All Forum Posts by: Henry Clark

Hello, sounds like you moved forward.

Will help you answer your question two ways:

a.  Go to google and type in Self Storage and your town or zip code.  See which of the above storage softwares show up both the most and the earliest.  Some of these softwares are actually the same company and system.  That is the Best one.

b.  Would you get them through Google anyways.  Go to google and type in self storage for your town or zip code.  1.  On google maps, hit the see all and see what rank you are.  If your the top three and show on the first page great.  If your number 50, then Google maps is not helping you.  Your SEO power is not strong enough.; 2.  Same on Google, look and see what page you show up.  This is a reflection of your SEO power.  Sparefoot will always win against a single company or location.  Same for the large national accounts.  Plus it will take you $1,500 per month and several months or years to work your way up.  Versus if your on Sparefoot, your immediately at the top.; 3.  At the bottom are you in the "other people searches"?  If not, your google ranking isn't high enough, so your not getting Google tenants through Sparefoot.

Your real question is why are you at 1/4 vacant.

a.  Analyze by size.

b.  By size do comparisons to your local competitors within 3 miles.  Price, discounts, physical appearance, security, etc.  Are you priced correctly for Value.

c.  Obvious.  Do you have a road sign.

d.  What are your competitors vacancy rate.  If all of you are at 25% vacate then the market is saturated.  You then need to either lower your price, which I don't recommend.  Or change your product/configurations or purpose.

Start small and make your big mistakes early.

Most people never make the jump to investing.

1.  How much is your downside to this deal?  If you buy the unit for $8k and rent for the same $415 per month, assume for the lot rental.  You rent the trailer for $???  $850k.  Net is lets say $400k.  Winner.  Plus I believe you can write off this investment in year one and pay no taxes for a while.  Cash or 3/5 year loan deal.

2.  Same as above, but you put $2.5k in.  Now your at lets say $11k.  Rent for $850k; lot is $415k?  Confirm this $415k is not an old grandfathered in rate.  Net$400k.  Cash or 3/5 year loan deal.

3.  You flip.  Renovate and sell for $70k.  Sounds to good.  If you don't own the lot.  You buy a new Trailer.  Isn't your cost well below $70k.  I would do this all day long then.  Recheck the numbers and understanding.

Recommendation:

a. So you lose your entire $8k investment. How much does it cost to dispose of a trailer. You get a learning opportunity, plus you leapt off the cliff towards REI.

b.  You buy for $8k and sell for $6k.

c.  Be careful between friend and sucker.  Do your homework and math, don't make your first deal because it was a friend and you didn't do your due diligence.  Make sure this is a learning experience.

The most important part of this deal is that you start your Real estate investment.  And your downside is small.  You truly don't start to learn until you put money down.  This is a great opportunity with low exposure.

Your background said heavy equipment.  Start driving around and looking for filthy, nasty, dirt/locations, swampy, boggy, trees/brush, etc.  You should be able to see that and "what it can be".  And estimate cost to clear.  Check on sewer/water/storm drain-ponds/electric/fire hydrants.   Most people can't do that.  After that, stick to the motto; location/location/location.  Go with your strengths.

Like the deal your looking at.

Being from Louisiana, sometime I just have to say Honey, I love you.

Just got our ice and snow removed about two days ago from the Shady side of our buildings. Now our next snow storm is moving in. Hopefully it will be light. And we have some 40 degree days following.

Again, part of this post is sharing my failures and hopefully lessons learned. The building above is double pitched roof one side facing south and the other facing north. The north facing side gets no sun and takes forever to melt. You can get the ground cleaned, but the snow and ice on the roof keeps thawing and re-freezing, making the road below slick.

The next picture is a 40 x 200 building on our new location. We ordered with a single pitch roof facing the south. Should melt off fast and keep the road clear. The north facing sides we will just need to remove the snow/ice on the ground and not worry about liquid from the roof.

@Greg N.

Just because its snowing up here in Iowa and I don't have anything to do.  Also I went to LSU.  I'll throw some questions out for you to consider.  Key no matter what I say, I think it is a good idea for you to start REI investments.

1. Read the HOA agreement thoroughly and understand it, and its down side.

2.  Looks like College renters.  What happens if you miss one month of rent?

3.  How fast and for how much can you turn your apartment around.  Reduce impact of 2 above.  Cost of repainting and clean up.  Will you pay someone or are you prepared to drop what you are doing personally and get it ready?

4.  Covid impact.  What are the schools doing for in-class or all online.  They can do that from home.

5. Are you doing this from a revenue or a value generation perspective? Just need to make sure it is meeting your REI objectives. Will these apartments 10 years from now, be worth more or less? Whats the neighborhood look like now and in the future?

6.  $46k cash;  Why is this so high?  You want to put as little cash in as possible, especially with todays interest rates.

7. Relative to 5 above.  What is your target?  Do you want to make $2,500 per month cash, thus you will need 10 of these?  Do you have the cash or equity access for the downpayment to go down this road?

8.  Your note on reserves for maintenance.  Lay a spreadsheet out and note the years.  Evaluate your property.  Put so much and so often in for carpet replacement, Tile or linoleum replacement, kitchen, windows, bathroom, HVAC, hot water, etc. Compare that against your $250 per month.

9.  Note payment $550 per month.  Sounds okay if your financing the full 110k.  But your putting $46k down.  Seems to high.

Again, no matter what, now is the time for you to start investing in Real Estate.

Send me a picture of a stick of Boudin at your local gas station.  Steaks are great up here, but miss all of the flavor.

Geaux Tigers

@Michael Marroquin

Way to start the next step.  Glad you have a known figure to invest.  Take that against how you plan to finance and that will help you set your investment target.

Example:

SBA loan 10% then you can have a $800,000 investment.

SBA loan 15% then $530,000

Traditional 25% then $320,000

and so forth.  Require a construction loan, interest only until your off the ground.

Starting out, I would recommend: 

a.  Keep some cash reserves to cover any unknown costs and any revenue or timing shortfalls. 

b.  Always start small and make your big mistakes early.  Better to try a $150,000 investment versus a $800,000 one.  You can recover financially quicker and you learn the same lesson for a lot less cost.  Plus you have enough cash to do a second deal.

I know this is money, but I would get as much fun and learning out of this as possible.

1.  Talk to a realtor and let them know you may run a deal through them.  Also if they see something.  Look on line in your area and see which realtor is handling the most deals in your ballpark$$.  Don't try to learn to much at once.  Later you might try to close through a lawyer or etc. But for now get a deal done.

2.  Talk to a banker and tell them your path.  Get them your last 3 years tax returns and also fill out any loan applications and balance sheet info. If you do an SBA loan, make sure your bank is comfortable handling these.

The above people will start to be part of your team.  Make sure you like them and they are good.

3.  Get dirty/have fun.  Start driving and looking for properties.  Go for Coal and not diamonds.  Let your friends and acquaintances know.  Talk to Lawyers who handle bankruptcies, divorces and estate closures.  Talk to lawn service people.   Develop a call list of the above.  Call them every 3 months until they know you. Its snowing where I'm at. Look at every property that isn't cleaned up one week later and start knocking.  Stay in your kind of $$$$$ investment neighborhood, increase your odds, plus stay small starting out.

4. Don't mentally get stuck on SFH/MFH; everyone is looking for that. Example: Look at "Loopnet" 512 W Simpson st, Mechanicsburg, PA. You can do this is in other areas. Commercial property. Get it re-zoned. Its already in a neighborhood. Take it to a duplex or triplex. House hack it, if its an area you can live in. Take your house or rental money and convert it to this property with a 1031 or just no more rent. While you live there work on the other 1 or 2 units. What you have as a new investor is a lot more options than long time investors, use that to your strength; look for deals that work for you but not them. Less competition, lower price. This one doesn't work, try the next one. One of these will work price, living, zoning, etc wise. That's the fun. Don't wait for a realtor to find you a deal, it won't happen physically or value wise.

Do a store front or service front, and a rental unit in back.  Great parking and road frontage.  You may go through 10 of these before you find the one that works for you.

5.  Keep all of your properties up for sale.  Even while you are rehabbing think in terms of resale.  Some properties will cash flow great and you will want to keep.  Always have a price on them, even though you will probably keep.  Some properties will be a great flip and make you some money.  Take the learning experience and move on to the next opportunity.  Don't sit on a mediocre deal.

Fun times starting out.  You will never have all of the info.  Just look at your big exposure items; roof, floor, ceiling, footings, HVAC, windows, water/sewer, any EPA.  Make sure you cover all of the big gotchas.  If you fail, fail small.  Key thing is to make an investment and start.

There is to much going on and to long to get in depth.  Take anything I say and adjust it based on knowledge base of your situation.  Don't worry about responding to me, point by point.

1.  Learning more, whether on the ground or textbook is not your issue.  If anything you may hurt yourself.  Your going to reach a level, where even if you can do the drywall and could save money, you shouldn't.  Otherwise you stay an hourly employee, even if your working for yourself.  Plus time management with the family or working on the next deal.

2.  Personal side- finances and 4 Kids.  I am probably totally misreading your comments. Adjust to fit your knowledge base, versus giving me more info. Sounds like you did a lot of work but the end result is no cash or investment? But I look on your background and it looks like you have a lot of REI investments, which becomes a question, to what degree are they cash flowing. Obvious- On the kids side, they require time.    On the REI side your could work till 12 every night and still have things to do.  My point on this, is later your REI investment approach, will need to balance these.  Example:  You can't have three rehabs going at the same time, trying to do the work yourself and still go to ball games or say goodnight.  Your REI investment style at some point has to become more entrepreneur and less physical rehabber.

3.  When to switch over. When your fired or between jobs, but have the financial backing to reach the "Goal" of REI investor only. Or, when you have a day job and an REI business, and you finally run out of time to do both. But you also have REI cash flow going to supplement. Never assume you will reach a point where your covering your salary. Your jump will be before you hit that number, which means you have to adjust your Personal finances for the 1 to 3 years till you get back to your number.

Recommendation:

Take all that you know and build a financial, deal, personal road map to the "Goal".

Your at point "A". Define REI cashflow, debt load, cash on hand, etc. Family. Make sure your wife is along for the ride. Show her the roadmap.

You want to get to point "B".  Same as above.

Now define how you get between A and B.  How many deals?  What type of Deals?  What magnitude of deals? How much work do you do? Work hours versus family hours.  They will never be balanced, but how do you make them work?

An example output:

I need to have 10 deals cash flowing $7,000 per year each.  I need to add two deals every year.  Or you stay salaried, but go for long-term wealth growth versus cash flow.  Example:  Want to have 5 investments I can cash out in 15 years for $500,000 net.

Need to either get rid of or not do any cash flow deals under $x,xxx per year.  Sucks up to much time and less return for the same amount of work.  Only do these when you have a time hole, and do as a fix/flip for cash generation.  Don't do with your money, do for another investor, so your not out cash.

You have already done the above in your Masters Bus Ldrshp as an exercise.  Just need to do for yourself.

Once a month pull this map out and question your workload and approach.  

Cash is never an issue.  Read throughout BP.  A lot of East/West coast people looking to Ohio and the Midwest.

Work the baby boomer crowd. Versus doing 2 or 3 deals in a year, you might do one that is 20 times larger. Look at Apartment complexes and Trailer Parks. I know of an 85 year old that has 37 SFH/MFH units. Something has to give for him and his family. Find those people in your area and get to know them. Give them more than money. Hire them at $10,000 a year and tell them you need "their help" working 8 to 12 hours a week.

You can get to your REI full time level one SFH at a time or you might do it in one deal. Key point is to do your GAP analysis A to B; and force/question your approach. Otherwise your will work your butt off and be at the same place 5 years from now.

Just need a road map.  You got everything else.  Experience, knowledge, reason to succeed, Cash is available and most importantly you don't mind jumping off the Salary/Hourly cliff.

Catch you in 5 years.

The numbers say do it. We are all looking at upward curves on REI, and downward curves on Interest rates.

The answer to your question is on the back end of a bubble burst for the industry or you personally.

1.  What if your 30 year 2.67% mortgage gets "called".  Divorce, move cities- you don't rent out a $700,000 home, oil industry goes bust and your impacted.  Are you liquid enough to take the house going down to $450,000 and being forced to sell in that market?

Weigh that versus your potential upside.  Will the $700,000 house go above $800,000 in the next few years?  Is it worth it with a 7% sales commission (note your a realtor).  Will interest rates go further below 2.67%; how much if any will that improve your value or increase the Buyer action.

2.  If you buy up, how do you protect yourself from the "downward Trend" that will come.  Buy into a neighborhood that has no downside in market.  Your in Houston.  Do your neighbors have little miniature ponies running around on the lawn.  Then your fine, your market won't go down.  I wouldn't buy into a new subdivision.

Just thoughts.  Not an area we are investing in or doing.

We are actually in the countryside and subdividing off and selling land into this market.  Also do Self Storage.  Have two large projects we are currently adding on.  Self Storage is good whether the economy is bad or good.  Only down side is when its stagnant, and that okay if your rented up already.

Just opinions, your dollars.  Good luck

@Thomas Houpt

No feed back.  Was this a hoax post?

Had two days with 50 highs. The road contractor was able to pour the two sidewalk edges. This is a major bike, jogging and dog walking section. So I really wanted to get this in, before winter closed out pouring concrete. This is the last work we will do until around March of next year with concrete. The orange rubber bumps are required by the city to assist with visually impaired at crossings. Will give the concrete about 7 days to cure, then will remove the barricades.  Get back to being a good neighbor, yahoo.

Probably wait till spring to do grass and landscaping.

Side bit of info.  If you do an Airport property build to suit, they are their own legal entity.  They usually don't have a property tax.  There may be a small charge for road maintenance or if another tenant has gone bankrupt, you may have to help pay a portion.