All Forum Posts by: Henry Clark

On these long projects, every once in a while you want to stop and think why you are doing them.  Pay for your house or Son's college.  A bigger "Number". Pure joy.

Or knowing we got our 10,000 Teak trees planted down in Belize, and life is good.  Can't wait to go down around Covid, and walk through the Teak plantation and seeing the trees growing.

Been doing paperwork to finalize the subdividing of the 8 acres:

1.  City Economic development review- completed

2.  County GIS review- finalize Thursday.

3.  County Assessor signoff.

4.  County recorders office- copy of plat, certified resolution, then record the subdivision.

Although this property is in the City, for whatever reason, need both City and County review/approval.

At this point the local Banker will work with the SBA, to get them to release the front 4 acres so I can do the Contractor buildings.  Again, SBA won't loan on properties where someone else is running a business, which this will be 100% contractor rentals.  Should not be an issue as noted in the post above.  SBA portion of Self Storage, has roughly $400k value extra per appraisal than the 10% $160k equity required for the loan.  But we will see, government and bank project.  

Forgot pictures on last post.

Check the following:

a.  See if the utilities are directly in front of your property.  Water, Sewer, electric.  I paid $130,000 for water because the fire hydrant I saw was a private hydrant  and I couldn't use.  Had to run water a quarter mile away.

b.  Look around the area and see if new locations are putting in Storm ponds.  Took 1/3 acre out.

c.  Look and see if they have storm drains  $110,000 for mine on 4 acres.

d.  We are doing a 4 acre contractor building site.  Electric rough estimate is $300,000 to get to panels.  And then wire.  This does not include the hookup cost at the front of the property, just the buildings.

e.  Insulation.  $???,???  Spray foam, roof, side walls, etc.

f.  Just the driveway for our Self Storage, 7 inch concrete, 25 foot wide by 1700 ft, $450,000.  Use this and convert to a sq ft cost for your estimates.

g.  Slab will be about the same.  A lot more for frost free footings and rebar.

h.  Just plumbing for bathrooms and walling off will be $10,000 minimum per unit.

i.  Security fence?  Would be $40,000 with roll gate, if automated.

j.  Exterior lighting?

k.  Gutters?

l.  Landscaping- see what the development group will require and what you will want, even if engineering fabric with rocks on top. $15,000

m.  Engineering costs.  Either you will buy a pre-engineered building and still need the site engineered for permitting; or you will pay for both building and site engineering.  $50,000

n.  Floor drains; no, middle, front outside.

o.  Go halfsies on HVAC, they leave if they move out.

 p.  Same on office space, as O above. 

Keep going with your project, but make a spreadsheet and lay out each of these items.  Make sure you get hard numbers for the big numbers and softer numbers for the small ones.  Key thing is chop this project up and really nail down the big dollars.

If first time out, you might pay an extra 10% for a General contractor.

 Start small and Make Your Big Mistakes Early.

Putting myself back in your shoes and lifestyle at 19.

a.  How is your housing costs?  Try an RV court.  Look for an RV to purchase and also check with the owners for Rent free, if you assist on a year round basis, that fits your schedule.  Sweat equity.

b.  If its close and the parking is big enough.  Sell your car and drive the RV to work or get a motorcycle.  Austin is a lot drier and better weather than up north.

c.  When your ready, sell the RV and then move up to house hacking.  Unless you already have enough for the downpayment for a house.

d. Before your do any of the above, call my brother, he's in LaVernia.  Your in Texas, the greatest place for Sheriff sales, and off list property sales.  Take advantage of this opportunity.  Buy a house for $10,000 taxes owed, straight up, no waiting, no lien exposure and fix it up.  Sale and move to the next tax sale house.  If it is land and no house, buy an RV, clean the property up and/or subdivide and sale.

Most importantly go swimming at Barton Springs or Hippy Hollow and enjoy being there.  Drive down to Port Aransas for Spring break and enjoy yourself.  Sleep on the beach.  Go flounder gigging at night.  Get someone to teach you how to do beer butt chicken barbecue.  Go on your life time search for the greatest tamale.  It has to have lard and not vegetable oil. Drive out into the countryside and stop at a large rancher's house.  Offer to come out and help on some weekends, so you can hunt deer and hogs on his property.  Most importantly take time in the spring to enjoy the bluebonnets along the highway.

You mentioned transitioning. I would look in Oregon, near you. If you have plenty of equity built up and are wanting to transition, I would do a 1031 exchange out of SFR into Storage. Otherwise your only leveraging the bank collateral % of the value, say 70% versus 100%. Pick your worst SFR or the one you don't expect to appreciate further and do 1031.

Look on Loopnet self storage as an example.  There are 3 storage locations for sale, they are all priced high, but hey you negotiate.  Personally I would look at the Vale Oregon location and vet it.  a.  Extra land, b.  Largest and 99% occupied, then you control rent rates in town., c.  Buy the other locations out., d.  Increase rent rates

Don't talk with SBA.  You will go through a bank that handles SBA loans.  Pick a bank that is mid size.  You would like your loan officer to grow with your business.  If you pick a large National bank, that person will be gone in 2 years.

Good luck.

Wichita has some heavy hitters already.  But it looks like there is room for growth, but you will need to be strategic.  Looks like the market can handle about 32,000 units.  Recommend you build.  Most of the big hitters you won't be able to buy out.  The others will be in the $1mm to $2mm range if they have 200 units or more.  Do the following:

1.  Google- Wichita Self Storage-  Look on the map.  Look for "holes" where there is no storage.  Then look for zoning within that area that allows storage.  2 acre minimum.  Also do Sparefoot and switch to the map to see competitors and prices.

2.  Go against the grain.  Don't do traditional storage, or do just a little.  For example, google Loopnet Wichita Industrial.  Look at the 4035 South Broadway property as an example.

a.  I would check if you can do Cargo Containers for storage.  Cheaper, add as you need, no property tax, quicker payback.  Lower price point competition. Also for taxes you can write them off in year one.

b.  Also build Contractor units for plumbers, electricians, landscaping.  You would have plenty of land, which these folks like for parking and outside storage and turning.

c.  RV/Boat storage.

d.  Check on any epa issues, looks like a current or former car salvage yard.

If your looking for smaller investments, I would check out every storage location from your place south of Wichita, up to Wichita. 

Check out your infrastructure costs:

1.  Sewer/water/fire hydrants

2.  Storm sewer. Storm retention pond needs.

3.  Setbacks

4.  Electrical hookups

5.  Footing, road requirements, and parking requirements.

1.  Do a 10% down with an SBA loan.  Get 20 to 25 year terms with current interest around 2.??%.

2.  I would not use any cash. Have the bank collateralize one of the houses for the 10% ($45k).

3. If there is another Covid government funding, you may get the 6 month free on the SBA side of the P/I.

4.  Find a bank that does Storage or Apartment buildings.

5..  Evaluate any improvements or expansions you want to do now and incorporate them into the loan.  Ask the bank you want a construction loan with interest only to make these happen.  Prior to rolling into the SBA loan.  That way you don't have to foot the repairs or expansions.

6. If you haven't closed yet, talk with your Tax person.  Do an Asset purchase versus buying the business.  Break out the roads, security, lighting, signs, etc.  Possibly do a non compete agreement with the owner.  Basically move as much away from Land and building as possible, so you can get a year one write off.  Carry forward loss if you can't use it this year.

See our Self service youtube on the website below.  Try to get away from an onsite manager.  You will still need someone to help you manage locally.  

Operations:

a.  Insurance- call Ponderosa insurance, part of Uhaul.  They have storage specific coverage.  Unless you already have insurance.  $450k coverage will probably cost around $1,500.  Over insure, its really cheap  $600k coverage will be around $1,700.  You want to cover clean up costs also and lost rent.

b.  Get on Sparefoot for advertising.

c.  If manual move to internet and web based storage software.  We use Web selfstorage with Uhaul for $44.95 per month.  Can see anywhere in the world.  Check out Storedge, I am not recommending them, but one of our local competitors used them, and got ranked real high and fast on Google. They have an SEO part of their business.

d.  Security- get web connection so you can see your operations and get notifications.  Example:  Anyone opens the door with the code, I get a text.  If someone breaks in, I get a phone call.  Have your security person check out Uniview systems.  They have motion sensors which you can dial up or down for size.  They have line sensors if you break a plane.  These events are color coded on the timeline to help you find activity.  Have them tie you in, so you can look at the cameras either on your cell or computer.

e.  Get a battery and surge protector unit for your computer and nvr system.

Good luck, great investment.