Author Archives: Bill Moist

Desire Investment Alternative…Consider Self-Storage

 Issue 94 – Investment Alternative

Introduction…”The bottom line is that if we go into a bad housing market, people have to put their stuff somewhere,” says Mednick, who is also president of the Orange County Real Estate Forum investors club. “When the economy is good and people buy too much stuff they have to put it in storage. You’re winning as the market goes down, and winning as the market goes up.”

A “safe” investment… For those investors looking for an alternative to being a landlord, self-storage is considered a relatively safe real estate alternative.

Self-storage is monthly rentals of interior spaces made up of concrete floors with steel or concrete walls.  That’s it.  Once a renter moves out, the manager can just blow out space and rent again.  Our make ready is a leaf blower.

If the renter fails to pay rent, then the property can be sold at auction to recoup all or part of the lost rental income including late fees.  In fact, this last Texas legislative session codified online auction as an allowable sale method.

The secret…It is a contrarian approach to the commercial real estate, but generally, our leases are month to month.   If we had a term lease, like most commercial real estate, then at the end of the term renters would be planning to move out.  With the month to month leases, there is no rush to move out.  They can always move out next.  And maybe five or ten years later, they will still be moving out next month.

In summary…Self-storage is a simple, but elegant alternative to other more complicated residential or commercial real estate.  To learn more and “Get 9 Little Know Secrets For Steady Real Estate income FREE” subscribe above right.

Source:  Joel Cone, “Self-Storage Is An Investment Alternative,” U.S. News Money, 11 Jan 2018

New Concept: Self-Storage Mobility Center

 Issue 93 – Future of Mobility?

Introduction…U-Haul International is building in Tallahassee, FL its first “mobility center.”  This will be a U-Haul facility that is unprecedented. Unlike anything, it has ever developed.

So, what is it?  The mobility center will include:

  • Self-storage space
  • Truck-sharing and rental services
  • Car-sharing and rental services
  • Charging stations for electric vehicles
  • A research and innovation incubator
  • Bicycle sales and repair services
  • Stations for alternative fuels
  • A “smart mobility center”
  •  It will be an “innovative mix of transportation and business services

Where’s the profit?  Looks like to this author that the services that will be profitable are the same services U-Haul provides now.  Self-storage and truck rentals.

In summary…The self-storage industry is growing in two opposite directions.  First, this amalgamation of services as U-Hual is developing.  The second is a total unmanned kiosk run storage facility discussed in a previous issue here.   Which will be successful will depend largely on the market location.

After an extensive commercial real estate career, I settled on self-storage investing for two reasons. It’s the best passive – residual income in the market today.

Where Can You Store Your Boat & RV?

Issue 92 – RV & Boat Storage…Where?

Introduction…In the United States, 11,870,000 recreational boating vessels need storage.  Add to that number 8.900,000 recreation vehicles need storage. That totals 20,770,000 recreational items that need to be stored for the off-season.

RV And Boat Sales Growing Self-Storage Demand…RV The research, conducted by Dr. Richard Curtin, RV industry analyst, and director of consumer surveys at the University of Michigan, reveals the number of RV-owning households has grown to a new peak of 8.9 million households, up from 7.9 million in 2005. According to the report, 8.5% of U.S. households now own RVs, up from 8.0% in 2005.  Annual U.S. recreational boat sales have averaged 550,000 per year since 1990.

So, where do the 20,770,000  households store their recreational vehicles and boats?  Most of the larger motorhomes, larger travel trailers, and boats can’t be stored in city residential areas.

The self-storage industry has recognized and met this demand.  Many properties have built larger storage units to accommodate the largest motor-coach.

What’s next… We have purchased a 64,000 square foot boat storage facility.  You can find it at www.wylieboatrvstorage.com.  We will have three units available at the end of January after we auction the abandoned property in those units.  Other than that, we are 100% leased,  This experience has been better than expected, so we are looking for another similar facility.

Drop me a note if you want to get on our potential future owner’s list.  bill@billmoist.net

Forget New Year’s Resolutions!

 

Introduction…Every year Americans fail to keep their New Year’s Resolutions.

But, somehow we think if we just try harder, this year will be different.

There are scientific and spiritual reasons why we should “Forget New Year’s Resolutions and Instead Prepare Our Minds For Success.”

Click here to watch this powerful 5-minute video.

Click to get 9 Little Known Secrets For Steady Real Estate Income…Free

Happy New Year to you and your family!

Bill Moist, Self-storage buyer and developer

bill@billmoist.net

Click here to see this powerful 5-minute video

How Will The Biggest Tax Cuts Ever Impact Real Estate Investors

  Issue 90 – Fort Worth Skyline

Introduction…Republicans were joyful Friday as they finalized their tax plan, bridging differences between the House and Senate bills and moving another step closer to getting legislation to President Trump by Christmas.

The income tax incentive to invest in real estate is alive and well under the Tax Cuts and Jobs Act.

Here are ten items that will impact real estate investors:

  1. Tax Cuts…The Tax Cuts and Jobs Act represents the largest one-time corporate tax rate cut in history.  The top corporate rate will drop from the current rate of 35% to 21%.  The bill lowers the taxes for most Americans and small business owners and corporate real estate investors and developers.
  2. “Pass through” entities…The vast majority of American businesses “pass through” its income to the owners.  These entities include S corporations, LLCs, partnerships, and sole proprietors.  Under the tax bill, these companies get to deduct 20% of their income tax-free until 2025 when it is scheduled to expire.
  3. Corporate Alt Min Tax…The final GOP bill gets rid of the corporate alternative minimum tax (AMT) which is a big relief for the business community.  The AMT carries a massive unproductive accounting cost for all that are impacted.
  4. Like-Kind Exchanges here to stay…The Section 1031 like-kind exchange which allows real estate investors to save millions of dollars when trading existing real estate for new property remains in tack.
  5. Business interest deduction unchanged…Fear over the mortgage interest deductions has been addressed when the personal residence loan that can deduct interest is limited to $750,000.   Forbes reported they thought this change would eliminate the economic incentive for many to buy homes.  Really?
  6. The longer holding period for long-term capital gains…The holding period to get long-term capital gains tax treatment on the sale of assets is increased from one year to three years.
  7. Limit on state, local, and property tax deductions…Individual taxpayers will face a $10,000 limit on deductions for state, local, and property tax deductions
  8. Individual Standard Deduction Increase…The Individual Standard Deduction is raised from $6,200 to $10,000. Or it could be raised to $12,000 depending on the source.
  9. Estate Exemption to double…Successful real estate investors who want to pass on their real estate to heirs got a break.  The current estate tax exemption for individual doubled from $5,490,000 to $11,000,000.  The current estate tax exemption for couples doubled from $10,980,000 to $22,000,000.  This is a new incentive for investors to build real estate fortunes.
  10. Individual Income Tax Rates Change...The existing individual income tax rates are 10%, 15%, 25%, 28%, 33%, and 39.6%.  These tax rates will be reduced to 10%, 12%, 22%, 24%, 32%, 35%, 37%.  More detail on this item in fiture issues of the newsletter.

In conclusion…The benefits of the GOP Tax Plan for real estate investors will be very significant.

Bill Moist, MS Taxation, CPA
Self-storage buyer and developer
bill@billmoist.net
References:  Heather Long, “The final GOP tax bill is complete.  Here’s what is in it.” Washington Post, 15 Dec 2017; Lara O’Keefe, “7 Items In The GOP’s Combined Tax Bill That Could Affect Real Estate, Bisnow, 13 December 2017; “GOP tax bill: A look at the final brackets, FoxBusiness, 15 Dec 2017

Closely-Guarded Secrets To Becoming Carefree Investor

Issue 89 – Why Those Who Discovered The Secret Are So Happy

Introduction...The meeting was held at ElFenix in Dallas, Texas on March 15, 2016. This was spring break week and attendance was unusually low.  However, the meeting was quite lively and those in attendance were very engaged and excited to be there.  The meeting had a warmth and supportive atmosphere not common to many business luncheons.  Many of those in attendance were owners & investors of this asset class.

I have never been around a group of owners & investors who were so:

  1. Carefree
  2. Stress free
  3. Disconnected from current market conditions concerns
  4. Happy
  5. Joyful
  6. Supportive of one another

Why have you not heard of this before?  Several reasons:

  • Generally, this is not an asset class promoted by Wall Street
  • Insurance salesman do not sell this product
  • This is not a product promoted by most brokers – in fact, very few understand this class
  • Few people even notice this product type when they drive by it or ask if they should have this their portfolio

Here is a true story.  I contacted a broker with a major brokerage firm that I’ve done business with previously.  He said, “Bill, we just don’t sell that product here.”  Later, I discovered that his company had a national group active in this area and one of the top Texas brokers was in his office right under his nose.

So, it is apparent that this is a closely-guarded secret.  In fact, in the state of Texas, there are only a handful of brokers who sell it.

One of these brokers told me, “Bill, I discovered this asset class 17 years ago.  Once I understood it, this is all I wanted to sell.”  I heard those words by several people, “once I discovered this asset class this is all I want to invest in or purchase.”

There are many reasons these owners & investors mentioned above are so carefree.  One reason is that it does well in both good times and bad economic times.  Also, the loan default rate is low single digits.

Click Here to watch the above video The Closely-Guarded Secret To Becoming A Care Free Investor.

Conclusion…You owe to yourself to find out what these happy, carefree owners & investors have discovered.  To discover what they know and “Get Little Known Secrets For Steady Income” FREE go to billmoist.com

How Big Can Self-Storage Get?

 Issue 88 – Largest Public Storage Debut

Introduction...The largest Public Storage property makes its debut in Jersey City, N.J.  The facility is located in the Powerhouse Arts District’s renovated 100-year old, block-long building.

The debut... Public Storage hosted its grand opening this last spring and now offers a total of 3,978 units.

Conclusion….With enough population density, there doesn’t seem to be a limit on how big storage properties can get.

Creating Community And Connections With Self-Storage

 Issue 87 – Creating Community

Introduction...Self-storage facility may not be the first place you would expect to create community and connections, but great managers and owners are doing just that.

Community created...I visited one facility that was for sale west of Fort Worth.  It was an older property in need of some repair.  And yet the owner created community and connections which resulted in higher occupancy and rental rates than the Class A property a few hundred yards away.

Many self-storage facilities in hurricane-ravaged areas are extending help to their community.  Expect to hear stories of help and goodwill during the lengthy clean-up and rebuilding process.

Creating community and connections...Here is the short list of ways we can create community and connections with our self-storage staff and managers:

  1. Support and raise funds for local charities
  2. Creating connections with local business partners, chambers of commerce, and service organizations through volunteering
  3. Creating connections through marketing relevant and engaging communications
  4. Creating connections through social media inviting local content
  5. Practicing the Golden Rule as Rotary so eloquently reminds business leaders each week

Conclusion...Any business can be used for good or evil purposes.  It’s up to owners and managers to set the best direction that impacts the local community in the most positive direction.  Yes, even self-storage facilities are “Creating Community And Connections.”

Creating Wealth Through Self-Storage

Issue 86 – Why Use Self-Storage To Create Wealth

Introduction...The self-storage industry has experienced amazing growth.  Currently, 1 in 11 families, up from 1 of 8 families in 1990, use self-storage.  That means the number of families using self-storage has increased by 2,200,000 in a ten-year time frame.

Current owners…Property owners with just one property make up 63% of the total. These mom an pop’s normally rarely if ever raise rents and rarely make capital improvements that would allow further rent increases. This gives subsequent professional owners room for significant value add…or total revenue increase.

Owners with 10 or more facilities make up only 12% of the market. The rest, 25%, own 2 to 9 facilities.

The real estate investment trusts normally do not buy properties that are less than 50,000 square feet.  If we can add some additional space to get the mom and pop’s over 50,000 square feet, we may be able to sell to the REITs who generally buy at the lowest cap rates (highest purchase price.)

Who are the customers?…Generally, 80% of our customers are residential an 20% are commercial.  As a rule, 75% of our renters are within 3 miles radius of the property and another 15% drive from 3 to 5 miles to the property.

Conclusion…Self-storage is a growth industry.  Not only are the number of U.S. households increasing, but the percentage of households using storage is increasing.  And for the local buyers, like us, there is significant opportunity to raise rental income when we purchase properties owned by mom and pop’s

Source:  Review of Creating Wealth Through Self-Storage by Mark Helm.

Investors…Consider The Uncomplicated Self-Storage

 Issue 85 – Uncomplicated Self-Storage

Introduction...The uncomplicated world of self-storage recently became the most desirable way to invest in commercial real estate.

Two examples...

  1. One Fort Worth owner had is property 95% leased when a buyer came along and asked if he’d sell.  The owner estimated his property value to be $4,000,000.  When the offer arrived at $5,500,000 the owner said, “SOLD!”
  2. Another owner had accumulated 20 smaller properties in Texas and New Mexico. He was very happy with the management and the cash flow.  Until a California investor wanted to jump into the market and offered $25,000,000.  Again, this owner “SOLD!”

Why so much interest in self-storage…In the past apartments were considered the most desired way to invest in real estate.  However, there are many good reasons to branch out.

Self-storage has proven to be recession proof.  During boom times we buy more stuff to store.  During contraction when we are downsizing, we tend to store our extra stuff rather than sell it.

In a recent issue of the Self-Storage Insider, we reported…The Commercial Mortgage Backed Securities (CMBS) self-storage loans funded over the past 10 years have the lowest default rate of all property types at less than 1 percent.

In conclusion…Do you have self-storage in your portfolio?  If not, let us give you more insider information by contacting us at bill@billmoist.net.