Wealth Wisdom System

1. Not starting sooner – I should have looked into this industry years earlier when the opportunity presented itself and also when my wife had suggested we look into it.

Learn How You Can Invest in Self Storage Facilities

2. Not implementing an industry related property management tool for running your operations and effectively handle the accounts receivable (incoming rent). There are so many facility owners literally flying by the seat of their pants using accounting software to manage their facilities, or in some cases, a spiral bound notebook! Investigate a few, and then implement from the beginning. Your bookkeeper, CPA, will thank you for doing so (and so will you).

3. Not counting the actual number of units, and comparing each and every unit to the rent roll given by the seller. At one facility, we found that the actual # of units were 7 fewer than what the seller had represented in his listing sheet for the property.

4. Wrongful sale of tenant’s goods. I and my attorney friends could talk about this for an hour, but the bottom line is that this single oversight can land you in more hot water, and open you open to a lawsuit quicker than just about anything else in this business. Each state has its own lien laws, which have to be followed to the letter to ensure you are not sued. The laws can be found on the web in each state at the government level or by going to www.storagelienlaws.com

5. Not hiring an inspector. – It’s true, there aren’t too many moving parts to a storage facility, but you still need to have an inspector to look at the site for drainage, the structures, HVAC, and to look at the roof construction/installation.

6. Not hiring a management company when buying out of state. We use property management companies when investing out of state so that if (when) the employee leaves or has to be let go, they will replace that person immediately with no disruption to your business.

7. Not accounting for increases in Property taxes upon the sale of a property you are purchase your facility. If you buy a property for $1,000,000 and you carried the same property tax figure going forward under your ownership, and the last time the taxes were assessed, the value was $400,000, you may be in for a very unpleasant surprise shortly after the sale. It’s important to look at the tax rate and then multiply that by the purchase price to get a more accurate depiction of what the taxes are going to look like after you purchase it.

Learn How You Can Invest in Self Storage Facilities

I’ve been studying real estate methods for a few years. Sometimes it’s hard to put all the pieces together. Where do you buy? What do you buy? How should you buy? Who should you choose to do the rehabbing? Who do you choose to manage the property? Etc. etc…

So I was pretty excited when I hooked up with Steve Hettema and his Passive REO investing program. Two different classes of houses are available. You examine the inspection reports for the homes in the company’s inventory and then pick the house you want. You can get a house for $29,000 that needs no more than $5,000 in repairs. Or, you can get a nicer house for $32,000 that needs no more than $2,000 in repairs. They hook you up with contractors to do the repairs, and then they hook you up with a local property manager to put a rent-to-own tenant in the house. You make $450 monthly cash flow until the rent-to-own tenant refinances and cashes you out. Since these homes are valued at at least $45,000, you make a profit on the back end as well.

How many of these $450 cash flowing houses can you get? As many as you want! Buy them inside of your self-directed IRA and build an incredible retirement plan for yourself!