All Forum Posts by: Henry Clark

@Sohrab Ansari

Please walk away from this deal.  Not saying its not a good deal, but you haven't run your numbers.  You need to get to a higher level of understanding before having your very first deal be $2.6mm.

A.  All of the value add points you note above.  You have to "run" them.  Can't just say them.  "Adding Insurance" example   About 20% of your 343 units will buy your insurance if the world is great.  Most likely only 5% will buy.  But you will make about $1 on a $7.95 per month policy for $1,000 coverage.  So 20% x 343 x$1 x12 months= $823 of income from selling insurance.  It took you over 40 hours per year to achieve this.  My point is not about is Adding Insurance a value add model.  It is.  But if you did the numbers and saw what I just presented, you wouldn't have brought it up.  You need to do your numbers.

B.  Read my previous post above.  Don't trust anyone's numbers other than your own.  If you received numbers from the Realtor or Seller, don't trust them.  Build both the revenue and expense figures yourself.  Don't use an "Expense Ratio".

C.  Cost or Development basis.  Not including cash flow for existing rentals.

a.  Land 5.5 acres.  Say $100,000 per acre=  $550,000

b.  Buildings 10 x15 or 10 x 20 equivalents are running around $4,000 erected.  You PM'd me some info.  Over half of your units are 5 x 10 and 5 x 15.  Lets say your overall buildings are 240 equivalent.  240 x $4,000= $960,000

c.  Roads, say rock.  $50,000

d.  Fence  5.5 acres  $50,000

e.  Electric/lights- $60,000

f.  Security- $50,000; motorized gate $20,000

g.  Engineering, fire hydrants, water, sewer, office, landscaping, dirt work, water/sewer/electric to property, etc, etc. $$$$$

Total= $1,740,000

h.  Interest during construction period and rent up phase= rough 3 years= est $50,000

Total= $1,790,000;  Say $1,800,000 rounded.  Brand New.

How old are buildings?

i.  Cash flow stream: They show $225,000 net revenue stream for 2020 above.NOI $155k above. Real rough next. Deduct out depreciation, add in Income tax, add back depreciation to get to cash flow. Lets say $120k cash flow after everything. Say 6% over 12 years = $1,006,000 NPV.

$1,800,000  Development costs- really rough; brand new.

$1,006,000 Cash flow stream- really rough

$2,806,000 value for a brand new facility with a known value stream.

Change all of the figures above to "Boots on the Ground" information.

They are asking $2,600,000.  I actually like these people.  They think just like me.  The majority of our facilities are brand new.  All the development and Rent up phase risk/exposure has been handled by us.  I would never sell ours for the cost to develop or for the revenue stream individually.  Why give a person a property at cost, that will be worth the same amount in 15 years disregarding inflation, with very little repairs or tenant repairs; plus give them a revenue stream to pay it off.

There isn't a lot of Meat left on the Bone.  You have to truly nail the acquisition numbers, and then you have to nail the "Value Add" potential.  Otherwise you don't make any money or equity until after about 12 years.

Last:

Have you done a Risk analysis on the property and market?  How easy is it for someone else to build next to you?  Do the other competitors have extra land to build? etc, etc.

This is a great exercise for you.  Do about 5 more of these. Throw them out on BP like you did.  Just pick them off Loopnet, so people can easily see the property details.  Go to some training/seminars/coaching.  Then definitely jump out there.  Definitely buy a small location. You will learn more from that than 10 years of training or coaching.  Lets say you bought or built a small 25 unit location and the numbers or ratios were similar to the project above.  I would say definitely do it.  Start learning, with little potential for significant loss.  Matter of fact, ask one of the trainers to actually design a 25 unit location, that people buy, manage and sell for 6 months as part of their training.  Tell them to charge you $15,000 for this experience.  It will be worth it.  My favorite location is our first 35 unit spot.  Learned the majority of Self Storage there. 

Start small and Make Your Big Mistakes Early.

Pond is still being dug out.  Getting closer.  Its amazing how much dirt is in a place.  The Driveway down, is starting to get narrowed down.  They are starting to pull up more of the dirt out of the bottom.  Then I need them to go back down in, and dig some really deep holes.  

Starting to fill the temperatures drop and Fall in the air.  Getting antsy to get the pond done, sides seeded down, fish stocked, plant some wild pond plants;  sit back and watch the wood ducks fly through in the evening.

Filing for SBA loan on another property. Attached are some of the info needed:

1. Balance sheets as of 12/31/xx Current year 08/31/2021 and 12/31/2020 2019 2018

2. Interim income statement, must be within x months of filing. 08/31/2021

3. Debt schedule as of the most current date 08/31/2021

4. Tax returns for last three years.

5. Tax returns for any associated companies for last two years.

6. Full documentation of construction or purchase cost. Either a General contractor bid or actual invoices.

7. If LLC or corporation, need Corporation certification and Operating agreements.

8. SBA form 413

You can finance with the SBA up to $5mm.  This is there portion of the loan.  Example:  You $1mm; SBA $5mm; Local Bank $5mm. rough numbers.

Use magnifying glass search feature at top 

@Valerie Lane

Read my two posts. 

Self storage.  Financing for new investors. 

@Joseph Hammel

Read my post. 

Self storage.  So you just died. 

Don’t talk with your regular lawyer. 

@Devin Duval

Please send two side pictures and one direct picture from about 40 feet away. 

See pictures above.  Crew has been pouring roadways on and off for the last month.  Picture below shows the last roadway that needs to be poured.  They normally pour 8 trucks a day, but they have been getting rationed, zero, 3 or 5 trucks a day.  Thus they haven't been able to knock it out.  Would prefer all of the concrete to set for at least a week before Building delivery trucks show up at the end of September.  Running close.

Discussed with Concrete contractor.  The picture below shows the construction site entrance.  We plan to leave about a 20 x 20 spot not poured.  See bottom left we have concrete "curbs".  If we pour then the trucks will need to hop the curb.  I will put more rock there.  But decided just to wait and finish the work entrance, once all of the material is delivered and on site.  The building erectors won't need the construction work entrance after that, and we can pour it then.

Also schedule for the security fence along that road side to be installed, as soon as all of the material is delivered.

Sparefoot:

Worked on them:

Moved to recommended rankings 

CB 35   15th to 3rd out of 92 locations

CB RR   27th to 24th out of 92 locations.

Trying to move them up since this is the prime fall season for Storage activity.  The above is for the entire Omaha area, which isn't necessarily our market since it can cover over 20 miles.  In our zip codes we rank 2 and 3; or 1 and 8 in our two zip codes.

Will shoot for 1 and 2 in both of our zip codes for next month.

Again, most people now are using their phones/pcs to look up storage.  Sparefoot, is the number one aggregator for Self storage.  Both of our locations are running about 50% going through Sparefoot.  The rest is through other means.  Which is good, since we don't have to pay 1.5 months fee for each new rental.

Google Map- Self Storage:

Moved up to 2 and 8th for both of our locations.

Google Youtube:

Google moved videos to under "more" and then "Video" at the top bar.  All of our videos are showing up on page one.

Bus Bench Advertising:

Have 14 out, in our two towns.  Can't tell impact of them yet.  They are like billboards, in the back of your mind, but you actually don't notice them every day.

@Freddie J Jones

not enough info.