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💰🔥 SELF STORAGE DEAL IN ARKANSAS - BREAK DOWN
I just ran the numbers on a 4-acre facility. This is a classic example of why you have to look at the "Actuals" vs. the "Bank Rules" before you ever make an offer. Here is exactly how we are breaking this deal down to find the right offer price while making sure we walk away with a $150,000 Assignment Fee. 💰 ============================================== 📍 THE PROPERTY STATS - Total Units: 290 (Mix of 10x10, 10x15, 10x20, plus RV/Boat spots) - Occupancy: 80% (Room to grow!) - Actual Annual Income: $159,000 - Gross Potential (If 100% full): $240,820 - Extra Juice: Expansion land (1.4 acres) + 10.5k sq ft concrete pad already poured! - What does this mean? 🧐 This facility is currently under-managed at 80% occupancy. That "missing" 20% isn't just empty space; it’s a massive opportunity for us to increase the value once we take over and fill it up. ============================================== 📉 SCENARIO A: THE "BANK RULE" (35% EXPENSES) Banks are conservative. They assume 35% of the money coming in goes right back out to bills. - Gross Income: $159,000 - Expenses (35%): $55,650 - Net Profit (NOI): $103,350 - Property Value (10% Cap): $1,033,500 - Our Assignment Fee: $150,000 - THE OFFER: $883,500 What does this mean? 🧐 Banks use this 35% rule to protect themselves against surprises. Even if the owner spends less, the bank calculates value based on this "safe" number. We use this to make sure the deal works for a buyer who needs a bank loan. ============================================== 📈 SCENARIO B: THE "OWNER ACTUALS" The owner says they only spend about $21k a year on taxes, insurance, and utilities. - Gross Income: $159,000 - Actual Expenses: $21,000 - Net Profit (NOI): $138,000 - Property Value (10% Cap): $1,380,000 - Our Assignment Fee: $150,000 - THE OFFER: $1,230,000 What does this mean? 🧐 Owners usually spend less because they aren't paying for professional management or marketing. This shows the "real" cash flow happening right now. We subtract our $150k fee from this higher value to see the absolute max we should offer.
💰🔥 SELF STORAGE DEAL IN ARKANSAS - BREAK DOWN
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👀 453 Units, $1.5M Gap & a $100K Fee — What Would You Offer?
What’s up guys! I’m looking at a 5-facility portfolio out of Alabama right now from a wholesaler's perspective. The goal? Clear a $100,000 assignment fee while making sure the deal actually makes sense for an end-buyer. Here is exactly how we break down the math when a seller's numbers look "too good to be true." 1. The Portfolio Snapshot - Total Units: 453 - Total Sq Ft: 65,650 - Total Monthly Income: $27,100 - Annual Gross Income: $325,200 - Current Occupancy: 82% (Upside alert! 🚨 ~81 vacant units) - 2. The Expense Trap: Seller vs. Reality The seller says they only spend $5,000/month on expenses across 5 locations. That’s an 18% expense ratio. Don't fall for this. Once a buyer takes over, taxes reset, insurance goes up, and management needs to be paid. Standard practice is to underwrite at a 35% expense ratio. Here is the comparison: SELLER’S NUMBERS: - Annual Income: $325,200 - Annual Expenses: $60,000 - Net Operating Income (NOI): $265,200 INDUSTRY BENCHMARK (35%): - Annual Income: $325,200 - Annual Expenses: $113,820 - Net Operating Income (NOI): $211,380 3. The Valuation (9% vs 10% Cap Rate) In this market, sophisticated buyers are looking for 9-10% returns on actual performance. - Value at 9% Cap Rate: $2,348,666 - Value at 10% Cap Rate: $2,113,800 The Reality Check: The seller is currently asking $3,550,000. Based on the real numbers, that’s a 5.9% Cap Rate. That is way too skinny for Class C storage in Alabama. 4. Reverse Engineering the Wholesale Fee If I want to make $100,000 on this deal and sell it to a buyer who wants a 10% return: - Buyer’s Purchase Price: $2,113,800 - My Fee: $100,000 - Maximum Allowable Offer (MAO): 🛑 $2,013,800 💡 The Strategy The "Gap" between the asking price ($3.55M) and our target buy price ($2.01M) is over $1.5 Million. To close this deal, we have to educate the seller on how commercial property is actually valued. We aren't just buying buildings; we are buying a cash-flow stream.
👀 453 Units, $1.5M Gap & a $100K Fee — What Would You Offer?
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