All Forum Posts by: Nick Heil

Clemens, definitely follow Michael's advice and try those resources. Also, I would add that if you are going to find a self storage deal, it will probably be an off-market deal where you approach the owner privately. Honestly, these just don't come up for sale very often because they are great little businesses and the owners generally have a list of people who have offered to buy from them over the years, so in a lot of cases there is no need for them to publicly list them. In addition, I find a lot of the facilities that do end up listed want far too much money and they generally get those prices from investors who just don't care how low the cap rates are. 

So with that I would develop a big list of all the local storage facilities you can find and start sending mailers/stopping in to visit and see if you can make connections with the owners and go from there.

In the long run I think just about every real estate sector will be fine, in the short term I think it's obviously retail and hospitality (hotels, parks, etc...). Obviously these properties and their businesses are closed right now and in most cases generating $0 in revenue. All of this on top of the fact these particular sectors are under pressure to begin with. There will probably be a lot of businesses in this space that don't make it through this, but with that comes opportunity for the ones that do survive to be bigger and better than they ever were before. 

You have received a lot of great advice here. House hacking is definitely one of the best first steps you can take and will probably have the largest immediate impact on your financial situation. With the average person spending an excess of 30% of their monthly income just on living, house hacking gives you the ability to completely or partially offset this expense altogether. There are not a whole lot of financial steps you can make that would have this sort of impact right away. Also, to take this step so early in your life will have dramatic long-term compounding affects later in your life so definitely do a house hack!

Another thing I would recommend is opening a couple Vanguard accounts and start dollar cost averaging (automatically investing with every paycheck) into some quality index funds. Your investment strategy over the long-term should include both real estate and the stock market. Hope this helps!

Sounds like a great deal!

Yes I would agree with all the points raised here already as far as trying to identify any other expenses the property has. $1,200 for book keeping seems a little high and 66 units is very manageable on your own, so you could cut that expense drastically. I have 84 portable storage units right now and I use quickbooks for book keeping and it does not cost me that much per year. Really, for a traditional facility with 66 units you could pretty easily manage that in excel if you stay on top of it and assuming you want to put some extra sweat equity into your first deal.

Even if you find there are some additional expenses such as utilities this still sounds like a pretty solid deal. Self storage is very difficult to buy at a reasonable price these days. Also, sounds like you have some room to raise prices at an average of $50/unit and 100% occupancy. In addition, you could hook up with a few of the self storage insurance brokers that offer tenant insurance programs that allow you to earn extra revenue. They build insurance right into your lease agreement and you could add $5 to $10 per unit per month to offer your tenants insurance on their goods.

Is there room to add portable storage units to the property and immediately increase capacity? That would be another quick way to increase value of the property. 

Congrats Samantha! I know nothing about the Chicago market and I'm from a rural area, but $125,000 in a large market like that for a multifamily sounds like a pretty solid deal on the face of it. What are you getting for rent? Also, that is an impressive low down payment amount for a property of that value, too.

No for the many reasons already listed. The 401(k) is a great LONG-TERM tool to build wealth. Take advantage of the employer match and save more on top of that if you can. 

You also stated you have a good job so figure out a way to increase your savings rate to make the down payment on a property. Once you've saved enough for your first down payment and get your first property secured, then begin reinvesting the earnings from that investment on top of your savings rate to get into the next property. Then rinse and repeat. As you get better and more comfortable you can get into more creative financing strategies that requires less of your own money to get into the deals.

Your 401(k) will grow and your rental portfolio will grow faster and faster and will allow you to take advantage of leverage. Having a nice equity portfolio also makes the lending process much easier. When my lender looks at my personal financial statement and sees I have a large stock equity position it makes borrowing money for real estate and other investment projects a breeze. I have financed several projects 100% through traditional bank lending because of this. They are willing to do this because they see I have a large liquid position that I can easily access if I ever get myself into trouble. Balance between stocks and real estate is important!

Inside Self Storage is another great resource along with trachte.com. Also, given that you are already in California they put on a great self storage trade show in Vegas in April of every year that would be great for you to attend. Between those resources, other online resources you can find googling, and what you can find on YouTube you can learn a ton.

Yes, I have two lots at this point actually. Most of my inventory stays out at customer locations, but I do have two lots to rent them onsite as traditional units and to park empties in between rents. 

If you can pass the cost on to the tenant then that is the best option. Make sure it is covered in the lease. But honestly, one of the best things you could do is go talk with the municipality you are buying in. I work for the City I live in and I can tell you it would build a lot of credibility if you go into the office and introduce yourself and explain that you are a new landlord looking to be a good landlord and have questions about best practices.Water bills are handled differently in every municipality so it would be worth a conversation with them to see what they recommend. Here in my City it is easy to separately meter small multifamily properties and require the tenant to be responsible for the water bills.

If I had to be responsible for the water bill as a landlord I like the idea mentioned above of paying the minimum water bill and billing anything above back to the tenants; it still incentivises them to keep an eye on their consumption. Just put it in writing and do a good job of documenting and keeping track of everything.