If you’re thinking about buying or selling a self-storage facility in New York, this podcast is for you. Stacy Rossetti gives a step-by-step look into a deal in Watertown, New York. She takes us across crucial information that would help you cross your t’s and dot your i’s in future deals of your own—from deal analysis, to executive summary, to deal analyzer. Find out which documents to look at. Learn how to organize your information. Watch out for unique market conditions. Let Stacy help you make informed decisions and get the best possible price for your property. Tune in now as she discusses the latest news and trends in the New York self-storage market. Don’t miss out on helpful tips on how to buy or sell a self-storage facility in New York.
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New York Storage Facility For Sale: The World Is Your Oyster In Watertown
We’re going to talk about the Watertown, New York facility that we got under contract. This is a very good deal. I’m hoping that I find a buyer for this deal because I hate passing up deals. That’s one of the reasons why I started my fund. The Self-Storage Fund of America is there so that I don’t have to pass up any good deal. For the students of Storage Nerds, I did a two-day bootcamp on how to fund deals, find private money, find investors, and creatively structure deals. It was all things funding and financing.
There are so many different ways to fund a deal, but everybody always thinks of one way, the bank. We have a very good deal in Oklahoma that one of our students is looking at. He’s talking to local banks, and the local banks are being super picky. The deal is a good deal. It’s 3.5 acres. It’s 100 doors and it’s full. It’s producing. It’s making $90,000 a year and the banks are being super sticky about it. It’s like, “How else can we fund this thing? Can we find a partner? Can we joint venture? What can we do to get this thing closed? I do not want this deal to fall through my fingers.” That’s why teach how to be more creative and think outside the box outside of traditional financing.
Deal In Watertown, New York
This deal that I’m going to go over is in Watertown, New York. If anybody knows Watertown, New York, Watertown is close to Lake Ontario on the northern side of Lake Ontario. Lake Ontario is the lake that divides Canada and New York. We’ll go over all of the information about the deal. I’ll talk about how I put the deal together and step-by-step processes. That is what we’re going to do. If you have any questions, post them in the chat. We’ll go over them if I see them at the end of the session or during the session.
Watertown, New York looks like a cute city. It’s supposedly growing very fast. It’s located in upstate New York. I talked to the owner. I’ve been on Zoom many times with the owner. Once we find an owner willing to work with us and get an offer, I hop on Zoom and meet them. I live in Tallahassee, so I can’t go hang out with the owner. We do a lot of Zoom meetings with owners. This owner had never even been on Zoom before, but he was like, “I’ll hop on Zoom.”
We helped him figure it out. We got on Zoom to talk to him about this facility. He told us all about it. I’m going to share that with you here in a second. After talking to him on Zoom the first time, he was like, “I’ll sell it to you guys. It’s okay. We could do that.” If you cannot meet with the owner in person, which is the best way to go about doing something, then the second best way is to hop on Zoom. A lot of people do not get on Zoom, which is very weird because this is how you do business nowadays. A lot of storage facility owners have never even been on Zoom. They can’t figure it out, so you have to walk them through.
I do a lot of business on Zoom. There’s nothing wrong with meeting the owner on Zoom, talking to them about the deal, getting to know them, and seeing them face-to-face. When I talk to an owner on the phone versus talking to an owner on Zoom, it’s like night and day. They don’t want to tell you no even if it’s on Zoom whereas on the phone, they’re not seeing you. They’re not seeing your face. They’re more apt to be like, “I’ll think about it,” or whatever. They’re more apt to say no. Whereas if you’re face-to-face in a meeting or on Zoom, they work with you a little bit better. I’m reiterating. Get on Zoom if you can with the owners and talk to them or go and meet them face-to-face. Sitting and talking to somebody on the phone is not going to get you a deal.
Get on Zoom if you can with the owners or meet them face-to-face and talk to them. Sitting and talking to somebody on the phone is not going to get you a deal. Share on XIn fact, we did our mastermind for Storage Nerds. We do the mastermind a couple of times a month. Somebody came on and gave us some pointers and stuff on finding facilities. He went over some mistakes that he’s seen people make in the industry. He said one of the big mistakes is that they’re trying to get somebody to sell their facility to them over the phone. The truth is it doesn’t work.
You can give them an offer if you want. You can say, “Tell me how much money you’re making. Tell me how big your storage facility is. Tell me what your occupancy is.” I can then say, “It’s going to be somewhere around this,” to get the conversation going. To get to the nitty-gritty of it, you want to be in person or on Zoom. That’s that.
Here is the location. He lives in Watertown but his storage facilities in between Fort Drum and Watertown. What’s the population of Watertown? Watertown, New York almost has almost 25,000 people. It is steady. It’s a good tertiary market facility or area. If you go back to Google Maps, you can see that Watertown is near Fort Drum. He said that 50% of his tenants are military because his facility is in between Watertown and Fort Drum.
He said that a lot of military people rent from him. He gives a discount for the military as well, too. It was 10% or 20%. You want to keep in mind that being near a military base is not a bad thing, honestly. People are coming, going, relocating, and stuff like this, so a lot of times, they have to put their stuff in storage. The only thing about renting to military people is that you can’t randomly auction their stuff out. You have to figure out what the state’s rules are for having military tenants. There are a lot of state rules about that, so you want to make sure you understand that.
What I thought was interesting, too, is how big Fort Drum is compared to Watertown. 24,000 people are here. I wonder how many people are in Fort Drum. Let’s see how many. Fort Drum’s population is 13,000. A lot of space is what they got. You’re in between a town of 13,000 and 25,000. There are little tiny towns around here. This is where it’s located.
We were talking about snow. It snows up here. It’s upstate New York, so they get snow. He was saying that they don’t get as much snow as they do down here because there’s something with the atmosphere and the wind or whatever off of the water of the lake and stuff. He was like, “You’d think we would get a lot of snow but we don’t.”
He said that during the winter, he does snowplow probably throughout the whole winter. He does it himself because he lives right in that area. He said last winter in 2022, he probably went between 20 and 25 times to snowplow the facility. You have to know that in this area, it’s going to cost some money to snowplow. It’s the same thing down where we have in Georgia. In all of our facilities in Georgia, we got a lot of grass. We may not be snowplowing, but we are mowing. You’ve got the expense. It’s part of the expense. You make sure that you can afford it
We were asking, “How much is it going to cost us to snowplow this thing?” He said, “About $5,000 a year is what it was going to cost.” That was what his guess was. It’s not too bad because if you think about it, we’re paying probably around $300 a month to like to get our properties mowed every month, twice a month. It’s costing us probably about $150. We have one that’s costing us $200 because there’s a lot of grass and stuff. It is typically $150 every time somebody goes out to mow the lawn and clean it up and stuff. That’s $300 a month, so that’s $3,600 a year. It’s the same thing. Snowplowing is going to be the same thing. That’s my two cents on that.
The way that I teach my students and the way I’m teaching you guys is that you need to use an online way to store your documents and stuff. All the information that you need in order to make a decision on whether or not the deal is a good deal is the same exact information that your lender’s going to need if you need to get financing for the deal.
Deal Analysis
Also, if you’re wholesaling a deal, it’s the same exact information that your buyer’s going to need. We’re wholesaling this deal. Every folder here has everything that I need to know in order to make a decision on whether or not it’s a good deal. That means that you need to have a deal analysis. With deal analysis, you’re looking at the numbers and seeing if the numbers are good. That’s a big part of it. The truth of the matter is that there’s so much more to looking at a deal.
I get emailed on a weekly basis. Every couple of days, I’ll get some random person that’s like, “Here is this address. Is it a good deal?” I’m like, “It doesn’t work like that. You have to analyze the deal in order to know if it’s a good one or not. You can do some quick calculations.” I know typically how much everything costs if I can get a good idea of what it’s going to cost based on how much income they have and then what the square footage is. Looking at the overall picture is going to help you decide if it’s a good deal or not.
Look at your 3, 5, and 10-mile radius population. You Population is a key point in determining the factor of what the price and what the cap rate of the facility is going to be. We need to know the population. This is a very important thing to me. I’m asking my students all the time and my virtual assistants, “What’s the population of this town?” It is that I can get an idea of whether it is a tertiary market, a secondary market, or a primary market. Based on the type of facility, that is going to determine what your cap rate is. That’s why we have the population here.
We also have competition. All of the competition within a certain radius is going into this folder because you need to do a competitive analysis. With the competitive analysis, it gives you an idea of what the opportunity of the deal could be. If you’re not looking at your competition, how will you know what you’re going to be able to get your rates to? How are you going to know what your competition is doing and what sales are they doing? Do they use dynamic pricing or not? Are they mom-and-pop or are they not?” It is understanding the competition.
I tell my students all the time that driving for storage equals market research. Getting out and looking at the types of facilities that are in the areas that you’re interested in is going to educate you. Understanding what your competition looks like is going to educate you and help you make a better analysis of your deal.
As we have competition, we also have the county info. The county info is your property report card. This is what it’s called. You go to the county site and pull up the property report card of every single property out there. They’ll give you what the taxes are, what the square footage is, what the acreage is, and what the sales history is. Everything that’s ever happened to this property since it was built is inside your county website.
We have the Deal Analyzer. That’s running the deal analysis. We have the demographics. What’s the household income? What does the area look like? Is it low-income, high, or middle? What are the demographics? We’re looking at that as well, too. Who’s going to be renting? Is it all military? Is there going to be a lot of military or not a lot of military?
Also, the documents from the owner. We have this one under contract. Did we get tax returns? Did we get any reports from any of the software that they used? Did we get the financials? Did we get P&Ls and balance sheets or whatever it is? I’ll show you what we got from the owner. Once we get it under contract, we start getting all that information and then we go through it.
The executive summary is a report you put together. It’s a couple of pages and it gives you a synopsis. In fact, everything from every single folder is put into the executive summary. In that way, the person that looks at this deal, whether it’s me, the buyer, a student, or whoever it is, opens up the executive summary. Everything that you need is right there. That way, you don’t have to go through every single one of the folders to see what the deal is about. Financials are here from the owner. The map, street view, and facility are all there. You can see pictures of it on Google Maps. The offer letter is here with what we offered the owner, and then the purchase and sell contract is here as well, too, with what we got it under contract for.
Regrid is a site that you can use. It’s free. Parcel data is what it is. You could search for your address or whatever it is that you want to go to on the map. A property record is what it is, but you can see it’s always trying to upgrade you. There’s a free version of it that gives you so much data, but it’s not going to give you all the data you need. It does give you the boundaries. It gives you things like this. We use Regrid quite often because it’s free. I’ve never upgraded. We use other software to find anything else that we can’t find. That’s all in the folder.
Everything that I’m telling you here is exactly what you’re going to need in order to make a decision on whether or not it’s a good deal or not. You should be getting into the habit that when you find a deal, you create a folder. Whichever system you use, if it’s OneDrive, Dropbox, Google Drive, or whatever it is, you’re creating a folder in there and then starting to add all the documents.
You don’t want to have a folder that has a whole bunch of documents. This is what pisses me off when people send me this stuff. They’ll send me a Google Drive folder and there will be all these kinds of documents. They’re not even named properly, so I have no idea what they are and have to open up every single folder to see. You have been through this, too. You understand what I’m talking about. It’s annoying to me. What we do is make sure that every single folder is named properly. Exactly what the folder is saying is what’s going to be in there so when you open it up, you’ll be able to see the names of the documents as well, too. It’s not some JDPFQT64-3 or whatever. Some people send me documents and I’m like, “What’s this?”
You can see the property on Regrid. The property itself is on 10 acres. You get to buy 10 acres when you buy this property. The storage facility itself is right here. It’s 230 doors. I can’t remember. There are a lot of doors. It’s a big facility. He also has parking right here as well, too. There’s plenty of space to do even more parking. You’ve got another 6 to 8 acres to do covered parking, boat, and RV parking, more units, or whatever. He said that what he would do is add more units because he’s full. He’s not full because he’s using a lot of the units himself, but with what he’s not using, he’s full. He was like, “We need more units here.”
With parking and stuff, you can do a whole bunch of stuff here. The world is your oyster when you have 10 acres of land to do whatever you want. It’s all clear. That’s the thing. It’s all cleared as well, too, which is pretty cool. In Regrid, you could see it’s 10.87 acres. It has got a whole bunch of stuff on here, like all the information about the property. Regrid is very good at giving you information about the actual property or the land is what it is as well, too. There’s that.
Let’s start from the beginning here. We have all of the stuff in the folder. The 3, 5, and 10-mile population is here. We’ve got all the competitors. KO Storage is a secondary market player that buys a lot of storage and secondary markets. They’re his competitors. He’s got some bigger players. He said that KO has asked to buy it but he never sold it to them because he wanted a mom-and-pop to come and buy this thing. That was what he wanted. That’s why he never sold it to them. They’ve asked several times to buy the facility, so they’re also interested in it.
Competition is here. County info is here. The Jefferson County parcel tax information about the property is all there. You have the demographics. That’s the growth rate and household. It’s declining a little bit. Watertown is, but Fort Drum is growing. The actual owner of the facility told me that Fort Drum got some massive government contract to build some more weapons and stuff or whatever they do over there.
He said that Fort Drum is doing nothing but expanding and growing. Watertown has always been a small town of 25,000 people, but Fort Drum is growing. It is a very big military. If anybody knows anything about Fort Drum, you could say what they’re doing because I don’t know. He was explaining it to me and it was going in one ear and not the other.
Executive Summary
Google Maps is here. The satellite view is here. This is the executive summary. This is the information about the facility. It is 233 units. It is almost 30,000 square feet on 10 acres. It’s got $11,000 in property taxes. The utilities are about $1,400. Insurance is $2,700. The income is $181,000. Indoor storage is $166,000. The outdoor storage is $1,400. The vacancy rate is 40%. The reason it’s vacant at 40% is that he has 12 units that are his. He uses outdoor storage as well, too. He’s using half of them for his stuff. Once we close on the facility, he will have all that cleaned out. He’s going to move it over to his property and stuff. He’ll have all that.
When I tell you the numbers on this facility, he’s full with the units that he has available, but the units that he can’t rent out are the ones that we’re considering vacant. That’s how it’s working. He has a lot of units that he cannot rent out himself. It’s one whole building of units, but it’s sporadic everywhere. It’s one building of units that he cannot rent out because all his stuff is in it. This is very typical. We bought one facility up in North Georgia. He had ten units full of crap or whatever. You have to get them to get that stuff out. You can’t say, “Keep your stuff there. It’s fine,” or whatever because that’s money in your pocket. You want to get that.
This is the facility. Remember, it’s on 10 acres. Watertown has about 24,000 people in it. In a 3-mile radius, there are 18,000. In a 5-mile, there are 51,000. In a 10-mile, there are 71,000. With Fort Drum and all the little towns in between Watertown and Fort Drum, it’s quite a big population of people. There is storage for other storage facilities there. Watertown itself is one of those towns in New York that is always the same. It doesn’t go down. It doesn’t go up. It’s a stable town that people live in. Everybody stays there. They don’t leave. He said he’s been there his whole life. He’s never left. He said that a lot of people are like this. That’s where it’s at.
With the map, you can see where it’s located. You can always go and google it as well, too. Get onto Google and search Watertown. You will see what I’m talking about. On the map of where it’s located, there are the borders. On Regrid, this is the 10 acres. There is lots of room to expand and grow. You can do whatever you want. The world is your oyster. There are facilities. It’s a very nice-looking facility, honestly. It is very clean and clean-cut. There’s some parking and stuff.
There’s the county. Do you remember I told you can go in and get the county information? There’s the competition. There are all these competitors. We have ours right here. There’s Watertown and Fort Drum up there. It is in between. It is right in the middle between both. It’s a very good location. There are no other storage facilities in the area. KO is in Fort Drum, and there’s a KO in Watertown, but there’s nothing in between. When I go through this, put your thoughts in, so I can see. I have the comment section up so I won’t miss any of your messages.
KO looks exactly the same except that it is fenced in. His is not fenced in. Eventually, maybe you don’t want to do that and get it all fenced in. He never fenced it in. Watertown Patriot is looking rough there. KO is looking good. What they did is they bought this facility and then they came in. They put gravel down, cleaned it up, and power-washed it. That’s what they did. It’s exactly what we do.
Here is something in Watertown. This is all concrete brick. This is a nice facility. Here’s another Watertown, a new store in Watertown. They didn’t put gravel down. They were like, “It looks good. It looks fine to me.” The Store House is looking good and nice. They have nice facilities in this area. Here, we have the unit mix and the competition. It has all the different sizes of unit mixes he has. He has a lot of unit mixes. He’s got a lot of sizes from small to big.
Also, another thing that he told me, too, is his facility is one of those ones where you could switch the size. If you see that one size is needed, you could go and change the walls. You can move the walls around and stuff like that. Here’s his current rate. He’s at $0.79 a square foot. If he was full, this is where he would be with all his unit rates. He’s also right where the competition is at. He’s at the same price. The competition here is where the competitors are at. You can’t go in and raise rates. Maybe later down the road, you could increase the rate by $5 or $10 or something like that. You always want to be increasing your rates anyways, like 5% maybe nine months or something like this.
We were talking in our mastermind. The speaker said that he always raises rates in the winter. Winter is the best time to raise rates. Why is winter the best time to raise rates? Put it into the comments what you think. Here are the numbers. $1.7 million is where we ran the numbers out of the 7% cap. He’s making $165,000 for the storage. He has numbers. He has tax returns to prove this.
Somebody said, “Nobody wants to move in the winter.” Brenda says, “Weather.” Exactly. People don’t want to move in the winter. The best time to raise rates is in the wintertime. I’m in Florida, so it doesn’t get that cold. I don’t know if that works in Florida, but in New York, that works, for sure. Nobody wants to be moving their stuff in the middle of winter. Raise the rates. If you need to raise the rates after you buy this thing by $20 or whatever, then do it in the wintertime.
He’s making $166,000 or $167,000 for the storage. I remember he’s 40% vacant. It is 40% because all that space is all those 12 units. That whole building is pretty much all his stuff. He is going to get all that cleaned out and then you’ll be able to raise those rates. That is how we ran the number. We put $0.77 a square foot because that’s what the competition is at.
Remember, his income is $181,000 or $282,000. He has the tax return showing that. Where does the other money come from? The $160,000 is for storage, but the rest of the money is coming from the parking. Remember, he has parking there as well, too. He always has boats and RVs. Remember, he’s right next to that lake, so people are parking their boats and RVs. He says it’s easy money. It’s uncovered. He says, “If I use all that space out there, you can figure out some way to do some parking as well, too.” He’s like, “You could do more parking.”
It’s a total of $183,000. You can see we ran the numbers out of the 7% cap. That is what we ran the numbers at, which is a good cap rate. It’s a secondary market cap rate. That’s a very nice facility. We came up with $1.7 million as the price of the facility based on the numbers that he gave us, and he accepted that offer. It’s 40% vacant. The way you’re going to make the money on the property is by getting all his stuff out and then leasing all that up first.
Phase one is to get it from 40% to 8%. We’re doing current to potential. He should be making around $250,000 a year. If he got all his crap out, he’d be making $250,000 a year. The valuation of $250,000 comes out to $2.9 million, almost $3 million for the property. You’re getting a $3 million property for $1.7 million. That’s a very good deal.
On top of that, you have all of the extra lands to add stuff on. If you added another 100 units and some parking, the world is your oyster, honestly, in this area. We did not run the numbers and add units and things like that because I wanted to explain to everybody that by getting the occupancy to where it shouldn’t be, the value of this property is very high.
Just by getting the occupancy to where it should be, the value of the property gets very high. Share on XDo you have any questions about that? Eric says, “I’m from the west coast where it’s warm and doesn’t snow at all. How much plowing will be needed during the winter? Do the boots-on-the-ground do the clearing?” Eric came in late. That’s okay. I was talking about this at the beginning of this session, but I know you, so it’s all good. We talked about plowing. He plows everything himself. He said in 2022, he had to plow between 20 and 25 times. It doesn’t cost him anything because he does it himself. He said it’s probably going to cost around $5,000 for the winter season to do all the plowing that is needed.
I also compared that plowing to all the grass. If you had the whole thing lawned, you’d have to mow it anyways. We put the expenses in. Property maintenance is $25,000. $7,400 is for staffing. $10,000 to $11,000 is for the software and merchant fees. $3,000 a year is for marketing. All those expenses are here. There are also property taxes, utilities, and insurance.
Documents From The Owner
Let me go back. Let’s talk about the Deal Analyzer. Let’s see the demographics, the documents from the owners, and the financials. Let’s see what he sent us. This is what he sent us. He sent us the management summary as of the end of 2022. The total income per year was $181,000. There is also the sales occupancy. All his rent roll is here from his units and what he is charging. He uses ESS, Easy Storage Solutions. I have the documents I told him to pull. I said, “Pull the management summary for 2022 and 2023.” He has made $75,000. It has all his fees and extra income that he’s gotten in his occupancy. I have his yearly revenues for 2022. I could see how much he collected, how many fees, what fees he made, etc. It has 2023 and all the income that he has made up until then.
Honestly, if you think about it, could you imagine owning a storage facility like this? He has this storage facility where he says he mows the lawn, does his rent roll, and takes in tenants and stuff like this. He manages this himself. This is his job. If you were taking care of this one facility and making $180,000 a year that you manage it yourself and do all this stuff, that’s a pretty good income for $180,000 a year. He should be making $250,000, but he has a whole bunch of stuff. You could get this thing up to be making $250,000 a year. It’s a very good facility to be owning. On top of that, you could add more units, build on them, and lease that up.
I have his rent role, tenants and stuff, and what they’re paying. He printed all this out from ESS. He sent over the survey. He was like, “I don’t have a P&L.” He doesn’t use QuickBooks or anything like this, FYI. He wrote everything out for us. He said, “Here is all my insurance. These are my expenses. This is what I paid. This is me managing the facility itself. This is how much it’s going to cost.”
We run our expenses at 38%. That is where we’re at. If this is your own facility and you’re managing it yourself, your expenses are going to be way lower. This is how it is. When I look at it, these expenses are exactly the same expenses that we have running our facilities. This is exactly how our P&L looks. Ours is in QuickBooks. The good thing is that he could write all this up. Since he sent over his tax returns, the banks are going to be fine financing this deal. I’m in the process of talking to a whole bunch of banks to see what they think about the deal and the number that we came up with and stuff. Since he’s making $180,000, they should be able to finance this deal.
I have his insurance. He sent over the insurance. He sent over his tax returns. He sent everything over. Everything that you need to show the lender to get a loan on this thing is in the folder. He sent over a better picture of the plat. He said he took a picture of it and said, “This is the plat with the boundaries and stuff.” That’s where we’re at on this property. We’ve got it under contract. We agreed on a price. We got it under contract and we’re going to be talking to lenders.
At the same time, we are going to be wholesaling this deal. I’ve already pitched it out to the students to see if any of my students want to buy it. If they don’t want to buy it, then it’s going to be available for anybody else. I’ll be pitching this out to let everybody else know about it, but I figured I would let you guys know if anybody’s interested. This is a very good facility to buy, but you’re going to have to think, “Who’s going to finance this thing?” You’re going to have to get a loan on this. You could probably get a SBA loan if you could get 10% down.
I bought a $2.5 million facility and did an SBA loan on it. We had to put 10% down. That was it. That’s how that works. For sure, SBA would finance this. Your interest rate would be a little high because SBA loans are prime plus one typically, but as long as you can pay the mortgage. You could talk to your lenders about doing interest-only payments for the first six months or something like this. You could do a conventional loan. A conventional loan is going to be 25% down and roughly around 6.5% interest.
I have been under contract for $1.7 million, and I’ll wholesale the deal for I don’t know what price. Give me an offer and then we can work it out, honestly. I’ll talk to Annie Bennett about working out deals because I partner. I do all kinds of stuff. I want to get the deal done. I do not like property slipping through my fingers. If it’s a good deal, let’s try to work out and get the deal done. Email me if you’re interested in this deal. You have to email Questions@StacyRossetti.com. We can hop on Zoom and go over the deal, and then see if we can work together.
I am going to be talking to a whole bunch of lenders. I’m sending this out to lenders. They’re going to look at it. I’ll see what they’ll say as well, too. Also, the person that’s interested in buying it should be looking for lenders as well, too. Every lender is equal. Every lender is completely different. There’s not one lender that’s the same. Make sure you’re always talking to lenders.
Deal Analyzer
Quickly, I was going to share the Deal Analyzer with you. It’s the same exact Deal Analyzer. We’re running numbers at different prices and stuff. There are $166,000 and $992,000. I want to show you something about the Deal Analyzer. Somebody asked, “Do I have a free Deal Analyzer?” The answer is no. I’m not going to give you a free Deal Analyzer. I sell this Deal Analyzer. This Deal Analyzer cost me a lot of money to put together, so no. I’m teaching for free, but if you want my Deal Analyzer, you have to pay for it. It’s a couple of hundred dollars. It’s not that big of a deal. I give you training videos to go along with it. Unless you want to be a student, then you get it for free if you join my coaching program.
I wanted to tell you all the valuation current, potential, and after update. We run our numbers based on what is it as is. If we get it from 40% to 10% vacancy, what is it if we add on units? I want to play around with that and tell you, in my mind, how I’m thinking about this deal. In the valuation current, we have the parking. He’s making $14,400 a year. That is what he is making for parking.
We left that number the same. We did not put it like we can increase rates. We didn’t add any more units for parking or anything like that yet. If I wanted to add more parking here or increase the rates, I would be changing it under the after updates. After updates mean, “I’m going to go out there and I’m going to figure out how to put some more parking on this facility.” That can add more space and stuff. You’re going to be making more money here.
Remember, the price is the same. The price per square foot is the same because the competition is the same. He’s at the same price as the competition. The only thing is that he’s 40% vacant. We want to get it to 8% vacant. This is our opportunity right here. The potential rent is $276,000 for the storage. The boat and RV are $14,000. It’s a total of $291,000 minus the vacancy of $22,000 because it’s going to be 10% vacant. You’re never ever full. If you are full, then you’re not charging enough. You should never ever be an owner who is like, “I’m full. I’m 1%.” That means he is not charging enough. You always want to be around 8% to 10%, maybe even sometimes 15% vacant depending on which market you’re in.
If you are full, then you're not charging enough. Share on XThe effective gross income is $269,000. We’re running our numbers at $60,000 a year to manage this property, which comes out to almost 38% of our expenses. That includes property taxes and insurance as well, too. It is all in 38%. The national average, and we talked about this in the mastermind, is anywhere from 35% to 42% or something. We are right at 38%, which is a good number to run your numbers at.
Our NOI is at $209,000. Let’s say that we add more units. Let’s say we add 100 more units to this facility and we’re going to run the numbers. The number here is $232,000, so we’re going to add $332,000. We’re going to add 10,000 square feet. You’re going to add 10×10. A hundred 10x10s is 10,000 square feet. We’re at $39,966. We can’t increase the rates, so we’re going to be full.
We need to put in our build cost. Our build cost is going to cost us, let’s say, $45 a square foot to build. If it was a new build, maybe it is $50. Since you’re adding another unit, it’s going to be $40. It probably won’t even be that much, honestly, He’s already got that flat land. You might want to pour some asphalt. I probably want you to be that much. Let’s say that we run it at $40. 40 times 100 is $400,000. We’ll put that. I added that in.
If I added 100 units to this property, that’s probably another 2 buildings. You get rid of the parking and you could add two buildings right there. He said there’s plenty of space to add a couple of buildings right there. We would be at $339,000. The parking, we could take this out. We’re going to take out of the parking and we’re going to only add two more buildings on that space right there.
We’re at $339,000, and the valuation of our property is $3.9 million. By spending $400,000, you’re getting a $1.7 million facility. $1.7 million plus four is $2.3 million. You’ll make $3.9 million if you sell it and get it in full. Adding more units is good. You have way more space to do more. You could do covered parking and boat and RV parking. The world is your oyster in this place. Playing around with that shows how amazing this deal is. This is a very good deal. I hope somebody buys this thing. That’s my two cents and I’m sticking with it.
Let’s do some quick questions. Richard’s saying, “Why not any management fee?” Add your management fee in there if you want. If you have a boots-on-the-ground person and a phone person, you’re set. This facility does not need a management company. Honestly, you can handle easily 400 doors on your own with the boots-on-the-ground person and a phone person. It is like an office person and a boots-on-the-ground person. We don’t have any management company. We manage all of our facilities ourselves and we got 2,000 doors. I wouldn’t waste your money on the management fee.
You don’t want to have an onsite property manager. He does not have an onsite property manager. You do not need an onsite property manager. You need a boots-on-the-ground person to go out there once a week or maybe twice a week and clean up the facility, overlock, and pick the trash up. This stuff is what you need. This facility will be easy to manage.
That’s the deal. I’m going to be pitching this out as well, too. I’m opening it up to anybody that’s interested. All you have to do is email Questions@StacyRossetti.com if you’re interested in this deal. Time is of the essence because we have 30 days of due diligence. That’s it. If you think you’re interested in this deal, email me. I can share the folder with you. We can hop on Zoom, etc.
Somebody asked, “How are the boots-on-ground normally paid?” It’s with money, typically. We pay them through our bank account. We do a wire. Our wires are free at our bank accounts. We wire our money over. We started using Paycom, but you’re going to be paying them whatever the hourly rate is. We pay $20 an hour to our boots-on-the-ground people. You pay them whatever the hourly rate is up there. I would check it and see but it’s typically around $20 an hour.
Richard’s saying, “Why don’t you want this deal?” We closed on 500 doors a couple of months ago. On top of that, we’re buying another 200 doors. We also have three other facilities under contract. I can’t buy every facility. There’s no way. This is all the way in New York, and we buy our stuff in the Southeast. I can’t buy every facility. We find facilities and offer them to our students. If they don’t want to buy them, then we’ll offer them out to everybody else.
I don’t know the wholesale price. Make an offer to me. The purchase price is $1.7 million, so you need to come up with something more than $1.7 million. I am open to working with anybody. There are no rules with me. I don’t live in the circle. I live outside the circle. I appreciate you here hanging out with me. Don’t forget the triad. The triad is the Wednesday webinar, the course, and the Deal Analyzer. If you get those, you can do this. I appreciate it. You take care. Have a good week.
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