Weeks 40 and 41 of Self Employment:

Houlton Storage Garages LLC finally has the security camera system pretty well installed. While installing the system the contractor didn't quickly install their underground conduit and pull wires. They came and they went and then they came and went again. By doing so, we ran into a few freeze-thaw cycles which inevitably filled up the conduit with water and then ice. We can argue all day long about what should have been done or not done but at the end of the day, we're in the same predicament, open trenching with conduit in most, if not all of it with the inability to get through a section of 25' under our driveway that will have to wait until spring. We've literally tried everything from pouring salt and windshield washer fluid into it, tried drilling it out with really long drill bits (15' long), to putting a heat gun on one end for an extended period of time. All efforts were futile (most of which were my idea, btw) and really didn't get us anywhere. Our solution was to put a temporary camera in a tree that would cover, albeit from a bit farther away, the area we couldn't get two cameras to. The camera on Building 4 would also have to wait until spring. The good news is that most of that area is currently covered by the cameras on Building 3 that we were able to connect. In the end I'm satisfied with our coverage but wish the process went a little faster. After all, our original quote mentioned that the entire project would take 3-4 days. 2.5 months later, we have something to get us through the winter. The open trench is another story. I worry that snowmelt will destroy our ditches in the spring. A big part of the problem was that the trenches were run in the ditch bottoms rather than on the top of the berms as I requested, and therefore when we got a warmup, all water runs to the ditches and therefore the trenching. No bueno. I just hope all parties learned from the experience. Maybe, maybe not. I learned that I need to be more vigilant with my contractors otherwise they just do what they feel is reasonable. Nothing up until now has been malicious, but preplanning has been a little suspect at times.

Storage Garages of Hudson: Still working on renting up our Building 3. We have seen a lot more interest since Jan 1st but not much in the way of actually renters. Mostly people looking for mini-storage which we really aren't. We have big units, for lots o' stuff. We're cheap based on the size of our space but we're expense if you're looking to store a few boxes and a sofa. Lotsa boxes and sofas? We got you covered!

Border Properties: Prescott is still going strong as far as we can tell.

Other angles: One of my 2 goals for 2019 is to do a deal with a partner. I want my friends and/or family to also reap the benefits of a good investment real estate. There are a ton of benefits of real estate investing that I may get into in a future post but my favorite two are: 1.) You can be as active or passive as you want to be - you can bring the expertise to a project, you can bring money to a project, or you can bring any combination of both. 2.) Real estate is the most tax-favored investment asset on the planet. If you make $100k at your normal job, expect to pay approximately 40% in state and federal taxes (not including sales tax on all the goods and services you buy). So you bring home $60k. With RE if you make $100k, you have the benefit of depreciation and write-offs. You're tax bill is likely to be in the 20% range. That's the equivalent of a 33% raise at work (from $60k take home to $80k take home). The objective is to keep as much of the dough at the end of the day, right? That's why 401Ks are good. They keep all your profits in the deal compounding more and more of your money. The bad news is that you can't take it out until 59.5 years old. What if you wanted to retire at 55? You better have some savings or income to live off of from 55 to 59.5 yo. Something to think about/consider. With income producing real estate you get to make money, pay reduced taxes on the income, and spend it when you need it....now. Whereas you HAVE to wait to spend your 401K or incur penalties (also known as taxes).

Other opportunities:
So I've been putting myself (and family) out there for 41 weeks now. I realize that I'm plenty annoying but I've also been getting some amazing responses regarding investing. Some friends are looking to put money to work, some people have properties that they want my assistance developing, some people have questions about self storage, and some people are looking to sell properties. Putting myself out there has been good for networking purposes and I see it as easy to avoid if you don't want to read this. Hey, I completely understand. But I also want to say that everyone should put themselves out there to a certain degree so others can know what your hopes and wants are. You never know who might be reading.

Various opportunities that I've been chasing:
Outdoor boat storage facility
3 - Mini Storage facilities
Low income apartment building
Assisting others with the development of a garage condo facility
Taking over a storage facility development

My second goal for 2019 is to add 2 facilities to our bag of tricks this year. This goal goes hand in hand with my first goal. We don't have the resources to take down two facilities by ourselves and therefore if we reach the second goal, goal #1 will also get checked off the list. Come hell or high water, we're going to accomplish both goals this year. We'll have to figure out the management side of thing but we keep saying that the next facility will afford us the ability to hire additional help for Angie. Although there will be work up front, hopefully this means that Angie can slowly unwind the big day-to-day responsibilities. Wait, is that a 3rd goal? I think it is!

Week 39 of self employment:

Property Updates:
Houlton Storage Garages LLC - We are getting close to wrapping this project up (Phase 1 anyway). Getting a bunch of documents to the bank so that we can close out the loan. We have an SBA loan which allowed us to put down less money, which is great, but it also adds a few extra hurdles. Nothing that we can't handle but it is stuff that adds time and complication.
We had to extend our loan terms on our bank loan so that our mortgage doesn't come due before we close on the SBA portion of the loan. I won't bore you any further with this but if you have any questions about SBA (Small Business Administration) loans, feel free to reach out. We've done 3 SBA loans now and I do have to say they've been great. It takes risk off the banks which allows them to more confidently loan out money to startups. Banks are inherently risk averse and SBA loans reduce their risk to the point that they can loan you money with confidence. And when your loan is backed up with hard assets, that is risk they can live with.

Storage Garages of Hudson - We were pretty excited to rent our office space and warehouse space to a budding entrepreneur but that seems to have fallen through. We certainly wish her the best but it would have been a good fit for our current tenant and facility.
We built this facility knowing that many people were looking for a place to "dock" their boat in the summer and winter months and to protect their RVs and campers from the elements. Sun can really beat up a camper or RV, nevermind snow, ice, and rain. However, the fun part of owning a storage facility is meeting all the people who rent from us. In the end, only about 1/3 of the tenants use it for what we thought they would. Obviously, businesses are our greatest percentage of renters. These people generally have a lot of stuff that they need to store to run their business. Their garages and driveways can no longer accommodate their growing businesses. It's great knowing we're helping small businesses grow.
As far as the facility, our second building (B3) is still empty. With the holidays, things were definitely slow. Since the first of the year, we've received a lot more inquiries. We hope this continues. We realize this isn't exactly the busy season but we expect traffic to pick up soon.

Border Properties - No real news to speak of.

Other Properties - We are looking at a handful of properties that we're trying to work out a deal on. I don't think any of them are officially on market. This is a good and bad thing. The good is they don't have to monkey around with all kinds of tire kickers the bad is that I have to come up with a price out of thin air that meets both of our expectations. I think 2019 is going to be a banner year if we can get creative enough to get some deals done.

Other - We had a meeting of the minds to discuss global cashflow and expected profits for 2019. Up until now we've only made interest payments on Houlton and Hudson and that is going to end for Houlton very soon (March). We also know we'll have a sizeable tax bill due to the sale of our mini storage in Prescott. We are hoping the depreciation on Houlton and Hudson will offset a bunch of that but in the meantime we're hoarding cash like fools. This is the part of our self employment that has gotten a little uncertain. We think we have things covered but you never really know by how much until the taxes are fully run. We had an estimate run earlier in the year but that didn't include Hudson or some consulting income. We've tried our best to estimate the tax implications of most everything but we always have to hold our breath a little come tax season. My strategy at this point is estimate high and hopefully get another income producing property in the door to make some money to help pay the tax bill come April. And if that isn't enough, we'll ask for an extension to hopefully make more money to pay the tax bill. Wait, is it bad that both of my strategies involve adding properties to pay the tax man? Only time will tell.

Weeks 36 - 38 of Self Employment:

Wups. 3 weeks have passed without an update. It's definitely time to reflect on the past few weeks and how I can improve our business practices. The first thing that comes to mind is contractor accountability and timeliness. We are struggling to get things done on in a timely fashion due to contractors being busy. First off, I will say that I completely understand that contractors are busy. However, there aren't any excuses for contractors continuing to push our projects off. We have had issues with our daylight sensors on our exterior lights since the facility first opened (in Feb of 2017) and we just got them finished this week. I assumed (wrongly) that if I set up a date for a contractor to come and do repairs (this does not only reference the electrical contractor), that the contractor would come on that day and stay until they finished the work. That has been a completely wrong assumption. And that, my friends, is MY fault. I have been running with nothing more than a signed estimate/proposal as my construction agreement. That has allowed the contractors to drag out our projects on their terms or just show up at their convenience. Effectively, I was the accordian in their schedule. I shrunk and expand as their needs arise. That has amounted to me tapping my foot while potential renters wait until units are done and I continue to tell them "next week". In the end, I look like a boob that can't keep his contractors in check (which is precisely true). This year I will be putting into writing the tasks, start date, completion date, and damages for not achieving their completion date. I was clearly too lackadaisical. I assumed their word was good. That is not enough for me. We don't have that benefit. We lose money when our units aren't rented. Not to mention we are trying to provide a great experience for our tenants and when we have to tell them "next week" for 4 weeks in a row, our tenants don't walk away thinking, "Boy, I just had a great experience". I see the maxi storage business as 50% customer service with the other 50% being a box for people to put stuff in. People are paying for convenience so they want that throughout their experience, not just the day they start renting. I digress....

Another issue that goes along with this is having accurate plans drawn up. In more than one situation I've argued after the fact with contractors about what they did and didn't include (or should have and shouldn't have included). If it was on our other four buildings, why wasn't it included on the 5th? The answer is always, "well, it wasn't included on the estimate so it's not included". If I can't rely on the expert in that field, who the heck can I rely on? I'm going to start with requiring plans and adjust accordingly if that isn't enough. I'm getting tired of having to come up with additional funds because I didn't catch the lack of fans in an estimate (even though I said to match the other building). Part of me feels like that's not my fault but in the end, it is because I've been too easy going. That is not a good trait to have when your checkbook is on the line. Who's checkbook do you think the contractor is concerned about, mine or theirs?

I'm sure I'll elaborate on this a bit more in the future but for now, on to facility updates.

Border Properties LLC: Still trucking along. We are contemplating refinancing some money out of this property to do some tax advantaged tricks but we haven't completely decided on that yet. With the new cap on interest deduction from your primary residence, we are exploring the idea of taking more out of our business real estate to transfer some of the interest write offs from our personal residence to investment properties. I may be incorrect in thinking that there is a difference. I know Trump's new tax plan is meant to spurn more business related investment so I'll have to see if this benefits us. More on this later.

Houlton Storage Garages LLC: Again, struggling with our security camera installer. They blame weather. We blame poor planning. In the end, it doesn't matter because we are stuck with it taking way longer than it should (in our opinion). Therefore, we can blame them, but really, I'm blaming me. I need to have more concrete start and finish dates.

Electrician finished up replacing daylight sensors for our exterior lighting and one remaining fan switch. Glad to be caught up on this....sort of.

We hired another electrician to split unit 1E into two units (1E and 1F) to account for demand on our smaller units. We are still waiting for a meter to get installed over one month later. Apparently we need a permit to split the electrical and add a partition in between the units. Electrician didn't think we'd need to pull a permit. I agreed. We were wrong. Got the permit last week (with penalties for doing the work prior to pulling a permit). Live and learn...again.

Gates are up and fully functional. No calls yet either (uh-oh, did I just jinx myself?)

Snow plow drivers backed/slid into the corner of Building 5. Not the first, not the last dinger. They are 2 for 2 in the past two months so I hope they can go the rest of the season without any more incidents.

Storage Garages of Hudson: Interestingly enough, we have to change our address. Apparently the road that is basically our driveway was erased from Township existence a while back but no one really realized this during our Township hearings. Anyhow, other than the annoyance of having some things printed out with the old address, I think in general, the new address will be more straightforward for customers (assuming Google Maps directs people to us properly).

We have Building 3 (our second building) up and complete with lights mounted and working. I continue to worry about the exposed wires (not in conduit) that are now under the gravel parking lot that got hit by the excavator while digging the foundation for Building 5 this fall. The electrician didn't come back and fix things before it got buried. They will now have to dig it up in spring to fix the broken conduit. Disappointing to say the least. The grading contractor did need to get things buttoned up before freeze, so I had to ask them to move forward with covering it up. It is yet to be seen whether this was the correct call or not (it's probably not likely). In the meantime I'm going to act like an Ostrich and stick my head in the sand until spring when we have to deal with it. For now, I'll sleep reasonably well at night.