A lot of people reach out to me asking how to buy a storage facility and what size to go after.
Here's a thread to get you started.
If you're an individual investor you want to start out small. $500k range is perfect to get huge value because its too big for most single family investors and too small for big players (my team only looks at $1MM and up now).
That means about 7-15k rentable square feet.
How much cash do you need?
At least 30% of the purchase price. You can raise it from friends / family / investors if you have less. Thats what we did on our first few deals.
I also like to have an extra $50-100k in the bank for surprises.
We've used "seller financing" on two self storage deals in the past year.
And it raised our cash on cash return by 20%+.
And lowered the amount of capital we needed by $500k.
Here's a THREAD about a deal of mine and how this magical debt structure can work.
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My method is simple. In the late stages of negotiation I submit two offers:
One at a lower price.
And one at the exact price the seller wants but with him holding back 10-20% of the purchase price in the form of a 2nd mortgage (with a second position to your bank loan).
Contrary to popular belief seller financing rarely includes the seller holding back 70-80% and acting as your bank.
A thread on how real estate investors, developers and operators can make millions a year and pay almost nothing in TAXES by using depreciation, bonus depreciation, and 1031 exchanges.
A thread on how it works:
Depreciation is the act of slowly, over time, deducting the initial expense of an asset against your taxable income. Generally over a 27.5 (residential) or 39 (commercial) yr time frame. So each year you can write off 2-3.6% of the purchase price against your income.
Thats a big deal. We're buying a new property, a $3MM self storage facility. Thats a $60k a year write off against about $260k in NOI and 200k in cashflow on a $3MM deal.