K, maybe I'm just an idiot with business but I personally look at this and think....... 270 units at 80% occupancy = about 216 units that are regularly paying. Then... $79,000 income last yr ÷ 216 units = $365.74 per year for each unit. Meaning the monthly cost of the units being rented is $30.48 per month!! WTF! No way! At that rate I'm thinking this must be a class C.
I agree. In business the word “income” isn’t clear. I like when a person uses the words, “revenue, profit, and loss.” For me they provide a clearer picture.
Finally someone that will share the math behind it. I thank you "my friend" for sharing that with us, as a laymen who is very interested in learning everything I can about this side of the industry, this has definitely been the catalyst that I believe will push me forward into my next step, well done cheers
How do you know if a person is a professional in the field? Easy. He/she explains complicated things very easily without any unnecessary information. This video is a great example of it. Thanks a lot for this video! Nicely done!
I have a serious question. Why would anyone want to buy a business with there life savings as a down payment, go all in and take on all that extra work for a yearly salary of 23grand, am I missing something?
Because it’s adding 23 grand into your pocket in addition to the money you put down. The life savings you put down do not go anywhere, they are in the value of the building you purchased and you are able to sell the property to get it back. However by doing this you are simply allowing your savings to produce income for you, while the value of the property begins to appreciate until it reaches a point where you can sell it for more than what you paid for it, and while you’re waiting for that to happen, you are getting paid 19% on your investment annually (in this case it’s 23,0000 per year)
That's because the rich buys "assets" that produces income per year. This $23k is also tax free income so imagine you get paid $100,000 as a W-2 worker, your take home will be around $60k after taxes. If I get three of these self storages, I would make more than an employee making $100,000.
This video was so very informative and well presented for a newbie like me. I'm looking to invest and gathering information at this point. My only question is on the final calculations being done. Do the operation expenses include salary for an on-site manager? Thank you.
Any comments on if you already have the land in a great location? We might want to build self storage units on the land but not sure where to start and what the costs will be to build it out? Where are the best places to buy the storage units etc?
Hey Peter, Great video I had a question about when you analyzed the deal. What is a bad C.O.C (Cash on Cash) number? What is considered bad C.F (Cash Flow) numbers? Also, would I analyze a multi-units numbers the same way? Thanks so much. I'm really learning a lot.
Thanks for the great videos. Off topic but the turnover-rate in the apartment business is 6-7 months ? (4m40s). My expectations were quite a bit more to the upside. Thanks very much
At full occupancy, the example is charging a rate of $22.22 per month. The average unit price per month should be quadrupled if not more. Also, 40% on expenses???? I hope all these numbers aren’t even close to realistic or I’m stepping away from the idea of owning a storage facility.
I was thinking the same thing. $79K in annual income for 270 units seems waaaay too low. That's about $24 a month in rent per unit! No way!!! Good info otherwise.
Mr. Harris,Thank you so much for the deeply informative videos and the care and passion you put into teaching beginners. I am a new subscriber and I am hungry for knowledge and am ready to jump into the commercial RE game.Here's a question for you: As a brand new investor, is it better to start out investing in commercial-sized multifamily properties or self-storage? I am interested in investing in both eventually, and know that they both have their own pros and cons. I guess my main concern is that one may require more input or experience than the other and would love your opinion.Thank you.
@@CommercialPropertyAdvisors would you say the same about mobile home parks? I'm interested in those, apartments, and nnn commercial space. Also Mr. Harris can you make two videos on these two subjects they will help not just me but others #1. When syndication what's the difference between irr, coc, and roi and which is most important to investors? Also can you structure a syndication so that when you refinance you cash out your investors and you now have 100% ownership? Would you dissolve the LLC or create a new 1? Video#2 the closing process. It's cloudy at best. What is the exact step by step process? No one I've followed has ever described it. Thanks Mr. Harris.
It would be great getting more people to make their monthly payments instead of making it their last priority, and even then making partial payments.... very very annoying.many won’t pay unless they need to get into their unit because we have them locked out due to non-payment, or we sent them Aution papers that we are auctioning their things. It’s not a piece of cake folks be prepared to put your LIFE into it.
The facility I rent from gave me the option of automatic payments.The payments are pulled from the card my choosing and all I ever hear from them is an emailed receipt every month.
Awesome video and very inspiring. Great content and breaking it down on what you need to know. Pretty soon I’ll be looking into investing in self storage.
Good video, I however do not think this facility was a good deal at $485K. Very rarely banks will do more than a 15 year amortization. That brings this deal to a 11% CAP RATE. This property based on these preliminary numbers has a net of $12,481.88 when financed with the prevalent commercial loan standard of 15 years.
Thank you for the video! Although 7 years old.. Still picked up on the easy way to find Cash Flow then divide by down payment to see RoI or COC as you call it! Awesome quick way to evaluate a deal!!
Another very insightful video Mr. Harris! You mentioned the SBA as possible funding sources for these types of properties with two different types. I've not looked into it but do happen to know what, if any, strings could be attached given as you mentioned 10% down as opposed to 25% down as could be the industry norm with commercial lenders? A sharing of gains perhaps when you sell the property for profit? Or any other encumbrance you may know of? Thank you again for these great presentations! Bill Turner
Informative, however I'm curious how it would look if the property management, utility bills, Monthly Insurance, & property taxes were figured in & how to figure them, would this property still cash flow as well...
He didn't show what items made up the operating expenses $. He used an industry standard of 40% of gross profit. I assume they are included as 40% ($32,000) seems high for a self-storage unit. I am curious what line items are in this 40% as well.
I love your content MF and now Storage. Please work on the clarity of your content. The content comes across distorted or with an echo. Peter please spend a few dollars on upgrading the quality of voice output of your content. Thanks for all you do.
With all those figures, it seems that the manager expense wasn’t included. I’d prefer more information on that missing criteria. It makes a big difference.
Another awesome video. Thank you. I just wanted you to know you don't have a #4 even though you referred to it in the video. In the Why Invest in Self Storage Facilities?
Storage facilities around 30,000 - 40,000 sq ft in my area are priced well over 1.5 million. Would it be better to build a storage facility from the ground up? Do you have information on this?
Why is a 6% rate of return a bad investment..... In two years with normal rate increases that will become 9% and so on and so on..... Site selection is the most important thing in self storage. That does not mean the best storage facility to buy is always the A++++ facility.... Its the facility with the best upside potential. Can it be expanded. What is the potential for ancillary sales.
How is the return on investment? I live in Canada, where population is only about 10% of the population of U.S. I've been wanting to get into the mini storage busines for over 10 years, but just can't afford land in Victoria BC. I own several rental homes, and would like to get into mini storage.
@@mikepurewal5816 I think it’s a great investment because you have people paying for your building and down the road you can sell for much more . Just go for it.
Hello I have a ??. I’m building storage units for sleeping rooms of 20 rooms of 12x12 and 2 small rooms.8x12 on the end. 130x 30 how many can I put on 1 acer 12x12 +8= 128 round of 130// 12+12+4 = 28 round of to 30 there 4 foot down the middle of these units with doors on both ends.
Sir. I have 2 commercials in my area: Public storage for example. How would I compete with them if I invest in a distressed self storage units local mom/pop??
Thank you for the wisdom sir! I’m looking into building one on a vacant piece of land I own. Any recommendation on what company to contract? I’m in Nashville, TN.
it reflects the amount of population that are willing to travel to your location/business. Most customers in the storage industry will not travel more than 10 miles to a location.
Thku for an informative demo how ever when you did the adding & subtraction it leaves basically a little under 500.00 per week take home & that's not to apealing , but its it's not a total turn off
Get started investing in self-storage by applying for our Protege Program: www.commercialpropertyadvisors.com/protege-program
You are an excellent teacher and representative of real estate investing! Much respect to you Peter. Keep em coming.
This is the best video I have seen yet on getting started with self-storage. Thank you!
You sir, are simply amazing!! This was the very first time in my life that I was actually interested to learn math formulas!! Thank you!!!
As a commercial broker I can definitely attest to the importance of building relationships. Most of the good deals are not found online. Great video!
K, maybe I'm just an idiot with business but I personally look at this and think.......
270 units at 80% occupancy = about 216 units that are regularly paying.
Then...
$79,000 income last yr ÷ 216 units = $365.74 per year for each unit.
Meaning the monthly cost of the units being rented is $30.48 per month!!
WTF! No way!
At that rate I'm thinking this must be a class C.
I agree. In business the word “income” isn’t clear. I like when a person uses the words, “revenue, profit, and loss.” For me they provide a clearer picture.
I see we all here on the same mindset of cash flow with storage units
Finally someone that will share the math behind it. I thank you "my friend" for sharing that with us, as a laymen who is very interested in learning everything I can about this side of the industry, this has definitely been the catalyst that I believe will push me forward into my next step, well done cheers
How's that going bro? I'm curious to see how you are doing after over 5 years. Cheers!
I used to be a storage property manager and a truck rental manager. I've considered this as a future investment.
How do you know if a person is a professional in the field? Easy. He/she explains complicated things very easily without any unnecessary information. This video is a great example of it. Thanks a lot for this video! Nicely done!
Wait a minute, ... Brokers put their pants on one leg at a time? That's just like you and me!!
I have a serious question.
Why would anyone want to buy a business with there life savings as a down payment, go all in and take on all that extra work for a yearly salary of 23grand, am I missing something?
Because it’s adding 23 grand into your pocket in addition to the money you put down. The life savings you put down do not go anywhere, they are in the value of the building you purchased and you are able to sell the property to get it back. However by doing this you are simply allowing your savings to produce income for you, while the value of the property begins to appreciate until it reaches a point where you can sell it for more than what you paid for it, and while you’re waiting for that to happen, you are getting paid 19% on your investment annually (in this case it’s 23,0000 per year)
Ask yourself if you’re getting 19% return on your life savings.
That's because the rich buys "assets" that produces income per year. This $23k is also tax free income so imagine you get paid $100,000 as a W-2 worker, your take home will be around $60k after taxes. If I get three of these self storages, I would make more than an employee making $100,000.
These videos are very, very good.
I learn by interacting and making mistakes.
Great video. It has been my dream for the greater part of 10 years to get into the self storage business.
Sounds like you’re doing well
Amazing video, informative, specific and so helpful. Thank you!
Excellent video and explanation. Thank you Peter!
How much of the calculated expense goes to paying the property manager?
A 3rd party manager of a self storage facility usually gets 5% since there is very little work to be done.
It seems like this would be a difficult way to be "self-employed". Not much of a profit margin once you factor in time for management and maintenance.
If you self manage you get a lot of the 'expenses' portion also.
This video was so very informative and well presented for a newbie like me. I'm looking to invest and gathering information at this point. My only question is on the final calculations being done. Do the operation expenses include salary for an on-site manager? Thank you.
I wonder exactly the same!
Great information. I'm in Orlando. I'm a beginner. Looking forward to starting. Thanks for sharing
Any comments on if you already have the land in a great location? We might want to build self storage units on the land but not sure where to start and what the costs will be to build it out? Where are the best places to buy the storage units etc?
If you are brand new, you may not want to build from the ground up. That's a whole new universe beyond just self storage.
@@CommercialPropertyAdvisors like what?
Hey Peter, Great video I had a question about when you analyzed the deal. What is a bad C.O.C (Cash on Cash) number? What is considered bad C.F (Cash Flow) numbers? Also, would I analyze a multi-units numbers the same way? Thanks so much. I'm really learning a lot.
Watch this video: ua-cam.com/video/JPfj6P5m5wE/v-deo.html
Thanks for the great videos. Off topic but the turnover-rate in the apartment business is 6-7 months ? (4m40s). My expectations were quite a bit more to the upside. Thanks very much
At full occupancy, the example is charging a rate of $22.22 per month. The average unit price per month should be quadrupled if not more. Also, 40% on expenses???? I hope all these numbers aren’t even close to realistic or I’m stepping away from the idea of owning a storage facility.
Dude same here! I rent two storage units and pay $150 a month!
tim tong your numbers are wrong they rent by the month not year. # of units x rent x 12
I was thinking the same thing. $79K in annual income for 270 units seems waaaay too low. That's about $24 a month in rent per unit! No way!!! Good info otherwise.
Mr. Harris,Thank you so much for the deeply informative videos and the care and passion you put into teaching beginners. I am a new subscriber and I am hungry for knowledge and am ready to jump into the commercial RE game.Here's a question for you: As a brand new investor, is it better to start out investing in commercial-sized multifamily properties or self-storage? I am interested in investing in both eventually, and know that they both have their own pros and cons. I guess my main concern is that one may require more input or experience than the other and would love your opinion.Thank you.
Both require equal amounts of input/experience. You can start with one or the other, but don't try both at the same time.
@@CommercialPropertyAdvisors would you say the same about mobile home parks? I'm interested in those, apartments, and nnn commercial space.
Also Mr. Harris can you make two videos on these two subjects they will help not just me but others
#1. When syndication what's the difference between irr, coc, and roi and which is most important to investors? Also can you structure a syndication so that when you refinance you cash out your investors and you now have 100% ownership? Would you dissolve the LLC or create a new 1?
Video#2 the closing process. It's cloudy at best. What is the exact step by step process? No one I've followed has ever described it. Thanks Mr. Harris.
@@CommercialPropertyAdvisors
Are you up for a chat ☎️?
I need to invest in something like this can we talk being this video is SEVEN years old
Excellent, very informative and simple to understand!
It would be great getting more people to make their monthly payments instead of making it their last priority, and even then making partial payments.... very very annoying.many won’t pay unless they need to get into their unit because we have them locked out due to non-payment, or we sent them Aution papers that we are auctioning their things. It’s not a piece of cake folks be prepared to put your LIFE into it.
The facility I rent from gave me the option of automatic payments.The payments are pulled from the card my choosing and all I ever hear from them is an emailed receipt every month.
Awesome video and very inspiring. Great content and breaking it down on what you need to know. Pretty soon I’ll be looking into investing in self storage.
Good video, I however do not think this facility was a good deal at $485K. Very rarely banks will do more than a 15 year amortization. That brings this deal to a 11% CAP RATE. This property based on these preliminary numbers has a net of $12,481.88 when financed with the prevalent commercial loan standard of 15 years.
with SBA you can get 25 years.
Thank you for the video! Although 7 years old.. Still picked up on the easy way to find Cash Flow then divide by down payment to see RoI or COC as you call it! Awesome quick way to evaluate a deal!!
Another very insightful video Mr. Harris!
You mentioned the SBA as possible funding sources for these types of properties with two different types.
I've not looked into it but do happen to know what, if any, strings could be attached given as you mentioned 10% down as opposed to 25% down as could be the industry norm with commercial lenders? A sharing of gains perhaps when you sell the property for profit? Or any other encumbrance you may know of?
Thank you again for these great presentations!
Bill Turner
Informative, however I'm curious how it would look if the property management, utility bills, Monthly Insurance, & property taxes were figured in & how to figure them, would this property still cash flow as well...
What a great video!!!
Excellent tutorial on investing, I’m a realtor and I learned a lot.
Very nicely done. You’re a great teacher.
Wouldn’t you calculate your taxes and insurance in your cash flow?
He didn't show what items made up the operating expenses $. He used an industry standard of 40% of gross profit. I assume they are included as 40% ($32,000) seems high for a self-storage unit. I am curious what line items are in this 40% as well.
It's hard to find your videos from the thumbnails because I'm looking for your face. FYI. Love the videos.
I love your content MF and now Storage. Please work on the clarity of your content. The content comes across distorted or with an echo. Peter please spend a few dollars on upgrading the quality of voice output of your content. Thanks for all you do.
With all those figures, it seems that the manager expense wasn’t included. I’d prefer more information on that missing criteria. It makes a big difference.
Another awesome video. Thank you. I just wanted you to know you don't have a #4 even though you referred to it in the video. In the Why Invest in Self Storage Facilities?
Very well explained... thank you!!
I’d like to get in touch with you for some coaching.
Class A-Stay (A)way
Class B- Do (B)usiness
Class C- (C)aution 👍🏾 Got it
u said it produces 23000 a year but if you have to hire a employee wouldn't you be losing money at the end of the year
Your videos are amazing and very informative, thanks!
3:19 Fact #4...… LOL
Beautiful handwriting!
Seems like a bad deal. You are not counting your salary to manage the place.
pls can u tell us 40% include what i mean the expences,thanks
thank you, very understandable.
Thank you man great info and highly detailed much respect 🙏🏾
Great video.
It’s 7 years later and now most storage units are automated.
Storage facilities around 30,000 - 40,000 sq ft in my area are priced well over 1.5 million. Would it be better to build a storage facility from the ground up? Do you have information on this?
No I don't.
Will you be available if I need support?
look into cost of replacement its getting more expensive to build facilities nowadays.
a cap rate of 6% is just awful isnt it?
Why is a 6% rate of return a bad investment..... In two years with normal rate increases that will become 9% and so on and so on..... Site selection is the most important thing in self storage. That does not mean the best storage facility to buy is always the A++++ facility.... Its the facility with the best upside potential. Can it be expanded. What is the potential for ancillary sales.
Im going to be successful at this!
I'm confused as to how you got the monthly payment? 363750÷30=12125
12125÷12=1010.42
I dont know where to include the 5% interest?
Can you explain how you got the mortgage pymnt of $1952.69 from the 5% amortized over 30yr rate? Any assistance would be appreciated.
Oh no. I just bought a c class for $65k
How did it go?
PoodleParti going well. Only 2 units empty. However someone took a sledge hammer and smashed a hole in the cinder block twice and broke into units.
@@geoncox Oh no! I'm glad it's going well otherwise. I'm thinking of buying next door to me. It's more of a class b though I think.
How is the return on investment?
I live in Canada, where population is only about 10% of the population of U.S.
I've been wanting to get into the mini storage busines for over 10 years, but just can't afford land in Victoria BC.
I own several rental homes, and would like to get into mini storage.
@@mikepurewal5816 I think it’s a great investment because you have people paying for your building and down the road you can sell for much more . Just go for it.
Such a pain when people lose the locks inside the storage ugh just ask if you need all my belongings lol .. Why make a 2 year Movie? lol 🧐😏 Yikes!
I own self storage facilities, I wouldn't touch that deal with a 10 foot pole. A gross revenue of $79k for a $485k not a chance. Yikes!!
Where's employees income?
@@nelson6918np14 That's probably found in the operating costs which I believe was 32K which would include taxes, Ins, electric salaries etc.
That doesn't even equate to minimum wage
Hello I have a ??.
I’m building storage units for sleeping rooms of
20 rooms of 12x12 and 2 small rooms.8x12 on the end.
130x 30 how many can I put on 1 acer
12x12 +8= 128 round of 130// 12+12+4 = 28 round of to 30 there
4 foot down the middle of these units with doors on both ends.
27:00 i wonder if this is still true in 2021?
Sir. I have 2 commercials in my area: Public storage for example. How would I compete with them if I invest in a distressed self storage units local mom/pop??
Love all the noise you cut out and the 40% rule of thumb for penciling out a deal. Thank you!
Thank you for walking us through the financial details and other information on Self Storage units. Your videos are extremely informative. 😊
Thank you for the wisdom sir! I’m looking into building one on a vacant piece of land I own. Any recommendation on what company to contract? I’m in Nashville, TN.
This has been the most informative video I've watched regarding self-storage commercial real estate thank you so much for this information.
If "C" is 1960-80s, what is a 1900s limestone (retail lower/5 door apt) building on the town square?
what is included in expeses? would think taxes, insurance, utilities, salaries, etc. here mortgage is not considered an expense
Sir. We’re you prior military?
what about tax on profit? that should be taken off before calculating the ROI
What is a good mix of sizes?
What am I missing with the 1/3/5 mile radius? Why not just say 5 mile radius?
Michael Sanchez Maybe it depends on the population density. e.g.: 5 miles if semi-rural, 1 mile if urban
it reflects the amount of population that are willing to travel to your location/business. Most customers in the storage industry will not travel more than 10 miles to a location.
Is self-storage something you invest in? And if so how do you rate that investment with your other investments? Thank you,
Such a great humble spirit and great content! Thank you for all of the information! 💫
Excellent source of information. Subscribed.
Price too high to me but it does look like the facility has high expenses/poor management
Thank you so much for great and valuable information
Excellent, thank you. Good all round explanation.
thank you, for taking the time to make this video, it was very useful.
Richard are the state taxes included in the expense category?
Is the property management included in the expenses?
Great educational lesson. Thank you.
Nice simple presentation..you made it very easy to understand, Congrats
Thanks for the Information I really want to invest
In order to make sure you're not renting the space/storage for traffickers (drugs, human, and etc), what should be done? Any tips?
Advise your clients that your facility is used by law enforcement in the training of their narcotics/cadaver dogs.
Excellent
Easy to understand and well explained. Thank you!
I like this presentation is cool, thank you
Thku for an informative demo how ever when you did the adding & subtraction it leaves basically a little under 500.00 per week take home & that's not to apealing , but its it's not a total turn off
If you do the managing yourself, you get more of the $ out of the expenses. I'm sure a lot of the expenses go to the manager.
Still great!
Excellent presentation, TY for posting
THANK YOU!
Thank you
Very helpful video, Thank you
excellent video. Thank you
Pretty sure the formula equals #22
great video, I learned a lot thanks!