Category Archives: Commercial Real Estate

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

Why Self-storage is Safer Than Other Real Estate

Issue 80 – What Safety Means To Investors

Introduction… 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.

This compares favorably to the 4.5 percent average delinquency rate for all commercial real estate and 3.9% delinquency rate for multi-family.

Why…why is self-storage 4.5 times better than other real estate?

This is counter-intuitive.

Click here to find out why…why is self-storage 4.5 times better than other real estate

If this intrigues you, how may I help you?  Bill@billmoist.net

It Only Just Appears Not To Be The Most Exciting

 Introduction…Renting rooms with no lights, toilets, showers, or kitchens appears not to be the most exciting. But, when you look at the dynamics of the Self-Storage industry’s growth today, it may be the most exciting of all the real estate market segments.
I attended a networking group in Colleyville, Texas hosted by a real estate broker. She recommended that if you were planning on selling your house in the near future and needed to put extra stuff in storage, then you better lease the storage unit right away because it might not be available when the you need it.

Here are just a few headlines from today’s Inside Self-Storage news: Metro Storage To Build New Self-Storage Facility in Wood Ridge, NJ

  • Metro Storage To Build New Self-Storage Facility in Wood Ridge, NJ
  • Firehouse Self Storage Development Moves Forward In Longmont, CO
  • Self-Storage Expands in Plano, TX
  • StorageVault Acquires 3 Self-Storage Facilities In Canada for $6.7M
  • Lexington Road Self-Storage Planned for Former Piggly Wiggly Site in Athens, GA
  • UHaul Transforms Abandoned Dairy to Self-Storage in Sioux Falls, SD

Why all the excitement in Self-Storage today?  Most facilities are nearly 100% leased with increasing rental rates and when new properties are opened, lease-up is at all time record speed.

The demand for new Self-Storage is so strong, that it is driving developers to look for existing commercial or industrial buildings to convert.

Click here to watch the above video.

In conclusion…One of my personal reasons why Self-Storage is so exciting is that it may be the easiest of all types of real estate to manage and lease. This is a quality of life choice to participate in Self-Storage ownership today.

As a result, many investors use their Self-directed IRAs and 401Ks retirement money in self-storage properties purchases.

Why Dallas Developer Entered Self-Storage

muti-story-ss

Multi-Story Self-Storage

Introduction…A Dallas developer, Baranof Holdings, has entered the self-storage arena with eight different properties in various levels of development.  Why jump into this space with eight properties to start?

What makes self-storage so attractive?  “Superior fundamentals in the space that are not found in any other property type,” says Andy Hendricks, managing partner at Baranof Holdings, explaining why the company wanted to invest in self storage.

“Large investors and institutions who have identified the storage sector for its performance during the downturn have a high demand for quality infill properties, yet few quality infill properties are available for acquisition as the public REITS rarely sell any properties of quality. The result is a void of quality infill product available for acquisition.”

“We (Baranof) continue to search for quality in-fill development sites in high barrier to entry markets. As the development cycle continues to progress in storage, we feel that developing in the right locations is going to be more important than ever. We will continue to focus on difficult but quality sites rather than any specific quantity, keeping close tabs on the overall market and especially the growing amount of development.”

In conclusion...This Dallas developer is one more example of social proof that self-storage is the real estate segment that continues to present opportunity.  Our model is to purchase and or develop properties on the edge of the metro areas that are not competition with the large public owners.

Drop an email, if you want additional information on this exciting low maintenance cash flow machine.

3 Things To Know About Self-Storage Ownership

3-thiings-to-know-about-self-storage-ownership

 Introduction…There are many factors to consider when purchasing commercial real estate.  We like self-storage because there are fewer items of concern.  Experts are saying that it will be at least the year 2020 or 2022 before the current self-storage demand is met. With an underserved market, is it no wonder that new properties in Texas go to 95% to 97% occupancy in a short period of time. Today, let’s look at the “3 Things To Know.”

  1. Buy…Are we in a mature market where most of the available building sites are taken and the city is not allowing new self-storage building permits.  This market may well be an area to purchase an existing property.  Market analysis is relatively easy here and we can take historical operating data and project future operating results.  Then we calculate the current and future value of the purchase.
  2. Build…Great building sites are often located in fast growing areas on the edge of well-developed metro areas.  These areas have rising household incomes with new housing construction underway. One area we are searching has a 50% projected population growth in the next five years and 5,200 residential lots coming on line.  If we are in the path of growth, we can often capture market share.
  3. Current supply…Is our market currently undersupplied, over supplied, or at equilibrium?  Equilibrium is described in three ways.  First, do we have 7.8 to 7.8 square feet of storage per person.  I prefer a second calculation that is easier to determine.  Do we have one storage unit per 10% of the households in our trade area.  The third measure is do all the storage properties in our area have 90% or greater occupancy.

Click here to watch 3 Things To Know About Self-Storage Ownership

In conclusion…There has never been a better time to buy or build self-storage.  As in all commercial real estate, current market analysis is critical and understanding the trend of that market is as important.

Bill Moist, MS, CPA is Founder and President of Professional Equities, Inc.  PEI is a commercial real estate firm currently focused on buying and building self-storage.  Bill has over 70 successful commerical real estate projects.  He is available to speak at civic and real estate clubs on self-storage investing.  One of the frequently requested topics is “8 Ways To Supercharge Your IRA or 401K.”

What to do nextClick here to Get 9 Little Known Secrets For Steady Real Estate Income  FREE

 

Announcing Better Marketing Tools That Makes Self-Storage Easy To Manage

Stress Free Zone

Introduction…Last week I was reviewing the possible purchase of a self-storage property just west of I-35 south of Dallas.  I was quickly able to see that the revenue reported was correct because the owner was using the number 1 marketing/management self-storage software tool. The rents were properly reported because it tied back to the occupancy report.

This means the rent collected was reflected as paid for each individual unit.  It made it very easy for the owner to verify that all the rents were properly deposited in the company bank account. The report showed how much was collected in check, credit card and cash.

This is a great example of what we can do today with the best marketing/management tools.  Here are a few of the benefits to owners or investors:

  • Internet Listing Services to connect with more potential renters
  • Call centers to answer prospects calls and make it easier to rent from you
  • Online rentals to make it easier for potential renters to rent and give you money
  • Online account management to make it easier for tenants to give you money
  • Online credit card, ACH, and Bank Draft processing to make it easier for tenants to give you money
  • Tenant Insurance to make it easier for tenants to insure their storage and give you more money
  • Revenue analytics to make it easy to manage and market the property increasing revenue to you

It seems to me that every business should make it as easy as possible for customers to give you money.  Oh yes, we do have the property office managed live for those who want to see and talk in person.

In conclusion…Relatively inexpensive marketing/management tools have now made self-storage ownership as close to passive income as available in real estate today.  Join me in this great venture to passive income.

Avoid Average Investor Sink Holes

InvestorSinkHoles

By: Bill Moist, MS, CPA

Introduction…Misinformation is the worst enemy of those planning for retirement.  Here are three critical items you have not been told before by the news media.

  1. Here is a shocking report according to Dalbar Research- the company that researches the Mutual Fund industry. The average annualized returns over the last 20 years:
  • The stock market has increased 4.9%
  • Junk bonds 8%
  • The average investor (asset allocation model) annualized 2.1%
  • Inflation averaged 2.2%
  1. How did the most left leaning election 4 years ago affect the market?
  • Dow then 14,000
  • Now 18,400 (a 31% increase)

Job growth

  • Before the great recession 140 million jobs
  • Now 150 million jobs
  • Now 5.5 million jobs unfilled and many of these are good jobs.

Not arguing for a left leaning government, but those changes

tend to be longer term.  In comparison, we are still less left

leaning than Europe or Asia.  U.S. investing has become a

safe haven for foreign investors.  Recommendation…Avoid

making financial decisions solely on election returns as it’s

not intuitive.

  1. The best asset classes 15 year returns in order:

Click here to watch the video  Avoid Average Investor Sink Holes.

Real estate investment trusts (with self-storage REIT at the very top of the list)

  1. Emerging market equity
  2. High yield bonds
  3. Small cap
  4. Large cap
  5. Asset allocation funds- what average investor uses

Conclusion…These rankings change with the time being calculated.  But, real estate has been the top performer for 20 years. And Self-storage REITs have been the best segment in that class.

Take action now… You owe to yourself to find out how one of the Forbes 400 built his fortune on self-storage.  To discover what he knows, click here to “Get Little Known Secrets For Steady Income” FREE.  At self-storageinsider.com

Reference:  Networth Radio Show, Spenser McCown Group, August 26, 2016

This is Bill Moist, MS, CPA speaking Avoid Average Investor Sink Holes

Self-Storage’s Appeal Defy Experts

Self-Storage w Brick

Self-storage assets lack the architectural themes and fine details that produce trophy properties in the office and retail sectors. No gleaming lobbies or guest amenities like the hotel sector. Yet investors have recognized other virtues in the self-storage asset class and driven capitalization rates (the annual return on the purchase price) down by 2.75 percent in recent years, a pace of almost .05 percent per quarter, according to a recent assessment from real estate services firm CBRE.

Now however, capitalization rate compression in the sector is slowing down. After the close of the first quarter of 2016, the average cap rate on transactions was 5.70 percent, a change of .04 percent. True enough, the drop in capitalization rates has slowed, but rates are still moving in a direction that is benefitting investors and owners.

“People love storage,” says Chris Sonne, executive vice president and national self-storage valuation group leader in CBRE’s valuation and advisory services division. “While there wasn’t a lot of activity in any sector in terms of transaction volume, when you compare that to declines in other asset classes, like office, self-storage was impacted the least.”

Strongest Annual ROI...Self-storage has the strongest average annual ROI performance, around 18.0 percent, of any equity REIT sector between 1994 and 2014, according to NAREIT.

Trade areas for self-storage units are about three miles, according to Sonne. In 2010, analysts took note of the revenue models for the properties, and noted an unexpected and stunning benefit. If, for instance, a self-storage property has 500 units, the owner of that facility might raise rents by $5 in a lease’s fifth month. Tenants do continue to pay. In month 10, the rent might go up another $5 or even $10, and tenants still continue to make payments on the unit.

“You can raise rents without losing occupancy,” Sonne says.

In conclusion…“The sector is as close to a recession-resistant property class as there is,” says Arlen Nordhagen, CEO of National Storage Affiliates Trust, a Greenwood, Village, Colo.-based REIT. This advantage over other asset classes and the low management requirement has contributed to the massive influx of capital into self-storage acquisitions and development.

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Posted by: Bill Moist, MS, CPA, Self-Storage Buyer

Investors Lock In Solid Returns…Today’s Opportunity

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 This Nich product, Self-Storage… fills up.

Interest in self-storage… has skyrocketed during the last decade. This niche property’s stable returns and growing demand are drawing attention from an array of new investors, particularly large institutions seeking to diversify their portfolios. These new players are increasing transaction volume at a record-setting pace. In a recent joint venture, Extra Space Storage and Prudential Real Estate Investors bought Storage USA’s 458 facilities for $2.3 billion from GE Commercial Finance. This deal clearly demonstrates that the self-storage asset class has arrived.

Strong market fundamentals further support the sector’s growing presence. The United States has approximately 54,000 self-storage facilities totaling 2.63 billion square feet with a market value of about $120 billion. Public ownership of self-storage currently hovers around 13 percent, which is higher than that of apartment, office, and warehouse sectors. Extra Space Storage of Salt Lake City and U-Store-It of Cleveland both completed public offerings last year, joining existing self-storage real estate investment trusts Public Storage, Shurgard Storage Centers, and Sovran Self Storage. Other companies quickly are following suit by acquiring and developing properties with the intention of forming new REITs. These companies are fueling a consolidation trend that slowly is changing the self-storage market landscape.

Today’s opportunity…Public ownership of self-storage is currently only 13%.  That means 87% of the storage in America is in private hands.  In fact, a large portion of the ownership is what we call mom and pops.  What that means is someone had a tract of land that they built a self-storage building.  It leased up and they built a second and then a third.  We are looking for that mom and pop where we can bring significant technology and marketing upgrades to the property.  This increases both rents and value.

What’s next?  If you have not done so, Optin to “Get 9 Little Known Secrets For Steady Real Estate Income” at www.self-storageinsider.com

Texas Real Estate Opportunity Now

Texas Commerical Real Estate Opportunities Now

Texas faired better than most states…Since the 2008 captial markets implosion, Texas has been a favored state for commercial real estate. The Texas population growth from all sources starting July 1, 2014, to July 1, 2015 was an amazing 460,000 people.  The population of Texas could double by 2050, says a new report released by the Office of the State Demographer.

Texas is now the 12 largest economy in the world and produced 17.8% of U.S. Exports in 2014.

So, with all that population growth, commercial real estate of all types are in high demand.  But, where can the local investor compete with all the Wall Street money coming to Texas?

We believe that we’ve found one area where the big money is not looking.  That is in the secondary self-storage market.  In fact, 87% of all self-storage properties are owned by mom and pop operations in these secondary markets.

The biggest opportunity today is in what we call value-add properties.  These mom and pop operations are typically the only or main source of income so little money is put back into capital improvements or technology.  Some don’t even have a marketing website or modern management software in place.  And many don’t have fences, security gates and cameras.

These capital improvements are generally not that expensive, however the resulting increase in occupancy and/or rental rates can be significant.

In conclusion...We are purchasing those self-storage properties where some capital improvements can make a significant increase in occupancy, rental rates, and ultimately resale value.

For more information: Get 9 Little Known Secrets For Steady Real Estate Incom…FREE at Self-StorageInsider.com  This is Bill Moist, DHL, MS, CPA discussing Texas Real Estate Opportunity Now.