All Forum Posts by: Henry Clark

Copy of post I mentioned.

There was no reason, but the day I hit 30, I realized it was “ME”. Everyone around my family was doing fine, work was great, it was a nice day. Just for some reason, I realized I was the person in charge of my life. Its not like I all of a sudden matured. Paid my way thru college, top of the class, top 1% job, only got drunk twice in my life, etc, etc.

My realization was, I was it. Now I didn’t do anything with that thought. From that point on, until I was 50, I knew literally I could go through Mountains, jump over them, dig under them, go around them and stop Run away trains by hand. There was no obstacle in my life that I could not overcome.

And then it hit me. I ran into an obstacle, that I had no clue how to deal with, it could not exist (in my world), and the experts had no clue (from my point of view). No more Invincibility.

We are all at different points of our lives, perceptions of living into eternity, Invincibility, or just lack of thought on the subject. If your “there” and are aware of your lack of invincibility, please keep reading.

So you just Died. The following are actions not to put your Family through Hxxx. (Also Vendors, Customers, Bankers, employees)

A. “Will” or “Trust”?- Do you want things to go through Probate for several months or seamlessly go through a Trust with no stoppage in operations or control? Without a business, you might not care if your below a certain Dollar level or asset types that don’t deteriorate. Various discussion points- Bucket Trust, rename all of your assets to include the Trust, etc, talk with your attorney.

B. Power of Attorney- you can have this made specific to different aspects of your life. You may have a business partner who you want to be able to make decisions on your behalf for the Storage business, but have no say over your Personal life.

C. Bank Accounts “POD”- Payable on death, So you just died and who is going to pay the bills? This will automatically allow a person to access the funds and support the ongoing business. You probably have you and your spouse on the account already, so put somebody that is likely not traveling or living with you, in case both spouses pass at the same time.

D. Life insurance- not tax deductible, tax free proceeds. This is more about risk, comfort zone, lack of knowledge and stage of investment. With our fast growth we have taken loans out. All of the locations cash flow very well, so there really is no risk from losing a “wage earner”. It is more about taking pressure off the family members who will end up with the property. Also to cover any estate taxes or debt restructuring if they arise.

Where the major danger comes in, is if your in the middle of a development and your the main developer. The other family members only know how to run an existing facility. This is where you can lose a lot of money, if you have to sell the property and not complete the build out.

We identified three areas of risk and they are all on three different time tables. 1. Ongoing debt payments for existing units., 2. One location in Rent Up Phase., 3. One location in development phase and then Rent Up phase.

Per our advisor we took out three separate Term life policies. That way as the risk diminishes you can drop one policy at a time. If you had just one large policy covering all three risks, you would have to cancel a policy and renew. You have gotten older, any new health issues that arise, and the need to go through the review process again, may change your access and cost of an insurance renewal. Don’t get to exact figuring out your coverage needs, it is really cheap, go for the higher number.

E. Living Will; End of Life- This is more for applying medical treatment or not under certain circumstances to continue your life support, while you are incapacitated. Just added this so you have a complete package of estate issues. By this point you should not be in control of any business, unless you were incapacitated due to an accident or sudden medical issue.

F. Medical Power of Attorney- this allows someone to be in charge of your medical treatment if your incapacitated. Not so much a business impact, but wanted to keep the list complete.

G. Facilities Management- worst case, no one knows how to run or has the time to. Develop an “Info List” with all contacts and passwords. Identify ahead of time a Management company or local Realty company who you have vetted to manage the business. Have them identified on the list.

H. What does a storage facility look like 6 months after you have died? You go down to 70% occupancy from 95%. 40% of your customers are behind. Some customers haven’t paid in 6 months. No one can find the contracts. 5 of the units were yours. All of your systems are on paper and no one has kept up. Trash has been thrown over the back fence and the neighbors want it fixed. Weeds are everywhere. I come in and offer to pay 50% of the value. Ended up not buying your property. It takes about 3 to 4 months to get a location like this transitioned over to a management system and cleaned up, through auctions. Your investment value has greatly deteriorated since there was no transition plan.

So are you taking action; or are you sending everyone associated with you under the bus?

“Start small and Make Your Big Mistakes Early”

Just general info.  We have 40 units, used for Self storage, not housing.

1. Building Codes.  Check them first.  Our town does not allow Metal sided buildings of any kind.  One of the towns we have units in, does not allow Storage containers except in certain zones.

2.  Container prices have almost doubled since Covid.  China is the major source of used and 1 time containers and with shipping brought to a halt, the supply had dried up and prices have gone up.

3.  You have a choice of used or used 1 time containers.  Price is almost double for the used one time. 

4.  If you buy used, you need to check for hazardous chemical residue in the unit, if you want to use for housing.  This may be why you buy 1 time containers, easy to see last manifest.

5.  Normal sizes are 8 by 40 and 8 by 20.  

6.  Ceilings, get the High Cube.  This adds additional height.

7.  Look at all of the youtube videos on building Container houses.

8.  We put Mobile Home roofing paint on the roof.  This drops the temperature inside by about 20 degrees.  You will need to put a roof over it, or everything inside will cook, or run your electric bills up.

9.  I would research doing Solar panels over the roof with about 3 foot overhangs for shade.  This will not be water proof, but you don't need that.  This will provide shade for the units, will serving a purpose.

10.  Hurricanes.  Install a strap down process.

11.  Learn about heat transfer with metal.  You will want to insulate on the outside versus inside.  a.  To keep more space inside., b.  To keep heat off metal building, so it doesn't transfer inside.

12.  Check out any ADA concerns

Send some pics.

Read my post:  Self Storage, so you just died.  This will cover many areas you need to consider.

Then reach out to a "Trust" attorney to set things up.  Not your regular attorney.

Separate industry, but if your near the farm belt.  Have a discussion with a Farm Management service.  Get a fill for the type of services your looking for.  The fee and responsibility structure.

Parking pad poured today. Will need to dry for 7 days before we can use. Will paint handicap parking, put up handicap parking sign and penalty sign, then paint handicap path. The second picture below they are putting in the curb. This was part of the engineered drawing. Elsewhere I will try to get away with no curb, unless to catch water. Want to be able to push snow over the curb without hitting it.

Now that the parking spot is poured, we can put the road sign behind the two gentleman in the picture above. Stopped by my sign company and discussed what I was looking for. 4x8 double faced sign. He will erect with the bottom 4 feet off the ground. I will surround with landscaping blocks and fill in. The picture below is similar, but is using native stone blocks. Road signs are under a separate permitting process versus for the project itself, so a separate permit is required.

Called in to city permitting to get inspection. We are not totally done, but want to get the ball rolling. Still need to paint and put handicap signs, which I will do as soon as concrete dries. Also the Fence and Gate are not in. Stopped by the fence company. Our gate is third on the to do list in the shop, so should get done this week. The fence material is being rationed out, since they are short. But we have been on their list since last November, so we will get ours.

Shortages of material and price hikes. I have asked a Pool person in Phoenix and there is no Chlorine available for pools, Herbicide applicator for corn/soybeans who is almost out and it is just the start of the season, and Fence distributor. Plants are running, but the shortfall is due to fewer truckers. Back in 2017 E logs became Federally mandated for commercial truckers. A lot of the older truckers have decided to get out of the business.

Why do you care?  What is the decision your trying to make?

The reason I ask is there an off question behind the question, or just a general where will it go.

A.  I will answer you in a general fashion, because the answer is an Individual decision.

Lets say interest rates are:

1. 4% on an SFR or MFH investment your looking at.

2.  What % would you not make an investment at?  For me I stop investing at 9%.  If I was a Flipper and could move a property in 4 months, I would be okay at 15%.

3.  Lets say your stop investing % is also 9%.  Then to answer your original question, it doesn't matter as long as the interest rate is between 4% and 9%.  Within 4 to 9% it becomes a deal by deal question.

B.  From a macro standpoint, are you trying to not take the plunge.  Is another approach.  Because if it isn't the interest rate, it will be another issue, that keeps you from investing.

C.  A general Interest rate discussion is a simple matter of Cash supply and Risk.  1.  The Cash supply from an investment standpoint.  There is still a lot of cash out there.  The Federal government thru their spending is putting more cash out there.  Thus interest rates should stay low.  2.  However the economy was already hot.  By the Fed putting more dollars out there, the economy will heat up even more, causing inflation.  To correct they will need to raise the Interest rates to slow the economy down.  3.  Risk from your personal finances and deal standpoint.

Thus what do you think the dynamics in C above, will occur in the next 6 months to a year?  No investment you make should be dependent long term on these short-term rates.  The short-term rates should only impact your decision to get "in".

Run your numbers using 3 different interest rates.  Decide if the numbers work.  Then lock in long-term, or over your investment horizon.

Please breakdown what features you are looking for.

Example:

1.  Non internet

2.  Access camera pictures on line via phone or computer.

3.  Motion sensor.

4.  Unoccupied unit intrusion.

5.  Noise alarm or just message alarm to you.

6.  Parking lot and vehicle ID.

7.  Memory or how much retention do you want.

8.  Wide Angle or close up.

9.  Fire/water alarm

10. etcetera.

11.  Dimensions.  Height- ground level to 4th floor ceiling.  Length, one side of stair way or hall way to the other.

Although I hear of out of state investing. We have all we can handle in a 40 mile circle. We could keep investing for the next 10 years and still never be done. I would go after the value add multiples you get when you operate in an area versus several states. 

You would need to hire a general contractor.  Then hire a manager to start up.  

With all of the detail and issues that can come up, I personally would prefer to develop myself. But that would mean covering the project for over a year. 

Since your open to out of state. I personally would rather purchase a location versus develop out of state.  You will miss out in the inherent profit from the development but also the risk and time. 

Also purchasing takes less time allowing you to expand faster. 

Find some of the towns that don’t have any of the Reits or large regional firms. Then you have 2 or 3 value add propositions. 

Can you say slow going?
Great weather, but contractors are really tied up and hard to get to close small issues.

Uh Oh. My wife just looked over my shoulder and got on to me for posting her beautiful picture.

Assorted lose ends:
a. Will go for Occupancy and inspection next week. Was waiting on Plumber which is done., Fence/gate not responsive. Big Google project going on. Road contractor build form for parking and will pour next week. Parking is in the form. Need to put Handicap parking and regular parking for occupancy. Still have the handicap form from last project. Costs about $50. The dirt section in front will be where our Road sign goes. Still need to design.

b. Overview of phase 1, basically the buildings you see above. Phase 2 will be the two long buildings at the top of the picture below. Just need to pour the roads around them.

c. Phase 3, we will start doing pads on the bare ground above next week. Building cost went up about 25% since the units we build last year.

d. The storm retention pond drain is shown below. The drain is the large Concrete structure. Water can exit in both the round circle at the bottom and the small outlets at the top. Facing the side of the pond is the outlet which goes to the city storm drain. This pond has to be designed and sized by an engineer. They only count dry surface area as retention. If this pond had standing water, they would not count that area. The black tube on the left is the driveway drain. It is taking all of the water flowing from the buildings in "b" above for phase 1, into the pond.

e. Landscaping is almost done. Really dry here. Put seed, then grass mat down. Watering every night. My son and his friends will get home from College. Have them mulch all trees and bushes then. Also in the second picture, time to take the Silt fence out. Grass has mostly grown. Reseeding some. Have to get a zero turn mower to mow since this is a high bank and my riding lawn mowers wont work. The first picture where the two Bollards are in the concrete is where the security gate will go. You can also see a light green standing plastic stand. This is one of the connections where the Fiberoptics goes into the building. They just put in yesterday. Same security system as at our other location. Will go over later. Cameras are already recording in Phase 1.

f. City Inspection, will schedule next week. Kind of crazy, they have all of the inspectors come out at once. I will probably be the only one there. Contractors don't usually show. We will get a bullet list of items that need adjusted. Then we fix and just email a picture to them for approval. Just remembered on the bathroom sink, it has a plywood backing against the wall. It has to be painted, or the city won't accept. I noticed and painted today. Must be a plumber thing, that they don't paint wood. This was an exception at our last location inspection.

B.A.H.  Base Allowance for Housing.

A.  Find  out what your BAH is for that location.

B.  Recommend you buy a mobile home, and rent out extra rooms.  Use your BAH money for the payments.  When you leave, sell or keep renting.

C. Do a BRRR or Flip on the mobile home.

D.  Keep doing this, and as you get cash, start either moving up in value, or start to do more Mobile homes at each place you move to.

Reach out to the military folks here and get them to help you get started.  Checklist, appraisals, what to watch out for, etc.