Tools are made for everyone’s convenience. For storage facility investors, leveraging the tools available can make a difference in your investing experience. In this episode, Stacy Rossetti shares how investors can analyze storage facilities and speed things up by using Deal Analyzer. Stacy also shows how she closes a facility within a month or less. Tune in for a more in-depth discussion about the storage facility space.
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Deal Analysis – How Stacy Analyzes Self-Storage Deals
What I want to do now is I want to do deal analysis. I’m going to show you how I analyzed storage facilities. I hope this helps you. I’m going to take you through my deal analysis and the underwriting process. I’m in the process of buying a facility for $2.4 million. I get that a lot of you cannot afford a $2.4 million facility. I know you guys are all here because you want to buy your first facility. Please don’t worry about the price. Don’t worry about how much I’m spending on a facility because it doesn’t matter if it’s $2.4 million or $600,000 or $250,000. Your underwriting is pretty much the same until you get into these massive facilities that are 50,000 square feet big or bigger or whatever.
Even then, most of your due diligence is almost the same. Don’t worry about the price. The first eleven facilities that we bought were under $1 million. The process that I’m showing you is the exact same process that I bought for them. I’m buying properties that are between $1 million and $3 million. That’s why I’m showing it because this is what I’m buying. I want you guys to know that I’m here to help you get your first facility under contract or your next facility. You guys can tell me how many facilities you have if you have more. I’m here to show you how I do the underwriting, how I look at deals, and how I analyze deals. It doesn’t matter what the price is.
Another thing too. I want to point out that this webinar is every Monday night. I teach every Monday night. It is not the same webinar every Monday night. The series is, “How do I get a facility under contract within the next 90 days? How can I own a facility in the next 90 to 120 days?” That means that the content every Monday is completely new and different. It’s not an overall big picture of how to invest in self-storage because who wants to listen to that?
You can listen to podcasts on that. You can go onto YouTube. Everybody is teaching you how to get started in self-storage investing. They give you all the major bullets of what you can do, but they don’t teach. I teach every Monday night completely different information. I’m telling you that if you show up every Monday night over the course of the next couple of months, you will have a very good idea of what to do. I’m teaching you. I’m not giving you an overview. If you want an overview, all you have to do is go onto my YouTube channel, and there are self-storage 101 videos all over the place. Listen to my podcast.
It’s me teaching you to get to the nitty-gritty. That’s what it is. If you want to speed things up, I highly recommend that you buy my course. It costs a little bit of money to buy the course, but you will get over 100 videos in one place, taking you step by step. While you’re doing that course, you come here and you listen to me teaching you. On top of that, you join my Facebook group and that is where you’ll be able to communicate and ask questions as you go through all of this. Take action and implement what you’re learning. You can come into the Facebook group and then post there your questions.
I’m here and my team is there to answer your questions and to guide you along the way. Overall, those three things can help catapult you. What I’m going to show you is our deal analyzer. This is a brand-new deal analyzer that we implemented in 2022. My virtual assistants started using it. They were my Guinea pigs because if you remember, I have twelve virtual assistants that work for me. They do nothing but find storage facilities for my students. I had them play around with the deal analyzer. It took a good 3 or 4 months to fine-tune that. I handed it over to my students, and my students used it for about 3 or 4 months.
They got good at it and made sure everything was perfect with it. Now, I’m releasing it to the public. The public is allowed to buy this deal analyzer if they want to. If you buy the deal analyzer, there are videos and stuff going over, taking you step by step on how to use it. I’m going to show you the facility that we’re buying. We’re closing in about a month or maybe less than a month. It’s an all-climate-controlled facility near Orlando. I’m going to show you the numbers on it.
A Self-Storage Deal Analysis
I’m going to go through it and give you an idea. I’m going to show you how we’re going to pay for it too. If you can hang on throughout this session, then you’ll get a good idea of how it is. Let’s do a self-storage deal analysis. I don’t know what you want to call it. If you want to call it underwriting or whatever you want to call it.
We are skipping the first couple of steps on how to find facilities. You’ve already talked to owners or you’ve looked on Crexi or whatever it is to get the information. When you do deal analysis, you want to make sure that you are getting these things from them. This is what you have to get from the realtor, the broker, or the owner if you’re working with them.
Number one is you have to get the purchase price if they will give it to you. Most of the time, they’re not going to give you this. They’re like, “Just make me an offer,” but my virtual assistants and I push to get this. My virtual assistants are getting good at this. The script that they use is, “I would love to give you an offer but if you give me the number that you’re thinking, then we can run our numbers based on that and see if we can get close to it.”
Another thing is, “If you’ve been offered something and you’ve rejected that, please let us know that as well because we do not want to piss you off by offering something cheaper, lower, or whatever. If you’ve been offered something, please let us know what that is so we can make sure that if you want something higher than that, we’re above that.”
That’s the script that we use. It’s like, “We want to give you a fair offer. Can you give us the price that you’re thinking of so we can run our numbers on that? Otherwise, we’re going to be shooting from the hip and just giving you an offer.” I would say it’s 50-50. If you ask them, 50% of the owners are going to give you the price. If you work for a realtor, they’re going to give you the price. You already have that, but if you’re talking directly to the owner, you need to get it out of them. You have to say it like that.
If you work for a realtor, they will give you the price. But if you're talking directly to the owner, you must get it out of them. Click To TweetNumber two is you want the vacancy percentage. There are two types of vacancy percentages. There’s the economic and there’s the physical. Economic occupancy is what they’re actually paying. They could be 100% full, but they could be 50% economic occupancy. That’s the difference between both of those. You want to ask them, “What is your vacancy percentage?” They’ll say, “I’m full.” You say, “If you’re full, how many of those are paying?” That would be the difference between those. When we run our numbers, we run our numbers at physical occupancy on the deal analyzer. There’s a place where you could put economic occupancy so you can look and see what they’re making versus what they could be making.
Number three is you want the total units and square footage. With the total square footage, you want the unit mix. They could be like, “It’s 20,000 square feet,” and then they give you the actual unit mix and it comes up to 18,258. This is how it always is because they’re rounding it off. I’ve gone over this several times, but you want a table. This is how our VAs do it. You’re going to put the size, the price, and the vacancy. You’re going to say, “There are 10x10s. I charge $100 and I have 10 of those, and 8 of those are filled.”
Have a little chart. This is how my virtual assistants do it. They get all the sizes. They get the price, what they charge, and then they get the vacancy and the number. You have to put this into the deal analyzer. You need this for deal analysis, and then you’re going to add all this up. In the end, you’re going to add 90 sizes or whatever. You’re going to have all the weight total or you have 100 or whatever it is. The total amount is what it is.
I’ll show you how it looks in our deal analyzer, but you can just get an idea of what it looks like. It’s like a chart, and you’re going to be filling in the chart. This is time-consuming because you have to put all the sizes in. You need the purchase price. You need the total number of units, the total square footage, and the vacancy.
You need the property tax. You can look this up. You need property tax based on what the purchase price is going to be, not based on what they’re paying. They could have bought the land for $10,000, and built it, and they’re paying $250,000. You’re going to buy it and it’s going to be $1 million. When you buy that property, you are going to be paying taxes on the $1 million and not on the $250,000. You need to know what their property tax is now, but what you need to know is how the county or the city calculates it based on the purchase price.
Deal Analyzer Formula
In our deal analyzer, there’s a formula. You don’t do anything because it automatically calculates it up. If you don’t use our deal analyzer, you need to get this information because you need to know how much you’re going to be charged when you buy the facility. The thing is everybody is always like, “What are their expenses?” The truth is that their expenses are going to be a lot different than what your expenses are because you’re going to be running it differently.
We run our expenses at 38% because we know that it takes a lot of time and effort to run a facility. I was talking to a student and he was like, “I run my facilities at 27%.” That’s the goal. You’re going to run your numbers at 38% for expenses, but your goal is to be at 27%. The seller is like, “I run it at 27%.” That’s the number, but that’s not how we run our facility. We run our numbers at 38% because we have expenses and overhead. We know how much it costs.
Everybody is always worried about what their expenses are. You’ll see our deal analyzer and the truth is you need to know what your expenses are going to be. That’s what you need to know. Let’s put this down. What are your expenses? What is your property tax going to be? For instance, even under insurance. What I’ve seen lately is for the 100-unit facility, our insurance was $1,000 a year. It then went up to $1,200, and then it was $1,500, and now it’s $5,000 or something.
Insurance is such a scam. It keeps going up and up. Insurance is ridiculously priced. You’re going to see what they’re charging but the truth is that you need to know what you’re going to be charged. Insurance nowadays is super expensive in some areas. With the Great Plains or something, I’m not sure. Maybe they haven’t changed that much but in the Southeast, insurance is doing nothing but go up. You want to make sure you’re getting the right number for that. That falls under expenses.
Another thing too is utilities. Utilities are not going to change that much. If they’re getting charged $100 a month, most likely you’ll get charged $100 a month. That’s not going to change. For property tax, insurance, and utilities, those are formulas. We have those in the deal analyzer. We’ve learned over the course of the last 6 or 7 years that it’s just a number. It’s a formula. We put those right into our deal analyzer.
Areas Of Expenses
Do I know what the formula is? No, because my husband made the deal analyzer and he put the formulas in. I have no idea what those are. What are your expenses? Finally, with expenses too. These fall under expenses. You have property tabs, utilities, and insurance. On top of that, there are four other areas. One of them is going to be maintenance. The other one, we call staffing. We have one that’s called software, and then we have the market.
We have six different areas of expenses, not including the mortgage. It is an expense but it’s not included. This is to calculate your NOI. Maintenance includes our boots on the ground because that’s maintenance. He’s the maintenance person. Maintenance is the boots-on-the-ground person and any type of repairs or anything that you have to do.
Staffing is our office people. People that answer the phones, handle auctions, put the tenants in, and this kind of thing. If this is going to be you, then you don’t have to put any number in. You can put the number and say, “I’ve worked this much money,” or whatever. We have people that do all this. Software is included. Your property management software costs money. Also, your merchant fees. You have to make sure to include that. Those are merchant and software because your software does your merchant fee. We combine that into one and put that all together.
Your marketing includes your website, SpareFoot, Google Ads, signs in the yard, or whatever you’re going to do in order to get tenants into your facility. It’s marketing. Now, you have a list of the expenses. Remember that those are your expenses, not the owner’s expenses. A lot of the time, owners aren’t even doing a lot of marketing. You’re not even going to see that, but you know that in order to get tenants, you got to do marketing.
This is everything that you need. You’ve got purchase price, vacancy, total units, total square feet, unit mix, and expenses. Another thing that you need is what we call after updates. It’s an opportunity up, which we call after updates on our deal analyzer. This is like, “Can I increase the unit mix? Can I increase the square footage? Can I increase the rates?” This is what you would do, and then you would add your building costs or CapEx.
Evaluating Deals
When we evaluate a deal, we’re looking at three things. We’re looking at it as is. What is it making right now? That’s number one. Number two is what we call potential. This is for mismanaged facilities. The potential is it’s 40% full and I’m going to take it to 92% full. This is your vacancy decrease. That’s potential for us. Number three is opportunity. We went over that, which we call value-add or after updates.
This is my husband’s brain. It’s the way he’s thinking as the manager of our facilities. The opportunity of the facilities that we buy, because we buy severely mismanaged facilities, is that we are going to be fixing those up and stabilizing. What can we do to value-add that property? We can increase the rate. We can paint it. We can clean it up or whatever. We can get the old tenants out and the new tenants in. That’s a value-add. What is the value of that property going to be after we update all of the value add that we can do?
Those are the three different ways. We separate out our deal analyzer into those three ways, and that’s how you should be looking at it. It’s as is right now. Let’s say it’s an income-producing property and it’s at 90% full, then there’s no potential to increase vacancy. The only potential is maybe to increase rates. You want to look at, “Can I increase the rates? Can I increase the square footage? Can I increase the unit mix?” That’s what it is. When we go over the deal analyzer, that is how we’re going to be looking at it.
If it's an income-producing property, and it's at 90%, then there's no potential to increase vacancy. The only potential is to increase rates. Click To TweetDeal Analysis Steps
In the deal analyzer, these are the deal analysis steps. Step one is you need to put your inputs in. You’re going to have to put your input in so that you could evaluate your deal. Now, you know what you need to get from the owners or whenever. If you go to a broker or a realtor and you get the information from the realtor, you’re going to have to extract this information from what they give you.
Hopefully, they’ll give you a P&L, a balance sheet, tax returns, a unit mix, a rent roll, or whatever they’re going to give you. You’re going to have to extract that number from that information. You’re going to put it into your deal analyzer, whichever deal analyzer you use, whether it’s mine or somebody else’s. The time that it takes to extract that information is a lot. You have to give yourself some time to find this information so that you can put the inputs in.
That’s why I like to talk to the owners first. Essentially, our process is to talk to the owner and get the information from them. We only ask them for this much information. We ask them just like in the scripts that we talked about. The script on how you get the purchase price is like, “I need to know if you’ve had an offer before. Have you rejected any offers? What number are you thinking? Tell me this number.” That’s one of your scripts.
The second script that you’re going to ask them is this, “You’ve given me all this information here. Can you prove this to me?” That’s the question, “Are you going to be able to give me a P&L, a balance sheet, or a tax return so I can take that information and go to the bank?” I had a Zoom call with the two owners with their partners. It was a deal in Wisconsin for one of my students. They’ve given us all the information and they looked good. I said, “Can you prove these numbers?” They said, “Yeah, we can give you a P&L and the balance sheet. You can get in here if you want.” They’re working on getting all that information. It takes time to do that.
Another thing too is when you’re going directly to the owner and you’re asking for this stuff, you don’t want to ask them for a P&L and the balance sheet. In their mind, they’re not even thinking they want to sell and all of a sudden, you want to give them an offer and you’re asking for all this personal information. When we talk to the owners too and they’ll say, “I don’t want to give you that information unless you come down here and meet me. If you come here and meet me, I’ll show you everything that you want.” That happens quite often. Those types of owners want to know, like, and trust you. You got to get down there and you got to charm those people. There are different types of owners, and every owner is completely different. When you’re talking to them, you got to feel what type of owners they are so you know how to talk to them.
The first step is deal analysis. You’re going to get all this information so we can input it into the deal analyzer. The second step in the input is filling out the unit mix. You got to get all that unit mix in. The one that I’m going to show you have a ridiculous amount of sizes. It’s twenty different sizes. You’re going to sit there and input all this in. When you input all the units mix in with the price, the vacancies, the numbers, the sizes, and all this kind of stuff, it takes a little bit of time.
You’re going to input all the information. You’re going to put the unit mix in. The next step is competition. You’re going to look at the competition. You got to do a competitive analysis. What are all the competitors charging? You need to compare apples to apples. If they have only 20x10s and you have 10x10s and 10×15, this is not a competition. The competition is what are all the competitors that have 10x10s and 10x15s doing?
When we do our competitive analysis, it’s apples to apples. You want to keep that in mind as well. You need a minimum of 3 or 4 competitors. At the same time, you also want to respect which market you’re in. Remember that you have primary, secondary, and then tertiary. A primary market is greater than 1 mile. This one is 1 mile, and another is 3 miles. Another one is 10 miles. It’s 1 mile, 3 miles, and 10 miles. Your competitors need to be in these ranges. You don’t want to have a competitor that’s 10 miles away if you’re in a primary market. That’s not a competitor.
This section of the deal analysis is the most important because this is what’s going to determine what your opportunity is going to be. This is what’s going to determine whether there’s an opportunity inside this deal. That’s why that’s super important. That’s competitive analysis. Once you get the competitive analysis, then you need to start looking at the valuations. The valuation includes other income.
If there’s other income, you need to add that in. We have one right now that we’re looking at. I can’t remember what state it is in, but it’s on this huge property. It’s 17 acres or something. It’s a massive piece of property. He has his house, two apartments, and a commercial space. He also has an RV park. That’s what he does on his land and there’s still all this land too. It’s probably a couple of acres of residential and then commercial. He’s got the RV and boat parking. He got a whole bunch of land that’s not doing anything. This is almost on a major highway.
When you’re evaluating a deal like that and he says, “I’m making $100,000 a year.” You can’t just say, “He’s making $100,000 a year.” You have to split up every single one of those incomes and you have to look at each one of those incomes. When you’re analyzing storage, only storage is being analyzed in the input section. You can put other income in the other income areas. We analyze storage by itself and if they’re making $500 a month on a couple of apartment buildings, we’ll put that in there as other income, or if they’re making money on this or whatever.
You put it in as other income. You don’t want to combine all that. What that does if you combine everything is it screws up your price per square foot. You want to make sure that your price per square foot is clear so that you can compare the competitors to that price per square foot. Also, another thing that I like to do too is just like that deal I told you about. If there are a lot of different other incomes, then you can do a separate deal analysis.
If he’s doing boat and RV storage or any regular storage, then one deal analyzer is analyzing the boat and RV storage. The boat and RV storage is typically around $0.20 a square foot. In most places, it’s around $0.20 a square foot. The average price for storage not nationwide is $0.80 a square foot to $0.90 a square foot. If you took that $0.20 and put it into the $0.80, it’s going to screw your numbers. We analyze the RV and the boat storage separately, then we do the storage. We do that by analyzing other incomes separately.
We then have the financing inputs. Financing inputs are how I need to run the numbers to see how much this thing is worth to come up with an offer. That’s what financing inputs are. We’ll go over that. In our deal analyzer, we run five different offers at the same time. That’s under the financing inputs and here is where you want to know where the cash-on-cash return is. What’s your down payment? This is like lending inputs. If you’re paying cash, you don’t have lending inputs, but you still have cash-on-cash return.
If you’re doing bank financing, you need to know your down payment, your interest rate, and the term of your loan. All these different inputs have to go in so you can run that offer. We do that in the financing inputs. For deal analysis, you need to have an idea of what the terms are going to be if you go to a bank.
Overall, we’re going to do cashflow. What in the end is going to be our cashflow? How much money are we going to make? You’re doing a step-by-step of all these different things in order to figure out this. Once you figure out your cashflow, then you’re going to make your offer. You have all these different steps, inputs from your comp, unit mix, competition, other income, and financing. You get your cashflow from all that, and then you make your offer.
What The Deal Analyzer Looks Like
What I’m going to do is I’m going to pull up the deal analyzer on the facility that we are looking at right now and we’ll go over that. This is what our deal analyzer looks like. Everything in yellow is your input. This is the storage facility. It’s Beacon Storage. We’re buying this. We’ve been through all the due diligence. We got it under contract and did a lot of due diligence. This is a severely mismanaged facility.
This is a climate-controlled building that’s 25,000 square feet. It’s about 12,000 square feet of storage. There are probably about 2,000 square feet of it that are not being utilized in the storage area. There are a couple of little sections that he was like, “As soon as we buy this thing, we’re going to build that storage out as well.” This facility has a whole bunch of extra metal walls and stuff like this. They’re throwing it in with the buy. Pete is going to take all that and his team is going to build it.
It’s probably 12,000 to 13,000 worth of square feet. Right now, it’s about 10,000. You could see here 10,234 square feet. That’s us measuring and trying to figure it all out because the unit mix is also crazy. It’s 143 units. This building also has commercial space. Those are two different incomes. The storage is being evaluated here and the commercial space is under other income. You can see here that the vacancy is 50% full. You can see the purchase price is $2.4 million.
On our deal analyzer, you can toggle between each of the offers is what you can do. There’s a cash offer, three owner financing offers, and then a bank or private lender. We’re going to use a private lender as well. This facility, we’re getting it owner financed. This is a mismanaged facility. There is no bank that is going to fund this thing. That’s for sure. When you know that a bank will not finance anything, what I do is push owner financing. I say, “This is a severely mismanaged facility. There’s no bank that is going to finance this, especially nowadays that the market is so crazy. I think that you should consider owner-financing this. Would you be open to doing that? That way, we can make this facility stable. In a couple of years, we can refi it out.”
On the deal analyzer, you can toggle between each of the offers. There's a cash offer, three owner financing offers, and a bank or private lender. Click To TweetWe had talked to the owners about this, and he said yeah. You could see the annual income is $108,000. $108,000 seems like a lot of money, but not when you’re supposed to be making double. It doesn’t seem like a lot of money. A lot of banks will look at this and they’ll say, “This is a risky investment. We are not going to finance this.” Another thing we didn’t talk about is the market cap rate. We have it at 7%. Remember, when I went over primary, second, and tertiary markets, each of those markets has a cap rate that’s called the market cap rate, which is the cap rate that you can be buying at right now.
This facility is near Orlando. It’s North of Leesburg, which I would consider a primary market, and most likely, we’ll be able to sell this at a 6% cap. These are the numbers that we ran. This is in Leesburg, which is right next to the villages. You have all heard of the villages in Florida. Villages are booming right now. Leesburg is this town that’s getting built up. They’re trying to clean it up and stuff. This is where this facility is. It’s very good. Florida is a great area to be in anyways. It’s a very good area. We have the inputs here. We have the current, potential, and after updates. Those are the three ways that we’re evaluating the deal. You can say, “I’m taking it from 50% to 80%. I’m taking it from $108,000 to $198,000”
Now, the prices that they add are right where the other competitors are. You can see it’s $1.76 and our competitors are at $1.82. There’s not a lot of room to add for rent to go. That’s $0.05. It’s not too bad. That’s not that much. We’re taking it currently from 50% to 80%. After updates, we didn’t add how many units we’re going to be adding or anything like that. There are still a couple of thousand square feet worth of space. We did not put that in.
What we did is analyze the deal as is right now. If we bought this thing right now, where would we be? That’s what I’m looking at. We are not adding any space. You can see here that we got a cleanout and there’s a building. If you were going to expand and stuff, you put your CapEx. The closing costs are in dollars. It’s going to cost $125,000 because a wholesaler brought this deal to me. That’s how I found it. That’s why I said if you want wholesale self-storage, this guy is making $125,000 off of finding this deal and giving it to me. If you want a wholesale self-storage, I am okay with paying $125,000 if I know I can take it from $2.5 million to $5 million.
Property tax is $15,600. This is the formula. The formula is equal max, times 1,200, and then it has another times 0.0065, times 0.6. The millage rate is about 0.0065. That’s how we calculated that. If you want to know how we’re calculating it, you can do that. The utilities are the number and the insurance is another formula. It’s 12 x C13 x 1,200. That’s how we came up with our numbers. My husband Pete came up with those numbers. The numbers that he used. That’s where we’re at.
Also, property maintenance. The property maintenance was the boots-on-the-ground person. The person that’s going to be maintaining, fixing up, cleaning this facility, overlooking, cleaning the units out, and stuff like that. It’s going to cost us about $36,000 a year for that, and $7,400 a year for staffing. That’s the person handling the auctions and doing the phone. The software is going to cost about $9,500, the software plus the merchant fees. The marketing is going to be about $1,887 a year. We do those ads. We know how to market and stuff like this.
It’s minus our mortgage. This is where you’re inputting your information. That’s step one. Step two is the unit mix. I told you there are a ridiculous amount of units and sizes here. We have all the sizes. The square foot of the size, the number of units, and the total square footage. You can see the current. These are the rates that they have on their website. If they were full at these rates, they would be at $2.09 a square foot.
They’re not, but they’re charging higher rates. They’re 50% full. They might be 50% full because they’re charging too much based on the competition because the competition is here. This is their apples-to-apples and then they’re at $1.82 a square foot. That’s how we’re comparing apples to apples for the competition. We have over here the number currently filled. This is economic occupancy right here. Economic occupancy is what they have filled.
Right here, you can see there are 103 units at $10,234. They should be making anywhere from $18,000 to $21,000 depending on where we’re at with the price per square foot. We went ahead and went with the competition at $1.82, which comes out to $18,636. With competition, we have four competitors within a 2-mile to 3-mile radius. We compared them all apples to apples. All the sizes that we have, the competitors don’t have. The competitor doesn’t have a $3.9. We keep those prices where they’re at right now. If we do have 5x5s, 5x8s, 5x10s that you see all the way through, but we’re looking at apples to apples on that. That’s competition.
We did unit mix and competition info. We’re also going to do valuations. We evaluate in three different ways, current, potential, and after updates. The current is here. We have another income of $126,000, which is what they’re making from their commercial retail space. They have a commercial retail space where they have some nice offices they’re renting out. We left that number here. The potential is here and also in the valuation of updates.
Another thing is on this building, right next to it is this massive fenced-in parking space that they’re doing nothing with. They don’t have any parking there at all. It’s this empty space. We calculated that in that space right there, you can make around $60,000 a year in parking. We’ll set up lanes and all this kind of stuff. For any other income, we separate that out. You can see our valuation here comes out to 143 units at $130 per unit. The valuation is coming out to $4.3 million and $1.8 million as equity. It’s almost $2 million in equity.
The NOI is $307,000. After we pay our mortgage, we’re at $223,000. The financing inputs are here. I told you we run our numbers at five different offers. We can do cash, owner financing, bank, private financing, fixed terms, or interest-only terms. Look at owner financing number one. This is what we got. It’s $2.4 million. There’s a 30% down payment, which comes out to $720,000 that we have to come up with to buy. It’s 5% interest. It’s an interest only-loan for two years, which comes out to $7,000 a month. We’ll be paying $7,000 a month for two years interest-only.
You can see our loan amount is $1.68 million. We’ll pay $168,000 in interest. Total pay is $2.56 million. In two years, we’ll pay it off. We’ll have to refi it or sell it. We’ve got two years to stabilize this deal. You can see that our cash-on-cash is at 26%. That’s an amazing cash-on-cash deal. Our net after the mortgage is $223,000. We have to get it filled up. It’s 50% full. It’s going to take two years for us to make this amount of money, but we’ll get it there for sure.
You can run your numbers cash, owner finance, bank, and private financing as well. Once you do that, you can send out your offer letter. Your offer letter will look something like this, “Thank you for your interest in getting an offer.” Here’s our little tab. Here’s our little matrix of what we’re showing the owner. Here are our offers, purchase price, monthly payment, interest rate, term of the loan, down payment, and total interest of the owner.
It’s like, “Let us know what you think.” You can see here that we’ve come up with a lot of owner financing offers, “We think that this deal is perfect for owner financing. It’s best for you if we owner-finance it because it’s going to save you a lot of money as well.” We put that in there and then we send this out. We send this letter as our offer letter to the owners. That’s the steps.
Finally, we have the cashflow. Here’s our matrix, which is the same thing that’s going on in the offer letter. We do current versus after updates. We’re owner financing number one so our gross monthly income is $19,500, operating expense is $7,000, and our NOI is $12,486, minus our mortgage which equals our monthly net income of $5,486. Our cash-on-cash as is right now that we did nothing is 7.8%, which isn’t too bad. Once we get it stabilized and we get it from 50% full to 90% full, we’ll be at $32,000 a month gross income.
That’s including doing something with the parking, getting that filled up with all the extra space that we have, and something like that. $30,000 a month is what we’re shooting for. Operating expenses are still the same because you want to increase your income but keep your expenses the same. When you increase your income, you should keep your expenses the same. My NOI comes out to $25,000 and my mortgage is $7,000, so my net income is $18,000, which makes my cash-on-cash return 26%.
When you increase your income, you should keep your expenses the same. Click To TweetThis facility is going to be a lot of work, but in the end, we’ll be able to sell this thing for $5 million and make $2.5 million. That is a deal analysis for one of our deals. You can apply this to any type of deal and if you’re interested, you can get the deal analyzer. I wanted to show that to you right now. If you go to my website at StacyRossetti.com and then click on Deal Analyzer, you can buy the deal analyzer. There are training videos that go with it too. In the end, you can run the numbers on any type of deal and you can use the deal analyzer for that. If you don’t want to use the deal analyzer, you can get your own deal analyzer. You can do that.
If you want access to my deal analyzer, go to StacyRossetti.com and click on Deal Analyzer. It is now available to the public. If you want access to that, you can. You get some trading videos that come with it to show you what to do. That’s available to you. The Deal Analyzer is $497. That’s how much it costs. For $500, you can have access to the deal analyzer just like I did.
Somebody else said, “You mentioned you’d give a Crexi deal.” If you want my Crexi deal, then email Questions@StacyRossetti.com. Crexi is a software that we used to find property and to find storage facilities. If you want that discount or if you want me to introduce you to Grant, he’ll do a demo for you and then you can get my discount. If you don’t go through my discount, it’s way more expensive. Make sure that if you do want to get Crexi, message us.
I’m going to hop off right now. I need to go to my pitch. I’m going to be pitching my fund StacyRossetti.com/fund. It’s a 506(c) fund for accredited investors. If you got money and you want to put your money somewhere, then definitely hop on the fund. This deal is going into the fund. The Beacon deal will be in the fund. I’ll be able to share the $2.5 million that we make on that deal with all my investors. Those are the kinds of deals we could put in the fund. I appreciate you guys for tuning in. I hope you guys enjoyed this and I will see you soon. Take care.
