132 units bought off a retiring owner, 74 percent economic occupancy on day one

The lien cleanout is the part I'd be scared of. When you cleared those 11 units, how much of that space actually re-rented, and how fast? I keep imagining emptying 8 percent of a facility and then sitting on it for a year while the housing market stays frozen.

Worth saying loudly for anyone copying this: the self-storage lien statute is a state thing and the differences are not cosmetic. Notice periods, what counts as proper notice, where the sale has to be advertised, whether you can hold an online auction, all of it moves by state. Flint's short timeline is not everyone's timeline.

Other thing nobody mentions on a 22-year owner. Did the sale trigger a reassessment on your side? In some states the assessor picks up the transfer and the tax line jumps the year after closing. I've had that eat a third of a first-year NOI gain on a land deal.

@flint the payroll cut is the number I keep staring at. 41k to 19k is most of your NOI lift right there before you touched a single rent.

I look at rural facilities, 60 to 90 units, towns of 4,000. At that size you can't carry any staff at all. Everything has to be gate code, cameras, and someone local you pay per callout. Did you consider going fully unstaffed, and what made you keep the 24 hours?

I want the economic occupancy math spelled out because I think people misuse the term. Was your 74 percent (collected revenue divided by gross potential at street rate), or divided by gross potential at in-place contract rate? Those are very different numbers and brokers switch between them when it suits.

And what was bad debt as a percent of billed revenue at month 19 versus day one? Delinquency never goes to zero, it goes to a floor, and the floor is what I'd underwrite.

Fine result. My question is year five, not year two.

You bought a facility with 22 years of below-market rents in a market where the prior owner apparently faced no pressure. That suggests limited local supply. What happens when someone drops a new 700-unit building two miles down that four-lane road and runs 50 percent off for six months? Your whole thesis is in-place tenants absorbing increases, and those tenants are the ones a new operator will target. Supply has moderated nationally, but that's an average and it doesn't protect a single site.

61k for 2,800 square feet of climate conversion is 22 a foot, which is cheap. What was in that? I'm assuming the shell already had a slab and roof and you were adding mini splits or a packaged unit, insulation, ceiling, and hallway partitions.

Asking because I priced a similar conversion recently and the roll-up doors and the steel came back well over last year's numbers. Door pricing on my last two jobs moved on us mid-quote and the supplier pointed at tariffs. If your 61k is a 2023 number it isn't a 2026 number.

The thing I want to learn from this is the diligence step, not the operations. You saw a 17 point gap between physical and economic before you closed. How? Did the seller hand over bank statements voluntarily, or did you have to make it a condition?

I ask because I move slowly and I'd rather know exactly what to request. On a small owner-operated facility I assume the software report is whatever they typed into it.

@parcel the reassessment point is the one I hadn't thought about at all, thank you. Just checked and my state does pick up transfers, so I'd be underwriting a tax jump in year one on anything I buy from a long-time owner.

@thicket also want the answer on which denominator. If flint's 74 is against street rate then part of the "gap" was always going to be permanent, because you never get every legacy tenant to street.