💰🔥 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.