All Forum Posts by: Henry Clark

@Christian Smith

Pretty busy, so haven't responded.

I'm going to get the BAD out of the way and then move on to execution, knowing you have full knowledge.

1.  The location is barred to the south and East by the interstate, canals and swampland about a mile in each of those directions, thus you only have about a 1 to 1.5 mile market those two directions.  Prefer to have up to 3 miles, plus a better road intersection and road view.

2.  Don't know if this was an old picture but doesn't matter.  See all of those blue tarped roofs and blown over trees.  Luckily the competitors in the area are still standing.  You need to make a decision, when will this happen again.  Make sure you build nothing with wood frames (mold).  The carriers won't cover flood damage.  You need to get real educated about how they view hurricanes, wind damage, back up water, flood plains, etcetera.  You have to cover the cost of cleaning about 80% of your customers units out.  Make sure your insurance will cover that.  Also make sure you have Business Interruption insurance, as much as possible and it is covered for hurricanes, floods, or backflows (a backflow from a stream may not be considered a flood).

3.  Location.  The only bare areas I see are the school playground, which is a no.  And the property at the back of housing on a dirt road.  The dirt road can be fixed.  Validate the zoning allows you to build there and also the "Set back" rules.  You might have 2.6 acres, but you might only be able to build on 1.5 acres.  Also find out if you can build roads or put Storage containers on the setback ground.  This will determine your potential revenue stream size.  Verify your access, do you own it?

4.  Pad and Road build up.  It will cost some money but find out if it is allowed.  Also see if you have to do a Storm drain or Storm retention pond.  This will cut into cost and revenue.  Make sure you don't back the water into the neighbor yards or its lawsuits.

5.  Check on Fire hydrants and power.

WITH THE above said and you have full knowledge.  I would run if this is my first investment into storage.

With that said:

1.  Your competition is old.  They have narrow driveways.  

2.  Only one location near your is on Sparefoot.  And they only have 5x10's available and are climate controlled.  That means you will be at the top of internet searches.  Also you can outprice them and easier access since drive up.  Plus they are across town and not your market.

3.  The unit rental prices are relatively high in your area so this should make your numbers work better.  I would crank the numbers and see if you can get around a 6 year payback.  Maybe 8.  This is a gamble versus the next hurricane or flood.  If you can get enough equity built up in that time, then you might not go bankrupt.  Make sure you have Business Interruption insurance to carry maybe 2 years if you get hit, this will shorten your Gamble or exposure time.  Make sure it is covered though.

Run the numbers.  Use my checklist 101 and cost template and go through every line item.

Greatest risks: zoning, setback, fire hydrants, storm sewer system, storm retention pond, road access, Insurance understanding, backing water onto the neighbors and whatever I missed, not fully getting my head into your project and walking the ground.

Let me know general location or cross streets

As other people have mentioned.  Good to go take training. 

@Christian Smith 

Notes below.  1.  Market demand thought process.  2.  Self storage development checklist 101.

I'm originally from Pickering, LA.  An hour north of you.

1.  Risk management.  After the floods two years ago through out the country, all of the Self storage insurance companies, quit covering floods.  Being in Lake Charles, will you be "Paid Off" before the next major flood?

2.  Since you already have the spot purchased.  Count every storage unit within a 3 mile radius.  Keep track of 10's/15's/20's.  Then get a population count.  Using a ratio of 6 storage units per 100 people, compare that to the number you counted.  If you counted 1,500 units but your 6/100 says there is a need for 2,000 then you "might" build.  Don't trust me.  Validate.

3.  2.6 acres is just the perfect size to start a self storage location.  Don't plan to add MFH to it though.  

4.  Looking at sparefoot for Lake Charles, I only see one person turned on.  This means two things.  Either a lot of people don't use Sparefoot, thus you will take a priority position on the internet if you sign up with them.  Or, most of the locations are full and have all of there storage units filled and turned Sparefoot off.  You can verify by calling around.  Which means demand is high.

Market Demand- “Will they come?”;

I'll give you the tool I use, but you will have to make an investment of your own time. Otherwise you don't own the data.



Step 1 "Capacity":
Count the units and sizes in that market. Get headcount by googling the town or zip code. Be aware if the town is standalone, or it might have a large population outside since it is a suburban community to a larger town nearby. Add those people in by using County or School area population.

Example:
Town 1:
#of units/headcount= 300 units in the area/ population 3,000= 10 units per 100 people.

Town 2:
500 units; population 4,000= 12.5 per 100

Town 3:
and so on.

Do every stand alone town in a 60 mile radius, or until your satisfied. You will get a High, Low and a average. I have a certain ratio per 100 headcount (not households, not age, not sex) I use when deciding to buy or build in a town. You will get to the same answer I have.

Luckily we are all the same. Death, divorce, fire, home sale, floods, layoffs, etc. No matter whether your Rich or poor, city or country folk. The ratio above works anywhere.


Step 2 "Existing":
In each town count the number of units by size. When I do my ratio I assume all units are the same. Count the 10/15/20's. Any smaller units just make them equivalents of a 10 x15. Example: 3 5 x 10's= 1 unit

Although I am counting them all as the same, the reason, I say count by size is for when you build. You want to go the Size sweet spot where it is under served. If everyone built all 20’s then you built 30 wide buildings with a lot of 15’s and then a mix of 10 and 20’s.

Step 3: Lets calculate "Demand":
Number of units needed (Step 1) minus Number of units existing (Step 2) = Quantity to build.

Town 1:
300 - 100 = 200

Town 2:
500 - 400 = 100

Town 3:
and so on.

This will help you pick which town you have the greatest potential for success. "Subject" to other factors that is where you want to either buy or build first. You only need to do the above once. I have kept this ratio in my head since the first time and make all my decisions using it, before I move into a market. If your in a large city, use this ratio. Pick the zip codes in your territory.

Many exceptions to the above.
a. My town has the highest per 100 count around by far, and I am still building. There are reasons.
b. I just built in a town that was not the best of the ratios. But the largest facility with 1/2 the business is 4 miles out of town by themselves.
c. There is a town that is Fully Saturated. No extra unit will ever be rented in it. I would love to build there. Everyone built 10 x 20's for some reason and they did it at the south end of town where the zoning is easiest. I can build halfway to the population who are in the North end of town and I would build 10's and 15's with some 20's. Everyone thinks they have less than they have. They will rent 10's or 15's first.
d. We are building our last location. Your eyes never stop looking. The best spot I have seen is a cornfield where you can't see a single house. Would loved to have built that one.


You don't know me.
1. Own the data yourself. Don't have me give you the figure. Question the logic, “all of us are the same”.
2. We are in 5 towns, 8 locations. Most are in towns of 5,000 or less. We are in Phase 1 rent up stage in our first large city (1mm) location (630) and in building stage across town (330).

I have used this tool for all of the Buyouts or build outs above. "Put your money where your mouth is." Realize there is an existing market ratio already based on square foot, this is the one I use however, because I “Own it”.


Ad Hoc- Traffic counts
Two locations, one with 70,000 Vehicles per day and one with 15,000 per day. Both in the same general area. I picked the 15,000; why? Learn the nuances. Start small and make your mistakes then. The 70,000 is all interstate traffic, who are not your customers.

Don’t trust me. Own the info, it’s your money. Everything in the Storage business can be validated. Start small and make your Big Mistakes early.

@Tyler Hardy; @Bryan Mitchell

Thanks Bryan. Tyler this is just general solar info.  I'm not your man though.

1.  Call a solar person.

2.  Your concern is dependent if you go off the grid or not.  If your on the grid, your basically using the same system as all of us, thus no concern on dim lights.  If off the grid, depends on your Battery storage.  This is a far more expensive option (2 to 3 times) and you have to maintain batteries.

3.  Check with your electric company and tell them what you want to do.  See what credits they give you versus the usage you will have.  Have your electrician identify the lights and calculate the KWH usage.  

@Nolan Brendese

Here is a path I would recommend given the cost of housing and your first time out doing a BRRRR or fix/flip.

Looking at your background, your really at the point where you just need to "leap" into a deal.  Figure out your downside loss.  Don't worry about the upside, the key thing is you will learn real life situation.

1.  Buy a Trailer in a trailer park and live in it.  Try to get a 2 to 3 bed room trailer, you can rent one room out.  Realize you don't want the beer drinking college experience, so decide who you will rent with.  If this works out then buy a second Trailer.  Etc.  Its scalable, versus buying a $400,000 home or $600,000 duplex if your starting out.

2.  Calculate your loss, and don't worry about if your off.  It will be small.  Example:  $50,000 Trailer.  No sales commission going in or out.  See if you can seller finance, or traditional finance. Do this to get going.  You can sell it anytime.  Say you lose $10,000.  Even if it was your entire savings, no big deal.  Your in the game and just learned 90% more than you have to date.

3.  Financing:  How much do you have available?  What financing mechanism will you use?  Example;  If you have $20,000 cash.  Do a traditional loan, with 25% down, then you can do a $80,000 deal.  Keep some back for repairs and improvements.  Do this to help narrow your search and improve your success rate.

4.  Develop a Team.  Make a list of every professional you will need to know.  Attorney, Banker, RE Agent, plumber, zoning, electrician, hvac, etc.  Don't try to just go get names.  As your talking with each of them ask about who they recommend for the other spots.  This will make it a smaller leap, when you move up in investment size.

5. Develop a checklist along with your deal calculation.  Keep improving on it, each time you do an analysis.   Example:  Sewer, water, Electric, hvac, zoning, contract, bathroom, kitchen, floors, windows, ceilings/roof, doors, insurance, property tax,  etc.  As your reading these posts, learn from other peoples mistakes and add it to your checklist for deal analysis.

6.  Don't tell anyone, you took a class or are certified.  That will scare them away.  You want to tell them the deals you have done.  And your questions from your checklist will show them your organized.

@Luu Nathaniel

Each country has its pluses and minuses.  Start vacationing there now, to learn the potential areas.  Each trip out, schedule visits with Realtors.  Never ever buy.  Once you have picked a country and location, start developing relationships with locals and let them know you want to buy.  Properties are always way cheaper if you are not in a hurry (1 to 3 years) and also buy someone else dream and change it to fit your desires.  There is not a large resale market for the country type settings you mention and I am interested in.  Don't plan to make money when you sell, make it when you buy.  The Teak for example will not be sold in country which is poor, but exported to India and China.

Teak costs about $USD 2.00 for the plant and to plant.  You also have to clear the land and prep.  Then maintain.  Its a a 25 to 35 year investment.

Lots have really sold in the last 2 months.  Lots 7/8/9 and 10 are now closed.  See picture below.

Unusual items. 

Lot 10 just left for Okinawa for a 4 year military assignment.  They just loved the lot and wanted it to come back to.  

Lot 9 also bought their lot, but with material costs up, are waiting a year or two to build.

Lots 4/6/7 raised the price $20,000 each to help pay for the pond, plus they became more desirable with the pond.  The pond should help with a higher price or to sell quicker.  See the second picture below and think of a pond in the valley surrounded to the west with trees and the pasture as a back ground. Will be end of June before it is finished.  Moving dirt out as they sell it.  Should end up costing around $30,000.  This is a "dug out" pound and more expensive, than just a dam across a valley. 

Now that Lot 7 is sold, finishing up the shared drive for 6 and 7.  7 is using the old driveway for now. The white pvc pipe is the property marker and the center of the shared drive.  Just need to spread some crushed limestone over the dirt to start using.

First dry day in a week.  They started trucking some dirt out and also digging further on the pond.  We also did some work ourselves on Fish structure.  The grass has really jumped out in the last 8 days since planted.

Took our old Cattle Trailer which is really rusted and laid on its side.  This will provide Fish structure.

The orange pipes you see are the tubes from Fiberoptics.  Cemented into the ground while we can access the pond bottom.  This also will provide fish habitat.

The grass has really sprouted in the last 8 days.  Warmer temperatures, but slight rain or drizzles every day, made it sprout.

Won't bet the actual drainage tube for about 4 weeks, to install the permanent water outlet.

The first picture shows two islands with concrete around the sides.  This will help with erosion and also provide habitat.

The water in the last picture is really clean.  Most of this water comes from springs.  It will be dirtiest this time of year as the crop ground is bare and soil erosion can occur.

The first picture you see a truck going up the hill.  This lot just sold.  Raised it by $20,000 to help pay part of the pond construction.

As we are closing on these lots, having 100% of the funds sent directly to the bank, to pay down Self storage loans.  Closing on one more lot tonight at 8PM with realtor.  Signing papers since we will be out of town.

@Ali Garced

Luckily we are done building locations, otherwise, I would move to Tucson and build.

1.  Not a lot of locations for sale in Tucson, and in the near future there should not be, unless for exorbitant prices.  Its a great market to own in.

2.  Tucson proper should have about 32,400 units.  Looking at Sparefoot and Google, there can't be but about 1/3 of those.  Thus large demand for development.

3.  Not the answer you want to hear, but I would recommend developing versus building.  I'll give you an example.  Option A:  Buy the exact same location and pay $3,500,000.;  Option B: Build the exact same location and cost $2,000,000 day 1, with no tenants.  And be able to sell for $3,000,000 day one.  This is the market your in.  You will have a very hard time buying an existing location without paying above 1.5 times the cost of building.

4.  There are a lot of reasonably priced Industrial and commercial "land" properties for sale.  Check zoning and access.

5.  There are some big holes, needing filled with storage in the Tucson market.  Midvale, Sunnyside, Casas Adobes, West of I 10 Barrio Hollywood and the rest of the area, Eastside, anywhere north along the Rillito River or Tanque Creek.

6.  Your rents are high.  Everyone is full.  

7.  Very few people are using Sparefoot.  They are full.  If you come on board, you can be the number on the internet within 12 months, from an advertising standpoint.  Your rent up phase should be very fast.

Steps:

1.  Check on zoning for Self Storage.  Read my I-3 zoning post.

2.  Financing.  Determine how much funding or collateral you can bring to the table.  Then determine what financing avenue you will take.  Read my post on Self Storage New Investor.  This will determine the size of the deal you need to pursue.

3.  If you decide to move forward then read my Self Storage Checklist 101 post.

4.  Depending on your Family situation.  See how much your military BHA is.  Then add an office and living quarter to the Storage location to live at.  Get the rest of us to help pay for your facility while you are in Tucson.

Start small and Make Your Big Mistakes Early.

If you choose not to develop, then:

a.  Google Sparefoot and type in Tucson for a search.

b.  Look at all of the locations that are gray and not using Sparefoot.

c.  Develop a contact list and inventory.

d.  Exclude everyone that will be above your Investment level $$$$$$.  See my note above.

e.  Contact each person individually.  No Calls, No Letter, No emails.  Ever. Just interpersonal.  Ask them to sale.  Keep talking with them every 6 months.  Make sure your financing is in order and you are ready to buy from them in a week.  Do all of your due diligence ahead of time, other than survey or title/lien search.  In the meantime, use Loopnet Self Storage for sale "anywhere".  Look at deals that are your size.  Run the numbers and go through the Checklist 5 times.  Put these analysis out on Bigger pockets and ask people to go through your logic.  This will get you ready to make an offer in a week, when the deal comes up.

f.  Even if this is a little short of your financial profit targets, go for it.  Learn on a small location.  You can always resell and move up in your market for the next 10 years.  Under supplied market.

@Ronald Rohde

Next.  As you well know, you can't turn your brain off, once you get the entrepreneurial bug.  So it is hard to say "Enough".  I get a kick out of some of the posts that ask is the market bad, is this the time, or can't find deals.  Literally, I can't drive around without seeing business deals.  Just have more than enough.

Beachside:

So, what is Next.  We have bought 50 acres in Belize.  Planted 25 acres of teak trees and are rebuilding a three story house.  Living in Iowa, this will be a great match during the winter months, when Belize has it's dry season and is not humid.

If you research Belize, you will see it might not be the best place to invest, since there is very little market to sale in the future.  Although this will be relaxing for us, it still is a business deal for us.  The Teak trees are a 25 year investment and will be sold into India and China, where the primary markets are; not Belize.  The House was an old structure that we are in the process of rebuilding.  Not going to cost that much.  Also we have a beautiful River on the south property line and Iguana Creek on the East property line.  Two bodies of water and the location will make this an appreciating asset and fun for the meantime.  Going down for a Birthday party with one of our new friends there, next week.

Charity:

Already set up the trust.  Small town Fire station, amphitheater, etc.

Mentoring:

My Belizean Contractor, we have learned to "trust" each other.  Teaching and helping him to become "Rich" in Belizean standards.  Even in 1 1/2 years, he is very happy and he can "see" the Big Picture for him now.  He is twice as "Wealthy" as he was when we met and more importantly he understands most of the future "path" he needs to take.

Enjoyment:

See the Papaya picture at the bottom.  That is "our" papaya planted a while ago.  Eating our own fruit, is a big kick.  200 pineapples in another 12 months.  200 Coconut trees producing in another 5 years.  Hopefully one doesn't hit me in the head.  Another 150 fruit trees planted.