Investment Articles

The Self Storage Association (SSA) in the UK is holding a European conference to be held in June of this year in Berlin, Germany. It’s entitled “Going for Growth” and is deemed to be “Europe’s largest self storage conference & trade show.” It includes seminar sessions, trade shows, and an annual dinner and awards ceremony.

What does this mean and why is this bit of event important? It simply means that self storage investment is spreading like wildfire-especially now that there is a global recession and people are looking for investment properties that are more stable and solid. And do you know where it all started? Here in the U.S.! Now, conventions are being held in Europe to help raise awareness as to the benefits of investing in self storage-as a way of rejuvenating the flailing economy of the world.

Ok, let me tell you a bit of history. Self storage first began in the United States in the 1960s. It’s growth was monumental as people did need a place to store their stuff-well, those they can’t sell and those that hold precious memories that they can’t throw away. It reached the UK in the 80s and it has spread to Europe and Asia in the last decade. Now, the fact that self storage has broadened to include almost all the continents, it says one thing about this industry; and that is, it is something worth investing into.

If it’s not one of the places to find best investment properties, then it surely won’t be used to revive floundering economies, now would it? Let me tell you a bit more about self storage investment-just so you know what to invest in when it comes to buying commercial properties.

Self storage is recession-proof. The stuff that people buy when the economy is good does not just go away and disappear once the economy goes bad. Those that they can’t bear to auction off get carted off to a storage facility. I guess this habit is also a symbol of hope as these people have not lost hope that their lives will become better again and they’ll soon move back into a bigger place where they can bring back all of their stuff.

It has a skyrocketing demand. Like what I’ve mentioned, people always need a place to put their extra stuff in-whether the economy is good or bad. Plus, the almost 79 million baby boomers who will be retiring will need a place to store the things they can’t take into their new and smaller homes, as well as when they go on vacation. These two combined make up for a steadily increasing demand for self storage units.

Banks almost always approves loans for self storage. Why? Because self storage has the lowest bank loan failure rate at only 8% and because it presents a lower investment risk as you only need a 67$ occupancy rate to break even. It also has low development (hello, steel roof, walls and doors only!), labor costs (you only need one facility manager or even just a kiosk would do!) and operating costs (no leaky roofs and broken toilets!).

These are just the top three reasons why self storage investment is taking the world by storm! It’s spreading steadily and soon, the market will be tight with competition. So, I advise you-just like what I’ve been advised of-to take advantage of this opportunity now and be a factor in helping our economy recover.

Commercial Property Investing in Self Storage is a cash flow machine with hidden benefits.

The Self Storage Association (SSA) in the UK is holding a European conference to be held in June of this year in Berlin, Germany. It’s entitled “Going for Growth” and is deemed to be “Europe’s largest self storage conference & trade show.” It includes seminar sessions, trade shows, and an annual dinner and awards ceremony.

What does this mean and why is this bit of event important? It simply means that self storage investment is spreading like wildfire-especially now that there is a global recession and people are looking for investment properties that are more stable and solid. And do you know where it all started? Here in the U.S.! Now, conventions are being held in Europe to help raise awareness as to the benefits of investing in self storage-as a way of rejuvenating the flailing economy of the world.

Ok, let me tell you a bit of history. Self storage first began in the United States in the 1960s. It’s growth was monumental as people did need a place to store their stuff-well, those they can’t sell and those that hold precious memories that they can’t throw away. It reached the UK in the 80s and it has spread to Europe and Asia in the last decade. Now, the fact that self storage has broadened to include almost all the continents, it says one thing about this industry; and that is, it is something worth investing into.

If it’s not one of the places to find best investment properties, then it surely won’t be used to revive floundering economies, now would it? Let me tell you a bit more about self storage investment-just so you know what to invest in when it comes to buying commercial properties.

Self storage is recession-proof. The stuff that people buy when the economy is good does not just go away and disappear once the economy goes bad. Those that they can’t bear to auction off get carted off to a storage facility. I guess this habit is also a symbol of hope as these people have not lost hope that their lives will become better again and they’ll soon move back into a bigger place where they can bring back all of their stuff.

It has a skyrocketing demand. Like what I’ve mentioned, people always need a place to put their extra stuff in-whether the economy is good or bad. Plus, the almost 79 million baby boomers who will be retiring will need a place to store the things they can’t take into their new and smaller homes, as well as when they go on vacation. These two combined make up for a steadily increasing demand for self storage units.

Banks almost always approves loans for self storage. Why? Because self storage has the lowest bank loan failure rate at only 8% and because it presents a lower investment risk as you only need a 67$ occupancy rate to break even. It also has low development (hello, steel roof, walls and doors only!), labor costs (you only need one facility manager or even just a kiosk would do!) and operating costs (no leaky roofs and broken toilets!).

These are just the top three reasons why self storage investment is taking the world by storm! It’s spreading steadily and soon, the market will be tight with competition. So, I advise you-just like what I’ve been advised of-to take advantage of this opportunity now and be a factor in helping our economy recover.

Commercial Property Investing in Self Storage is a cash flow machine with hidden benefits.

This is a story that you may be familiar with: Bank wants financial statements for your investment property to obtain a refinance. Your CPA requests your financial statements in order to prepare tax returns. It’s been a while since you last looked at your financial records and now you realize that you are several months behind on your accounting and bookkeeping records. With the day to day hustle and bustle, there just isn’t enough time to go through all the receipts, credit card statements, and bank statements to determine where you stand financially with regards to your investment properties. Then a feeling of guilt and stress lingers over you…

If you have experienced this feeling, not to worry: You are one of the MANY that we as CPAs see all the time. Bookkeeping is a tedious process. And frankly, there are not may people out there who enjoy doing it. The two most common complaints that we hear most often are: 1) I don’t have the time to do the bookkeeping and/or 2) I can’t afford to hire a bookkeeper. In this article, we will share some of the benefits of having accurate and up-to-date financial records as well as techniques to decrease the amount of time spent on maintaining those records.

Unfortunately, one of the most common ways that real estate investors keep track of their bookkeeping is what we refer to as the “Shoe-Box Method”. Essentially, this method involves the individual investor stashing all the receipts that have accumulated during the year into a big shoe-box. At the end of the year or tax return preparation time, individuals usually dread having to go through the box of receipts that are now spilling out of the box and spend a couple hours or even days going through and organizing these receipts into some sort of order. Other investors use accounting software to track their income and expenses but don’t really keep them updated on a month to month basis. There are two major flaws with this. First, the investor does not have a clear understanding of the actual performance of the investment property during the year if all the expenses are either kept in a box or not entered timely into the software. Second, receipts may be lost or misplaced and that results in inaccurate income statements as well as lost tax deductions! Those are two big reasons why having an accurate and updated bookkeeping system is extremely beneficial to those who invest in real estate.

So what are some of the benefits of having an accurate and updated accounting system for your investment properties? First, it builds credibility with lenders, buyers, and professional advisors. Imagine trying to take a box of receipts into a bank when you are trying to re-negotiate a loan on your property. The chances that the banker will spend time going through your receipts or relying on your financial information is slim to none. What about when a potential buyer requests to see financial information to determine the profitability of the investment property? Having accurate financial statements not only builds credibility for the property but it also allows potential buyers to do a quick evaluation and move forward in the buying process. Another benefit of accurate bookkeeping is that it allows the investor to review the financial performance of the investment property on a monthly basis. By doing so, the investor is now able to strategically determine where to cut costs, where to increase spending, and identify high performing areas within the investment that can be leveraged or tapped into to increase investment returns. Another important benefit of accurate bookkeeping is the ability to plan for tax deductions. When all your expenses are tracked carefully throughout the year, the chance of losing a tax deduction due to a lost receipt decreases significantly.

Although we all know the many benefits of having accurate bookkeeping, the reality is that most of us either don’t have the time to actually do it or don’t have the money to hire a bookkeeper. A good way to accomplish this would be to hire your CPA to work with you to “set-up” an accounting system that works for your properties. This means having them work with you to set-up accounts that accurately reflect the common and recurring income and expense items relating to your properties. Next, we recommend that you work with your CPA to streamline and automate as much of the data entry process as possible. The 2-step process above will allow you to develop and maintain an accounting system that is consistent with your tax saving strategy and allow for accurate and meaningful tracking of income and expenses for performance analysis. There are accounting software out there that can automate a pretty significant portion of the bookkeeping process. So setting it up correctly can significantly diminish the amount of time you spend on data entry.

Remember that having accurate financial information is a critical component to your success as an investor. It allows you the ability to make informed decisions on ways to increase your return on investment as well as maximize your tax benefits. You may not think you have the time or money for bookkeeping for your properties, but can you really afford to lose out on the tax benefits or opportunities to maximize your return on investment?

Amanda Han is a Managing Director at Keystone CPA, Inc., a firm specializing in tax mitigation strategies for business owners and real estate investors. For complimentary top-notch tax mitigation strategies, visit http://www.keystonecpa.com and sign up for the Monthly Newsletter and Member’s Library.