All Forum Posts by: Henry Clark

Well it is really hot outside and I'm tired of landscaping.  

Start Small and make your big mistakes Early.

Deal breakers- market, finance, zoning, footings, road type, water/sewer availability, Storm sewers, Storm retention ponds.  Everything else you can mess up and not get to hammered.

Some of these stories will be ambiguous because they are still "live" items.  I am intentionally not telling you all of the details and am obfuscating some of the detail, just telling you the Deal story.

Got a call on a $5mm property with 600 units.  They want to, have to sell.

One of the most "beautiful", if you can say that about storage properties, I have seen.  Had two high tech features, I have not seen anywhere before in self storage or heard about, that are high value add.  To late for my locations to install.

35% full after 2 years.  

Market analysis says the town should have 400 units.  They have 600, just themselves.

They built all 40 foot outside units, plus they have indoors.

Population is on the other side of town, towards the big REIT locations 5 miles away, in another town.

Ran my numbers, best I could do is $3mm; that's with me making some management adjustments , and paying for my efforts and risk beforehand:

a.  Get on Sparefoot. They are just using their road location and website.

b.  No 10 or 15's in the outdoor drive-up.  Chop some of the buildings into 25/15 depths.  Get more product offerings.  25's are great for cars and 15's are great since no one thinks they have that much stuff.

c. If we don't have 15's, then rent some 20's out at the 15 price.  Just tell them we are out of 15's.

d.  10's rent both Outside and Climate control 10's at two different prices.  If someone rents an outside 10, give them an inside for the lower price.  Do this till you fill up.  Then only rent CC 10's.

e.  They have some large open face buildings for RV storage.  Close and put doors.  Rent out for Contractor bays.  Quadruple the rent.

f.  Have some gravel vehicle parking.  Get rid of them and buy some cargo containers.  Again another product and price point.

g.  Go self service, get rid of the manager.

I didn't make an offer.  Wanted to go back and help them out, but a loosing battle.  Until you hit bottom, you won't change.

Best I can figure is this is a Money guy, who said hey, storage looks like a great investment.  

Remember the Deal breakers above (Market).

How's a mother duck feel when her eggs hatch?  Still making errors.  Should of had the sign up about 3 months ago. But remember, Start Small and make your Big mistakes early.

Update on Marketing.

July 22nd were at 16.6% "rented", up from 12.66% end of June. Things slowed down the last 2 weeks in rentals. Our normal objective on a new location is to be at 30% by this time. I'm satisfied we have done all of the avenues I have noted above. So just need to forge forward, and what we get is what we get. Keep making improvements in each quadrant of marketing.

Got our road sign in today. Start taking advantage of our 13,000 to 15,000 vehicle per day count. This was the biggest mistake on this project. Normally we are in small towns, on major roads with 35 mph speed limits, so they can find us easily. And our fence and building signs work. Spent a lot of time on internet marketing and forgot this.

Google traffic has increased from 290 in June to 499 in July, thus our google placement and ranking should be going up. 74% are new visitors which is great.

75 of the 499 July visits came from Facebook links. We just started using Facebook in July, so this may work out to be a big marketing tool for us. Before last month I only had 5 Facebook links, so really started from Zero.

Our google ads are ranking high.

Still ranked 7th on the Google map listing.

Moved to the 3rd page of Google searches.

Kind of disappointing on youtubes not showing up. The only youtube showing is on the 5th page and its not ours. Hopefully the Google ranking calc keeps percolating us upwards. This is actually the internet marketing tool that I am the most excited about; if it comes to realization.

The top ranking storage location only opened last year. Note it is using Storedge management software and their SEO package. Did not look at other companies, but this package is getting a very high Google ranking very quickly. We use an independent management software and an independent SEO who we are their first Storage customer.

Did a coupon program on line and did door to door pamphlets. Have only gotten 1 renter from this in the last month. Will take another push at this for August. Met with a Regional Apartment complex manager on another project we are doing. He said for the two states he covers, he expects the laws to turn loose Landlords to seek payments, versus a Covid hold. If Storage is to see an impact from Tenants leaving apartments he would expect to see it in August. We will start reaching out to apartments with the Coupon program.

We don't do "First Month" or "Etc." free. May have to consider that, to be on par with competition.


Operations:

We are preparing for next year to do Contractor Incubator buildings up front. Our current loan is with SBA and they don't allow renting to other businesses for operations. We are doing a Subdivision to split the front property off. We will do a conventional bank loan. Have looked at many of these types of building products and they are very successful. Actually higher per square foot rent than our 10 x 20's. I like this, because it is a product that the large REITS have not engaged with.  Example below.  This is a 60 deep by 300 foot building.  Can be in 25 by 60 sections or joined together.  Getting $1 per square foot and totally rented out.  Developer wishes he could do more.  Will be on the land behind the Sign picture above, along the highway.  Intentionally built our storage buildings at the back of the lot, planning on these types along the front.

Getting an appraisal $2,500 done to establish the collateral and equity position for the SBA loan and to also establish equity/collateral position/needs for the future Contractor buildings. We should be fine since the land value should have doubled or tripled since we took it from Farm ground to property utilized for commercial use.

Continuing to invest for the future.  Talked about putting things on hold, but these projects have 1 to 2 year lead times.  Its easier to get contractors now.  Key is to finance the Rent up Phase.  We use either 65% occupancy or 18 months.  This puts less pressure on our Cash position.  Can usually handle P/I at 50% occupancy on Phase 1.

Our personal targets are 20% amort, with a 8 to 12 year payback.  Creating a positive cashflow position.  We have been using the extra cash to roll into our next locations.  Since we are building our last location, it will be fun to start using the extra cash flow to start paying off Debt.  I feel guilty when I listen to the Dave Ramsey show (no debt).  My brother makes me feel good, saying its positive debt.  Beats paying off a boat or RV loan.

I'll try to show my latest SEO Google reports next post.

Further update. Continuing to plant grass seed and grass mats on bare ground. I usually like to wait till the first week in August, but since the ground is worked, want to use it now.

To put the grass mats down our store where we buy the mats from, loan us the above tool to put staples in. I have never loved a tool so much than this. Saves my back and I can go about 3 times as fast.

Had the Bulldozer operator set flags at the corners of each of the buildings. This is so I can tell how the land lays compared to what we designed. I am trying to get as many units on the property as possible to help improve the return. Example: Normally I do 50 foot turns at the ends of the buildings, we may reduce these to 35 foot at each each. A reduction of 100 versus 70 to get an additional 30 feet or 6 additional 10 foot wide units per building.

To gain further ground in the picture below where the edge of the hill and white flags are. We will put a retaining wall. This will push into the hill and should give us another 10 feet. We gives us another 10 feet on each building. Will add about 2 more units per building.

At the front entrance of the property the engineer Stair stepped down the buildings to get to the road elevation. One building, but with 3 stair steps in it. Creating more cost and snow removal issues. I am having him in the next picture add a retaining wall behind the lower building which will be along the grass front. This will help raise the ground and level it, taking out the need for the stair step buildings.

This is also the drive in area. I'll have him do the first 30 foot off the street flat. Then do an incline to get to the building levels for the road. The electric service below cost $15,000. They had to run it underground from about 200 feet away. The silt fence was needed for Federal clean water regulations. Cost $2.25 or $2.35 per foot installed. Cheaper than me doing it, since I didn't have a "plow" to put the bottom into the dirt. Plus we had about 400 feet to put in, which I didn't want to do with a shovel.

The next picture is at the far end of the property. The curved ground with the red flags and the clods of dirt making a curved area, where we will build a retaining wall. Otherwise we would have "sloped" the dirt out about another 10 foot away from the ditch. This action, plus now seeing how the land lies relative to where we have the buildings, we will be able to add 30 feet to two of the buildings, adding another 12 units. Hard to see these adjustments on the drawings or until the dirt is moved. Problem with these changes, we will need to go back through the city which will add another 2-3 weeks. If the buildings get too long, they may request a split in the middle with a 10 foot fire break. We had to do that at our other building.

As you can tell by our efforts, we're betting we will come out of Covid.  Plus this gets us in position late spring.  Hope to open the entry section up with a few buildings this fall, to start renting.  This is a prime location from both a Demand/Market standpoint, but also it is very hard for "loose" money to come in and buy a site.  Both the zoning and topography are very difficult for storage.

Talked with the apartment manager, who covers our two states where we are at.  He thinks end of August the renter past dues will open up and they will start eviction processes.  Also home loan issues should start to shake out.  Again, Storage is about life situations.

Project has slowed down a little. The dirt contractors had to pull off for a large job, they have a penalty clause based on Completion date. Also the owner who was working on our job, rolled a dirt scraper and got crushed by it. Waited to include in this stream until he became stabilized. He is out of induced coma and is stabilized. Head and spinal cord are fine. Crushed his left shoulder, internal organs and hips. No one can see due to covid. Family says he is out of danger, but a long long road to recovery and several surgeries to go.

What the 25% means to Bigger Pockets.  Don't do all of the little (though important/valuable) suggestions people are making to the current forum software (including me).  Jump over that.  Go build a new platform, and integrate these suggestions there.  It is a lot easier to "Add" in a new platform, than it is to "patch".  Do a Beta test, with a Beta Data set, and Beta users.  Won't get into my IT management background.

My overall recommendation is to Benchmark against other forums.  I listed some and recommended no reply to them.  This defeats/minimizes the suggestion of benchmarking. 

Again, love BP. 

Its like, something I build or do.  If you ask me to improve it, it is very hard for me to switch my creative brain on again, since I "already know" I did a great job.  That's why you benchmark.  Your challenging your thoughts against another product who doesn't care about you.  Recommend you put a team together of both users, managers, and other stakeholders who were not part of the original design and do a bench mark against 3 to 5 other forums or similar products.

Don't limit yourself to just the "Discussion" forums.  Example: 

A.  Again, don't reply to this, even if it exists; its an example.  You do podcasts.  A week later do a podcast follow up.  Allow 10 people to sign on to interact with the speaker.  Allow as many people who want to listen in.

B.  Do a mentor/mentee or protege category.  Have them do it as a discussion.  This way other people can follow the thought stream and see questions they wanted to, but wouldn't ask and questions they never thought of.

C.  I'm amazed at the number of discussions started by someone, where they never reply back.  Set up a "Google" like metric that weights them negatively or makes it harder for them to start future Discussions.  Preferably make it a Positive stimulus for them to give feedback and respond.  I noted on another Discussion where a more senior member was tired of "this" minute question, with not response.  Put a control in place, to improve the Discussions.

Again, don't respond to the above.  These are examples of what might come out of a Benchmarking exercise.

Again, love BP.

Thanks, again the hard part of doing a benchmark is challenging your Baby.  One of my skills is as a Kaizen improvement leader.  Unless it is a 25% or greater improvement, we don't do it.  This forces you to make quantum leaps versus bleeding to death making small improvements.

Communicated some recommended suggestions to moderators. But wanted to make sure

Key is do a comparison of Bigger pockets versus other forums to identify improvement areas

Your first response will be to dismiss the examples below.   Don’t, the message is to compare against other forum features and improve.  Love BP, please make it even more user friendly  

Example:

1.  Add a view counter to each discussion. 

2.  Do a notification to the individuals email

3.  Do a notification if there is a comment on a followed discussion

4.  Searches

Etc

Thank you

Thanks @ Zach.  Followed up on suggestion.  Will keep seeking info elsewhere.  Anymore input from anyone.  Thanks.

@Zach.  Thanks a bunch.  Looked at all of the ones near me.  He's only 2 1/2 hours away.  Saw them on line looks great.  Appreciate it a bunch.

Other Folks if you have more input, please provide.  Thanks.

Let me try and read the crystal ball.  But from your perspective, which I will make an estimate.

1.  Do you have a stable job?  Thus, your job doesn't impact your buy/hold or must sale decision.  If your job is not stable in the climate, wait till your more comfortable.  Forget whether the deal is good or not, its about your risk level.  If its a crazy deal $500,000 property for $250,000; then do the obvious.

2.  Do you rent or own your current abode? If you rent, you could move into your purchased property if needed.  Thus you don't buy on a High market(rental property) and sell (your house) on a low market if needed.  You can "rent" your own investment, then this is a long term investment.

3.  Is this your first investment?  If its your 20th, you wouldn't ask this question.  You would trust your calculations and business decision over everyone on the forum.  Its your money, your decision is always right.

4.  Example:  We do Self Storage.  In a 3 year span 2019 thru 2022 we will build two new locations and invest approximately $7mm.  My plan is for success.  My potential failure is a portion of this number.  We can take the financial hit and still be picking bananas, pineapples and coconuts in Belize on our property.  Going swimming in the river in the afternoon.

- for you.  If the property you want to buy is $500,000.  What is your worst loss outlook?  A $200,000 loss if the world goes kaput?  Can you take the $200,000 hit.  What will be the impact on your family?  Do your kids not go to college?  Do you have to sell the Bugatti and buy a Kia?  Do you have to sell both the investment and your own house and have to live in "That" neighborhood, or worst yet with her parents?  As long as you can take the hit, then make the investment if the numbers are right.

You can't time the market; yes, you can assess it.  But you can time your personal risk assessment.  This is more about your personal risk assessment, than if it is a good time from a market standpoint.

If your worth $10mm, then disregard everything I just stated. 

Good luck.  Jump into the market at some point.  I wish I had done it earlier. 

I would be watching the strength of the US dollar in the world more than Covid, interest rates, jobless rates, defaulting student loans or foreclosures.  When you hear the Cartel has switched from US $20 to Chinese yuan or Indian rupees; its too late.  Just joking, right.