In this episode, we crack open a real deal analysis, dissecting a self-storage facility for sale in Florida. Is it a golden opportunity or a sandy nightmare? Tune in as we discuss the importance of unit mix and pricing strategies in determining the success of a storage facility venture. We also shed light on the significance of conducting thorough market research and staying abreast of competition to ensure optimal pricing and occupancy rates.
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I wanted to go over one of the deals that they found. What happened is the virtual assistant called the owner, and the owner sent the virtual assistant to the realtor because the facility was listed. My team does not look on Crexi at all for deals or LoopNet. We don’t talk to any wholesalers. We don’t go on the MLS or anything. We only ever find off-market properties. We do this by calling the owners directly. This is how I teach. If you wanted to learn how to find regular properties. You could go look on Crexi. I’m done teaching. Crexi was on the last episode. I do direct-to-owner.
It’s door knocking, but instead of door knocking, you’re like driving for storage. You’re cold-calling owners. That’s how I teach. My virtual assistant called the owner, a super nice older lady her husband owned the facility and then passed away. Now she has this facility and you know how it is. She doesn’t want this facility. She wants to sell it. She talked to my virtual assistant. My virtual assistant talked to the realtor afterward and said, “I talked to the lady.”
She said, “I’ll call you up and we’d be interested in putting an offer on this property.” That’s how it is. You can go online. I can’t remember anymore now because we have a lot of deals, but I think it’s listed on Crexi. I’ll show you it. I’m going to show you how we put the deal together and then how we run the deal analysis on it. You guys have an overall pitch. If you want to buy the property, you can buy the property. It’s a deal that we found.
The Florida Property
This is the property. It’s in San Mateo, Florida. It’s an Angel Middle mini-storage in San Mateo. This is what it looks like. You can tell this facility does look older to me. It looks a little bit mismanaged, but you don’t know if a property is mismanaged until you get into the numbers. That’s it. You can’t look at a facility and be like, “This property is a horrible one.” It’s not like residential properties. This came right from Crexi. This is the whole thing. You could see that there are 5 by 5s that are $50. There are 5 by 10 that are $80, 10 by 10s that are $130 and 10 by 20 that are $170. The prices seem normal to me.
There are units and it’s 10,000 square feet. Square footage in storage is super important. We’re always talking about price per square foot as is and as an opportunity. We’re going to try to figure out the price per square foot for this property. It’s on 8.86 acres, then the value is around $320,000 is what they picked or bought it. The purchase price was $600,000 in September of 2022. If I remember correctly, it was a family member that maybe bought it from them. That’s why there’s a sale. They’re asking $1,000,082 for this property.
This is the rep, Chris Travis. Here are the expenses. They make utilities $3,338. Taxes $3,800. Insurance, $7,200. This is Florida. Florida has some high insurance and then the vacancy is 25%. It’s making 110,000. This is what is on Crexi. Here are some pictures of the facility. It’s got a little sign-up. It’s located right here. It’s right next to the water but off the water. Here’s the demographic. Anywhere in Florida, you re going to have good demographics. There’s not any place in Florida that’s going to be a bad area to purchase in. You can see that within 5 miles there’s 4800, 1600, and then 42,000 with 10 miles. It’s a good amount of people living there. This is the Regrid information.
Florida has good demographics. There's not a place in Florida that's a bad area to purchase in. Click To TweetI went over this in the bootcamp. We use Regrid to pull boundaries. You can see what the property looks like. I’m not sure if this is on a hill or if this is extra land that you can add more expansion and stuff on. Here’s the county assessor’s website. This is basically you go to the county assessor. This is the free information that you can get from the county assessor. This will tell you here what they’re valuing the property for, how many acres, what they pay in taxes, et cetera. It’s like the property report card.
The Executive Summary
We put this together and this is what we call the executive summary. Internally, we call this executive summary. This is where we put all the main information of what we want to know about the property into this one document so that I can quickly look at it. I talked about this in the boot camp, but this is something internally that we do so I can look at the deal quickly. If we’re going to wholesale the deal out, which we do a lot of wholesaling on I would share this with the buyer because this is everything that you need to know in order to know if it’s a good deal or not outside of the deal analysis. This is the demographics and stuff.
This is our Google Drive folder. You can see how we put the folder together. Everything that you saw is in each of the folders. He’s going through and you can see that it’s Regrid. There are photos. Here’s our offer. Here are the maps, the executive summary, the demographics and the declared info. I’m not sure what that is. Here’s the county assessor’s information. Here’s the competition. This is how every single one of our folders is set up. I don’t want to open up every single one of these folders.
That is why we create the executive summary. That’s what you’re looking at in this executive summary. Let’s go in here to declare value. This is a listed property. This is listed in Crexi. They have the offering memorandum. They make this look pretty. It’s listed under Marcus & Millichap. This is the little memorandum that they put together about the property here. They got a lot of comps.
Comps are different from competition. Comps are like, “What’s a property like this and what did it sell for?” versus competition. Here are all the comps with all the facilities all over Florida. Here’s the cap rate chart. They’re showing what the cap rate’s going for. It’s still 6% cap in the area. A lot of times, it’s super low. We run numbers at a 7% cap, but but’s still a low cap rate. People are like, “You can get some double-digit cap rates.” I’m like, “No, you can’t get double-digit cap rates.”
Here’s the price per square feet chart that they put together. It’s always good to look if it is listed on Crexi so you can get an idea. It’s near Jacksonville is where it’s at. It’s the South of Jacksonville. Here’s the the population. Here’s all the demographics and stuff. You see how they put it all together, which is what we do. We do a short version. Here’s some information. There’s a bunch of info. Here are more demographics, school districts and stuff. Here are the radiuses of the property.
Let’s see what else they put together. Property information. We already have all that. I’ll get into the numbers here in a minute. Here’s the site plan and the property. You could see here there’s a little road right here. I’m not sure if this property here is included or not, but it’s coming on the other side of the water right here is where it’s at. That’s a good picture. Here are some highlights of the area. It looks like its concrete block is what it’s made out of with the metal roofing. It looks like it’s got gutters, it’s got big numbers on it. It’s got some latches. The paint is that bad. There’s grass in the middle.
It’s got a gated system here. It doesn’t look like it’s going to need a lot of improvements. Let’s look at the numbers and see what it is. You can see $1,000,082, 6.25% cap rate, 1.28. They’re running their numbers at 6.25%. We try to get 7% or higher. They’re saying that the market calls for a 6.25% cap rate. Here are all the numbers that they give, the gross potential income. This is potential income. This was a physical vacancy, economic vacancy. The actual rent income is $100,000. This is current. It’s saying they’re making $100,000 and then here’s all the expenses they have. They’ve got sales tax.
That’s another thing too. In Florida, you have to pay sales tax. Make sure that you add that to your taxes. That does add up. You charge the tenant for the sales tax. They pay the sales tax, but that’s it. Insurance dues and subscriptions, landscaping, marketing expenses, management fee and merchant expenses, repair and maintenance. I honestly don’t think that you could pay a management fee and that’s $5,000 a lot, but maybe that includes the boots on the ground. I’m not sure.
Here’s a maintenance for $1,500. The boots on the ground are their management fee. We have utilities. They’re coming out with expenses. It’s 35%, which is right where it’s supposed to be. The total expenses are $37,000. The NOI is at $67,000. They’re saying you can raise the rent, then your NOI would be at $90,000. This is what they’re saying. Somebody said you can’t see that, but it’s okay. We’ll go over our stuff here.
We’ve got competition. I want to pull up our competition so we can take a look at it. This is what we come up with competition. Here’s a competitor right here. Let’s see what it is. This is Matthews. It’s across the water then on the other side is where it’s at. This is at Matthew’s. Free-up storage is right here. It’s all asphalt. Asphalt is very expensive. If they put that in, you’ve got to make sure you have to consider that because it costs a lot of money to do asphalt.
Here’s where it’s at compared to where the location is. Here’s ours. It looks like we’re outside of this city is where we’re at. Here’s another one. Champion self-storage. It’s over in the city. There may not be a lot of competition B and W storage. There’s a storage facility here, then they’re parking big rigs. We own a storage facility like this where we can park big rigs and stuff. We have storage and parking. There’s nothing wrong with this if you’re okay with it.
That’s a little bit down over here. When you start looking for competition, you could call them up and see if they want to sell. Here’s another one right here. This is ours. There’s that one right there. It’s the closest competition. Another one is American Mini Storage. The competition is there. I wanted to show you the folder. Think how beautiful this folder is. Isn’t it great with everything in that you need it? This is it.
The Deal Analyzer
Let’s get into the deal analyzer. This is our internal deal analyzer. It’s making 110,000. This is the current price and income. We run our numbers in three different ways, current, potential and after updates. This deal analyzer is available for purchase. If you do not have a deal analyzer or anyone go to my website, you could purchase this. This is the income. It’s 128 units. It’s 10,100 square feet and it’s 27% vacant. We’re running it at a 7% cap. We’re not trying to get a 6.25% cap rate. They have it listed at that. We’re trying to get a 7% cap. If they’re listing it at a 6.25% cap rate, then we know that our number’s going to be lower because the higher the cap rate, the lower your purchase price.
We always run our numbers at 7% and try to get it at a 7% cap. In Florida, what the Marcus & Millichap executive summary was showing was that typically cap rates are 6% to 6.2% is where they’re at in Florida. You have to keep an eye out for what other stores’ facilities are going for. If your cap rate is higher than what the market calls for, then you’re never ever going to get a deal. This is something that I teach my students as well too. They’re like, “I want an 8% or 9% cap.” Your buy box has become super small because it is very difficult to find a cap rate outside of what the competition calls for. We always do a 7% cap.
A 7% cap is on the cusp of being too high but not bad or whatever. That’s how we’re doing it. Florida is a fast-growing state. Everybody is moving to Florida. That’s why the cap rate’s a little bit lower. That’s also like Texas. Texas has lower cap rates because everybody’s moving there. In a place where there’s a lot of growth, then you have to be able to do a lower cap rate in order to purchase something. If you go out into the middle of nowhere in a little tiny town like Mississippi, then maybe the cap rate’s going to be 8%. For the most part, 7 % is a very fair cap rate to be used on your deal analysis for a market cap rate.
We run our numbers in three different ways. You can see current, potential and after updates. The current is as is. What is it making? What is it worth? What’s the vacancy? Potential for us is, “Can you get it from 27% to 8% vacancy?” This is not full on this property. When you look at properties that are not full, you’re thinking to yourself, “This person who owns this property is not doing correctly.” Most of the time, it is marketing and price. Internally, every week, we’re looking at our prices. We have a lot of facilities. Every week we’re looking at a couple of facilities a week on a rotating basis. We’re always looking at our price, the competition and our occupancy.
Those three things are the basic formula for how your facility is going to be run then you figure out from your occupancy, your competition’s price and then your price because there’s a whole bunch of different prices out there. You figure out what you should be doing for marketing. You have the potential here, which is getting it from 27% vacancy to 8%. If you find a facility that’s 8%, then there’s no potential. It’s not a mismanaged facility. This is a mismanaged facility. If it’s 20% vacant or more, I would consider it to be a mismanaged facility. You can find facilities that are 25% full and 25% vacant. Your goal would be to get it to the 8%.
In a primary market, if you’re looking in Orlando or Miami, then they typically are running their numbers out 80% to 85% full. When you’re in a small town like these types of towns and stuff, you should be able to get that thing full. Tertiary and secondary markets should be at 90% full or higher. This is what we call the after updates or this is where you put the opportunity. The opportunity is there are 128 units at 10,000 square feet at 1.24% price per square foot and then 8%. These four things on the deal analyzer are all numbers that you can change. Anything in yellow, you can change.
You cannot click on this part. You can’t change that. You can get it from not full to full, but on the opportunity, you can add units, and square footage, increase prices or get your occupancy up. That’s what you can do. Those are the four big ways to make money on storage. That’s what you’re evaluating. On top of that, you have to put your expenses in. Your expenses are the same expenses that they had on the executive summary from Marcus & Millichap. Those are our expenses, but we put them into seven different things. Property maintenance for us is boots on the ground plus property maintenance. That probably was from the management fee and the maintenance, which I think was $5,000 plus $1,500 or something.
They’re at $65,000 to $7,000 and we’re at $8,000. That’s right around where it should be. You have staffing. Staffing is the person who answers the phone and does the auctions and stuff. There’s a lot of work to do this, either you’re going to hire somebody to do it or you’re going to do it. On our deal analyzer, if you do end up purchasing it, you can change these numbers. If you’re like, “Your numbers suck. I’m going to come in here and change them, do whatever. I think I can do this better.”
I have one student. He’s like, “I run my facilities at 27%.” That’s because he’s doing all the work. He does not have any extra property. He answers the phone and does all the boots on the ground person. You may need to decrease your expenses if you’re the one that’s going to be doing that. If you’re not, then these are good numbers. You can see here these are formulas. We typically leave these numbers. We come out to about 35% for expenses, which I think is a good number.
You see the software and the merchant fees are $7,600. That’s the software every single month, which is probably going to be anywhere from $200 to $300 a month. Your merchant fees are 3% or something like this. That’s adding up. That’s what the formula is. We run our numbers at 2.9% and then $300 a month for the software and merchant fees.
You could go around and be like, “I’m going to find the cheapest software that I can to decrease rates.” In small facilities, you may want to do that. You have to realize that the lower the price, then the less the bells and whistles of your software. We use storage internally. Storage offers like you can automate anything and everything you. We try to automate as much as we can because we already have a lot of stuff going on anyway. I don’t want to sit there and figure out pricing. I want dynamic pricing, revenue management, be able to automate my auctions and this kind of stuff because we have other things that we need to be doing like looking at occupancy competition and pricing. It takes up a lot of time to do that and then you have the marketing.
Try to automate as much as you can, especially when you have a lot of stuff going on. Click To TweetYou ask yourself, “How much marketing am I going to need?” This facility is not that bad. If you’re going to have a 25% full facility, you may want to increase the marketing to 25% vacancy. You’re going to be doing a lot more marketing to reach your goal and it’s going to cost you more money to reach the goal maybe even in the first 1 or 2 years. You can look at this number and see if you want to change it. You can see we’ve got an initial clean-out and then some CapEx. Honestly, there’s not a lot that needs to get done for this thing. Maybe some cleanup, but that’s it. It’s got a gate. It’s already painted. There’s not a lot of stuff that you’re going to be doing.
We don’t add a lot of CapEx for a building like this. Keep in mind with the CapEx, and I reiterated this in the boot camp, it’s like when you have CapEx, all that does is screw you over with your numbers. I have one student who said, “I need $50,000 in CapEx.” It didn’t matter what kind of deal it was. He just wanted $50,000. I was like, “This property is only making $110,000. Where are you going to get $50,000 from? If you have to add $50,000 to your purchase price, then you’re screwing the numbers up.” Think, “What do I need to get right now? What does the market call for? What kind of CapEx is truly needed? Is it something that I need to do right now or do later?”
You want to have the best offer that you possibly can and create a win-win situation for you and the owner, but you want to make sure that you can get something because I see all the time people are super conservative with their pricing. The truth is it takes at least 30 to 40 offers to get a facility under contract. I know this because we put in a lot of offers. We track all that. You’re going to have to put 30 to 40 offers in to get a deal. If you’re going over 40 offers like I talked to one guy, “I put 100 offers and I haven’t get any deal.” I’m like, “Probably, it’s because your offer sucks.”
The better your offer, the least amount of time it’s going to take for you to get a deal. If you’re giving a very good win-win situation offer, then you’re going to get that deal into the contra. If you’re giving lowball-sucky offers and being ultra-conservative, then you’re wasting your time. It is a lot of work to get to this point right here where you can run your numbers. Closing costs are here. $24,000, this number here includes if you were going to use a realtor to close your deal because then you got to pay for the realtor fees. It is a lot of money to close facilities or commercial deals. You could always change this number like, “No. I worked out a deal with the owner and he’s going to pay the closing cost and I’ll pay less money,” or something like this.
Property taxes are here. You want the utilities and the insurance. Those are the three things you can see. They’re all there. The $7,000 is there. Before I do financing inputs, I want to do the unit mix first. You’ve got to have your unit mix. This is super important because this is what’s going to tell you how big your facility is. They’ve got 5 by 10, 5 by 10s, 10s by 10s and 10 by 20s. They’ve got 32, 46, 30 and 20 totals out to this much square footage. At the bottom is how we get the number.
You always want to make sure because a lot of times owners will be like, “I got 10,000 square feet.” No, it’s 10,100 square feet. 100 square feet is a whole other $100 a month. You got to get the right numbers for the unit mix, the total units and then also the price. there are a lot of different prices. There’s the price that the owner tells the person when he’s on the phone with the person. There’s the price that you have on the website. There’s the price on SpareFoot and on Google, then you have revenue management.
If you’re 80% full, it’s this price. If you’re 90% full, it’s this price. If you’re 98% full, it’s this price. There are a lot of prices. You want to make sure that you get a good idea of what the typical average price is for the facility. you can get that from a rent roll if you can get a rent roll. This one is on Crexi. In Marcus & Millichap, they always put the whole thing together, the kit and the caboodles, you have that.
When you’re on Crexi, you have numbers. When you’re not on Crexi and you’re going directly to an owner, you do not get numbers. You only get half of the equation. Most of the time, the owners are lying anyway. You have to keep in mind that you need to look at all the different prices and what is the average that you’re going to be able to get that they’re getting right now for the unit size. You can see here it’s $1.24.
$1.24 is very high for storage. The reason it’s high for the price per square foot is because it’s in Florida. It’s a very good area and they’re at the highest rate. You can see here that they are at $1.24 a square foot and the competition is at $1.18. They’re even higher than the competition. Another thing that it would bring to my attention is, “Am I going to keep these prices?” Maybe they raised the rent and they had it good during COVID and stuff. Now the market is calling for a $1.18. They probably right are too high on their prices. That is why they are at 27% vacancy. This is why it is important to always look at the competition. Every quarter, we look at all the competitors and what they’re charging and if they’re full or if they’re not full so that we know if it’s a good deal and if we’re at the price that we’re supposed to be.
You can see from my personal opinion when I look at this deal, I think the prices are too high and if we lower the prices, we will probably be able to fill up these very quickly. If we have the right type of marketing, like if we list it on square foot and do some Google Ads, we should be able to fill this up pretty well. You’re going to have to run the number at price per square foot, and someone is asking, “What’s a good price per square foot?” You got to run the numbers. Every location of every city, of every market is completely different.
You've got to run the numbers. Every location of every city of every market is completely different. Click To TweetYou could see here that they should be making $12,580 if they were full at $1.24. At the market rate, at $1.18, they should make about $12,000 a month if they were full. Here is where we do the competition. We took all the competition that Marcus & Millichap found for us and put everything into our spreadsheet. Marcus & Millichap did the comps. They found facilities that were 128 units in Florida. They did comps that way. We look at the competition in the local market. In our competition you can see here is not even that far away. It’s from right next door to up to 10 miles is what we did. We found 7 facilities within 10 miles to check out what everybody in that area was doing. That’s the true competitive analysis. Not looking at every type of facility you can get the thing.
You want to fill this out as much as you possibly can. The only way to get the competition is to call them up and to look at their website. Remember that the website prices are going to be completely different a lot of times than what they tell people over the phone. We tell all of my phone support people, “If they’re calling in from some marketing that we’re doing, that marketing not only costs us money to get that call in, but to convert that call.” We have the best salesperson on the phone answering every sales call. His job is to close that person because every single one of those leads is important.
The best salesperson is on the phone answering every sales call. His job is to close that person because every single one of those leads are important. Whoever answers your phone is the person that is going to make or break your facility. Click To TweetWhen he’s on the phone, he’s literally trying to get close. He’s giving discounts. He’s like, “You called in. We’ve got the thing available. We can give you a discount. We can give you 3 months for 50% off,” or whatever it is we offer. Their job is to close that lead. We keep track of that. You have to remember that whoever answers your phone is to person who is going to make or break your facility. If it’s you, a phone service, your in-house team or whatever.
You can see here we only could do an analysis on apples to apples, 5 by 5s, 5 by 10s, 10 by 10s by 20 is what we have then we call around. We offer 50, the average price per square foot is 50. We offer 80, the average price per square foot is 75. We offer 130, the average price is 120. We offer q70, the average price is 165. These are where we would be dropping the prices. If the average is down, we probably drop our prices, but to get them equal to everybody else or maybe even $5 cheaper.
That’s to get leased up. You can always raise the rates later. We have the financing inputs here. This page is now you have to start thinking about how are you going to buy this thing. How are you going to buy it? Are you going to have to go to a bank and get a loan? Do you want to run your numbers based on 30% down and 8% interest if you’re going to get a conventional loan or you can do 15% down and 10% interest? It doesn’t work.
They’re asking for $1 million. At $800,000, those numbers do not work. Typically I’m going to tell you SBA loans are not working. We run our numbers at 30% down at 8% interest if you have to go to a bank. we still try to get at above 10% or higher on the cash-on-cash return. If it’s the 16%, we’d probably be able to go up higher on this, but you can see we offered $800,000. They’re asking for $1 million. That’s that 12% cash-on-cash return. We may want to go up to $900 to see what it is. You see it’s still 12% cash-on-cash here. You may be able to do %900,000, this is 10/80. You may even be able to go up higher on this number if you want to stay at the 10%.
You can see here that we have three owner-finance offers. We offered $1 million with 20%, 25% and 30% down and we did 4%, 4.5% and 5% interest. The higher the down payment, the lower the interest. The lower the down payment, the higher the interest. You can do fixed-interest or interest-only payments. You can say, “Why don’t I just do interest-only payments?” You could do, “let me do fixed interest with 10% over 25% amateurization.”
There are $1 million different ways you could play around the inputs. This is why we offer for this deal analyzer, you can run your numbers in five different ways. You can look at this deal and try to figure out, “What is the best way for me to purchase this thing? You just sit there and play around with it so that when you want to look at your cashflow, “Here’s the cashflow. If I paid,” whatever it was for the input, “$900,000 I’m at as is at 7% or 7.8% cash on cash. After I raised the rent, I’m at 10% cash on cash.”
It’s current versus opportunity. you’re going to be looking at your cashflow. Remember cashflow is as is at $9,000 a month and 3$,000 in expenses at $6,000 NOI. I have a mortgage payment of $5,000 and my net is $700. That’s a 2.9% cash on cash . Remember we weren’t even increasing the rent, we were trying to get it full. We could say, “We’re at $11,500, $3,000 for the expenses. Is that 35%? $8,000 NOI, $5,000 mortgage equals $3,000.”
By getting it full, you can net on this property $3,000 a month for the $900,000 purchase price that I put in. If you’re at $1 million for the owner financing, we’ll pick one of these, you can net anywhere from $4,500 to $5,500 depending on your owner financing. The question is, “Can you get financing on this thing?” Interest rates are coming down but not really. They will come down. By the time you close in the next couple of months, you should be able to get a good rate but you’ll have to be able to put 30% down in order to do this.
The Deal Analyzer
You’ll need a couple hundred thousand dollars down. You can see this down payment, $200,000, $250,000 and $300,000 is where we’re at. If we go to a bank and put 30% down at $900,000, that’s $270,000. You will need a couple hundred thousand dollars down to buy this facility. Gone are the days where you could put 10% down. SBA loans are not working. Banks and even sellers are asking for more down payment. This is the deal in a nutshell. I wanted to show it to you.
These are the three tabs that we have where you can look at the valuation. The current valuation, potential, and after updates. Remember current is as is. The potential is if we get it full and we don’t raise the rent. The valuation is, “I can add more units,” increase the rents or whatever the opportunity i, what this one is. You can come in and look at your numbers as is. We’ll do the gross potential rent. If you were full, you’d make $150,000, you would have $12,000 in vacancy because remember we always run our numbers at 8% to 10% vacancy because people are always coming, going and stuff.
Your gross income is $138,000 minus your expenses, which come up to $37,000 is $100,000. Depending on what type of loan you get, here on the deal analyzer, you’re going to toggle between which loan, “Am I going to do cash, bank financing or owner financing?” When you look at your cashflow or your financing inputs, you’ll be able to see all the numbers on this. You could see that you’re going to pay your mortgage and the net after your mortgage is $37,000.
That was the mortgage based off-of the financing inputs that you put in here. This is a super important step to understanding deal analysis. What are the inputs going to be? How much money can I come to the table with? What interest rate am I going to be able to forward? That’s why we put these five ways in here. You could run your numbers five different ways and see if you can come up with some good offers. Once you do that and you fill all this out throughout all the tabs, it creates the letter for you.
All this stuff is pulled in the address, anything in yellow, everything is all pulled in. It says, “Thank you for working with us. Based on the numbers that you gave us, these are the offers that we’re giving you. We push owner financing. If you’re interested, let us know and we can always meet on Zoom or I can come out there and meet you.” On this tab, you can see that we’ve got the purchase price, monthly payment, the interest rate, the term of the loan, the down payment and interest that the owner’s going to be making if they sell or finance it to us and then the total owner.
Q&A
If this person took this offer at $1 million with $200,000 down at 5% interest, they would make $400,000 on a loan. Over the course of 10 years, they would make $1.4 million on this property. They’d make $400,000 more. Show this in our letter to the owner. This is how we get many owners to sell and finance this. This deal analyzer is super powerful. Whether or not you use this or you do it on your own, this is what you need. The ultimate goal in your offer is to send this over. It doesn’t matter if it’s a realtor or an owner. This is what we send over and this is how we get many deals under contract. that is basically the deal in a nutshell. I saw some questions here.
“What was the net monthly?” The net is depending on what type of loan you get. If you’re getting bank financing, you’re making a couple of thousand, $3,000. If you get owner financing, it’s $5,000. It depends on what type of financing loan you get. Your net is based solely on your gross income minus your expenses, minus your mortgage equals your net.
Everybody will ask me, “How much money can you make?” I don’t know, you tell me. What expenses are you going to have? What mortgage are you going to have? You could figure it out. Do you include something about being able to repay the loan in the event? You can put this in the negotiation stuff. That’s way too technical. You make it an offer. You can put whatever you want in your offer.
“Interested in storage mastermind.” I’ll email you Dan and we can discuss this, “SBA has 10% down.” I know. SBA is 10% down and 11% interest. Nobody’s getting an SBA loan. I had a student who had very good credit a lot of money, and experience. He got a 15% down and 7% interest SBA fixed loan. You can do it but it’s very rare. That deal had a 2.5 million spread on it because he bought it for $2.5 million and he is going to sell it for $5 million.
That’s one of the deals that we found internally for our students. Ye got a very good deal. in $1 million or less, you aren’t going to get that. Ben says, “If you had to get a hard money loan for the down payment, is there anywhere in the deal analyzer, financial inputs where you could put that in?” You could put your down payment in. This is the first thing. I get you want to buy a storage facility. If you have to get a loan for the down payment and on top of that get a loan for the loan for facility, you should probably rethink what your goals are. Instead, you need to find somebody that you can partner with that has money.
If you don’t have any money then you can be the boots-on-the-ground person and get paid for the first deal to do that, which is something that students in my coaching program do. To have two mortgages on a property. I have a student who bought a facility. It was a mismanaged facility for $400,000. He got a hard money loan at 13% interest. The property is worth $1 million. That’s why he got it. he had to put 50% down, $200,000 down for a $400,000 loan. Hard money loans are expensive. You got to make sure the numbers are working but you can’t run the numbers.
You can separate it out into two different columns. You could say Owner Financing 1 because owner financing and big funds are all in the same column. You could run numbers like two different loans at the same time on each column. How critical is it to get a feasibility study? You don’t need to get a feasibility study until you are going to buy a property and build a property. That’s when you do feasibility studies. Unless you’re going to buy like $3 million plus properties, you don’t have to do a feasibility study. I told you exactly what to do. Listen to what I’m telling you. Exactly all the steps of the deal analyzer is what you need to know.
I have one student who has a deal under contract. It’s a very good deal and then all of a sudden, now is, “I need a feasibility study. I need an environmental study. I need soil testing.” Now the deal’s not going through because of all that. When your phone person offers something aggressive such as 3 months to 50% off to close the sale, is that an exchange for a specific or time? No.
“Are the facilities similar outdoor versus indoor when compared prices?” No, they’re outdoors and indoors. Two different types of products. You could do that on the Deal Analyzer. You say, “This is the outdoor drive-up access and this price is non-climate control. This is indoor non-climate.” You could have an indoor or outdoor climate, drive up inside and a gazillion different types of facilities. Once you get into this, it’s a lot of different types of units. Even in parking, there are big rig, cars, vehicles, boats, RVs and there’s covered and uncovered, enclosed and not enclosed. There are one bazillion different types of units of every sign. You want to make sure you’re renewing apples to apples with your competition.
“I got a quick note from an SBA lender that was able to do 15% down.” That is what I was talking about. The DSR was 2.2. Who going to do that? That’s like super high. Who is going to have a 2.2 DSR deal? You got to have a lot of spread. That’s exactly the type of deal that my student is closed on. You can find those types of deals in $2 million plus facilities, but you cannot find them. It’s very rare you’re going to find that in less than $2 million. You are going to have to have a lot of money to buy a deal. I think that’s good. Go to StacyRossetti.com for the course and the deal analyzer. If you want to join StorageNerds, go to StorageNerds.com. Take care.
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