Interested in raising money for a Self-Storage deal you want to buy?

I have done it many times. Raised many millions of dollars, and here is what I do.

First of all, if you didn’t listen or read last week’s episode “Show Me the Money”, do that first. It discusses the mindset of investors.

Knowing that, putting a presentation together for them is not as difficult as it sounds. Just remember, it is not about you, it is about them, their money, and what this facility can do to help them achieve their goals.

I will work backwards here. First I recommend having a short PowerPoint presentation highlighting exactly what is in a binder. Often I have skipped the PowerPoint and just gone straight to the binder, but know unless someone is very detailed, it can be overwhelming. The PowerPoint can set you up as a credible operator and then the binder proves it.

But for now let’s start with a binder.

I have a white binder (don’t know why, but white converts better) with a photo of the proposed facility and my information on the cover.

Next I have a short, and I mean never more than a page or one and a half page, Executive Summary of the project. This is a narrative of what you intend to do with the project and why you think it is a good deal.

This is a 25,000 square foot facility that is 18% under market. The three nearest facilities are 92%, 94%, and 89% physically occupied, and this project is 82%. We feel with proper management, we can bring the occupancy up 5% to 8% within 60 days. We can also double the square feet adding another $1.5 million in value upon stabilization. And so on.

Then I use dividers. The first section is my Proforma. This is perhaps the most critical section. I use the reports straight from the Storage World Analyzer. I go over them in detail, and basically take the approach of (1) here is how the facility is going to perform, and (2) if you put in $100,000 (or any amount) here is what you can expect.

Next section has the Owner’s or listing agent’s marketing material. In my presentation of the proforma, I highlight the differences. “My operating expenses are higher because they did not include all the real costs of operating an office like copy paper and stamps, we also pay a higher salary and thus get better quality managers”. “We have a higher income because we can add truck rental and raise the rents 5% within 90 days of owning”. And so on.

The next section has the Feasibility Report I always get. Here I emphasize the difference between the potential demand (always included based upon population data) and the current supply. I will only be presenting if there is a gap in supply/demand by the way. I am not going to take a risk on a property if the feasibility doesn’t have a healthy gap. Even in high growth markets, don’t make excuses for an over supplied submarket. Never ask someone to put their money in one.

Last section is a section with my resume and history. No matter what your background, if you can put a package like this together, you have something to offer an investor. Highlight this. The goal here is merely to let them know you know what you are talking about, and if you say you can raise rents, you know what you are talking about. Don’t go overboard here. Just something a person could show their spouse so that they look like they are not considering giving the family money to someone who has no idea what they are doing.

That’s it!

I also have a PowerPoint with just highlights of each section. In other words, “the feasibility report indicates there is a 50,000 square foot gap between supply and demand.” “The proforma shows an estimated 9.5% cash on cash return year one, 10.7% year two, then over 12% year’s three through five. We estimate a 1.7 million kicker in year ten”. And so on.

Have a good facility with a good plan, have this binder and presentation together, you will have investors liking your deal because you have the Self-Storage story, the best story there is in the commercial real estate investment world.
Next week, let’s look at where the investors hang out to show this binder to.