How much would it cost to buy huge forest of Oak trees? Likely more than you and I have to spend. But they all started with an acorn. An acorn that was free. To many people are wasting more and more good money trying to find the right “paid for marketing” that will make them oversized Self Storage Profits when they should be planting thousands of free acorns.
Take a look at this email I received from my manager last week. 8 Rentals in one day. Seven on the phone (notice the P for phone rental) and 1 walk in. Was this because we have a great manager? No, Kate is great, but this was just her third week on the job.
Was it because the nearby University of Connecticut is about to get out for the summer and all the students picked us because our prices are the lowest. Heck no, the guys right down the street rent a 5 x 10 for the summer for a total of $195 and we are $399 for the same summer rental.
So, what is the secret? We plant thousands of acorns every year. Here are just a few that led up to that one day of fun phone rentals. Which by the way are part of 150 rentals we will do in 45 days.
1 Our new manager of 3 weeks had a detailed manual that included rental scripts that must be followed.
2 Before she was hired Kate reviewed and practiced the scripts with us and agreed to use them word for word.
3 We did the hard work of role playing.
4 Our manual was clear it is our goal to rent over the phone to every caller. And if we do not, we get their number and call them back in 2 days.
5 On every call we promote our facility, “show them a unit on the phone”, confirm the size is the right size for them, provide the price and say “would you like to get one in your name before they are all gone”. Then we take a full month’s payments – we only rent – no reservations. FYI – next to none cancel and around 1 in ten transfers to a larger size.
6 Our manger is accountable daily and emails us every day detailing both the walk in and phone rentals and the walk ins and phone calls who did not rent.
To rent 8 units that day we had to more than be good at helping our clients finding the right unit for them. We had to get them to call or stop in, in the first place.
7 Month after month we add all move out emails and other town and university emails to our mail chimp site for our newsletter.
8 Two week earlier we sent out a mass email via mail chimp letting the UCONN students know we love them and would provide them a free lock if the prepaid for the summer.
9 Earlier in the spring we were the only self-storage to attended the University student fair. We handed out hundreds of cards and simply said have your mom or dad give us a call and we will take care of everything with them over the phone and they will just need to stop in and sign the lease.
10 For the last two weeks we had a table at two banks, one on campus and one in Town that highlighted our self-storage. We bought $200 of candy and other goodies to make sure we attracted everyone in the bank to our table. When my wife GP asked, did we really need to buy 50 lbs. of candy I reminded her each piece of candy is an acorn planted. If we rent just one extra unit because of the candy it will pay for all the candy. And many non-students will see our name one more time so when one day when they need storage they will think of us. And the great part is many students rent from us for 4 years!
11 We had already completed spring cleaning inside and out so both our employees and our renters are impressed.
12 Every morning we put out our Open banner and our sandwich board for thousands of people to see as they drive by. This month one side reads Spring is here! and the other “We love UCONN.
13 Not only do we have a huge candy bowl but we also have a premium candy like York Candy right next to it. Who could resist “Can you stop in this afternoon? I know you will be very impressed with our facility and I have York Peppermint Paddies with your name on them”
Have you been planting acorns day after day or just wasting money?
Why be motel 8 when you could be the Ritz?
By Marc Goodin
President of Storage Authority
Author of Cush Your Competition,
102 weeks of guerilla marketing for oversized profits for your self-storage.
Date: April 4, 2018
To: Self-Storage Property Owners
From: Heidi Henderson, Executive Vice President of Engineered Tax Services
Many real estate investors are unware of how the top industry professional utilize the tax code to their benefit. And most think that their tax professional is aware of every aspect of the existing code to advise them of any applicable credits or deductions they are eligible for. In reality, the tax code is complex and expecting your CPA to know every aspect of it, is like expecting your family doctor to be able to perform heart surgery!
I am a real estate investor myself and through many years in tax and accounting I have learned from the best on how to apply every aspect of the tax code to create the most tax efficient real estate portfolio, leading to continued success.
Recent tax changes under the Tax Cuts & Jobs Act expound on the benefits of real estate investing. Taxpayers can now capture immediate deductions for business related tangible property, your depreciation can be front loaded, and for energy efficient buildings the available credits and deductions were renewed in February of 2018 and assets removed during demolition can be written-off or donated for a charitable contribution on your tax return.
These are just a few of the complex tax code sections which can make the difference between a profitable business, and a losing proposition. Below is an article outlining 11 Frequently Asked Questions about Cost Segregation, which is one of the methods you can apply to your property.
We partner with business owners across the U.S. and have worked on thousands of self-storage properties nationally. Give me a call today for more information and to discuss the some of the tax strategies that might be applicable to your business or property. I can be reached at (801) 689-0325 or via email at firstname.lastname@example.org
11 Frequently Asked Questions about Cost Segregation for Self-Storage Properties
By: Heidi Henderson, Engineered Tax Services
Cost Segregation is the process of identifying personal property vs. real property, and individual building components for tax purposes, rather than treating a building purchase as one large asset. This determination allows a property owner to depreciate their assets over the useful life of each asset instead of assuming that the entire purchase amount applies to one long-term (39-year) asset.
All investment properties, including self-storage properties qualify for cost segregation. When a cost segregation study is applied, you are telling the IRS that you are simply choosing one acceptable method for depreciation (MACRS*) vs. another approved depreciation method (straight-line). Both are acceptable, however MACRS requires an analysis to identify the value of each individual asset you own, rather than looking at your property as one large asset.
Cost Segregation can be applied to a newly purchased building, a newly constructed building, or a building you have owned for around 15 years or less. If the property is not fully depreciated (39 years is the length of normal depreciation), then there is an opportunity to change the method with cost segregation. Although any property can be depreciated under MACRS, the costs of performing a cost segregation study may outweigh the benefits if the property was acquired for less than approximately $300,000.
Under straight-line depreciation a property’s total cost (less an allocation for land), is depreciated evenly over 39 years. Under MACRS the assets are identified and reclassified in 5-year, 15-year, and 39-year class lives depending on the IRS determination of its actual useful life. And whether the assets are used for your business use, or the basic function of the buildings use as a structure. Examples of 39-year property include; windows, walls, doors, roof, HVAC systems, plumbing, and electrical. Examples of 15-year property include exterior improvements such as; fencing, exterior signage, asphalt, curbs, landscaping, and exterior lighting. And examples of 5-year property are; carpet, appliances, specialty lighting, woodwork, unit partitions, individual unit locks and security, and business specific heating and ventilation systems.
Some property types will have a higher reallocation percentage than others. Interior, climate controlled self-storage properties will see a higher amount than a shed-row or boat and RV storage type. The allocations are based on actual assets and values or each of the components within the property.
Surprisingly, the information required to perform the study is limited. For a recent purchase, the closing statement or HUD is the only requirement. Blueprints are helpful but not necessary. New Construction projects require cost breakdowns and total costs for construction and development, but individual invoices are not required.
Choosing a reputable firm is a vital to ensuring that every aspect of the IRS requirements are met, and in the case of an audit the report is upheld without disallowances or associated interest and penalties. The IRS Audit Technique Guidelines dictate that a physical site visit is performed, the analysis is performed by a professional with cost-accounting or engineering expertise, and the method of determining asset value is an approved methodology. Make sure that audit defense is included in your study, and that the final report offers complete detail over every aspect of your property. Choosing a low-cost provide may be tempting, but the ultimate savings, detail and support of a reputable provider will far outweigh any additional costs. And finally, ask for references!
Cost Segregation is not a “trigger” for audit. The IRS issued automatic consent for deprecation whether applying a change from straight-line to MACRS at the time of purchase or retroactive for a property you bought 10 years ago. This means that taxpayers are allowed to make this change with the approved forms offered by reputable cost segregation firms. However, in the rare case of an IRS review, rest assured that a detail report with the proper IRS approved methods and audit support will affectively defend your tax filing position.
The cost is usually based upon the type and use of the building, size, and location of the property. Beware of cost segregation providers who charge a percentage of the tax savings. The tax savings is relative to the entity type, number of owners, the year of acquisition and other factors, so the actual cash benefit can vary. Most providers will offer a quote along with projected tax savings, so you and your CPA have the information necessary to make an educated decision.
The tax savings realized with a cost segregation can vary depending on the type of building, your total acquisition cost, and length of ownership. Self-storage properties vary in type and size and may see reclassification percentages from 15% to as high as 40%. Request a detailed benefit analysis from a qualified and experienced firm who has a history with self-storage properties.
The Trump administration passed the TCJA which is the largest tax reform bill passed in over 30 years. There are significant changes that offer tax cuts for real estate investors. The largest change being the adoption of 100% bonus depreciation for tangible personal property acquired after September 27, 2017. Tangible personal property is defined as assets with a useful life of 5, 7 or 15 years. Therefore, when cost segregation is performed to identify the personal property (5, 7 15-year property) apart from real property (39-year assets), it allows the property owner to capture bonus depreciation on those reclassified property and immediately expense the entire value in the year purchased!
*MACRS: Modified Accelerated Class Recovery System
Marc Goodin, President of Storage Authority LLC,
Ed, you must be excited to have started construction on your self-storage facility?
Ed: Absolutely. We have put substantial time and research into this project and the team is excited to open Storage Authority Houston-Walters Rd.
Marc: First I want to congratulate you and your wife Jenny. It was not that long ago we met as strangers in a Houston hotel lobby and you shared your goals with GP & I. Now we are friends and you are well on your way to making your self-storage dreams come true.
Can you provide us a short background on yourself?
Ed: I do remember that meeting with you and GP and it has been a pleasure working with you all on this project. I have been in the transportation industry working in an executive role for many years and I have also been involved in a few technology startups, but I always have had a passion for real estate.
Marc: I know you are all ready to starting your marketing for your grand Opening. What is your projected construction time?
Ed: Approximately 6 months
Marc: How helpful was the Storage Authority preferred Houston Area real estate broker Richard Anderson?
Ed: Richard was both a resource and an advisor through the entire process. He has an extensive commercial real estate and development background, so his experience was invaluable.
Marc: How many acres did you buy? And How many square feet of self-storage did you get approved?
Ed: We bought four acres of land and will be building a 60,000 sq ft facility in two phases.
Marc: You and I did some conceptual early on and then once your offer was accepted we worked together with your architect & engineer to come up with the final layout for both the buildings and the individual units. It’s a tradition civil engineers (like myself) get a little tough on Architects but other that did you feel the Storage authority process helped you understand the options and choose the right layout for you?
Ed: Yes indeed. You were involved in all reviews of the design process and we made many updates to the plans that gave us a much better final layout that I am confident is positioning us for a strong opening.
Marc: You actually had a very smooth design and approval process but what surprised you the most about the design or approval process?
Ed: Although the internal side of the design/approval was manageable, like any real estate deal I believe staying creative and alert to the details of the transaction is critical. We encountered several hurdles finalizing the deal that brought us to the close.
Marc: What advice would you offer a new franchise owner starting the design process?
Ed: Tap into Storage Authority’s experience and knowledge, while being sure to be mindful of local storage development trends. Bounce ideas off of Marc and collaborate to develop the best solution.
Marc: Obviously getting a loan is one of the very important steps of self-storage development. How does it feel to have your first multimillion-dollar loan?
Ed: Exciting and challenging. I believe the due diligence that we performed, feasibility studies and local research were all keys to forming a solid working partnership with my lender.
Marc: Many people don’t realize there is a lot of work between the site plan design and having the final construction bid & permits the bank requires. Sometimes inexperienced developers wait until after final site plan approval to start, the building design by the Architect and getting complete bids. You had your Architect and Contractor on board during the site design process. Do you agree this was critical for your project?
Ed: It was essential. I believe the site design process is essential to understanding the full scope of a deal’s feasibility.
Marc: What did you find the most challenging so far and why.
Ed: Keeping a detailed checklist, timeline and prioritizing all of the items was a challenge as we neared the final stages of the project. Large companies have teams that manage this process, and, in our case, it was me and the Storage Authority team.
Marc: Did Storage Authority meet your expectations? And what can Storage Authority do better to assist the next Storage Authority Owner?
Ed: Storage Authority exceeded my expectations. As for what can be improved, you all are already doing it. From enhancing your web platform to providing new operating guidelines your team is innovating to help me the other Owners be successful.
Marc: Thanks for share your experience and thoughts. One last question for now. Are you excited to start your self-storage marketing and renting up your facility?
Ed: Marc, we are ready to get this one leased up, so we can get back to work with you and the team on our next project.
Yesterday Kmart/Sears/Macy’s announced another round of store closings.
If you type in kmart & sears closings into google search you will see round after round of store closings. Maybe there is one near you. In the past 5 years Sears has gone from over 2000 stores down to 12oo stores.
Here is a map of the latest round closings. The article above will give the Towns.
While this is a sign that Amazon is killing the big box stores it is also a sign it time to consider conversions for self storage. I recent talked to one self storage developer and he only does conversions. He has done 4 and has each is doing very well. The big boxes are typically in areas of suitable, even high populations so it is a matter of confirming the available demand taking into consideration of the existing self storage.
Conversions typically save you time because they are much easier to get approvals and takes less time to build. Grocery stores are a great conversion as well and they don’t have to be oversized. Often a 30,000 square foot self storage will have a large parking lot you can convert into another 30,000 sf of self storage.
Here is a quick web demand study on one site I randomly choose. This is a great program everyone looking for self storage because what used to take a couple of days is provided in seconds. send me an email at Marc@storageauthority.com to learn more about conversions or this web demand study
If you look to the left you can see the existing self storage demand information. What is real interesting and what makes this site worth checking out is almost all the existing self storage is non climate control!
To More Success in 2018!
You can do it!
We have you covered with Morrow Hill!
We start by understanding you, your goals and your finances. Unfortunately most people and brokers start by looking on Loopnet. Big mistake, as Loopnet is where we find about 10% off our self storage sites. If thats your plan or your brokers plan it could take you several months if not longer to find the right parcel for you.
Next we provided 30 minute driving maps from your home or from the center of where the you want your facility. This map will also show the existing self storage facilities and the area road network. An areal view will also help you understand the population density. From this you can start to understand the existing self storage density along with changes to the population density.
We then typically choose an existing facility and draw a 1 & 3 mile radius. This in turn allows you to understand the general size of the compitition impact area.
As a side note many people look at the above map of Sarasota FL Area or their home town and think all the good places are gone. I have to laugh because many great successful self storages will be built this Sarasota FL area in the next couple of years. Until you compare the population density to the existing square footage of self storage you can not generalize. Here is the same 30 minute driving time map for Houston TX. See a much higher density of self storage? We have a new Storage Authority just about to start construction in Houston and expect many many more.
The next step is choosing a broker and educating them on self storage. This can take time. The Storage Authority Dynamic Ease Development Series has multiple sections to help you and your brokers find land. And of course we are there every step of the way as well. I hate to say it but many of our franchisees have told us they often do not even get call backs from agents for days.
To reduce the time to find land we have added Morrow Hill as our preferred national brokers. They understand Franchisees, Storage Authority and know how to find land.
If you have a great commercial land broker thats great just make sure they have the land requirements and work sheets from our Dynamic Ease Development Series and have the expertise to use all the tools required to find land fast. One of the many questions I would ask is, excluding loopnet how would you help us land.
The second pit fall in finding land is understanding if you need 5 acres of land, that any 5 acre parcel may not meet your needs for so may reasons and takes substantial investigation. This is because there are so many things that can reduce the usable area including wetlands, flood planes, easements, deed restrictions, utilities, zoning, stormwater detention, endangered species, topography, and even neighbors. And of course the 3 mile population density and amount of existing self storage in 3 miles , traffic counts, visibility, access, pricing are critical in the decision making process.. As a civil engineer and site plan designer for 30 years I learned site development in the trenches and am ready to share them with you and your team. Of course in many respects I am a part of the Morrow Hill team because we started by sharing our ideas on land and we will continue to so.
If you have questions about Storage Authority Franchising or finding land for your next self storage project give us a call. You can also sign up for our news letter and get our white paper on finding land.
Marc Goodin 860-830-6764
Now is one of the best times ever to join the self-storage industry. I hope you have a minute to read a little about my self storage story and Storage Authority. I became a self storage expert by learning in the trenches. As a professional engineer I designed my first self storage over 30 years ago and many more since then, including 3 personal self storages I designed, built, own and manage.
GP & I relaxing on the concrete slab of one of our self storage buildings.
I have helped many people get started in Self Storage. Quickly I learned everyone was asking the same questions over and over so I wrote a couple of self storage books, to help with some of the common questions and sold thousands. But only 1 in over a thousand readers ever got started. For most there were too many unknowns.
My book covers many of the basics but there is nothing compared to having Storage Authority on your Team.
One day a hotel franchise expert, Scott House, gave me a call. He had searched everywhere to find someone to help his hotel and apartment clients get started in self storage, where they would make much better returns. He could not find anyone until he read my books and decided to call me. I agreed to help. After about 2 months he was amazed at how complex it was to get started and how each project is both similar and unique and suggested we develop a self storage franchise. And Storage Authority Franchising was created, the only self storage franchise in the US. Scott got so excited about self storage and Storage Authority that he is presently building his first personal self storage in FL
This is the first draft elevation of Scotts office. The place is going to be beautiful.
Getting started with Storage Authority is easy and the best way to ensure your success in the self-storage industry. You will benefit from our many years’ of experience as we advise and assist you in all phases of self storage ownership, from land acquisition, design, construction, marketing, operations, sales and on-going support. We not only eliminate the need for a costly learning curve but provide your business with the latest technology, operating systems, marketing strategies and ongoing training that will not only allow you to compete in your market but dominate!
Many franchisees want to take advantage of additional profits by building their own self storage vs. buying an existing self storage. This route also allows many new franchisees to get started with $400K liquid cash equity, less than half the typical cash capital investment.
It is a complex maze between finding the right parcel of land, banking, design, obtaining regulatory approvals, construction, and pre-opening marketing and preparations with minefields, delays and cost overruns at every turn. Storage Authority is the Solution. We have learned self storage in the trenches and are ready to help you jump over the minefields.
You don’t want to be feeling like this guy! And that is why we have your covered!
We have created the Storage Authority proprietary “Dynamic Ease Development Series” Finding Land Through Pre-Opening Tasks. This step by step process along with our one on one expert guidance helps our franchisees throughout the land discovery and development phases, get started faster, go around the minefields, save money and be ready to open with a modern, premium facility with clients at the door waiting to move in day one.
We look forward to explaining more about how this optional premium development service will help you build your state of the art facility for less money and in less time, with confidence. The great news is we are waiving the $50,000 fee for this premium service for franchises awarded in the next 2 months.
I would love to sit down over a cup of coffee and tell you the rest of the story. Send me an email and I would be delighted to meet you in Sarasota FL
To Your Success!
Ps Don’t forget to sign up for our free news letter on our website. Every month you get the latest Self Storage news and tips you can use. www.storageauthorityfranchise.com
Must Read, Bloomberg Self Storage News June 2017
Bloomberg news recently published this Self Storage video & article you need to check out. I often skip videos but don’t miss this one to hear about how self storage and apartments rent for the same price per square foot but self Storage cost much less to build and operate for more profits. ExtraSpace management talks about $600,000 NOI per store.
If a slow moving machine with little to no sales and marketing can make this much, imagine how much you can make with The superior Storage Authority systems and sale and marketing platforms.
Storage Authority is excited to announce 3 new franchise locations.
New Franchises John G.
John came on board last week. We are excited to be working with John. He is looking for land to build a new facility in central PA.
Why not make 2017 the year your financial future & retirement was changed for ever. Contact us now for more information.
New Company Facility
Storage Authority Co founder Scott House has just started the design for the third Storage Authority company store. It will be located in Lakeland FL on an 8 acre parcel. Construction for the 75,000 square foot Self & RV facility is slated to start construction this fall.
The first thing we do is a quick hand sketch to confirm we can get the square footage based upon the local zoning and site. Soon after we field determine the wetlands and do another quick sketch – see below
Franchisee Edward O.
Ed’s offer for 4 acres in Houston was just excepted. Houston is unique in the sense there are not the typical zoning regulations like most cities. The 60,000 square foot facility is under design and construction is slated for late fall.
When you look at land you should consider the opportunity to buy less than the whole parcel. Here the owner was willing to sell 4 acres keeping the land cost down and still have the 50,000 sf development.
Normally we may need 5 acres but Houston does not have the restrictive zoning that most cities have.
Why not you? Why not now? Feel free to email me at marc@StorageAuthority.com for more information and how to get started.