Globalbiz CRE Academy

Virtual Deal Simulator

No Toilets, No Tenants: The Palmetto Self Storage Acquisition

A first-time buyer thinks self-storage income is basically an annuity -- until you show him it's a pricing strategy.

You’ll Practice

  • Recognize how revenue management (dynamic pricing, existing-customer rate increases) drives self-storage NOI beyond simple occupancy, and why trailing NOI reflects current management practice rather than a guarantee
  • Calculate DSCR from note rate, amortization schedule, and NOI for a permanent acquisition loan
  • Evaluate lender types -- regional bank, credit union, and debt fund -- against LTV needs, execution certainty, and rate structure for a first-time buyer in a new asset class
  • Assemble a complete self-storage acquisition loan package and distinguish asset-specific diligence items from multifamily or retail equivalents that don't apply
  • Coach a first-time buyer through realistic post-close management expectations instead of a 'passive income' misconception
  • Navigate a PCA-driven repair negotiation between buyer, seller, and lender against a rate-lock deadline
beginnerSelf-StorageacquisitionStage 1 of 8 · 0 scored so far

The File: Palmetto Self Storage

Devin Okafor -- a first-time self-storage buyer who spent the last twelve years running a small car wash chain -- has Palmetto Self Storage under contract in Summerville, South Carolina, just outside Charleston. The seller, Wendell Ashby, has run the 512-unit, non-climate-controlled facility himself since 1998 and is retiring. Devin is drawn to storage's reputation for low operating intensity -- no tenants, no toilets, no 2 a.m. calls -- and wants to move fast. Your job is to qualify him, size the debt, and get this to the right lender before his excitement outruns his diligence.

Property
Palmetto Self Storage -- 512 units, 68,400 net rentable sq. ft., non-climate-controlled, built 1998
Location
Summerville, SC (Charleston MSA)
Purchase Price
$5,200,000
In-Place NOI
$410,000/year
Implied Cap Rate
7.9%
Physical Occupancy
89%
Requested Loan
$4,200,000 (approx. 81% LTV)
Buyer
Devin Okafor -- first CRE acquisition outside a personal duplex; former car wash chain owner
Seller
Wendell Ashby -- owner-operator since 1998, retiring