SUCCESS STORY #1
STUDENT- David Manka
MENTORING PROGRAM- 12 week group
MENTORS- Jesse Luke
ACADEMY ATTENDANCE DATE- August 2010 Indianapolis
METHOD OF LOCATING DEAL – Broker
CLOSING DATE- May 17, 2011
BROKER- Jesse Luke
LOCATION OF FACILITY- Danville, IL
UNITS- 247
SQUARE FEET- 28,110
CAP RATE- 10.5%
FUNDING TYPE- SBA
I had been looking for deals for 6 months through direct-mail marketing and on-market listings through my broker/mentor Jesse Luke. A number of the deals looked good at first glance, with tremendous upside potential. After thinking about it more, however, I realized that with a young family and full-time job, I did not have the right combination of time and experience to turn around a distressed property.
When Jesse sent me the Danville deal, I was attracted by the aggressive cap rate, and the fact that it had stable income. There is also some upside potential, with space for another building to increase the net rentable sf by about 20%. What sealed it for me was that Jesse was able to put me in touch with the right mortgage brokers to finance the deal with great leverage and good terms (80% LTV, low rate, 25 year amortization) through the SBA.
The strategy that I learned from the mentoring program that helped me the most was to recognize the value of a good team, i.e. a group of individuals working toward a common goal. Closing this deal required perseverance and support from my mentors, the mortgage brokers, the bank and many others. The mentoring program was the lynchpin that held this team together and kept me moving toward my goal.
I hope to have my second facility under contract within days. This has tremendous upside potential, having been sold 10 years earlier for 1M more than the current purchase price. Even better, the seller is offering financing with excellent terms (+80% LTV, 10 year term, 20 year amortization, 6%). Regarding Danville, I plan to add the new building and refinance to back out some equity in the next 2 years to enjoy some tax-free (or at least deferred) capital growth.
SUCCESS STORY #2
STUDENT – Tony and Gary Harkin
MENTORING PROGRAM – Automated
MENTORS – Jesse D. Luke
ACADEMY ATTENDANCE DATE – Indianapolis (June 23, 2011)
METHOD OF LOCATING DEAL – Local Broker/Jesse D. Luke
CLOSING DATE – December 1, 2011
BROKER - Jesse D. Luke
LOCATION OF FACILITY – Bettendorf, IA
PRICE – $4,710,000
UNITS – 944
SQUARE FEET – 133,930
CAP RATE – 8.60%
FUNDING TYPE – Local Bank (75% LTV)
The Harkin Family engaged us after attending the Indianapolis Academy in the summer of 2011. We started the mentorship program on August 10, 2011. Within weeks, with the assistance of a local broker, we were able to find an off-market property in their home state of Iowa. We officially went under contract in Mid-October, and closed on December 1, 2011. The deal was actually comprised of two locations (neighboring facilities) that were owned by the same individual and run as one operation.
The business was not being run to its fullest potential, and through the advice of the Self Storage Investing mentors the Harkins have already put in an operating system, website and have begun making site improvements. Additional site improvements will include; perimeter fencing and gate systems, an on-site office, a security system, a rental kiosk and a truck rental business.
SUCCESS STORY #3
STUDENT – Art Gonty & Samantha Gonty-Kingsley
MENTORING PROGRAM – Advanced Turn Key
MENTORS – Jesse Luke & Anne Williams
ACADEMY ATTENDANCE DATE – Indianapolis (August 2010)
METHOD OF LOCATING DEAL – Direct Mail/Cold Calling
CLOSING DATE – December 2011
BROKER – None
LOCATION OF FACILITY – Shelbyville, KY
PRICE – $470,000
UNITS – 90 + raw land to expand
SQUARE FEET – 11,200
CAP RATE – 9.26%
FUNDING TYPE – Local Bank
Art and Samantha sourced this opportunity through direct mail and cold calling campaigns. They diligently worked to find deals in their home state of Kentucky. After sifting through a number of leads (over more than a year of hunting), they finally came across Summit Self Storage.
After some discussion with the seller, Art and Samantha realized that they had a common tie with him. They were both students of Scott Meyers. The seller, after working with Scott’s program, had purchased the facility about a year +/- prior and was looking to sell due to his involvement in another business.
Art and Samantha were drawn to the opportunity due to the upside potential, through both physical expansion and improved operations. The seller’s involvement in starting another business had taken his focus off of the storage operation. They were able to finance the deal through the lender that held the note for the seller – 75% LTV and got a competitive interest rate. The favorable debt package, 9.26% going-in cap rate, and upside potential made this a deal that was too good to pass on.
SUCCESS STORY # 04
STUDENT(S): Ante & Marla Colic
MENTORING PROGRAM: 16-Week Platinum Program
MENTORS: Anne Williams
DATE OF ACADEMY: March 24 – 26, 2011
LOCATION OF FACILITY: St. Louis, MO
BROKER: The Colic’s sourced the deal on their own
CLOSING DATE: January 4, 2012
PRICE: $750,000
UNITS: 167 Non-Climate Controlled Units
RENTABLE SQUARE FEET: 19,605 Sq. Ft.
CAP RATE: 5.24% cap rate
FUNDING TYPE: 85% LTV from Celtic Bank Corp
Exit Strategy/future plans:
This is a long term hold strategy for the Colic’s where they plan on increasing occupancy, improving the existing operations and ultimately expanding the facility.
Strategy that we taught them that helped them the most:
Patience!
How they found the deal:
After looking at and underwriting several deals, the Colic’s attended the Missouri Self Storage Owners Association convention where they let it be known that they were looking to buy a storage facility. They were introduced to the seller and the rest is history, as they say.
Was is it a normal deal, was it bank owned etc?
This was a normal off market deal
Why did they like it?
This investment has great potential for a new owner (the Colic’s) to improve the operations, enhance the curb appeal, increase the occupancy and expand adding more income potential. While the cap rate was aggressive, this is a long term investment and the payoff will be realized over time.
SUCCESS STORY #5
STUDENT – Greg Michael
MENTORING PROGRAM – Academy/Home Study Course
MENTORS – Scott Meyers
ACADEMY ATTENDANCE DATE- January 2010
METHOD OF LOCATING DEAL – Searching the internet frequently
CLOSING DATE – October 2011
BROKER – ReMax, John Stock, Angola,IN
LOCATION OF FACILITY – Railroad St., Waterloo, IN
PRICE – $47,000
UNITS – 16
SQUARE FEET – 2200
CAP RATE – 9.5%
FUNDING TYPE – Private investor loan – 7 year amortization – 6% fixed interest
The Rest of the Story:
How did you find the deal?
We had previously purchased a facility from this broker & he knew we were looking for more, plus it was only a few blocks from a facility we currently own. This is our 3rd facility purchased since we attended the Academy. We now have over 200 units.
Was is it a normal deal, was it bank owned etc.?
An Investor in California had taken it in trade & could not manage it. Only 3 units were rented when we bought it. We currently have 12 units rented.
Why did you like it?
Building was a 3 year old Trachte building in excellent condition. It is located near a railroad with Amtrak service. The community feels that Amtrak may need our land for future expansion so we may be able to profit in the future on the land and move the building to our other facility.
What Strategy we taught you helped the most?
Thinking outside the box for financing and also to not be turned off by the asking price. They originally were asking $70K.
What are your Expansion and Value Creation plans?
We added this facility to our “emove” software program. This allows us to get rentals from U-Haul Corporation at very little cost. We also changed the signage to show our company name & toll free #. The building has exterior lights but was not hooked up to power. We took care of this so that the building is much more visible at night and will provide better security.
Future Value in 6 months, 1 year, 3 years, or 5 years _______?
The only future value is that someday we might portfolio all our facilities in one package & see if we can sell them & do a 1031 exchange into one larger facility.
Exit Strategy:
Currently we have no exit strategy. We plan on keeping all our facilities (or exchanging as mentioned above) well into retirement and have someone else manage them & send us passive income. This will happen in 10 years or less. We are very near to signing for another facility with a little over 100 units. Our goal is to have somewhere around 500-600 units someday soon.