All Forum Posts by: Henry Clark

OP.  Best to start with your personal situation.

1. Assume your tag line Tallahassee, FL.

2.  How much disposable cash do you have?

3.  What is your housing arrangement and cost?

4.  What type of job do you have?  8 to 5?

5.  How handy are you?

6.  How presentable are you?

7.  Type and value of Transporation?

8.  How close to FSU, FAMU, hospital, etc do you live?

9.  Etc etc.  Based on this info, there are tons of options for you.  But you have to start small and build up your Cash Snowball.

Note Fix/Flip is great, but you have to pay taxes, have potential cost overruns due to unidentified events, etc.  

OP.  Stop reading and watching podcasts.  Let's narrow down your options.  You don't need to answer these online.

1.  What town do you live near?  Reason- learn in a market you are familiar with.  Narrow your focus down.

2.  How much investable cash do you have?  Reason- you can work backwards into the size of your investment. Say you have $20,000.  You can finance with 10% downpayment.  Then you can do a $200,000 deal.  Narrow your focus down.

3. What is your housing arrangement? Reason- can you do BRRRR, rent share, etc. How much is your housing, that can be part of your financing. Narrow down your RE strategy.

4.  What is the makeup of your family?  Reason- again to narrow down your RE strategy.

5.  Wifes concerns- either you have to take her along for the learning, or do risk analysis on the investment for her so she knows  the top side risk.

This will now help you to narrow your learning and to start actually to do some deal analysis.

OP.  I would start with dryland marine storage first.  Run the numbers on 1021 S. 82nd St in Tampa.  Asking price is $4mm which could work.  I would make a 3 day offer at $3mm.  If they make a counteroffer, accept their $4mm but with a zero-interest loan of $1.5mm for 5 years.  They would need to take second position if you get a lender involved.

I would get the occupancy rate up to around 60% by year 3 and then put on the market for $11mm. You should make $3 to $4mm profit.

You will have to bring about $2mm to the table for the total deal.  Run the numbers and do your due diligence.  I'm just writing on a napkin.

Or do Conexes or Cargo Containers 8x20; since your near ports should be relatively cheaper.  Should give you about a $30mm valuation once occupancy gets around 90%.  Also depends if they will let you do Conexes and also if they will let you do rock roads or has to be concrete.  You will need about $4mm plus the land cost above.  At 25% down; you would have to bring about, again $2mm to the table.

OP.  Since you're a lender.  What types of loan structures would you do for the 3 options above?

OP.  I would pick the prime location with the lower returns.  

Example:  Since your reference is Miami.  Would make an offer on 5253 NW 7th Ave, Miami.

.54 acres; $1,073,000 asking price, 12,936 sqft not sure this is correct; tons of parking or building space.  Listed 05/22/2024.  Funeral Home.

Would make an offer for $700,000 with a 3 day window.  

3 value add plays:

a.  Split the existing facility into more rentals.  Double the current income stream.

b.  Demolish and sell the lot for $1,200,000

c.  Add another building to the location for rent.  Plus split the existing facility into more rentals.

Would have 5 properties lined up to make offers.  One after the other.  Subject to Inspection and financing.  Whichever one bites is the deal I would do.  Luckily lots of properties in the Miami metro.

OP. Capex, existing contracts and lessors, value add proposition.

The CAP rate and cash flow stream, I will back into the price and Metrics, I'm willing to pay for the property.

OP.  Google every similar site within 300 miles and go visit. In similar size metro areas.  Our local town of 60,000 has a huge complex just for Soccer. 

1.  Get tons of pictures and ideas on layout.  Example above, 20 parking spots as a minimum would be a non starter.

2.  Ask them for their "Sales Deck".

3.  Look for the big donators in the community.  The casinos may be required to invest in the community or do funding.  Bring them along for the ride.  

4.  Start building a team.  Insurance, Finance, legal, marketing, RE developer, CPA, GC,  etc.

5.  What do you do for a Day job?  Someone has to push this thru for the next 5 years.  If you're not the person, find them.  You can still fulfill part of the development.

6.  Decide if it will be Non-profit or For Profit.  Set up a Legal entity.

7.  Go talk with the local Pro Soccer club business team.

8.  As you develop the layout, think of player interaction safety.

This won't be a YOU project.  You will need a Team.  Throughout all of the player families, your team exists, with a passion for Las Vegas Soccer.  

@James Hamling       

Secret Sauce- remember War and Strategy.  I use a Wagon Wheel or Spider Web market approach.  Basically the same thing, just the Wagon Wheel uses a large city as a base, and the Spideer Web is for smaller markets spread out 10 to 20 miles.

1.  All cities roads are built in the general shape of a Wagon wheel.  You emanate from down town, the main roads then spread out like Wheel Spokes, then you have an outer loop road, the main roads get farther from each other the farther out.  Like a Wagon Wheel.  "Strategy"- Closer to the city are the Big Dog REITS or regional competitors.  Don't compete against them, but "USE" them. Traditionally the rate for say a 10x20 is let's say $200 on the outer loop.  Pick one main road and let's say every 5 miles the rate goes down.  $150, $130, $100, $80.  You want to buy or build along that road.  Now your strategy.  Each of the ones you build or buy along this route you increase the rental rate.  So the $150 you move up to $200;  They can't go towards the city since it is also $200 and you are closer.  Then the $130 you increase to $150, and so forth.  Since the Spokes or roads get farther away from each other the further out, the customers can't just go to the left or right to another main road, because it is too far.  

2. Buying one of the above, you can afford to pay more since the current owner already thinks they are charging to much. But you now have a Business Reason why you can charge more. Even thought $20 per unit doesn't sound like much, that can be a 30% increase in cash flow and profit. Immediately increasing the CAP rate and value of the property on day one.

3.  Spider Web- basically the same thing as the Wagon Wheel but your out in the country side with towns 10 to 20 miles away from each other.  The more you buy in that spider web area, the more you can increase the price.  Since to get away from you they have to start driving 30 to 40 miles away, which they won't.

4.  What is different about Self Storage is since my ratio is 1 unit per 6 people, you can control a market easier than housing which requires housing for each person.  And your market is smaller than the housing market.  They have already committed to living in an area and are now looking for Storage.  Whereas Housing, they will move to anywhere in the city to find what they want and the price point.

5.  Minnesota is a high Rec area.  Build parking storage along the major roads towards the rec areas.  Always preferable closer to the persons residence.  Or near the Rec area.

6.  Your near ports.  Cargo Containers or Conexes should be relatively inexpensive.

7.  Summary, although there is a ton more.  Minneapolis is a great market and needs more.  Even if Minneapolis currently had say 10,000 storage units and for all eternity, it would only need 10,000 units, it is still a great market to build.  Because there are to many "Black Holes".

8.  Remember the harder to find a spot, the more valuable it is.  Less competition.

"Start small and Make Your Big Mistakes Early".

@James Hamling

Time to look for a place to develop or to pick an existing location to buy and understand how "Strong" that location is.

Now keep both screens up from above posts.  Compare them.

1.  Look for the "Black Holes" where no one is for 1 to 3 miles, and there are a lot of lines underneath or Residential blocks.

2.  Look for where the highest rents are in the city.

3.  Look for competitors who you can "cut off" from the customers.

4.  Get both the zoning map and the future zoning map.  Understand what zones storage can go in, special use, conditional use, or Mixed use.

5.  Secret Sauce- Your city has several Train tracks running thru.  Use your GIS property tax map and follow the railroads and look for any land larger than 1 acre that the Railroad still owns.  See if it is being used.  If not, then ask them to buy.  It should be in a great location in the city, zoning should be okay, or since a Railroad will not allow any Human habitation, easier to get special use.

6.  Secret Sauce- Look on Loopnet/Crexi.  Look for land or real old buildings with a lot of parking or extra ground.  Only old listings.  See if you can buy cheap, and also check zoning if you can do Parking or Cargo Containers, this makes use of the existing parking surface, even if it is cracked.  Depending on size, this will save you $500k to $1mm in surfacing.

@James Hamling   Next step from above post.  Now do a google search but for "Sparefoot" in your city.  Same as the map above which shows locations with Google map pins.  But this shows people using "Sparefoot" which is the largest advertiser or conglomerator for Self Storage.

a.  Do the same search.  Then open on the upper left the map.  Disregard prices on the map, this shows for all different kinds of units.  If a location shows on the "Google search map" but not the "Sparefoot" map, they either don't use Sparefoot, or all of that size is full and they "turned off" Sparefoot so they don't get calls and charged for the Reservation.

b.  Now look at the map and see where your competition is.  On the original page you can filter to see your competition.  Example size 10 x 20; climate control or not; access, etc.  If you don't see anyone in the area with your type available, means they are full and you can increase your price.