Thread by @sweatystartup

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.

How do you find a deal?

Go on google and make a list of facilities in your area that meet your criteria.

Call them up. Talk to the owners.

Keep an eye on loopnet. Talk to brokers.

Find out how full it is?

98%+ is ideal. That means they are undercharging and you can often raise rents significantly to add value.

Big city or rural?

I don't care as long as its full. As a matter of fact rural means less interested buyers.

Does the market matter?

Yes, but not as much if its full. I care about past performance.

Now its time to get pricing expectations.

A back-of-the-napkin test is the multiple of monthly revenue.

I like to buy at 80-100x monthly revenue. Maybe more if its a larger facility.

If I can raise rents a bit I know it'll be a decent deal.

Underwriting is tough. I do consulting here. If you need help here is how it works:

sweatystartup.com/storage

Operations:

Answer the phone and keep the place clean. Its as simple as that. I manage remotely with a gate and keypad. Software to pay online.

Its a simple business.

And there you have it! Want more?

Sign up for my newsletter - I've got some good stuff in the works.

sweatystartup.substack.com

Here's a video where I talk about one of the small $475k facilities we bought in late 2019.

https://twitter.com/sweatystartup/status/1402074275213942785?s=20