When to build new units? I think I’m there.

mstok

Hey all I just have a few questions and like opinions. 

I’ve owned my storage business since 2017. When I acquired it we were right around 65%-70% occupancy. Within that year or so I’ve had it up to 85%+ occupancy. 

The current facility isn’t a huge one at 116 units, but I have the land and room to build an additional 25 units or so. I get calls consistently probably 3-4 average per week and about 9/10 times I don’t have the right size as it’s usually on a 5x10 available. 

I guess my question is does this sound like a good time to add units?  Construction will cost roughly $110k and return around 12-14% roi when 85-90% full. 

It almost feels like a no brainer, but at the same time there are quite a few facilities in town and don’t want to throw money around for no reason. I will be able to cash flow the construction so no debt will be added. 

Thanks!

helenatim

With that number of calls per week, your lack of available sizes , and ability to cash flow the additional units, I would not hesitate to build.  Even if you have to lower prices to "Lease up" the new building, I would think it wont take long. We have grown from 165 unit in 2007 to 1000 units today by doing just that!