The Tale of the Flying Tigers - part 3

I last left off with an approved storage project. And boy did they make us earn it.

It was time to design this thing. We’d all agreed that based on the shitty, grainy PDFs we had of old building plans (and the douchebag architects would NEVER share the real CAD files), there was probably room to do another 25k SF by adding an upstairs where the sloping ceiling allowed it.

It would cost a LOT more per SF:

But Chad wanted the project to be as healthy as possible and if we weren’t gonna self-manage, the operating margins would be much more palatable at 50,000+ rentable SF than at ~37,000 - and if we needed to sell, or wanted the most “down the fairway” cash-out refi at some point, a bigger facility would be helpful.

The architect I wanted to use was 4 hours from Valdosta and was encouraging me not to rely on his team for measuring the space. A lot of time was being wasted not knowing the ceiling height; Chad and I had repeatedly talked through our options and one of us just needed to go do it. I finally squeezed it into a trip to one of my projects in Florida.

Using a laser distance measurer, the ceiling height was exactly where we expected, so it was go time.

We kicked off the $64k proposal for architectural/MEP/structural design, got our first draft, went back and forth on the floorplan/layout (mostly trying to squeeze more units into random corners), … and finally had our go-to GC - plus one other who had built one in town there - take a stab at “hard bids.”

The hard bid from my go-to GC, based on the now-100% completed drawings, was a tad higher than his guesstimate but somehow still in the 40s per gross SF:

At the surprisingly high $18 rents our feasibility study guided us to, the project looked insane with hard bids in the final model:

I knew at the time this was a bit of a unicorn and I still believe that. Will probably never replicate this.

We took the model/budget/plans to the banker who did the 85% acquisition loan. He told the Kingfish he wouldn’t be able to hit 85 on our full project cost but could get close. We all got on a call and I basically begged; I have seen before where a small town bank doesn’t want to finance any of your carry cost during lease-up. Simply an old-fashioned mentality where they look at those expenses as something the developer should handle.

This bank president wasn’t as black-and-white as that, but he didn’t want to give us the full $520k interest reserve. He’d get us $4.95m (82.7% LTC) at construction loan closing and, on a handshake, said he’d modify it to our full ask after completion if things were going well.

The Kingfish, Chad, and I agreed that if it didn’t come through, and our lease-up wasn’t crazy-hot, we would have to be ready to chip in a projected ~$140k to get us through the 34-month lease-up I had underwritten.

The Kingfish and Chad reached into their pockets for the equity now needed to close the construction loan and I went to some friends for my share. We closed the construction loan without any bickering over docs or the closing statement and kicked off my go-to GC.

We opened at the end of January and we were 61% full end of November.

It’s been one of my best lease-ups ever, and I won’t pretend to know why, other than that is very prominent and accessible. The storage rents (though good) are not amazing right now, but that’s how storage operators lease up these days.

We hope to have it for a long time. It’s been a blast.