By Marc Goodin
We all know self storage land is hard to find. And we often want to move forward with a parcel of land that almost meets the criteria. And sometimes I agree. But sometimes you have to pass quickly on a maybe parcel so you have more time to look for a winner.
Is there a definable line that we should say no and move on. And then there is the tough maybe lines. Everyone has different goals and situations so our lines in the sand will not always be the same.
It is too expensive to pay for a feasibility study for every parcel of land you think might work. So it is much better to learn how to do the a basic study on your own!
Here are some ideas for you to set your lines(in the sand):
Usable Land Size - no wetlands, floodplain or steep slope
Yes: 6+ acres yes for 60,000+ sf single story
Maybe: 5 - 6 acres
No: 5 and less acres (unless you are building multi story)
Population
Yes: -15,000 people plus
Maybe: 10,000 people plus - maybe if no self storages exist in the 3 mile radius
No: under 10,000
Competition Rental Rates for a 10 x 10 NCC
Yes - over $140/month
Maybe: $120 - $140/month
No under: $120/month
Self Storage Demand
Yes: competition full and have great rental rates
Yes: - Total SF including existing, pipeline and your self storage 8 sf/person
Maybe: 8- 12 sf including existing, pipeline and your facility - need full competition with great rates.
No: 12 sf/person + including existing, pipeline and your facility
Land Purchase price (assume typical site costs)
Yes: $500,000 to $1,000,000
Yes : Over $1,000,000 and if you can match the land cost with your cash equity investment.
Yes: Over $1,000,000 when there are very high rental rates and facilities full.
Maybe: Slightly over $1,000,000 and do not meet above yes items
No over $1,200,000 and you only have $1,000,000 to invest.
A maybe site sometimes passes and sometimes fail. Some people should never go to the next level on a maybe and others are more than willing to take the chance and accept the $3,500 to $10,000 plus cost of a maybe turning into a no. Maybe it is like a zone change - they feel good (if you get approved) and terrible if you get denied because of the time and money spent.
A maybe or no, is be like buying Bitcoins. Crypto currency has made people rich and other lost money. You will see facilities on no and maybe sites you passed on. Maybe the price came down or maybe the developer had significantly more cash to into the project or maybe the developer will be forever sorry with limited returns for a long while?
One problem with the Maybe group is it takes a lot of work to turn it into a high maybe. And then to go to the next step you take a chance with a $3,500 - $10,000 3rd party feasibility study and often the cost to prepare a contract. And even if it is a go, it could be for a limited size facility and a longer rent up time frame.