Laura Jones RE Development: April 2012

Monday, April 23, 2012

Conclusion - Project #1

Financially, the before tax return on investment is very good at 13.79%. The maximum allowable construction costs are at $397,798.61, which I believe to be an overestimate for the necessary type of structures to be built on the site. The actual construction costs are projected to be $277,940. If the developer wished to utilize the maximum construction costs allowed, it is assumed they could construct more of the enclosed storage spaces and thereby increase rental income and NOI. The site chosen is relatively small in comparison to the market competition, and if the developer chose to look at a larger site, they could max out the allowable construction costs by building more covered storage spaces and so increase the NOI. Or the project could be completed in phases with a larger site.

There seemed to be quite a few competing businesses in the Mansfield area, but after further research and after speaking with a few of the businesses, there seemed to be a demand for this kind of storage facility, especially considering that many of the existing storage facilities were nearly 100% occupied and remain so for a majority of the year. And the city does have an ordinance prohibiting the parking of recreational vehicles and boats on residential yards or driveways. Mansfield also appears to be a growing area with the median income far exceeding the state median income level. This, along with the city's close proximity to Joe Pool Lake and much-traveled highways/interstates, makes Mansfield a desirable location for an RV and boat storage facility.

In conclusion, an RV and boat storage facility would produce desirable returns at the chosen site.

Rental Spaces

Kennedy RV & Boat Storage

- This site is similar in configuration to the suggested site, but is 3.4 times the size.
- The unit mix of enclosed boat storage (can also be used for regular self-storage), pull-through covered parking, and open parking seems like the best combination for the suggested site.
- 10'x30' enclosed storage spaces - qty: 8 at $110/mo
- 13'x45' pull-through covered spaces for RVs - qty: 4 at $120/mo
- 13'x35' pull-through covered spaces for RVs - qty: 14 at $100/mo
- 10'x30' open parking for boat or RV - qty: 24 at $50/mo

Market Competition

Kennedy RV & Boat Storage: 100% occupied
- 10'x30' enclosed spaces for boats: $120/mo - 30 spaces
- 13'x45' covered pull-through spaces for RVs: $130/mo. - 12 spaces
- 13'x35' covered pull-through spaces for RVs: $110/mo. - 50 spaces
- 10'x30' open parking for boats and smaller RVs: $50/mo - 80 spaces

C&S Mansfield Boat & RV Storage: nearly 100% occupied (by visual inspection)

- about 90% covered parking, enclosed on three sides

- about 10% open parking on perimeter

CubeSmart Self Storage

- 20' outdoor parking: $49.30/mo

All Weather Storage for boats and RVs

- about 60% open parking at $65/mo

- about 40% covered parking (almost 100% full)

- 30' spaces: $85/mo

- 35' spaces: $95/mo

- 40' spaces: $105/mo (fill up quicker)

- $40 setup fee

Vanguard Self-Storage

- RV storage - covered and uncovered
- Boat storage - covered and uncovered

Area Info

Estimated zip code population in 2010: 58,514
Zip code population (2000): 32,675

Median resident age: 33.8 years
Average household size: 3.1 people

Averages for the 2004 tax year for zip code 76063, filed in 2005:
Average Adjusted Gross Income (AGI) in 2004: $67,584 (Individual Income Tax Returns) - Higher than state average ($47,881)

Salary/wage: $60,607 (reported on 90.1% of returns)
Estimated median household income in 2010: $83,000 - higher than state median household income in 2010 ($49,585)

Percentage of family households: 70.9%
Percentage of households with unmarried partners: 5.4%

Houses and condos: 20,073
Renter-occupied apartments: 3,448
% of renters here: 18% - below state percentage (36%)

Housing units in zip code 76063 with a mortgage: 12,469 (1,821 second mortgage, 718 home equity loan, 152 both second mortgage and home equity loan)
Houses without a mortgage: 3,031

Median monthly owner costs for units with a mortgage: $1,798

Median monthly owner costs for units without a mortgage: $691
Residents with income below the poverty level in 2010: 8.7% - below state level (17.0%)

Cars and other vehicles available in 76063 in owner-occupied houses/condos:

no vehicle: 303

1 vehicle: 2,901

2 vehicles: 7,899

3 vehicles: 3,350

4 vehicles: 1,022

5+ vehicles: 249

City of Mansfield Regulations

Vehicle Parking

The parking of boats, trailers, campers or vehicles in the front yard or off of a paved concrete surface is prohibited. The parking of any vehicle in the side or rear yard of a residence on the grass or off of a paved concrete surface is prohibited unless it shall be enclosed by a screening fence at least 6' (six feet) in height.

Trucks rated to have a carrying capacity exceeding one ton are prohibited from parking in residential areas, with the exception of actively loading/unloading. Any vehicle (automobiles, boat, trailer, RV, bus, truck, etc.) over twenty-five feet (25') in overall length (including tongue) are prohibited from parking in residential areas except for actively loading/unloading. Vehicle are prohibited from being up on blocks, jacks, or anything other than the wheels or mechanism that are originally designed to equip such vehicles for traveling purposes.

Source: City of Mansfield Code Compliance

Sunday, April 22, 2012

Covered Storage

A Case Study for Covered RV & Boat Storage

Like any mini-storage business owner, Derrel Ridenour’s success is driven by the needs of his clientèle. With so many of the customers at his Fresno, CA-based Derrel’s Mini Storage (www.derrels.com) looking for custom-sized RV and boat protection, it just wouldn’t be sensible for Derrel to fill every lot with permanent standardized shelters. He wants to be flexible to address the specific coverage needs of his customers. That’s why one of America’s largest mini-storage operators uses VersaTube’s durable, easy-to-assemble steel RV and boat covers.

The shelter package is assembled and finished on site, and can just as easily be reconfigured, should one of Derrel’s customers decide to bring home that “bigger” boat or RV they’ve had their eye on. Plus, the VersaTube® RV and boat cover is classified as a “portable building,” so its cost is depreciated after just seven years. Compare that to the thirty years required for most commercial structures. All this, plus the unparalleled strength, versatility, and patented construction design that only VersaTube® can offer.