Why Ft. Worth Self Storage?
This existing we are planning to purchase, rebrand, and reposition 25,000 square feet of self-storage across 221 units in Fort Worth, Texas. The facility is currently ~55% occupied. The facility is extremely well-located in central Fort Worth, Texas, close to significant demand drivers such as the fast-growing Texas Christian University, Clearfork District, and the Chisholm Trail Parkway.
Fort Worth is a part of the Dallas-Fort Worth metroplex, which is a thriving hub for business with a pro-business political environment, central location within the region, a highly skilled workforce, relatively low cost of living, and high quality of life. The region is home to a population of over 7.8 million people and is one of the fastest-growing metropolitan areas in the United States, with rent and home price growth at commensurately high levels.
The facility is currently well below competitor rates despite significant demand drivers being present, due to more than a year of serious mismanagement that culminated in several break-ins/vandalism and poor customer service. This resulted in many repairs being needed to match the market, which were implemented by previous ownership (fence & gate upgrades, new security cameras, paint, and all new unit doors). We plan to further implement a cloud-based management system and online marketing to attract tenants willing to pay higher rates, as well as a full-time on-site manager during lease up.
Because the land at the site is maxed out, there is relatively little capex and permitting risk-we are looking at this as effectively a lease up play, as with all the repairs the facility looks almost brand new. We also anticipate that value will also be generated by the expansion of the Fort Worth downtown area into the submarket over time-we have projected all the numbers at a 6% cap rate, but over time it is likely that end buyers or lenders would value the facility more aggressively as the metro area expands. The land itself is also quite valuable given its location which will allow for various supplemental income opportunities to thrive, and there are high (almost insurmountable) barriers to entry for new self-storage in Fort Worth, which should allow rates to increase higher than the projected 3% per year as the area continues to improve.
The Investments Projected Returns
Aside from the great return on investment, we especially like the fact that the capital we invest is scheduled to be returned to us around year two while we still maintain our overall stake in the investment. This allows us to reinvest our capital in another property while still getting returns from this one.
