New investor looking to grow network!

[Aidan Richard Connly]

Hello! I am a Marine Officer Stationed at Camp Lejeune, North Carolina, and living in the Sneads Ferry area. I am looking to get my feet wet in the commercial real-estate game and am interested in storage unit investing in particular. If anyone would be willing to connect on this topic, that would be great, thanks!

[Henry Clark]

@Aidan Richard Connly

My family is primarily Army, but I will still give you some info to get going.  My son, is actually 3 weeks away from graduating Navy Boot camp, then off to Submarine electronic "A" school.  Glad your military, because I am going to show you how to Attack your market.

-   Personal Situation:  There are many factors in investing. Your "Personal" situation, you have to analyze, I won't delve into.  You might get to the optimal business situation, but decide not to pull the trigger.  Are you about to be deployed, retiring, family, etc.

-  Strengths/Weakness assessment:

A.  Enemy-  here are the key items that will explode your deal.  Start making a checklist so you can build  on it.  You need to do about 5 deal analyses before you even think of doing a deal.  Fire hydrants, water, storm ponds, storm drains, electric, bathrooms, zoning, floodways, EPA, Hurricanes/insurance.  These are the items that can blow up on you to $50,000 to $200,000.  You need to nail them down.

B.  Your strengths.  Before you even start, determine what you have in your Arsenal.  Cash or Collateral at 65% of value.  Finance method.  SBA 10% collateral; Conventional 25% or 40%.  With these two you can calculate how big of a deal you can do.  Example:   a. You have a $100,000 and are doing an SBA loan at 10% then you can do a $1mm deal.  Always have some extra in case you missed something., b.  You have $100,000 cash but do a Conventional  at 40%, then you can do a $250,000 deal.  No matter which way you go, you want to start with a Construction Loan paying interest only, until you get construction done and have rented up to about 60% or after 18 months.  Find a lender who understands Self Storage or Apartments.

C.  Enemy- yourself.  Most people will never invest in Real Estate, not because of how much it can make, but because they are scared of Failure.  The reason they are scared of failure is because they don't know what that means.  So, your mind always takes you to the worst situation, which could be total loss.  Calculate your potential loss.  Storage is never a zero sum game.  You can always lower your price.  Or if your occupancy doesn't reach your Break even point, it still is a valuable asset, or you need to change your product mix.

D.  Enemy- you.  You don't have any experience in this field. Bankers don't like that.  You need to "Start small and Make Your Big Mistakes Early."  Don't ask a banker to loan you $2mm right off the bat, and Learn your mistakes with you.  Start small and build credentials.

E.  Strength- BAH. If you decide to actually pursue, then let's come back and re-visit your BAH.  

- Battle field:  The following are three tools you will need to assess your target.  Recommend you stay within 40 minutes driving time.  Anything within that is your target.

A.  Google- Self storage for a town.  Literally type into Google and search for your area.  Use the map and expand and contract the map so you can see locations.  Think strategically. Roads, access, populations, recreation areas, etc.

B.  Sparefoot- zip code or town.  Same as above.  This also allows you to see what unit sizes and prices are out there.

C.  Loopnet- town or area.  Use this to either look for storage units available for sale, but more importantly if you decide to build.  Search for commercial lots or lots with existing building.  Look for 2 acres or larger.

- Target selection:

A.  Existing Self Storage facilities. I always prefer to buy an existing location, since this easier to start up, less learning curve.  Also takes a competitor off the table, and gives me both more price control and Logistical control.  I would prefer to own storage all in one area, than spread out.  Decide on your financial deal size.  Make a list of all the locations within your 40 mile range.  Luckily, you have a ton of Mom/Pop in your area.  Develop an info list on each one.  The "owners", location, size, # units, Unit prices, extra ground, access, etc.  Don't call, email, or mail.  Every 6 months go talk with them.  Let them know you are interested in buying their location.  "Offer them Solutions, not Money".  They don't need Money.  Yes, you will pay them money, but anyone can pay them money.  Can discuss this in more detail if you get that far.  They are going to tell you HELL no.  Keep visiting them in person.  The owner, not the Manager.  Out of all of the locations within your 40 mile sphere you will be able to buy one per year, if it fits your financial target.  If two locations are exactly alike and price, you pick the strategic one to your operation and "control".

B.  Build a location.  This gives you more options to start and also better site selection.  Most Mom/Pop locations built because they had extra space, not with the customer in mind.

C.  Make sure you don't pick a spot where I can build closer to the population and cut off your supply chain.

D.  It's hard to find a location due to size, zoning, availability, price, etc.  "That is GREAT".  The harder it is for you to find a spot in an area, the less chance a competitor will come in.  A greater chance for you to charge premium prices.

E.  I love Nasty properties. Most people can't visualize what a Bulldozer can do.

F.  Hurricanes, population and rec areas-  Most people like to have their stuff near them, at a cheaper location, away from the ocean, near the ocean, on the way to their rec areas, etc.  You need to understand this, when you look for a location.

-  Financial analysis:

A. Build a spreadsheet and pull together the Cost to buy or build, revenue model, and a cash flow model.

B.  Realize you're going to search and ask for "A" above.  Don't.  Do this quickly.  Don't worry about errors, or lack of info- list it though, etc.  Bring it back to this post and we will improve it.  By doing it this way, "YOU" will own the analysis and understand it.  If someone gives it to you, you won't understand it.

C.  Buy a location.  Google- Loopnet Self Storage North Carolina.  Pick the Highway 17 Williamston, NC location for $350,000.

D.  Build a location- on loopnet I have picked a spot for you in Kinston, NC.  7.6 Acres for $157,500.  Recommend you analyze this location to do RV and Boat storage primarily.  Along with Self Storage.  Strongly recommend you look at doing RV/boat storage first, with some Self storage.  This is your lowest cost/lowest risk/fastest cashflow option.  This is especially true for the area you are in.

On C and D above, only spend two hours at first analyzing them.  Then come back to this post and say, what am I missing.  What is next.  Do not waste time going for perfect or showing your intelligence. It's about moving you through the process with the least amount of wasted effort.

"Start small and Make Your Big Mistakes Early".