If you want to start passively investing in self-storage, we have the fund just for you. We’re raising money to buy income-producing or mismanaged properties. You can’t buy a mismanaged facility through a bank; you have to raise the money yourself. This is why we are starting this fund so we can continue to rehab these places. This is also a good first step if you’re new to self-storage or investing in general. Join Stacy Rossetti as she shares with you all the details you need to know. You can even go to the Self-Storage Fund of America for even more information. Be a part and earn a lot in the process.
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How To Passively Invest In Self-Storage
I have been investing in real estate since 2012 and in storage facilities for five years since 2017. We own eleven storage facilities all throughout Georgia and Florida. I will get into that in a minute. I wanted to welcome everybody and thank you so much for reading. I pitched this fund and I tell everybody that if you decide to invest with us, anytime that you want, you can hop on every Monday.
Quick Fund Update
I am going to give an update on what is going on with the fund too. You can think of this as, “I am pitching to find more money,” but at the same time, I will be going over all the different types of deals that we are looking at. We have under contract for any changes or updates for the fund as well. This will be the weekly update meeting for all the investors too.
I have been pitching now for about a few months. I launched the fund in February 2022, then pitching to everybody to at least listen to me and see if there is a way that we can work together. Now, this fund is called the Self-Storage Fund of America. It is a 506(c), Reg D fund. Over the years, we have bought eleven storage facilities and we have been buying properties that are about $1 million or less. In the self-storage investing world, properties that are $1 million or less are smaller facilities like mom-and-pop. It is typically 100 units or less.
If they are income-producing properties, there are 100 units or less. If they are mismanaged properties, they could be way more than that but they are smaller facilities. What we want to do is move up to the next level. The next level is $1 million to $3 million properties. This fund was created so that we can buy these $1 million to $3 million properties. That is what we are doing. I have a whole acquisitions team that is out there looking for deals that we can buy for the fund. We are looking at Georgia, Florida, and Alabama.
Those are the main areas. We will add Mississippi to it then we will probably go along from Texas, the 10 and the 20, all the way into Georgia and Florida. We may go up into the Carolinas. We will have to see how it is going. For now, we are not having a hard time finding deals. I am going to tell you about the deal that we have got under contract that we are going to be, hopefully, purchasing for the first deal in our fund.
That is a very good deal to start with. I am going to go over that as well, too. In this episode, I wanted to introduce myself to you, who we are, and who my team is. Also, we will get into the fund, what the fund entails, the terms of the fund, then I will get into the deal that we have under contract and we are working to fund the money for now. That is the goal.
Real fast, if you want to check me out or check my team out, you can always go to MsLillians.com. If you go there, you will be able to see all of the facilities that we own throughout Georgia. These are all in Georgia and then in Florida, we have the two. The very first facility that we have in our contract that we want to buy in the fund is in Florida. I want to let you know that if you want to check us out, you are more than welcome to do so. It is Ms. Lillian’s Self-storage.
Now, the fund is completely separate from Ms. Lillian’s Self-storage. It is like meeting my husband. We own all these facilities. We manage them. We are completely vertically integrated. Internally, we have an acquisitions team that is going out and finding facilities for us to buy. We also have internal property management company that manages all of our facilities.
What is happening with the fund is that this acquisitions team and property management team that we have are essentially being taken out of Ms. Lillian’s. They are now going to be falling under a different company and then we are going to be hiring these companies to find facilities for the funds. Now, we have an acquisitions team. Chris is not here. He leads that. We have the property management team, which is my husband, Pete, and he manages that.
The way we set our company up is find them, fund them, run them. Finding them is my acquisitions manager, Chris. Underneath him, he has a whole bunch of different acquisition specialists that are building lists, then calling owners and talking to them. They are managing the deal and making sure that Chris has all the information that he needs in order to look at the deal and do all the underwriting and stuff. That is how our acquisitions team works.
On top of that, we have Pete. Underneath him, we have our whole property management team. Our property management team now manages over a thousand doors. We will also be hired to manage the deals that we buy in the fund for Self-Storage Fund of America. Now the way the fund is set up, I am trying to raise $7.8 million. Every single deal that we find, we will have to close and you will be able to, as an investor, invest in that deal. It is like syndicating within the fund but what is going to happen is that the money that you put into the fund will stay into the fund for five years.
I will go over the numbers and I will show you the presentation a second but the minimum is $25,000. Let’s say that you invest $25,000. That $25,000 will be put into the fund and stay into the fund for the next five years. It will be used to close the very next deal, which is the deal that we have. If you put the $25,000 in, we will be able to close on our first deal, then you will get a percentage depending on how much you put into the deal. You will get the gain or the distribution on that deal as it comes out in a quarterly basis.
The Properties We Buy & Our Goal
Whenever we decide to sell it, you will get that distribution on that $25,000. It is crowdfunding at its finest. We are trying to pull as many people as we can. Fund together so we can go out and buy these facilities. These facilities are between $1 million and $3 million. They are going to be either income-producing properties. Properties that are making money but are not properties that are making the amount of money they should be making, which is like the one that we are going to buy now.
I am going to show you. It is making about $150,000 a year. It should be making $250,000 a year but the owner has not raised the rate since before COVID. That is one of the types of properties that we buy. Another type of property that we buy is severely mismanaged facilities. For instance, we have one now that we are trying to get under contract. That is 25% full. What happened on this one is very interesting.
In order to buy a mismanaged facility, you have to raise the money because no bank would fund that deal.
The owner had it listed as 25% full. He wants $1 million for it. It is worth probably about $2.5 million, maybe $3 million. The sweet spot in the industry from $1 million to $3 million is when it is 25% full, there is no bank that is going to fund this deal. In fact, if it is an income-producing property, it is making money, it is awesome, and going to get a great cap rate, your buyer pool is this big.
As you start getting into mismanaged facilities, your buyer pool gets smaller because the truth is, in order to buy a mismanaged facility, you have to raise the money because no bank is going to fund the deal. It is because it can’t prove that it can make that much money. If it is $1 million, it is going to cost so much money for the first year to come out of pocket, stabilize it, and get it marketed. It is hard to do that, honestly. That is why this $1 million to $3 million property is a very special type of property in the real estate investing world and in the commercial world.
This is what we buy. Up until now, we have bought properties exactly like this. In fact, every property that we have ever bought, all eleven of them are like this type of property. They are always severely mismanaged facilities. We can 2X to 3X those properties within two years. We have only ever focused on million dollars or less because we have been raising the money. If you can only raise so much money then you can fund the deal.
Now, we have to raise a lot of money. We raise a couple of million dollars, so it is a whole different world out there. When you want to raise $2 million, $3 million, or $4 million instead of $500,000 to $1 million, it is a whole different world. We started this fund to be able to put ourselves in front of people like you. People that are interested in passive income and investing in self-storage but not 100% sure how it works.
We are the get-your-foot-in-the-door type of people on the self-store side. We will be here for these types of people on the fund side. We have been buying mismanaged properties now for a few years. We know how to stabilize properties. I am telling you the one thing that we know how to do is to buy severely mismanaged facilities. Facilities where you rip the band-aid, increase the rates, get the bad tenants out, get the thing cleaned up, and stabilize. It takes a lot of work to do this.
It is way more difficult to do something like this than to buy a mismanaged property, start making money, and cashflow immediately. It is not as hard as building. Building storage facilities is also very difficult in a long process and takes a lot of time. I tell my students all the time like, “You have to have strong guts to be able to build.” It is the same thing with the mismanaged facility but the profit and the money that you can make on the back end is so good. That is why we typically have always leaned towards mismanaged facilities. I was a rehabber before I got into self-storage.
I rehab horrible-looking homes. The picture behind me is one of the facilities that we own. This facility that we own behind us is about 125 units. It has a lot of parking. The owner took it to the dumping ground. In fact, when we bought this facility, there were over 3,000 tires on this property. Can you imagine 3,000 tires?
That was honestly the worst part of the whole thing. What I did is I called EPA. I told EPA, “I think there is a hazard here. There are a lot of tires. You all need to come out because this has become a dumping ground for several years. People were dumping stuff everywhere.” EPA came out and looked at it. They were like, “How to get rid of all these tires?” From the time that we bought it until the time that the EPA came out and took all the tires. It took almost two years but they got rid of all the tires. Every tire for free. Can you imagine?
They also cleaned the holes, the property up, and everything. That was one of the things that we did. That is why we like to help stabilize the property. Another thing we did on this one is we repaved the whole driveway and stuff because on this property, we do park a lot of cars, trucks, and things like that. The owner had owned it for 40 years and never repaved it so we came in and repaved the whole thing. It did not cost us that much money. I think it cost us $50,000 to $60,000 to do that.
It is a huge 3-acre lot. We repaved it and there was no lighting anywhere. The tenants would complain like, “It is super dark at night,” so we put lighting up. The lighting does cost more for us per month but we put nice lights up. We put a nice gate system in and cleaned the whole place up. It is what we did and we stabilized it.
We bought it for $250,000. It is worth $1.5 million now. We are going to take that same concept but we are going to apply it to this middle sweet spot area where we are going to buy $1 million to $3 million properties that are severely mismanaged or have not been managed properly in the past couple of years, which there are a plethora of facilities out there like this. What happened is during COVID, people got scared and increased the rates.
Mom and pops that have no idea how to manage properties and stuff and run their business like a hobby instead of a business have not raised their rates. Even in primary, secondary, and tertiary markets have not raised the rates. We are going to take the same concept and we are going to stabilize it. Clean it up if it needs to or not, then share the profits with everybody that comes in and works with us. That is how it works.
Self-Storage Fund Of America
Let me show you a couple of things before we get into the deal that we want to buy. Now, we have the deal and we need to show the bank. We are talking to a bank and the seller. We need to show that we have money in order to get a loan from the bank. I am asking not only for call commitment. It is a commitment for you guys to help us to put money into the account so we can show this to our bank. This property is in Pensacola.
We already have two properties in the Panhandle. We not only had Pensacola that we are working on now. We have another one not near but in the city over. We have one that we are working on almost getting under contract as well. We are going to be focusing on the Panhandle then some of Southern Georgia. We are having a lot of luck in this area and also in Northern Georgia. You will hear me finding facilities a lot in the Northern Georgia area and the Panhandle of Florida as well.
It’s way more difficult to raise money for a mismanaged property than it is to just buy one and start cash flowing immediately.
Also, we are having a lot of luck in Alabama. We are looking in Alabama so you will be hearing about that too. Anyway, I wanted to show you before we get started. Let me get back into the fund. This is the website. It is the Self-StorageFundOfAmerica.com. This is where you would come. You will come in and you are going to set up an account here if you have not already, then we will give you access to the portal. If you could please do that, I would appreciate it. Once you get access to the portal, what will happen is you are going to have a page that is going to talk about the offering.
The Subscription Documents are here. Once you upgrade to investor access, you will have access to the subscription documents. You will be able to read the PPM in the account. Under View PPM, it will pop up but you could see it in the Book form. You can look through the book. You could check out the PPM. It gives you a list of all the properties that we have invested in since 2012 as well as all the information about the offerings. I want to let you know that as you scroll through, you will see there are case studies, investors, an analysis, and more information about the offering.
Here is a list of every property that we have invested in. We have done over $20 million in transactions. It is just my husband and me on our own. This is the very first fund that we have done. You will see all that and as you scroll through, the Operating Agreement is in here. It will come in and you can read the operating agreement. I want to make sure you know that is there. It is 100 pages so a lot of stuff to look at.
Another thing I was going to say too is if you want to hop on a meeting with me and go over any questions that you have, please feel free. I have opened up all my Tuesday. If you are interested in hopping on a call and going over everything, ask me any questions that you want as well. Anything that you think you need will be right here in the PPM. Any other documents that we sign are all right here for the PPM. Everything is here, so you can take a look at it.
Also, under Documents, there are supporting documents. If you decide to work with us, you will get quarterly and annual reports. Any financial documents will be here. All supporting documents will be here as well. We have already put in the Deal Analyzer and the case study for the deal that we have under contract.
I want you to know that that is all here. You can look at the numbers and things here. We also put in an accreditation letter template because we have got a couple of people to say, “What does the template look like? What are you supposed to say and stuff?” We put an example here of what ones should say. We have the investor presentation that you can look at and we will have the steps to invest.
A couple of people have asked me how do you become an accredited investor? Not that you are going to freak out about this but essentially, we made this little JPEG that we put in. You have to have an income of $200,000 individually or $300,000 with the spouse for the past two years or you have to have a net worth of $1 million. You can show proof of this by either getting a broker-dealer letter, an attorney letter, CPA letter, or going to VerifyInvestor.com. You have to be an accredited investor in order to invest in the fund.
The Steps After You Invest
If you are reading this and you are like, “I don’t fit these criteria but I still want to work with Stacy.” Let me know because we always have other deals and stuff that we are working on. Right now, we have one deal that the owner wants to owner finance on. We can always find other ways to do deals and stuff. For the fund, you have to be an accredited investor. I had one more thing I wanted to show, the steps to invest. We open this up before we go over the offering. This is how the steps are going to look after you decide to invest.
First, you are going to you sign up for the presentation. You are going to get access to the portal. Wait for the approval from the email. We are going to get this approved. You are going to be able to check out the PPM and the SCC filing. Anything that you want to see will all be right here. You are going to sign up for a Zoom meeting if you want to chat with me and ask me any questions about the fund or anything. You are going to upgrade your account to investor portal and you are going to wait for that approval. We have to approve this as well and then you are going to make a commitment of $25,000 or more.
You get verified as an investor, you upload your accreditation documents, you will upload the subscription, and then you will wire money into the account and get paid quarterly distributions. I want to show this to you in case you have not invested in the fund or anything like that before. We will help you through the process. It is a lengthy process but we will help you and if you have any questions or anything like that.
Back to the dashboard. Once you say, “Yes, I do want to invest.” This is again where you are going to find the subscription documents. This is where if you are wiring money as an individual, from a custodian like a 401(k) or anything like this, or if you are doing something through our company. Whichever one of these that you fall under is whatever subscription that you are going to be signing. The subscriptions are lengthy. You have a couple of things that you have to fill out.
This is where you are going to put your bank information. We have all that bank information from you so that we can keep track of that and our funds and things like this. Here is where you are going to upload your accreditation letter. This is where you will get the wire to show you and walk you through. Finally, I wanted to open up the industrial presentation. I am going to share and I am going to go over the offering.
I gone over this already. This is what we are looking for. This is the type of business that we are, so you can read through this when you look at the deck. This is what we are going to be talking about in the presentation. I talked about this a little bit already but we own eleven storage facilities that we bought in the last few years. We do have experience running and managing storage facilities. On top of that, we own rental properties, commercial properties, and single-family homes. We have bought about $20 million worth of real estate since 2012.
Our target is mom-and-pop shops. I am going to get into the storage one that we have under contract and give you a history on that. You can also look at MsLillians.com and see the types of stuff that we buy. Imagine that but a little bit bigger. We are focusing on the Southeast but we are open to Texas as well. Now, we are raising $7.875 million with an option to expand to $10 million if we wanted to. Our target IRR is 19%. The whole time is five years with an option of two years to extend if we need to.
You should feel blessed to own storage facilities in the Southeast and Texas because the big players are just starting to come here.
Let’s say that we found a facility that has a great deal and we wanted to hold onto it because we making so much money, we could extend it to two years if we wanted to. In my mind, the way the fund is going to work is that we will probably buy them, stabilize them, and within 1.5 to 2.5 years, we would sell them. As I said, hop onto the Monday calls and give your two cents as well.
It depends on each deal what we are going to do but we are running numbers. Our financial model is based off of exiting the deal within two years or refi them out. Either one of those scenarios, if we sell the facility in 1.5 to 2 years or if we refi it in two years, you would get a distribution based on how much money you put in. You will not only get the quarterly distributions from the income that the facility is making, but you would also get the distribution on how much money you would make based on the percentage that you put into the deal.
Let’s say you put $25,000 into a deal and the deal is $1.8 million. You would get that percentage. It is what you would get paid on a quarterly basis. Now, the facility that we have now under contract is income-producing property, which is awesome. I think it is a great first deal for everybody to be investing in because it will give you a taste of how the fund works.
Essentially, as soon as we buy that facility, you will be able to make money. It might take us a quarter or so to get stabilized and stuff. Immediately, I would say within the second quarter, you should be getting distributions from that facility because it is an income-producing property. It is making $150,000 a year. There would be distribution and it is supposed to be making $250,000 a year. It is making even more after we increased the rents.
As I said, the point of this is that so you know that we are running numbers based off of being able to sell the facility in two years or refi it out in two years. Maybe it is a totally awesome deal that we find and we want to hold onto it for a little bit longer because it is giving awesome distributions to our investors. The preferred return is 10% so you will be making 10% on your money.
The first hurdle is 80% to investors and 20% to us. It is a Sponsor Promote. That first hurdle is up to 15%. From 10% to 15%, we get to get that 20% sponsor. Me and my husband do not make any money on the deal so we hit that 10% IRR. After 10%, we will be able to get the 20% promote. The incentive for the hurdle is for us to be pushing the IRR as high as we possibly can.
The second hurdle is 75% split and 25% to us. That is after we hit over 15%. Up to 15% is still the 20%. Once we go over 15%, then we get the 25% to us and 75% to you. It is quarterly distributions. Also, another thing is we are putting some of our own money into the game. The managers don’t do that. We will be putting our own money into the game at 4% and we will do that at every closing. We will come up with our own money and put that money, depending on what the closing is.
IRR Distribution
Our first closing would be $1.8 million that we are going to buy for this facility, then we will come up with $80,000 to put into the deal. The 20% sponsor promote is after the 10% preferred return up to 15% IRR distribution. After 15% is 25%. I had a couple of people ask me about that. I want to make it clear. You can ask any questions that you want if you have any questions. The minimum investment is $25,000. You have to be an accredited investor and the offering type is a Reg D.
Now, up to 10% is a split between the investor and the co-invest. We are going to put 4% in and you get 96%. Our promote is zero. We don’t make any money on our promote. We will make money on the money that we put into the deal but we won’t make any extra money. From 10% to 15%, the split is 76%, 4% and 20%. 20% promote to us. The 4% is the money that we put into the deal. The 76% is to you guys, to the investors.
After we hit the 15% IRR, then there is a split of 71% to you, 4% to us, and 25% to us as the promote, so co-invest and promote. I am trying to explain it as clearly as I can. There are few management fees. We try to make this fun like super competitive because we looked at all the funds out there in the industry. It is our first fund. We want to gain your trust and show you what we can do. Essentially, the management fee is 0.625%. That management fee is a one-time fee per year. For every million dollars, we get $6,250.
The acquisition fee is 0.5% of the purchase price. Other than that, there is a development fee if we decide to build on and add more units and things like that. I would say most likely, we do not find deals like this. We may find something or we need to add on but the truth is we are more like stabilizing people. That is our mojo, so that is what we are going to be looking for.
Why Invest And Being Virtual
In our strategy, we hold them for 2 to 4 years. One mom and pop’s got into this a little bit. This is all about how we are marketing, how your mom and pop shops, and where we are focusing on. I got into this a little bit. Also, we talked about this as well. Why do you want to invest in storage? Why do you want to invest in the Southeast and Texas? I am telling you all. In the Southeast, I feel very blessed to already have owned storage facilities in this area. We own eleven.
The truth is all the bigger players are all coming here now. We already got our foot in the door and know the market very well. In fact, I know Florida and Georgia with the back of my hand. We are learning Alabama now. I think I have a heads up but you need money in order to buy bigger bills. That is why we are here trying to pitch to everybody. These are the types of facilities that we are looking for 15,000 to 45,000 square feet in the areas that we talked about.
We are completely virtual. I would say we have boots on the ground person that basically goes out twice a month to each of our facilities, checks on the facilities, manages it, overlock it, and does all the maintenance. Essentially, people go to our website. They call us to rent. Everything is done 24/7 on the phone. We do have phone support that answers the phone 24/7. That is three different people that answer our phone. Weekdays are all completely virtual.
Being virtual can really help you feel secure in this post-COVID environment.
We have locked systems. We moved everybody in without even meeting them. In fact, we have not met any tenants in years, so nobody has met us, not since the very first facility. The very first facility that we owned, we did not know what we were doing. We were always going out and meeting tenants, getting them to sign contracts, then we slowly learned, over the course of owning that thing, that you could run this completely virtual.
I am so glad that we figured that out way before even COVID started because COVID is what made everything virtual. When COVID hit us, we had literally no issues at all. All these mom and pop shops beforehand were freaking out. A lot of them shut down, were selling, and stuff like this because they did not know how to go virtual and stuff. Think about it. If you are 70 or 80 years old and you are owning the facility that you have had for 20 to 30 years, do you know how to go virtual? No.
Luckily, we had already been completely virtual. When COVID happened, we had a handful of people that did not want to pay their rent. Out of 1,000 doors that we had, we had 20 or 30 people that did not want to pay $50 a month or something like that. We felt very secure during our very COVID and the reason why is because we were completely virtual. We have been virtual since 2018 so we already had that going.
Now, they call it contactless. I am like, “We have been contactless.” We already talked about all this. Everything that we do is completely online. We do online payments. We offer tenant insurance. We do overlooks. We manage that all. Our boots on the ground person manage everything for us. We have a North Georgia, Central Georgia, and South Georgia with the Panhandle. As we grow and add more facilities, we will add more boots on the ground people.
The Storage Facilities We Want To Buy
As I said, we have a lot of facilities that we are looking at now. We have an acquisitions department that is on fire. We are trying to get out there and find good deals to put into the fund. We are out pitching and trying to find as much money as we possibly can. This is one of the case studies that are in the report in the deck that you guys can go through. What I wanted to do for the last couple of minutes of the session is I wanted to go into the stars facility that we are going to be hopefully buying because we are trying to raise the money to do it.
Let me show you all these pictures. It is a very nice facility. It is like a brand new looking facility. There are two facilities and they are in Pensacola. It has got the asphalt and the gate is all fenced in. There is all security there. It has an old-school kiosk where you can make your payments. This is the old-school way. It has not even been updated. These kiosks cost $20,000. It is so much money. Can you imagine? We did not do it that way. Essentially, we have everybody go online.
There is no reason to have a kiosk anymore but these are the other facilities. The other one is this reddish color. One of them was blue. It is a one-owner guy that has owned them forever. He has not raised rates since before COVID and he does not want to raise rates. He is too scared. That is what it looks like. He is 100% full. We run the numbers at 92%. For anybody that wants to look at it, this is in the portal. I will give you an idea of how we run the numbers. The property is $1.78 million.
We ran the numbers based on getting a loan from a bank at 5% interest for 120 months and that could change. We ran the numbers because that is a typical loan now in the commercial industry. It is at a six cap because it is a primary market. It is in Pensacola so it is at a higher cap rate. It is making $160,000 a year. You can see it is 164 units for both of them. It is almost 20,000 square feet. He is 9% vacant. He is not almost full but he is pretty much full. There is no CapEx at all needed for this deal.
In fact, what we are going to do is we are going to rip the band-aid. That is what I call it. Rip the band-aid and increase the rates. The property taxes are a little bit less than $5,000. They are $3,000 and we ran them at $5,000. I am not 100% sure if the property taxes are going to become when we buy the facility. I think they are less now and increase them to match the rate here. With the utilities, a lot of electrical gates. There is a higher utility rate. Also, I am pretty sure there is climate control. The insurance is $6,700.
Knowing Your Competitors
The kicker for this is the competition. We looked at every single competitor in the industry. What is cool is I was talking to a guy who’s a lender. I was like, “We are going to take out the CubeSmart, LiveStorage, and Public Storage‘s. We are going to do the competition apples-to-apples like real mom and pops to real mom and pops.” He was like, “No. When you look at the competition, you have to look at the CubeSmart, LiveStorage, and Public Storage because they are the ones that are spending money running numbers to know what numbers you can push the market to.”
You have to make sure that you keep all of those numbers into your underwriting so that you know all the competitor’s mom-and-pops. You could be looking at a mom-and-pop like ours that has not raised rates in 3, 4, or 5 years and they are not charging what they should be charging. The truth is CubeSmart is charging what they should be charging because they know how to push the market and be at what the market rate should be. He said, “You have to look at those.” I was like, “That is so good.” Anyway, as you can see, we looked at all the different competitors in the area. There are a lot of competitors because it is the Downtown Pensacola area. That is where all the competitors are.
The good thing is that they are all full. We call every single one of these facilities. Isn’t that crazy? You can see Simply Self Storage is charging $114, LiveStorage is charging $110, and all the other ones that are a little bit less than $90, some $70. This is what we do. We look at the competition because you have to be looking at what you can value add the property for. We sat and looked at four a 10×15 or a 10×20. CubeSmart is charging $350 for a 10×20, $347, $253, and $202.
Where Else To Look?
Basically, what we do is we come up with the average price per square foot. From there, we came up with a $1.20 per square foot. The truth is it is way higher than that but we wanted to be a little bit conservative on the prices. The Panhandle of Florida is a booming area. That is a great market area that a lot of people are not touching. They are staying down in Tampa. They are going to Jacksonville. They are in Southern Florida and Orlando but they are staying away from the Panhandle.
The Panhandle of Florida is the most affordable housing right now. It is growing super rapidly. The market is being pushed. As you can see, the owner is getting $0.74 a square foot. We picked a $1.20 because we are looking at several other facilities in the Panhandle area. All the numbers were almost the same but we decided to stick to this to be conservative. As you can see, by increasing the rates from $0.74 to $1.20, we go from a 1.732 evaluation to a 3.4. We are taking it from a 6 cap to a 12 cap.
Really look at the competition because the truth is, you have to be looking at what you can value the property for.
I am going to tell you, within the next couple of years, we will be able to sell this thing better than a 6 cap. That is what I call a facility that we rip the band-aid on. When we buy this facility, we will be able to stabilize it. If we raised the rent from $0.74 to $1.20, some people are going to leave but we don’t mind when people leave because that means as soon as they leave, we can charge the price that we should be charging.
What we do is what is called Revenue Management and Dynamic Pricing. What that means is that when you only have a certain percentage of units available, that price is higher. If you had 80% full and 20% vacant, your facility is at one price. If you had 90% full and 10% vacant, your units are at a different price. If you have 95% full and as 3 or 4 left, those prices or those units are ridiculously high. If you have one left, that unit is super-duper high, like crazy. That is why you can get up to $350 for a 10×20 in Pensacola.
That is what CubeSmart is charging. We focused on that, too. We learned that quite a few years ago. Honestly, I am telling you. If you go to CubeSmart and look at their prices, the price of their units is going to be $85.27. That means that they are doing dynamic pricing and they are looking at their numbers. If they are going by percentages, they are not like, “I have not done an increase in three months. Let me increase it to $10 or something like that.”
I don’t do that. Essentially, it is a 5% increase if you have 80% full and a 7% increase if it is 85%. A 10% if it is 90% and that is how they run their numbers. We learn how to do that many moons ago. We implement that into our facilities so we will be doing that with these as well. They are making $160,000. If we can get it to the $1.20 mark which I think we will probably rip the band-aid and do, we will be at $260,000 within the third quarter of when we own this thing. We are going to double the value of the property by increasing it by almost $0.50.
For me, that is considered a mismanaged facility. It is not like 25% full or 50% full. It is full but it is not being managed properly. Those are the facilities that we are looking for as well as severely mismanaged ones. Now, this facility here is going to be a great one for the first one because we will be able to make money immediately. It is already making money now, depending on what our NOI is going to be. If we go to a bank and get a loan, then the NOI is going to be lower than if we could pay cash.
I wish I had $1.7 million cash to go out and buy this thing. It would be great because then we can all share in that profit. Anybody that wants to invest in this fund, we could go out and do that. That would be awesome. If I can’t, then I will use the money that I make now as the down payment. We will have a mortgage on the property, which is okay because then we will be able to leverage all the money that is coming later to buy more facilities.
This facility will be able to make money immediately. You will get a distribution within, if not the first quarter, the second quarter. It is going to take us a little while to get stabilized and stuff. I am investing now. They bought it in November 2021. I am getting my first distribution, which I feel is getting the same thing for this one. If we bought the one that we are going to buy in the North toward the mountains, which is 25% full, that is going to take us a while to get filled up and to turn a profit.
That one is going to take us maybe 2 or 3 quarters in order to start making some money on it. You would not see a distribution immediately so fast because, as I said, that is a severely mismanaged facility. It is going to take us time to stabilize that. There are two different types of facilities that we buy. I want to make sure that is clear. Some of them are you will be able to make money immediately and some of them are going to make even more money but it is going to take a little bit more time to make that money.
As I said, everything is in the Self Storage Fund portal. That sheet plus some other information on the facility, then all of the supporting documents that you need in order to make a decision are all in the portal. You have to sign up and become an investor. If you want to set an appointment with me, you can email at Questions@StacyRossetti.com or Questions@Self-StorageFundOfAmerica.com and let us know. We can send you the link to my calendar, you could talk to me and ask me questions.
I feel like I went over a lot of stuff. Do you have any questions and thoughts that you want to bring up? As I said, we are calling for commitment now and hopefully, we got more calling for money. We got this thing and I need some money in order to get this deal going. We are looking for people that are willing to commit now and put money into escrow for us.
The exit strategy is going to be either to sell this. This property that I showed you, most likely, we will sell this thing within 18 months to 2 years. It is going to take us six months to a year to stabilize it then we will work on getting that first PNL, balance sheet, and tax return that we can show to sell. We will list and sell this one is what we will do. It could be refi now or sell. Those are two strategies that we are working with. I appreciate you reading, letting me pitch, and knowing my spill. I am here if you need anything at all and hop on a call. Tuesdays are open for all investors, so I can chat with you. Thank you very much for reading. Take care.
