All Forum Posts by: Henry Clark

@James Walker

Not to squash a dream, but maybe re-direct it.  Within a mile of you, you have three of the largest indoor storage companies with brand new, great looking facilities.  Within the next mile you have another 3 large nationals.

I would call them all and tell them your redoing your house in two months and ask how far ahead you need to reserve a 10 x 15 unit and what the cost is.  If they are all full then maybe pursue your idea.  If they have units always available, then I would pass.  You could also do a walk tour through the facilities any ways to get a feel for the competition.

The good thing, if as everyone has noted to you, check zoning; you are closer to the population than all of them.  Thus it becomes a "location" question, is yours visible and accessible.

These National companies are playing the Average of numbers game.  One location is bad they have others to average out.  You will only have one location.  

SEO power.  They will always have better SEO power than you.  Even on Sparefoot they will always outrank you.

If you do this, ask for a Construction loan with interest only.  Then a rent up phase interest only. Example 18 months or until 65% occupancy.  The problem with in door storage in multi level buildings, is you generally have to build it all at once and it takes longer to get to break even.  I build outdoor access.  When we need more buildings, we build more.  Or you need extra cash sitting on the sidelines to help if your rent up phase takes longer, or it you get into a Price war with deeper pocket companies.

a.  Go for it.

b.  Sell to one of the nationals.

c.  Sell and if you want to do storage, go further out and do a B/C/D location.

d.  Like everyone said, check the zoning.  Be careful on setbacks and Storm pond requirements.  This will reduce your footprint and units.  .5 acres is a really small footprint.  Your build out cost will be less competitive for the elevator systems, fire sprinklers, exterior parking spots- unless you do drive through load zones, and exterior wall surface.

e.  You might go a different way and consider a Car dominium.

f.  Do contractor garages or incubators.  Look up Kansas City contractor garages for a model.

Great area.  Best of luck.

@Trent Kloter

Really not much unless your doing "A" class RV's and boats.  $250,000 to $1,000,000 RV's example.

You have two types of storage operations.

a.  Straight storage, inexpensive parking spot.  $20,000 to $60,000 RV's and boats.

b.  Premium- you have covered parking $250 to $350 per month.  Then you can do the following services:

1.  Dump station

2.  Electrical hookup

3.  Wash station

4.  Concierge service: plug in refrigerator prior to trip to cool down, check tire pressure and oil, Park and Pull out, Clean out, Wash, dump, 

5.  Insurance your only making about $2 per month per policy.

Depends on your set up.

@Sean Hugo

We do anniversary.

We are at 1,100 units right now with another 360 coming online next year and another 200 the year after that.  In 5 towns and 8 locations. I would hate the first of the months, if we did it then.  Also, we rent out all month long.  Would like units be be resolved and cleared out at different time periods versus based on the first of the month starting the Auction or eviction cycle.

Whatever fits your lifestyle.  Cash flow part isn't that big of a deciding factor for me.

@Musa Elsir

Follow @Michael DeFrancisis notes.

Few reasons:

1.  Don't rush, ever.

2.  "Basis" change after death.  Using just numbers.  If she bought for $10,000 back in 1960.  And then she sells now for $400,000; she has to pay taxes on the difference.  If she doesn't sell and has it go to a trust to be executed against, then the "Basis" will go up to current market value.  Get an appraiser based on time of death.  Lets say it appraises at $360,000 and sells for $400,000; the kids only have to pay taxes on the $40,000.

3.  If she needs cash now, but might pass away soon, still don't sell.  Take a loan out against the appraised amount or other avenue.  Basically don't transact with the old "Basis".

4.  Don't have her "gift" it to the kids.  Same tax issue for old "Basis".

@Harvey Cardwell

Lets lay out the options:

1.  Lease to next door car lot.  NPV of future payments.

2.  Sell to them.  $???,???

3.  Clean up and Lease as Auto repair shop $??,???

4.  Stay in your lane, sounds like you have rental units.  I recommend you focus there.  Especially with low interest rates now and Covid upheaval.

5.  Self storage- This is our "lane".  Don't know your market thus change figures based on your local.

    a.  1.6 acres, if rectangle or square shape;  depending on setbacks and shape of land, you might get 140 units on it.  Cost 140 x $3,100 for installed buildings= $434,000;  site clean up $30,000;  fence $20,000; gate $20,000; Security, electric- $12,000;  Hard Surfaced roads required? no, use rock- $30,000; yes- $200,000; Footings required? no- $0; yes $120,000; Storm sewer system$$$$, Storm Retention pond needed $??????;

  b.  Revenue- again change to your local.  Assume 90% full, but you have to finance for about 18 months to 65% full, unless you get a construction loan.  140 units  $100 per month= $14,000 x 90% occupancy= $12,600 monthly x 12= $151,000;  less income tax, property tax, insurance, electrical, management, etc.

c.  Stupid money- look around you and see what the competition is like, are they full;  How easy is it to buy (zoning and land availability) near you.  You will bet to small for a large national firm to buy you out, thus they will compete against you.  Look in the 3 mile radius around you.  Use either Google or Sparefoot to both look for locations and to see their rental rates.

Self storage can be great.  But I would only do if you plan to buy/build more locations.  Recommend you look at the options above or stay in the housing lane if you are already doing it.

Congratulations on all of the options.

@Nate Smoyer

Your bio, looks like your already set for this type of investment, so I will stick to Storage specific:

1.  Insurance- look at Ponderosa Insurance, owned by Uhaul.  Very inexpensive and Storage specific coverage.  Example: $2,000,000 coverage might be $6,000 annual.

2.  Security system.  Get your security system set up so you can view anytime and anywhere in the world from your phone or computer.  Set various messages or call alarms to your phone.  Office door opening message, after hour intrusion phone call, etc.

3.  Operation software, get a web based software so you can either view or assist any where in the world.  We use Uhaul software, but check out Storedge.  I'm not recommending them and have not researched them.  But a recent competitor uses them and their SEO engine support moved them to the top very quickly.

4.  Your deal.  See if you can do an asset deal.  Talk with your Tax person.  See if you can break out Roads, Security, electrical, security systems, etc. for year one write off.

5.  Your deal.  Ask your tax accountant.  See benefits of a non compete agreement as being part of the cost.  Ask about quicker write off.  Basically you want to take as much value away from Land and building, so you can get the writeoffs.

6.  Security systems, see one of my posts.

7.  Self Service versus on site management.  Go to our website and watch the youtube on how we do it.

Good luck.  Great Passive Income.

@Kishore P.

Make lemonade.  Happened to me and I ramped up our Self storage business to 7 locations and #8 being built.

Recommend you check out the following and develop a business model, if you do not have already.  

Virtual assistant office and Uhaul self storage call center.

See the services they are doing, their price structure, and then the volume you would need to do.

Basically develop a vision of success and make sure it fits your needs ($xx,xxx/year) and lifestyle (example 4 time zones).  This would be great if you were also doing self storage, since there is a lot of down time.

Read my Self Storage posts.  If interested send me a PM.  Tell me the town your looking at or nearby and I will do a self storage investment analysis for you.  Please read, "Broad discussion on Financing" first, this will help narrow your investment size; then read "Zoning I 3????";  This will help you narrow down the search.

Lets get you going on Passive Income.  Let me know if I can help.

@Robert Tinker

your welcome.  If you get closer to a deal, give a yell out and I will take a look in anyway useful to you.

@Ryan York

Just google storage containers detroit.  Being near a port you should have lots of options and price levels available.

@John Erlanger

Without even knowing your background, your about to hear the same thing you have heard your entire career.  "It's not about you."  When your responding to someone else's thread answer their question and support them in their growth.  This is not about your personal ego or need to demean people.  If you have done any deals, look back at the times you have corrected realtors, demeaned the owners of the property, or challenged an Appraiser just to prove your correct.  That's not a win, winning is getting the deal done.  This is not about your ego.

a.  Again, I will be more than happy to review your responses or threads on a separate PM before you post them, so they are more beneficial.  You obviously don't have a "tact" filter.

b.  Taking your knowledge and/or experience with Cap Rate, recommend you start your own post for the benefit of all the users.  I have already outlined above the approach you should use to fully cover the subject.  Your above one offs, will be better served as a true effort on your part, if you pull them together in a formatted approach.

c.  All of your comments I have read, are from a purely technical standpoint.  Bring your real world experience into the discussion.  As the majority of the successful and experienced people on this forum will tell you, 1 + 1 does not equal 2.  It better equal 3 or more, otherwise we wouldn't be in the game.  If you don't understand that concept then you haven't been doing real world deals.  I invest $1.7mm over the course of 2 years and now it is worth $2.7mm, that's a real world application.  And it is not about "me" being correct during that process, its about "me" fighting through every reason or instance to not be successful. 

Go back to @Isacc Lightbourn and revisit both his questions and his background.  And see how you can help him move forward in his RE future.  If he needs guidance in "valuation" in terms of his avenue, House Hacking, give him your expertise; if you don't believe Cap Rates is applicable.