💰🔥 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. 💰

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📍 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.

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📉 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.

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📈 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.

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🎯 THE CAP RATE SENSITIVITY (WHAT BUYERS PAY)

Depending on the buyer, they might accept a lower return (Cap Rate), which means they'll pay more for the building.

Based on Owner Actuals ($138k Profit):

9% Cap Value: $1,533,333 — (Offer: $1,383,333 after our fee)
8% Cap Value: $1,725,000 — (Offer: $1,575,000 after our fee)

What does this mean? 🧐

A "Cap Rate" is just a multiplier. As the number goes down (10% to 8%), the price goes up. This helps us see that the seller's $2M asking price is way too high for what the building is doing today!

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🔮 THE PRO FORMA (THE FUTURE)

What happens when we get this to 90% occupancy at a 10% Cap?

Projected Profit: $140,880
Future Value: $1,408,800

What does this mean? 🧐

"Pro Forma" is the "What If" version. It shows that by just being professional and filling the units, we add hundreds of thousands in value. To get to that $2M mark the seller wants, we’d need to build on that extra land!

No, you got to run the numbers and making a 150,000 sign the fee. And remember, you know, you want to break the numbers Down based on their actual income versus the 35% expenses and we're going to break it down based on their expenses and the 35%, The offer that we're going to be make is going to be made based on us making $150,000 subtracted from the noi at at at 10%, That's that's the off. We're going to be making.

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