5 Steps in Due Diligence Before Investing in Storage Property in Lake Havasu City
Lake Havasu storage investing is emerging as a hot opportunity for commercial real estate investors. Local tourism and recreation create unique storage investments. Seasonal residents and the growing permanent population also offer opportunities. However, several factors should be considered before purchasing a storage property in Lake Havasu City. This post explores the stages of due diligence to perform before investing in storage properties.
Key Due Diligence Steps for Buying a Storage Property in Lake Havasu City
Financial Performance
A detailed financial review is critical for performing due diligence on any income-generating commercial property. Analyze the property’s current and historical income statements to understand trends in rental income and operating costs. Verify rental income through lease agreements and payment records. Assess both rental prices and occupancy rates. Review operating expenses, including property taxes, insurance, utilities, payroll, maintenance, and management fees. You should also be familiar with debt records and assess whether the debt is sustainable.
Physical Inspections
Investors must also inspect the property’s physical condition. Inspect all structures, including roofs, doors, driveways, gates, and drainage systems. Assess HVAC systems in climate-controlled units, as well as electrical and plumbing infrastructure. Identify any deferred maintenance or immediate repair needs. An environmental site assessment may also be necessary, especially for older properties and those that may have stored hazardous materials.
Operational Assessments
Assessing the facility’s operations provides valuable insights into how well the current owners manage the business. Review the current management structure and practices. Is the owner also the manager, or is there a third-party management team? Evaluate staffing levels, compensation, and employee contracts. Analyze how the facility handles marketing, tenant acquisition, and customer service. Review security practices, including access systems, surveillance cameras, lighting, and the alarm system.
Market Analysis
A review of the Lake Havasu City market can also provide valuable insights for investors. Identify local competition, their rental prices, occupancy rates, and facility conditions. Look at the local demand drivers in Lake Havasu City. Consider population trends, new developments, and the local commercial sector. Determine whether the market for this type of storage is already saturated or if there are growth opportunities. Look for gaps in the local market the facility could potentially fill.
Legal Concerns
Commercial investors must also perform thorough legal due diligence. Begin by verifying that the property complies with local zoning and land use regulations. Review building permits and operational licenses to ensure the facility complies with all relevant regulations. Investors should also review the terms of all customer leases and contracts the facility has with suppliers and service providers. Verify compliance with fire codes, ADA standards, and relevant environmental regulations. A title search is a crucial component of any property transaction.
If you’d like a more information on due diligence, here’s a checklist you can follow for your investment purchases. Click here for our checklist.
Are you interested in Lake Havasu storage properties for sale? Shuffler Commercial Realty is your expert guide. We can help you identify promising opportunities and guide you through the due diligence process. Reach out now to learn more about our commercial real estate services.
