All Forum Posts by: Henry Clark

Please note to read "your State" regulations on Self Storage.  Don't follow my specific example, just the logic, not the number of days.  Each state is different.

Addl info. We went with a "Standing Seam" roof for these buildings. A little higher cost than normal screw down.  I will do a separate post on Standing Seam roofs.

@Spencer Evans

Your a hard one to please, ha ha.  "So Far". 

We are about 1/2 way through.  Still a long way to go.

See your a PHD candidate at Penn State in Real Estate.

If you haven't picked a thesis yet, please do your topic on is the Self Storage business about to crash.  I get a chuckle each time I see one of these posts.

Or, just do it on Self Storage.

Best wishes on your program.

Follow up to a contact I had.  Asking hasn't it gotten worse and customers are more disrespectful.

From when we started 6 years ago with 35 units at one location, to now 7 operating locations and in 5 towns with 800 units; things haven't gotten worse; we changed. Yes we run into the people your talking about, but we have about the same number of issues when we were at 100 units as we are now at 800 units. When we go to do auctions we always start with about 25 accounts and by the time its auction time, we are usually around 5 units. Whether we were at 100 or 800 units. We changed our operations.

After I got burned and finally got tired of calls and excuses we took the following actions as I grew in my understanding:

a. Lock sooner. Used to wait till 3 weeks to lock. Now we lock out in 1 week. That way more "good" stuff is there and you have more leverage.
b. Moved more and more to Autopay. This takes out the lag time for Check is in the mail. Our new locations, we only do Autopay. Most of our bad customers in the past came through Cash payment. We now lock in 3 days for accounts on Autopay.
c. Auction faster. Used to let people get 2 to 3 months out. Now, start at 5 weeks.
d. Escalation. If customer is continuously late or a problem. Move to Autopay. If they won't or can't, then evict. If they won't move out, then we increase their rent significantly, and when they don't pay, move to auction.
e. We cut the lock sooner, to see if anything is in there. If the people are not responding.
f. We are always responsible. In questionable items, we always take the customers point. Whether, I forgot to tell you, I moved out and you charged me a month. We refund. My boyfriend was supposed to take over my lease and send in a new contract. As long as cleaned out, we will refund. Just not worth the internet hassle. "You got me" lets move on.

The key point above is to cycle through the bad customers. I say when your starting up a new location, you have to go through 3 customers to get to a good customer. As the good customers "stick" and you cycle through the bad customers, your overall customer base gets easier to deal with.

I avoided the question of has society gotten worse.  Which I'm sure every generation says the new generation is worse.  We probably hit the reset button whenever we hit a Great Depression or a World War, and then start to digress.  But, for our business we just weed out the bad customers as fast as possible.

Everything averages out. As much trouble as we had with our contractors erecting buildings on our last project, this crew is just knocking it out of the park. Next week we will have sunny days, highs of 45 and lows of 25. This is great weather for our area. They have one 30 x 220 building left to do and to wrap up some of the smaller buildings they have half finished. Took them over some Korean bulgogi, tagi gogi and chop chai for lunch. That hit the spot, they couldn't talk, they were eating so fast.

Below is the office. Where you see the bottoms on the outside not done, that is where we have to put wainscot. Will walk you through that process later. Glass doors are to be replaced with solid doors for security.

Multiple steps and in order have to be performed:
My site contractor needs to partially finished the interior walls and ceilings.
Then my plumber has to install fixtures in the wall.
Then spray foam.
Then finish interior walls with same clad.
Then Electrician and plumber have to finish.

Next picture is side of smaller units. Again, bottom wainscot has to be installed. You can see we had 6 inches of snow on the ground. The large 40 x 200 building was erected but without the roof when the snow fell. So we have a lot of snow in the buildings. With the 40 degrees weather next week, we will open the doors so it can melt off, versus spending the time shoveling.

You might note the roofs are single slope towards the front of the building. Normally we would do to the back of the building to get the water out of the travel area. The Storm pond has extremely steep sides, so I did not want the water to steadily erode the banks. It will go to a road drain and then into the pond.

Will have to get closer shots, but the roof ridges stand higher. This is because it is a Standing Seam roof, versus a screw down roof. Costs a little more, but less chance of leaks and screws working themselves out. Will get some close ups and process.

Day Care.

A.  Contact "Schools for Sale, Inc" they are a neighbor of yours in Florida.  Either facilities, or business and facilities are for sale.  I would check out both.  They either own the facilities or investors like you own the buildings and lease.  Talked with the realtor and child care providers are about to start "Tapping" out in the next 2 months, more will be coming to market.  

B.  Contact School Districts.  Most have old school properties for sale.  A contractor of mine bought two of these and converted to high cash flowing apartment complexes.  His wife took the Gym, cafeteria and parking to make reception and event centers.  She had 26 events booked in her first year before Covid hit.

These will be depressed since these are similar investment types coming to the market at the same type. A lot of investors won't visualize how this fits their portfolio. And a lot of investors will keep hammering the SFH/MFH and not look at something that is not identified as SFH/MFH.

Good luck hunting.

Helping a Friend out, several states away, who wants to get into Self Storage.  We identified a property for sale on line and did all of the financial analysis, education, and marketing study on line over three calls.  The numbers all look great.  Profitability, cash flow, debt repayment, down payment, etc.  Since it was a Friend, I decided to drive 13 hours and put my feet on the ground and drive the area.

Now my friend had said there was No Zoning in the county, just the city limits.  I can easily understand that, but in my head it just didn't register.  Who doesn't have zoning.  Out of 99 counties in Iowa, ours was the last to establish zoning and codes, thus I had seen it both ways.  As I drove into the area, I started noting Storage facilities in various areas, that made no sense.  Finally looked at the property we had spent a lot of time analyzing and within  5 minutes said, we decided to take a pass.  Beautiful facilities, again numbers worked, but now I realized there is truly No Zoning here.  I explained why my Risk assessment of this investment was off the charts.  Since anyone, anywhere could build another Storage facility. Normally I am always moaning about zoning, but as I have said before, the harder it is for us to locate a spot, the harder it is for other businesses also.  Thus it is a safer investment.  

Had to re-group and re-evaluate the way I normally assess and select a new storage location.  Now knowing/understanding, we could build anywhere in the county we went through the following approach.  Let's look for a great Customer based location, closest to them, at cross roads, two way intersections, road way visibility, etc.  Then we took a look at the properties from a Competitor location between the customers to our location.  We started noting flood areas, Large tracts of land that would not be split up to use as Self Storage. Who wants or could buy 200 acres, just to get 4 acres for storage.  Power lines with large easements crossing the property.  Etcetera.

We are chasing down some info for Monday.  Subject to that we plan to make an offer on some land.  This location will pressure two other existing Storage facilities, since ours will out position theirs.  We are perfectly positioned for the customers ease.  No land for competitors to buy within a reasonable distance.  And, our location is not to big.  I explained given the no zoning rule for the county, I would never build a large 300 and up location.  I would prefer to build 200 and down, at several locations.  Although this is not the best Cost approach, it is definitely the best Risk mitigation approach.

This was a really fun exercise for me.  I had to rethink our approaches and come up with new ways to select and protect a new location.  As always saw about 3 other locations that once my friend gets established, recommend they build. 

Ran into an RV park investment that is not on the market, but they knew we were looking to invest in storage and wanted to discuss with us.  My friend was worried they might ask $2mm; but I said they are generating $25,000 per month, with no property tax.  So they should talk with them. 

Not my area, but we identified a building that didn't fit what we wanted, but would be great for a reception hall which is needed in the area. 

Also identified a need for Child care centers, even though that business is not viable right now with Covid.  But these will be a great investment for someone looking with value, since they are financially stressed.  Owning the building and renting out.  Talked with a National broker and he noted within the next two months these will start to go on the market.  People are getting tapped out.

But it's about staying in your lane and staying focused.  They were amazed at all of the opportunities within a 10 minute drive, that they had never noticed.  Their brains got turned on and the wheels started turning.

"Start small and Make Your Big Mistakes Early".

@Tanner Grindel

Renters pay the insurance.  Look up my post.  We sell the insurance from an outside provider

@Daniel Lioz

They stand up really well.  You actually don’t want them to float otherwise mine would have been 100 miles down river.  Inside power washed out and no water damage after a month under water

I forgot we built an extra concrete slab, that we are not putting a building on this year. This is included in the Bldg Slab cost. Backing it out, the total Concrete slab cost is $92,000 versus the $128,000 shown above. This was a 40 x 220 building, which is not shown in the buildings above, but which was in the Bldg Slab cost.

Total erected building is now $225,000 plus $79,000 plus $92,000=$396,000

22,000 sq ft is correct, it did not include this extra slab.

New cost per sqft is $396,000 / 22,000 sqft= $18.00/sqft.

This is only for the erected building, not land, fence, roads, electric, security, etc.

@Zach Quick

Glad to give info, but not done yet.  Below is a rough estimate. The total project will cover 4 acres, but we only will get half built this year.  

Also this city requires both hard surface roads (we chose concrete) and Frost free footings.  Don't know if that is comparable to what you are looking at.  Also had some extras.  This property did not have a "Main" waterline in front of it.  Required.  $130,000 add.  Some other things also, not normal on our other sites.

Disregard the unusual items noted.  If you leave the frost free footings out and if you adjust the road to gravel or your preferred surface.

a.  I would say double the Erected building cost.  Lets call it $870,000 all four acres.

b.  You put in your roads and frost free footing cost as needed.

c.  Security system $70,000- we have a set package we go with. One camera per 6 units.

d.  Electric/lights $50,000- LED

e.  Fence/gate  $50,000 automated Roll gate.

f.  Finish office  $20,000 

g.  Signage- $25,000 road side advertising and premise instructions

h.  Put your figure in, for 4 acres.  We got a great price, had been on the market for 10 years.  Great "B" street location.

i.  Grading- $30,000

j.  Landscaping- $5,000

k.  Engineering- $80,000 about double what I had planned.  To make it "work" on this land we did a lot of changes.  Most buildings are on a 1% slope, which had no impact on any of the costs.

Total $1,200,000 plus others above or your adds.  Add road/land/frost free footing, etc.  This will get us a mixture of 340 units 10 by 10/15/20/25 etc units.  The number of units will probably go down.  Thinking about changing a few to 12 wide and 12 tall for a different market mix.  Lower rental per sq ft, but I like additional product mix to increase the versatility.  I'm off a little on my square feet, just doubling, but gives you a picture.

The end numbers work for us and even better, this location is in a very protected area from competition (zoning, land availability and hilly) and high income.  So it will be one of our most safe investment locations.