Louisiana Facility Site Visit - Day 2 of 3 Update:

Today was all about meeting and getting to know the current BOTG and getting contractors' insights on the condition of the roofs and building structures. The most helpful parts of the day were learning from 2 roofers (who both also did general construction) about the condition of the buildings and roofs, and getting open and honest feedback from Judy (the current boots-on-the-ground) and her husband who live onsite about how things are run.

Roofers / General Contractors: I had two roofers who are also general contractors come by to inspect the roofs. Rookie mistake on my end—their arrival times overlapped, which made it obvious they were bidding against each other. Thankfully, they were cool about it. After chatting with each other, one of them actually backed out of the bid because he liked the other's idea of coating the roof instead of replacing it. He doesn't do coatings, but the other guy does, so I’m moving forward with a quote from the one who does coatings. He’ll give me an itemized quote this week, but they both seemed really concerned about the condition of the roof.

Property Condition: This place is in rough shape. Ricky, the current owner, runs it on an “if it ain’t broke, don’t fix it—and if it is, fix it as cheaply as possible, even if it’s not the recommended way to fix it” approach. Ricky’s go-to handyman does things as cheaply as possible because that’s what Ricky tells him to do, even knowing it’s not the best way to resolve the issues for the long term. There's certainly no preventative maintenance being done.

Feedback from Judy (BOTG) and her husband: I spent about an hour with Judy and her husband—they were super candid and could’ve talked for hours. Judy seems great at her job, well-liked by customers, and seems to genuinely care. But she’s frustrated. Ricky ignores her repair requests so often that she’s stopped reporting issues altogether.

Here’s what they shared:

There’s been little to no capital invested in the business over the 24 years he’s owned it, and now all that deferred maintenance is catching up and likely expensive, major repairs are overdue.

Another local storage owner, Jim (who owns 6 local facilities), passed on buying this one when Ricky offered it to him because of its poor condition.

The place really needs working security cameras. It has had numerous issues, but one for example was that after a break-in, they had nothing to show the police because the current cameras don’t work. And other bad things happen and Ricky turns a blind eye to them.

There’s termite damage, rotting wood, multiple leaks (plumbing, siding, doors), water pressure issues in the onsite home, and rodent problems.

They offer the cheapest rates in town because the facility is in the worst condition.

Other Notes:

Ricky claims the facility is fully occupied, but the real number is about 198 out of 282 units rented—roughly 70% occupancy.

On the bright side, it’s crawfish season, and they’re incredible!

Big Picture: After today, I have serious concerns. This place may realistically need $200-300K+ in capex just to catch up on deferred repairs and maintenance and set it up for success for the next 7-10 years. Unless Ricky is willing to significantly drop the price and reduce the down payment, this may not be worth taking on.

One more day tomorrow and a few more contractors to meet with and then that will be a wrap for this trip.

I’m not sure what to do at this point.

I badly want to buy my first facility but I believe it was AJ Osborne who said, “don’t let the excitement of doing a deal get in the way of the viability of the deal.”

#DueDiligence

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