All Forum Posts by: Henry Clark

@Frank Hinck

Western NC.  Looks like a lot of National Forest out there.  Check on going low tech with Cargo container rental units.  No permanent water, electricity, sewer.

Water- replaceable 5 gallon tanks as part of the rental.  Extra tank there, break the cap additional $20.

Electricity- Solar panels.  To power night light and everyone's electric gizmos.

Sewer- Compost toilets above ground.

Propane tank open grills, put breakable seals.  Seal is broken, then $20 fee.

Go gnarly with the paint jobs.  Camo Joe, Sunflower Suzy, Big Bear, etc.

20 ft container runs about $2,000 then delivery and setting cost.

Rent out $50 per night with a 3 day minimum.  Get someone local depending on where you live to refurbish after each guest.  Holidays and hunting season, $70 per night 3 day minimum.

Centralized Key box at each park with individual combinations.  With drop box for used keys.  This way you can do Self Service and not have to meet customers.  Do a youtube on the park, surroundings, container usage, cleanup, etc on your web page.  See ours at our web.

Recommend you do Cots, and they bring their sleeping bags.  That way you don't have to deal with mattress and bedsheet damage.  They can sleep how ever many they want.

Put some fire rings out side. Go to old tractor shops and buy used tractor rims.  

Get wifi.

Either find a central location or next to an attraction- lake, hiking path, bike path, etc.

You know how people have RV parks.  You will have a Cargo Container park.  " Hinck's Home Away" park 1.  What I like about this model where you will be at, if the first is successful, it has a cookie cutter business plan.  Park 2, Park 3, etc.  Your downside risk.  Your $2,000 container sells to locals for $1,500.  

Since these are moveable, don't make your park rigid and in line.  Go with the flow of the existing trees, rocks, geography.  Fit the containers to the land.

Sounds like chump change right?  Low risk, scale able, easy exit, cookie cutter business plan, no property tax on containers.  I do self storage for $65 per month, your getting $50 per night on lower cost units.

Looked at the map again.  Even better than I thought.  These parks are a perfect distance from Chattanooga, Charlotte, Columbia, Athens and Atlanta markets.  Tons of small towns around the parks to base out of.

Would recommend doing a lot of small locations versus large locations, to keep the "feel".  Go with the flow, use what's in your local.

Hook up with a local for rates on Enduro Bike, ATV rentals, Canoe, Horse rides, etc. with breaks for your customers.  Put 2 coupons in each key boxes.

When you have this business plan knocked out and going; GO to the BEACH with the same model.  Check out Euro hostel models for more ideas, this isn't my area.

@Kathleen D.

Not enough info.  Age, her wealth, her health, lifestyle, what she enjoys, etc.  Not a financial advisor.

Use this as an approach, since we don't have all of the info:

1.  First investment is to set her at ease.  Long term health coverage.  By 60.

2.  Again to set her at ease.  Next Long term assisted living. By 60.

3.  Assuming she isn't 99 years old and with bad health, needs to set aside 5 years of cash in low return 3 month cd's, nothing longer.  This investment is about maintaining her lifestyle and not about making money.

4.  Next is a burial policy.  Like most parents, she doesn't want to be a "burden" on her kids.

5.  Any kids or grandkids education plans, 529.

6.  Whatever other risk aversion investments.

7.  Now we are ready to either have some fun or make some money, with funds, she doesn't mind losing.  Would hate to go back to work at age 70 or have to live with the kids.

8. If there are no other Kids in the family, I would loan you 5% money with no Collateralization. She's not investing in your SFH's, she's investing in you. Again, this is money she can lose or take a reduction.

9.  Personally, I'm taking a cash position right now on some funds freeing up.  Don't see a big upside and see a greater downside.  Realize everyone says don't time the market, but I say time your Risk Aversion.  Hers should be higher than most people.  She probably doesn't want to take a 50% drop and wait 15 years to recover.

10.  As noted above, any long term fixed income investment she takes a position in now with interest rates low, she will "lose" money in the next 3 to 5 years on that investment as rates go higher.

11.  With the Cash position.  Identify her investment parameters and plan to invest should we go on a down cycle.  We are 298 points off the Dow high today.  Just back in March we were at 19,000 versus today 29,000.  She doesn't need to be in that type of investment.  What would she miss out on:  10% gain would be 2,900 points; 20% gain 5,800.  What is going to create that type of move.  P/E ratios can't go to 50/1, not enough fairy dust.

Summary:

Let her enjoy life.  A.  Take care of any Known downsides (illness, assisted living, long term health care, burial, helping the kids); B.  Set aside for maintaining life style 5 to 10 years out; C.  If she is still active have her bank "memories" (take grandkids to disney world, daughter to FIJI, etc).  Memories will be worth more than money when she is 80 to 90 and can't travel.  Have fun, get to know her as a 20 to 30 year old.  This was one of the fun things I got as my dad went thru PTSD.  Got to know his youth.

Thanks for the input above.  My take away is to look beyond Hard product companies.  Luckily we have Fiberoptics at our entrance.

If you get a chance and are up for a truck ride would like to show you a town I live near that I would like to help re-juvenate. About 20 minutes from you. Pacific Junction along with one of my storage locations (back up and running) were flooded for about 40 days last year. About 80% of the people have left or are being bought out. I don't do SFH or MFH. Would like to get ideas from you. This is a standalone town. Zoning and inspection the only rules are no Single wide trailers and the Electric has to be inspected. Check me out ClarkstorageLLC and let me know if your up for an hour round trip ride and discussion.

Thanks.

Primarily do Self Storage.  As I have looked around several cities, I have come across Industrial Flex, Contractor Garages and Contractor Incubator buildings.

We have 4 acres set aside on a 4 lane road with 15,000 Vehicle Traffic Count per day. This is an 8 acre site.  We built Phase 1 as self storage 230 units on the back side.  Phase 2 will be 200 self storage units.  However a mix will be 12 x 40 with electricity to support our Contractor Incubator buildings.  Phase 3 which is along the road will be what I call Contractor Incubator buildings.

Site selection:

Normally you would select a site for a particular investment.  In this case we could do 630 Storage units in this location, but we do not feel the market will support that.  Thus we saved the road frontage and a separate access for this endeavor.  We are lucky, this is a perfect site.  4810 South 35th street, Council Bluffs, IA if you want to Google.  Veterans highway which is the 4 lane in front of us goes East (Council Bluffs) and West (South Omaha and Downtown Omaha).  Interstate 80 and Highway 75 which are tied to Veterans run North and South.  The actual location does not have a street light, but has two turn in/out lanes both to cross the street and to get off the street.  The entrance to the location is on a slow dead end street, giving you a chance to approach the highway.  With the internet, Contractors (electricians, plumbers, hvac, landscapers, etc don't need a location on the main drag anymore.  Plus they don't bring their customers to their shops.  Another big plus for this location, is the major Electrical Supply house and Welding Supply house are on our highway nearby, thus we get a lot of contractor traffic.  Just need to clean some brush and move the Orange Storage container we are using during construction.  Otherwise we have access, zoning, water, sewer, electrical and Ground project ready.

Market:

I will document the market next time.  This will be harder, since I have a "proven" method for Self Storage. I need to come up with one for Contractor buildings.

Product (building/services):

Competition:

Facility Costs:

Revenue Stream:

Financing:

Marketing:

Insurance:

Pros/Cons:

If I'm missing a topic, just let me know to add.

@Owen Schwaegerle

I actually did an analysis for someone in that area this past month.

Please read my Member Blog under Education on "site selection".

For a quick spin, do the following:

a.  Pull up "Sparefoot" and type in Perris, CA.

b.  Pull up google self storage, Perris, CA.

c.  Pull up Loopnet, CA

d.  Look at the 1057 W. 7th st. Perris, CA. $1,579,000  3.31 acres.  See if zoning its grandfathered in for RV's only or if you can build Self Storage units.

Normally I say start small and make your Big Mistakes Early, except in California most storage locations run $5 to $13mm per location.

Here is what I "see":

1.  Perris, CA has a population of 79,000 which means it has a market for 4,740 storage units.

2.  Sparefoot search, switch to distance.  Only shows 2 nonlisted storage locations. You would need to go see for yourself.  This means no one in Perris is using Sparefoot, which is great for you.  You will immediately be Number 1 on the internet if you use them.

3.  Google search for self Storage Perris, CA.  I see about 9 locations.  This "Astra" location is by itself in the city, which is good, it will pull the locals.  Its kind of a bad spot since it is out of the way.  Luckily the internet, they will come.  Plus no one is using Sparefoot in Perris, so you would be immediately ahead on Internet searches.  Also switch software to "Storedge" management software.  Not a recommendation.  Just know locally for me a "new" location used them and they are ranked high on Google almost immediately.

4.  Need your boots on the ground.  9 locations can't be eating up 4,740 units.  Thus there is a lot of unmet demand.  You need to spend a weekend there and count units and sizes.  You can do this through the internet google earth and through their fences.

Why?  Why look at this place.  Normally RV/Boat storage brings a lot less revenue than Storage.  Read my other posts or blogs.  Thus the property will be valued at RV/Boat storage value versus a converted Self Storage.

This is what I call a "Cherry" location.  Valued at a lower product usage.

Not recommending this place.  But work through this process.  Do it on some other small towns/Cities.  Its a little different in large cities, you have to be more strategic.  This and the blog answer your question on how to search.  The next question you need to cover is: A.  What is the market size and demand potential, B.  How to value.

Good luck.

@Kristian Conway

Around here $.85 to $1.00 per sq ft per month. NNN to be discussed by you.

Look up Kansas City Contractor garages and look at their set ups.

Contractors don't want top road frontage.  They prefer off the grid, but close to the neighborhoods.

Good luck.

Always make an offer if it has value. You said maybe $100,000.  Ask for:

a.  $60,000

b.  $40,000 and then $40,000 no interest in 5 years.

c.  $80,000 if they replace and update the elevator to your specs.  etc.

These are more deal versus finance approaches.  Buy the assets and peg a separate cost to the road, electric, plumbing, parking pads, security, etc.  Talk with your cpa.  Put as much value away from the land itself which can’t be depreciated.  Check on a non compete agreement.  Try to get as much early writeoff assets identified as possible. 

Back on the financing. If there is some fix up costs needed. Do a construction loan with a commercial bank to only charge interest only while fixing up the property.  Request xx months. Then role into an Sba loan with 20 year term to lock in interest rates.  This should put you in a positive cash flow. 

@Kristian Conway

Agree with above, to small to waste your time on storage.  Also the elevator would be the bottle neck.  You would need a whole new system, if you were basing your success on it and it would need to be a service elevator size.

Would recommend you look at the following mix:

Downstairs split into two 1,000 sq ft Contractor rentals.  (electrician, plumber, hvac, landscaping, etc).  We are looking at building these next in one of our storage locations.  They bring in more money per square foot than traditional storage, with less invest up front and ongoing.  If its a warehouse you should already have some bay/garage doors.  Just to rip out any excess material, then power wash.  Maybe a dividing wall and extra walk through door.  See if grandfathered in on sprinkler systems or don't need.  Also depends on outside parking and access.  To get a feel for the interest, you might "list" them on Loopnet or Craigslist and see what interest you get before you buy.  Or talk with a Commercial Real Estate person.

Upstairs- make two or three large loft, retro apartments.  Strip barebones and paint all piping and ceiling black.  Put in three shower/commode/sink/kitchen, etc units.

If this place has character and the right neighborhood.  I would also reach out to the local Micro brewery scene and see if someone is ready for the next size operation.

For $100,000 depending on location, there is a business model there waiting to be found.

I’ve given you our number.  

Are you able to run the analysis I showed above?  

 Really a profitability analysis

Shape of property, market pricing, land cost, how you park the vehicles (pull through, single or back to back), fencing/gate or not, etc. Your mix of 20/30/40 foot spaces.  Each one requires a wider driveway and a wider parking spot the bigger they are.  Example. You might get more rent for a 40 ft spot but make less money since you have more bare ground. 

Example:

We have exactly 2 acres:

40 acres= 1,320 ft x 1,320 ft = 1,742,400/40*2= 87,120 sq ft.  Total Sq ft.

Potential rent at 100%= $2,870 per month.

Is this good or bad?  Run your cost to buy and improve.  Then pull together your annual expenses.

What is your COC, Cap rate, or I use Payback period 8 to 12 years , versus a loan amort of 20 to 25 years.

Also depends on how you are parking.  If your Valet parking, then you can get 50% more spots, but you have to put the labor in.

Recommend you look macro at the deal:

Costs:  Use the below to see if you have any "Missing" costs you need to recognize.

$100,000  land cost

$   20,000 Fence

$  25,000  Automated Gate

$  25,000 Rock surface

$   7,000 Electric

$  7,000 Security

Expenses:

$????????  Property tax

$ ???????  Insurance

$  ??????? Electricity

$  ??????? Monthly management software

$  ???????  Lawn/Snow removal