Nothing drives IRR like a hand written rent roll at acquisition
[{"id": "fskcikm", "text": "Life's too short to do this shit by hand", "replies": [{"id": "fskrqe1", "text": "Somewhere, there is an analyst typing in hardcode by hand out there who could not agree with you more.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fskeg6s", "text": "Wow, it's like totally retro Excel! Is this a plug-in?", "replies": [], "depth": 1}, {"id": "fskeilz", "text": "Holy shit hahahaha", "replies": [], "depth": 1}, {"id": "fskfns0", "text": "What is the row labels on the right? Let's see the entire thing", "replies": [{"id": "fskfx1z", "text": "Names on the left is all. It\u2019s a 26,500 sf self storage facility in the middle of nowhere. I offered $26 per sf and they took it.", "replies": [{"id": "fsknp76", "text": "Is there any chance you can give me the numbers on this deal and why you offered what you did? Thinking about getting into self storage and am really curious how the numbers add up. \n\nSo you paid almost $700,000 for this? How many units does it have and how many units do you need filled to make a decent enough return? How many units were filled when you bought it and do you need to increase occupancy rate to make a return? How\u2019d you arrive at your $26 per sf calculation? A lot of questions I know but feel free to answer whatever you want. It sounds like this is relatively easy to run once you have a system in place I\u2019d just be always worried about occupancy rates but I guess that\u2019s always an issue in real estate. \n\nAlso I\u2019m pretty sure I recognize you from the entrepreneur subreddit and I love your story from there!", "replies": [{"id": "fskt8gf", "text": "Yeah man I\u2019ll shoot you my Pro forma! Nick@storagesquad.com", "replies": [{"id": "fsl5xen", "text": "Shooting you a PM as well! Love the SS sub", "replies": [], "depth": 5}, {"id": "fslnqi6", "text": "I\u2019m a student and would like to see your pro forma as well (if it\u2019s not too big of an ask). Can I PM you my email ?", "replies": [{"id": "fslwc62", "text": "Ditto I would like a proforma as well... always looking to see another way to look at the numbers", "replies": [{"id": "fsmkuj1", "text": "Sure!", "replies": [{"id": "fsn12p8", "text": "If it's not too much, i'd love a peek as well.  PMing email to you.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fskg4qg", "text": "Old. School.", "replies": [], "depth": 1}, {"id": "fskgr5q", "text": "who sent you our internal documents?!?", "replies": [], "depth": 1}, {"id": "fskhyyc", "text": "Epic, the sellers have anything else on the market?", "replies": [{"id": "fsngfzs", "text": "Lots of unused ledger books, and some pens.", "replies": [{"id": "fsnsup8", "text": "Mazel Tov on the acquisition", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fskje2y", "text": "I buy little podunk self storage properties and remotely manage them. This is a 26,500 sf self storage facility in the middle of nowhere. I offered $26 per sf and they took it.\n\nExcited to streamline!", "replies": [{"id": "fskk5r5", "text": "How do you remotely manage a self storage facility? Do you still have to hire a property manager?", "replies": [{"id": "fskkgka", "text": "https://www.roboticstoday.com/uploads/images/robots/robotpictures-all/MobileRobotHelper(MR%20Helper)_001.jpg", "replies": [], "depth": 3}, {"id": "fskl28j", "text": "Gates and security cameras! Rent online, get gate code and directions texted/emailed, free lock waiting in unit!", "replies": [{"id": "fskn1bn", "text": "What happens if you need boots on the ground to evict a unit? How do you do Maintenance checks and periodic cleaning? Thanks for answering.", "replies": [{"id": "fskwgas", "text": "We go out, cut a lock, take photos, put on a combo lock - auction online! The winner of the auction gets the combo - then we have an empty unit to rent again!", "replies": [{"id": "fsl0pwp", "text": "How far is it from you? I was thinking you meant out of state when you mentioned  you would manage it remotely.", "replies": [{"id": "fsl1hz5", "text": "I\u2019m in Athens GA and it\u2019s in Pennsylvania", "replies": [{"id": "fsl2rp8", "text": "So every time you need to evict or be on the property you\u2019ll fly?", "replies": [{"id": "fsl5n5z", "text": "No we have a local cleaning company that bills by the hour. $2300 on labor last YEAR!", "replies": [{"id": "fsmo1bl", "text": "Teach me your ways master yoda!", "replies": [], "depth": 10}], "depth": 9}], "depth": 8}, {"id": "i2fdb01", "text": "What do the numbers look like on these things ?", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fskxud9", "text": "What is your expected hold period and IRR? On an real cash basis.\n\nYou bought this for $700k~, what kind of cash flow do you expect?", "replies": [{"id": "fskz6cc", "text": "We\u2019re buying at a 12 cap on our pro forma. We\u2019d raise rents, decrease expenses, and refinance at 36 months. Hope to get valued around $1.6\n\n$86k a year NOI.", "replies": [{"id": "fsl9hkg", "text": "I used to lend for 12-14 caps in another asset class, those were the days", "replies": [{"id": "fslf81y", "text": "What's the relationship between DSCR and cap rate? If caprate=NOI/(costofaqusitionORMarketVal)and DSCR = NOI/TotalDebtService\n\nIf you have a DSCR of 1.5, doesn't that mean that you could payoff the prop in 2 years?", "replies": [{"id": "fslhu7e", "text": "No, it means NOI is 1.5x the total debt service payments THAT YEAR. I.e. mortgage/loan payments, not the total debt balance.\n\nDSCR is a metric to measure the property's ability to be self-sufficient, gauging the risk of how badly a change in NOI could impact your ability to cover your debt obligations.", "replies": [], "depth": 6}], "depth": 5}, {"id": "fso6nsa", "text": "i bet you could still do it with really shitty strip malls lol", "replies": [{"id": "fsokipy", "text": "No question, you probably wouldn\u2019t be surprised at what you can find out there. You may be surprised with underwriting standards when looking at assets like that though!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fskywru", "text": "Whoa I bet there\u2019s plenty of value add you\u2019re making to this deal.", "replies": [], "depth": 1}, {"id": "fsl37yu", "text": "IRR?", "replies": [{"id": "fsl47py", "text": "Internal Rate of Return.  It\u2019s the discount rate to get the PV to $0.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fsl41a1", "text": "Just make sure there are actual leases in place and not IOU on sticky notes", "replies": [], "depth": 1}, {"id": "fsl45gv", "text": "Wait til you see the leasekins", "replies": [], "depth": 1}, {"id": "fslh053", "text": "I'd rather have that than bullshit in excel.", "replies": [{"id": "fsli4bi", "text": "What's your beef with excel?", "replies": [{"id": "fsljf0y", "text": "Not with excel. Garbage in, garbage out!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fslkg4w", "text": "Thanks for sharing. Im in BC/Canada. I had to laugh out loud at a 12 cap. We chase anything above 4.5..:)", "replies": [{"id": "fsmoqxe", "text": "You should find a good US based real estate group!", "replies": [], "depth": 2}], "depth": 1}, {"id": "fslllaz", "text": "*Cries in excel*", "replies": [], "depth": 1}, {"id": "fsmdtjx", "text": "Noice... congrats. I am a fellow Georgia bulldog.", "replies": [{"id": "fsmkwip", "text": "Go dawgs!", "replies": [], "depth": 2}], "depth": 1}, {"id": "fsmiv49", "text": "Still better than Argus lol", "replies": [{"id": "fsn832u", "text": "ARGUS isn\u2019t the answer to all of our problems?  That\u2019s what they told me at least.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fsmpvja", "text": "Love the post. I'm not into self storage, but I never understood why it would be needed in a small, \"Podunk\" town. Isn't there plenty of space in general in these towns...garage, barns, etc? Is it the security the tenants want, is it more temporary need- between houses/apartments?", "replies": [], "depth": 1}, {"id": "fsn532t", "text": "I think this is one of the best posts I've seen on this sub... thanks for sharing!", "replies": [], "depth": 1}]