area is well overbuilt and it may take a while to absorb all the units. You can bet I filed that little tidbit of info away for future reference. If the absorption takes longer than some of the owners have planned for there may be some distress sale opportunities, and that’s something I’m always interested in.