All Forum Posts by: Henry Clark

@Jason Turgeon

Forgot your $200k into it comment.  We footed the $200k in cash.  SBA 10% could have been $2mm loan.  But we only needed around $1.6mm.

Everyone has a great deal they did or that they passed on story.

This was a great deal story.  Was looking for land, had 3 spots I had identified with a realtor.  Came back to their office and I wasn't really excited by any of them.  The owner of the realty company sat down with me and the realtor as we went through the 3 properties.  He said, I have a property you need to see, its not even listed yet, just came in yesterday.  It was not in the location I wanted.  He told me the price, 8 acres for $200,000.  I said let me drive over right now.  Came back 30 minutes later and said we will take it.

3 siblings in their 80's decided to sell their old homesite.  No house on it, just 5 acres of soybeans and 3 acres of mid growth timber and brush.  Wanted to sell it quick.

Bought the land for $25,000 per acre.  See appraised notes above.  About 2 years later after we cleared land, put in 2 acres of Self Storage, and added all utilities, the same appraiser, appraised the land at $145,000 per acre.  So we end up with a lot of appraised collateral, which we can use on our next projects, with only having put the original $200k in to begin with.

Part of the big discrepancy, is when they originally appraised the land, he only appraised for about $28,000 per acre.  I argued it should be in the $100k comparable, but he said since I just bought it for $25k, no way could he go that high.  Maybe a year or two later.  Which he finally brought it up to comps.

Key is a lot of chainsaw and bulldozer work; bringing utilities up, really increased the value of an agricultural property.

Our land is bordered on one side by Iguana Creek, and the front is the Belize River. Actually have 5 to 7 foot big Iguanas.

Haven't seen them, but my contractor says we have 7 foot crocodiles.

@Jason Turgeon

Thanks for the detailed response.  Just because of that and you said you went near Philadelphia.

Please check out these three properties; researched that area for another post person, who never responded.

Loopnet:

240 Sickle Lane, Woodbury, NJ

105 Cedar Brook Rd, Sickerville, NJ

Bldg 801, 300 Thomas Ave, Williamstown, NJ

Not in my area and I am done opening new locations.  With the high storage rents in that area, and high population, I would be looking at these types of properties.  Realize you have to turn over 10 boulders to find gold, but I like the looks of these three, from several angles.

I see regular Self Storage, Large storage units, inside/outside vehicle storage, lay down yard, MFH, Wedding/Reception hall, subdivision lots, Contractor bays, etc.

$200,000 gets you into any of these with build out.  SBA 10% on a $2mm loan.  They won't do contractor bays.

Hey, I need a big Iguana art piece for our property down in Belize.  Is it cheaper to ship it from Maine, to ship you down there to build?  ha ha.

Again, thanks for input.

Material came in, to do the Siding. This property is zoned PC or Planned Community. In Industrial zoning you can do whatever you want. In PC, you have to get approval for everything. In our instance, for any building side facing the street we had to have a Siding on the bottom skirt or wainscot. Some of our buildings where we could, we put end units so we didn't have to do the Siding. The fence we will need to do ornamental bar rails versus chain link.

We picked a plastic molded product to keep the price down. They would not allow us to do a different color metal for the wainscot. This application will cost about $20,000 more than just sheet metal. If we had gone with the false stone or brick face, it would have cost around $40,000; which we had already run into cost over runs on some other areas, so I took the least expensive route.

Basically it takes a few more metal ribs, we screwed treated Plywood on, so it wouldn't rot, then you fit and screw down the molding. All of our buildings are now buttoned up. Just need to finish out the Office.

Had a new investor ask how to avoid large REIT competition when selecting their first Storage location.

Lets understand their "normal" business model first:
a. Onsite management, lowers their margins and causes increased prices.
b. Climate controlled, which is cheaper if you build multi level versus single. Also because the land is more expensive in larger cities.
c. Now lets work back wards. Lets say a location for them has to be at least 350 units to make it worth it.  Change the number as you see fit.
d. I use a ratio of 6 units per 100 population, not houses.
e. Minimum 350 units at 6 per 100 people = 350/6x100= 5,800 people. That assumes no one has built there already.
f. Problem with a town of 5,800 people is that market does not want or need controlled climate at those prices. In a large city they are forced there because the land is too expensive to build one story drive up. So even though the math says 5,800 minimum size that isn't correct.
g. Now at what price does the land become so high, that: 1. You are forced to build multi story (not $50,000 per acre, because I'm happy to build drive up at that price. $100,000 per acre, I would still build drive up.) Lets leave it at $100,000 per acre city property.; 2. REIT Customer base has to be willing to pay around 10x10 $110; 10 x15 $140 per unit. The city has to be large enough to where they can't drive easily beyond 1 to 2 miles to get to drive up storage. To me that is a town of around 100,000 people.
h. There is your answer. Look for towns of less than 100,000 people which is a market for 6,000 units. And Commercial/Industrial land prices of $100,000 or less for 2 acres or more.

Now lets test that approach:
1. Go to sparefoot and pull up a town of 100,000 to 50,000; don't worry about below, REITS won't get to 25,000 population towns. See which large National or Regional REITS are there. Sort by Distance. Storage 5 miles away is not your competition.
2. Do the same thing using Google search for self storage in that town. Look by distance also.

Look for large locals. Same impact as REITS in a smaller city/town. Also just because there is not a REIT there, there could be too many local locations. I love REITS, can beat them on price, convenience (drive up versus elevator), "larger" size offering, different product (climate versus non-climate) and location. Don't play their business model.  Don't be a castle (large customer base or circle needed), be agile and mobile.  If you can buy the land/zoning; if there are 4 large National or Regional REITS within a mile of each other and they are stabilized at 70% full, build between them; its a great location.  You will be at 90% occupancy.

But as many have said, know your numbers. It's about you, not them.

"Start small and Make Your Big Mistakes Early"

@Mark Brown

@Jerel Ehlert

Not trying to out anyone commission.  We found the property on our own.  Also along the way we found a realtor we might do  business with in the future.  After we had already engaged individually on the property we are looking at.

The reason I am bringing the point up, is both the Texas standard offer letter really stresses the differentiation between owner and buyer realtor, the Seller rep really stressed it.  So I came back with why all of the Point stressing, is there some Texas process that I am not seeing.

Read my beginning comments, in light of that.

Sounds like no one has any input as to the need for a Buyers Realtor, beyond the normal course of Purchasing property.  There is nothing special about doing business in Texas from a Realtor standpoint.

Thank you.

@Christian Sidaros

Christian lets see where you at first, before you head down the path.

You need three things:

1.  How much money or Collateral 60% of asset value; can you bring to the table?  

2.  What finance method are you going to use?  This will determine how much equity you have to put in.  Example:  SBA 10% of value; Traditional 25%; Traditional 40%.  You need to see if you qualify.  SBA will not do loans where you do not have at least 51% of the occupancy for your own business.

3.  Your investment track history.

Adjust the figures as you see fit:

Lets say you have $100,000 cash or Collateral at 65% of value:

SBA 10%  means a $1,000,000 project, with you investing $100,000

Trad 25%  $400,000 with you at $100,000

Trad 40%   $250,000 with you at $100,000

You need to start with the above or your wasting your time, if you go it alone.  

If you partner, and don't have the money, you have to bring something to the table.  Sweat equity, live on premise, management, etc.

Limitations-  Do you have a business to house in this investment, 51% of sqft?  If not, then SBA can't be used.  Unless your doing something like Self Storage (what I invest in).

As mentioned above, look out on Loopnet for Raleigh.  Use commercial or industrial.  Use the sort key and sort from lowest to highest.  Where your number hits, are the properties you "might" be able to do a project.  Keep in mind you can't go all in with your cash.  There are always issues.  Slow to rent up.  Rent levels you thought are to high.  Added repairs.  Client build out requirements.  Etc.

Catch us up on your status.  Based on that we might be able to bring more options to the table.

The above will set your expectations, and give you more focus on your efforts to get started.

"Start small and Make Your Big Mistakes Early"

Took a quick look at your area, within 30 miles.  Would love to build there.

Tell me what you mean by "lottttssss of inventory out here"?  If you mean a spot has 4 National Big Box storage locations all within a mile of each other with Climate control, I would love to build right between all of them.  Love your prices there.

What is your property tax rate for commercial/industrial in your area?

What type of contracting do you do?  Do you know other contractors in your area?

There is an underlying business potential for each of my questions above.

Looked out on Loopnet.  Subject to Zoning for Storage, saw about 3 spots that would be great for storage.  One that pays for itself without doing anything, before you put the storage on it.  Basically your land is free, if zoning allows.

Looked out on Sparefoot and Google.  Your storage market has three "Product offering" problems, which you would want to offer a solution for, that they can't.  It's not part of their business model.

Supply me the above info and I'll come back with a quick business plan.  You will need to get a different Cell Phone.  You will run this on a Self Service basis and never meet the customers.  Keep your day job, just stop at breaks, lunch or at night and catch calls.

Your in a great area.  Thanks for the note.

Thanks a second time.

Main building will be red iron.  This is for subcontractors wanting 25 x50; or 50 x 50 taking a wall down.  Walk thru door and a lift door as described.

Thanks for the Gable comment, was thinking single slope for our snow, facing south to melt off originally.  Gable will be easier to section off, with supports horizontal to floor.

4 inch sounds light, but a lot less money.  Mainly service trucks- plumbers, electricians, some landscape, trades, etc.

Should be no masonry on this zoning.  But they do have to approve.

What are your thoughts on common bathroom. 

Access to outside faucets.

No drains inside.  

Driveway widths?  Parking will be 25 in front of building.  There will be some storage buildings across the driveway with no parking in front of them.  Our normal driveways are 25ft.  That would give them 50 foot including their parking to turn into the bay.

I would say "Roll Tide"; but you don't know who your talking to in Alabama.

Kicking back listening to all the Beatles Songs, while I am having dinner at the office and paying bills.   "Little Darling, feel like that snow is melting"  "Here comes the Sun, it's alright".

Today made me think back to Xmas many many years ago.  Could barely go to sleep the night before.  Was that long present, my first BB gun?

The Erection crew has the final 30 x 220 building done.  Just need to tension the doors and clean up the job site.  Great team (one week 25 highs and 9 lows, luckily no wind).  All buildings are completed except for the Office, which will take a while for us to finish the inside.  Tomorrow the buildings will get turned over to us.  We have already had several rains and snow melts.  All the roofs are leak tight.  Used a Standing Seam roof for the first time.  

If you look back over the post, you can see all of the steps needed, potential missteps, etc.  The biggest test is "Will they Come?".  See my post on that topic.  

As our Basketball coach would say, pat yourself on the back for a day, then get back to practice.

We are about half way there with this location and project.  Still need to build more in the Spring, but all of the tasks are laid out.  Will start setting up the signage, gates/fences, internet, Sparefoot, Security, etc.  Then the race to 65% occupancy (breakeven).