All Forum Posts by: Henry Clark

Just started doing our year end tax work. Why, I have been doing a lot of posting the last day or so, just forestalling jumping into bookkeeping and taxes. I'm a retired CPA, Controller, and CFO; but I hate doing taxes. I am not giving any tax advice.

Luckily, I think we have gotten to critical mass, so we can start moving our bookkeeping to our CPA firm.

One note on Taxes and this project. The majority of your 15 year or less depreciable life assets can be accelerated in year one. Depending on the project status and the potential to bill prior to year end. I will contact all of our vendors and have them catch up their billings prior to 12/31 so we can pay.

Examples:
Electrical
Plumbing- road drainage
Road contractor
Security systems
Signage

Why do this?
In Self Storage you usually will have significant cash flow later, but at start up/rent up phase, you have less cash. This reduction of Income Tax, is a cash savings in the early stages. You will have to pay more in taxes in the future since you wrote of these assets, but you will have more cash then.

Forgot, you need to protect your NVR.

Our security guy added a text alarm to my phone should the NVR either go offline or be detached.  The best thing is for Offsite backup, but this is expensive.

We already have virtually an Air Raid level megaphone in our Office if you don't type in the code quickly.  This literally will force you out of the building if you don't put both hands over your ears.

Response to a persons question on Crime management at Self Storage

My Brother wrote the Nuclear, Biological and Chemical warfare manuals for all North American Air Force and Army bases. One California Fire Season he was in charge of the overall operations. When the bridges in Minneapolis fell into the river, he was in charge of assembling the Underwater task force for recovery. I'm saying he's trained to think logically and results oriented. On one visit, since I was on the School Board talked with him on School attacks and shootings.

Explained about our Active Shooter training, school kids training, should teachers have guns, etc, etc, etc.

He asked;
"Do you want to stop the Shooter, or prevent the Shooting?" He said we are all approaching it wrong.

Even if you wanted to stop a Shooting, most of the deaths and wounded occur in the first 1 1/2 minutes. Police response time even in a good situation is 5 minutes or longer. Not their fault. School front office has to verify there truly is a shooter, Notify Police, Police have to come, then they have to locate the shooter, and then they have to change their normal tactics and "Attack" versus "Contain".



So what has this got to do with Self Storage?


1. Prevent versus Stop:
a. Signage- cameras, alarms, Website, etc. Let them know your systems. Be a "Hard" target.
b. Customers- get rid of your troublesome customers. See my post on Bad Customers. I believe an article once said 70% of all Self Storage crimes are by people who rent there.

2. Catch them:
a. It takes the following actions to go through the "Legal" prosecution process.
- Catch them (cameras) both breaking and entering the unit. That unit, not a unit. If you camera shows 15 units, its slanted and you can't tell which unit they went into.
- Get a picture of them. I love people with Tattoos.
- Get a vehicle and license plate, so you can find them.
b. Put an alarm system to your night phone. I wouldn't have it go to Police (false alarms). You can re-act in 15 seconds based on your security system. Won't go into detail.

@Bernie Neyer

Thanks for adding to the line.  If you could locate the info and maybe attach some pictures that would be great.

All of the other contractors always put the Doors on, before they put the roof on. Since the door is crammed against the roof above their heads they prefer to be able to stick through the roof and work at waist height. This crew puts the roof on first and then the doors. Did not ask if this is because its winter and they want to keep as much snow out as possible or if they prefer that way.

Below is the side of a door. The metal arm will be attached to the wall through the open bolt holes. Once attached, they will use a level and move the bolts up or down to level the door.

Next step is to "Tension" the door so it rolls up or down with ease. The special rod he has will be inserted into the sprocket hole and he will crank each side until the coil or spring inside is tensioned correctly for the door to operate smoothly. Always make sure you roll each door up and down before the crew takes off.

Standing Seam Roofs

Our latest location we decided to do Standing Seam roofs, versus screw down. Costs a little more, but will last longer with less leaks and need for future (15 to 25 years) checking on loose screws.

Now I did not and am not giving a definitive answer on which is best and etc. My local distributor and prior contractor had both mentioned and recommended it, so decided to try it.

Comparison:
Cost wise, I don't have the difference.
Screw down replacement, if you did have to tighten or replace screws on the Screw down system, just get larger screws so they seal better and replace.
Erection time. Standing Seam takes extra time to place and set the hidden clamps. Every 5 feet, so not a lot of time. But you do a lot less screws overall.

Picture below is of a normal screw down system. You will have screws all along the ridges and all across the sheet every 5 feet. These two Lips of the two different sheets show them not matching, which could lead to leakage.

Next picture shows the Standing Seam roof. The metal clip is screwed in place. This side of the sheet is clipped under the clip, then the next sheet will be laid on top and the two edges will be snapped into place. Invert your hands to each other. Then curl your fingers. Pull your curled fingers together and that is how the sheets are connected. The top sheet has glue on it, which gives an air and water tight sill to them. These also set about 3 inches above the "trough" or valley of the sheet, whereas "Screw down" method is about an inch high. Creates less chance for water or ice to come under the seams.

Next is the clip itself from front and back. The back side shows you the screw holes attached to the trusses. This is hidden under the roof. This clip is set in the ridge where the two sheets meet and are then pushed or snapped down to each other and this clip.

Next, I'm showing you the width of the valleys on the 'Standing Seam roof". Normal Screw down roof valleys are about a foot wide and this is about 2 foot wide, using my fore arm as a gauge. Can't wait to see how this helps with snow melting or blowing off the roof, compared to the narrower screw down valleys.

Below is an end shot of the Standing Seam roof:

Again which is better? Don't know the answer. "Standing Seam" costs more, but I don't have the figures for you. Should last longer (30 to 50 years) with less leakage problems. All my other buildings are "Screw Down" and no leakage problems thus far (1 to 6 years). I do have a "Screw Down" building we bought the location, that is around 20 years old. We are having leaks and we will have to take the screws off and replace with larger screws (so they "bite" the existing screw hole) this summer.

Thanks for all of your input.  Its a new market for me,  that my friend lives in (hasn't ever needed a realtor).  Timing thing, we looked at about 10 properties.  Found this one with the road sign.  Along the way we found a Realtor we want to use in the future, really responsive and really knows the type of properties we are looking for.

Using a buyer's Realtor has never really been an issue for us.  About 4 of our buys we have dealt directly with the owners and gone through an attorney.  The other 4 we went through our local realtor, who is both our Neighbor and friend.  I trust him to the degree he has called me into his office with a contract and told me to buy it, which we did.

@JD Cohen

For the deal info, look at my Commercial section post.  Self Storage- Deal 11  Can't give details yet as there are two deals in the storyline, waiting to close, and I don't want to impact either one.

Thanks again folks.  I grew up in Louisiana and Texas.  Doing this property search was actually challenging and exciting.  Although my friend told me most counties in Texas had no Zoning, I couldn't comprehend it.  Once I got down there and it registered I had to change the way I analyzed properties from both a location and a Risk assessment standpoint.

@Jai Reddy

"Out of the box thinking" concept. We only do Self storage, but has been educational and enjoyable seeing other issues on BP. Buying old school buildings and/or day care buildings, at first seems "out of a person's lane" if they are doing SFH/MFH; but its just a piece of Coal. Make it what you want.

Please tell ODOT to add an extra lane between Oklahoma City and Edmond where you live.  Did a trip from Iowa to San Antonio to help identify a Self Storage location for a friend; that 5 or 8 mile stretch was the only slow down on the entire trip.  Hit it about 3:30.   Edmond must be a hot market, because the traffic is to overwhelming for 3:30.  Next exit down sounds great. All of the traffic got off in Edmond.  Forget everyone talking about Austin.

Good luck on your REI in 2021.

Below is an end shot of the Standing Seam roof for comparison.

Going to make an offer on some land this week, for a future Self Storage location in Texas.  

We found the land by driving by and called the Realtor.  We're not working with a realtor when we found this property.  We do have a different realtor who helped us look at several other properties.

On the offer contract, it notes the Realtor is acting for the Seller.  I did not note a Buyer Realtor.

Will have both my attorney and Banker look over the documents, although this is a straight forward purchase with a little Earnest money, and very little due diligence.

Should I let the Realtor have the full commission?  $350,000 asking price.  Or bring in the other Realtor.  Will probably not work with this Seller realtor in the future, but will probably work with the other realtor.  Only benefits of bringing them is they review the transaction, which is on a Texas State form; and they should be more than useful in the future since they got a commission without doing any work.

Please give input.  Thanks.