Self Storage Review

Few would deny that real estate is a solid investment. Nationally, there hasn’t been a decline in home values since the end of World War II, according to the National Association of Realtors in a report the one-million-member trade organization released in March of last year. These widespread equity gains in residential real estate, as well as monies from other sources, have led many to invest beyond their primary residence and into income-producing properties such as rental housing, apartment buildings, or small office or retail centers. Over the years, many of these investment properties have built up substantial equity.

However, many seniors now find themselves in a quandary. They have become equity rich, but are cash poor– with increases in the value of their property far outpacing income growth. Plus, they have grown tired of the day-to-day property management headaches such as toilets, tenants and trash, and want to simplify their lifestyle and enjoy golf, grandkids and gardening.

Of course they could always sell the property and unleash that accumulated equity, but this can have disastrous tax consequences. Moreover, even if they decided to sell and take the tax hit, where do they re-invest? After all, the Dow Jones is still 1,000 points below its high water mark reached in January 2000, the NASDAQ is less than half of its March 2000 peak, money market funds are barely ahead of inflation, and saving accounts can’t keep pace with inflation.

INVESTMENT PRACTICES THAT DATE BACK GENERATIONS, EVEN CENTURIES

For years, investors have been using an investment option that allows them to sell a property and defer all taxes on capital gains by using the profits to acquire another “like-kind” property. In use since the 1920s, a 1031 exchange, so named for its designation in the IRS tax code, allows you to sell your income-producing property and “exchange” it for another while deferring capital gains taxes. Of course there are rules by which investors need to abide. Among them: the exchanged property must be of the same or greater value; the seller has 45 days after closing escrow on the old property to identify a new property; the seller has 180 days from the sale of the old property to close escrow on the new property.

Meanwhile, another real estate investment opportunity, Tenant-In-Common (TIC) ownership, has been around for centuries, dating back to British Common Law. TIC ownership allows for multiple parties to own an investment property, with each fractional owner holding separate title to his portion of the property. Additionally, like any property held in sole ownership, fractional ownership in a TIC can be purchased, sold, gifted, bequeathed by will or inherited. Naturally, it is also subject to property taxes, gift tax, and estate and inheritance taxes in the same manner as a solely owned property.

TIC ownership has been gaining momentum over the last 10 years, due largely to the increasing costs of acquiring real estate. By combining their resources, multiple investors can think beyond what they could purchase on their own, including gaining access to institutional-grade properties, such as grocery and drug store anchored shopping centers, large office buildings, malls, and multifamily apartment communities.

With the increasing popularity of TIC ownership, in March 2002 the IRS issued Revenue Procedure 2002-22, which set forth formal guidelines regarding the structure of TIC investments, including the maximum number of co-owners allowed in a property (35).

COMBINING OPENS OPPORTUNITIES TO SENIORS AND BABY BOOMERS

Many seniors and Baby Boomers are now finding that investing in a Tenant-In-Common property through a 1031 exchange is an attractive– and increasingly mainstream– investment. Now, instead of merely exchanging a “like-kind” property as part of a 1031 exchange, an investor can sell the property and pool his proceeds with other investors. This allows the investor to swap, for example, that sole ownership in a three-unit apartment building into a fractional ownership of a class-A office building in downtown Chicago, as well as an additional fractional ownership of a 220-unit, professionally managed apartment complex in the suburbs of Los Angeles. Or the investor could swap the proceeds from the sale of a strip retail center into a regional shopping center anchored by national tenants.

Aside from freeing the investor from the obligation of property management, the investor has “traded up” into institutional-grade properties that are professionally managed and have received professional scrutiny for their continued financial performance through a comprehensive due diligence process. Also, the investor can potentially reduce investment risk through geographic diversification and investing in a spectrum of property types. The TIC investors get the same oversight that’s provided for a large institutional investor, including monthly reports, while potentially increasing monthly cash flow.

RAPID GROWTH IN 1031 AS TIC INVESTMENT

Since the IRS provided guidelines for TIC investments, total equity invested in this sector has more than doubled every year, according to Barron’s magazine. It went from $350 million in 2002, to $750 million in 2003, and to $1.8 billion in 2004. The total is expected to reach $4.2 billion for 2005.

But beyond the numbers, there are other factors contributing to the accelerated momentum of such TIC investments for seniors:

Demographics
Today’s class of seniors is the best educated and wealthiest ever. Investment and saving have long been a part of their financial discipline. Now, they are increasingly focused on wealth preservation, which involves minimizing the amount of taxes owed. TICs can accomplish just that– allowing a taxpayer to enjoy cash flow, potentially increase equity, while continuing to defer taxes.

Meanwhile, there are 76 million Baby Boomers (those born between 1946 and 1964) who are just beginning to retire, or preparing to do so. Perhaps no other generation has been so enriched by real estate. Consequently, they tend to be comfortable– and eager– to reinvest their gains right back in.

Lifestyle
Being at the beck and call of your tenants to repair an overflowing toilet, or an electrical malfunction is never fun. For a senior, the physical demands of hands-on property management can become that much harder. For busy Boomers it’s hard to find the time. Investment-grade properties– office buildings, shopping malls, apartment complexes and industrial properties, valued anywhere from $10 million to $300-plus million– employ professional asset and property managers. They relieve investors of day-to-day maintenance and leasing headaches. That can mean more days of uninterrupted golf, travel, time with grandkids and other pursuits.

Diversification
For those worried about a local real estate “bubble,” TIC investments give investors the opportunity to diversify into different real estate asset classes, upgrade their investment, and get into different markets. For example, by pooling the equity earned on a three-unit apartment building into a self-storage complex in the suburbs, a class-A office building across the country, or a 220-unit high-rise condominium tower, the investor softens potential revenue fluctuation from vacancies. He is also less beholden to the performance of a particular local market or asset class.

Estate Planning
For estate planning purposes, a TIC structured investment in inherently like any other real estate investment. Upon passing, your surviving heirs inherit the investments. They can either sell the real estate, 1031 exchange their investment into something else, or can continue the TIC process. Like it did for you, this allows your heirs to enjoy tax-deferred capital gains, cash flow, and the ease of having professional property managers deal with leases, tenants and maintenance.

AN INVESTMENT THAT’S RIGHT FOR YOU?

The benefits of investing in a property through Tenant-In-Common ownership are many:
o Ability to keep real estate in your investment portfolio
o Opportunity to diversify property holdings geographically and across property types
o Mitigation of vacancy risk with larger properties that have more tenants
o Elimination of day-to-day property management headaches inherent in sole ownership properties
o Deferral of capital gains taxes when acquired using the proceeds from a 1031 exchange

Of course, investors must remember that, TIC investments have the same material risks of their previous (indeed of all) real estate investments, including potential for property value decrease, illiquidity, change of tax status, and the possible impact of fees/expenses which may outweigh a property’s tax benefits.

Lastly, it is also important that the TIC real estate investment offered to you is structured as a security. When structured as a security the bar is set much higher for due diligence, confirmation of investor suitability, broker/dealer record keeping, and licensing and training of registered representatives.

This is neither an offer to sell nor an offer to buy real estate or securities. There are material risks associated with the ownership of real estate. Securities offered through Sigma Financial Corporation, Member NASD/SIPC.

During summer, it’s a great time to take stock of what you really need and don’t need. Without being guilty, if you haven’t used that resource book or statue of Zeus in a long time, get rid of it. Clutter is the deathknell of an organized room. After clearing as much as you can, observe the layout of your classroom. Are your shelves keeping what you use? Are your closets packed with items you actually need? Is there a missing opportunity?Double or Triple Use?At our classroom, we store our students books within our classroom. They are stored there, during summer. I realized once the student books are removed, I have five shelves that I could utilize with teacher materials. These materials, in turn, I keep in plastic boxes within an empty closet. When the students return, the closets are full of backpacks, the plastic box is a storage for their playyard equipment which arrives from where it’s stored at the athletic department, the shelves are emptied and then filled with my teacher ’stuff’. It’s a circular path of storage!Hang ‘em HighI don’t have much wall space. But students love (and I think need) to see their artwork. With the help of the plant manager, we created a ‘cross hatch’ of strong fishing wire, like multiple tic toe games. Until it’s in use, the fishing wire is unnoticeable. Using clothes pins, I can hang student artwork or creations. The cross hatch allows more possibilities than straight simple lines. Using yarn, I can create vertical lines when needed to hang smaller artwork and this also lets me more arrange more student work than if I simply clipped them directly onto the lines.Win with Cork PanelsAgain, the wall problem. On the plus side, I have many closets. On the downside, these closets are not ideal for pinning or taping anything on them, as this destroys the varnish of the wood. Well, after a year of feeling guilty about pinning the wood, I dove in and “resurfaced” the doors of two closets by pasting cork panels. This gave me a lot more space for pinning than a simple corkboard. I paneled the doors from to to bottom. Before you think it’s a 70s flashback (and it is) in my classroom it actually had a nice appeal. If I were to completely cork panel the remaining closets (and that is a goal of mine) I wonder if it will diminish some of the sound vibrations. Well, we’ll see. Now learn from my mistakes. First, sanding down the doors would have been better. It would have created a better surface for adhesion then the varnished wood. If I were clever, I would have sanded down only the areas being covered by the panels, leaving a nice varnished ring of wood around them. Second, use Liquid Nails brand ‘glue’ , specially marked for use with cork. Do not use those silly sticky back squares that the cork panel companies provide. In a classroom, cork panels will get heavy use and in a matter of weeks of pinning and unpinning, the sticky back squares will loosen and drop the cork, leaving an embaressingly pockmarked door. Thirdly, don’t be afraid of using the Liquid Nails glue. Experiment with different amounts and find what works right. You may find as I did that I had to hold a panel in place for about thirty seconds to keep it from sliding down. Once I did that, it “stuck” and til today, is near impossible to remove. Be Kind in DesignOh, please note: you can cut the cork panels with sharp scissors. If you want to cover your surface completely, I suggest you measure your area carefully, and then lay out your cork panels on a large flat surface. Mark where you have to cut, then cut. My assumption here is you will want to see evenly paced cork panels, not large pieces then skinny pieces filling in “short” areas. Or you can do it the lazy way (which isn’t bad) and start from the top, knowing that the bottom may be cut off short. Not too many people notice the bottom of an area, especially a door. In addition, any ‘design’ approach you use with the cork, do it consisently. If you’ve got a short bottom on one door, the door next to it should have the same short bottom. Haphazard patterns of any material is an eyesore. I’ve used tempera paint on the cork panels in small designs, like stamping, and it brightened up an otherwise plain cork area. I think an oil based paint would have been better, because the tempera paint gives off very tiny flakes after awhile.Cloth is BossSome classrooms have built in bulletin boards. A nice touch is to cover your bulletin boards with cloth. Some teachers use paper because its cheaper or more available. This is an okay option, but with cloth your background lasts longer, looks attractive when papers are taken down (the pin holes disappear) and really isn’t that much more expensive. If you are truly stuck for money (and what teacher isn’t) shop at a local thrift shop for an old sheet or curtain with an interesting pattern. (You may wish to cover your cork panels with cloth, but these panels are thinner than a real cork board, and may not hold up the weight of the cloth. You decide. I haven’t done it and can’t comment but those are my thoughts on it. Use a staple gun to affix the cloth. And don’t imagine you are Wild Bill Cody. Two or there staples along each side should suffice.Other ThingsI had too many coathooks in my closets. About sixty. I removed twenty and that left forty for my students on which to hang their backbacks without stabbing themselves on the arms. I also eyeballed the hook space, being careful not to plan a backpack to hang where the closet door should close. A strong magnetic hook on the side of my filing cabinet holds my car keys. A second holds extra closet keys. (I never hang my school keys, for security reasons). A magnetic curtain rod is hanging from my classroom door. Beneath it is a general poster of learning. I can hang seasonal “flags” from it, without using tape (which peels off my door paint) to change the “look” of the entry way.Other Things I’ve SeenI can’t use these “chair backpacks” but I’ve seen them, in various teacher supply books. It’s essentially a hanging wall of pockets for the backs of the student chairs, some pockets being large enough to hold extra books. These are better for self-contained classrooms, in my opinion. They are expensive, about $15.00 per chair (multiply that by 30!), but I’ve had the thought that a willing parent or other person with good sewing skills could possibly make the same thing out of canvas. Coat hooks on the inside of some locking closets could work for my personal items. A first grade teacher used plastic sandwich bags to have her students grow their plants. Other Plans I haveI’d like to hang window boxes from my classroom windows so I can show off a student created garden. Since my walls are brick, I’m going to install a heavy duty adhesive style hooks to hold my classroom’s set of broom and dustpan. I know I can use a cement drill bit, but you know, the adhesive hooks sound easier. I’d like to see a locking area above my closet so I can have additional secure space. I’d like a lateral two drawer filing cabinet so I could use the top of it as additional table space for books or files or decoration. These are very expensive so I keep an eye out for a used one. I hope one turns up!
There may be other creative ways to use your classroom space. You have to look and imagine all the possibilities.

Moving as one of the most stressful events in your life so you want to take care when choosing a moving and storage company to be sure you get the one that best suits your needs. Choosing the right company that can help with what you need will take a lot of the load off your shoulders so here’s some things to look for when researching moving and storage companies.

1. Free Estimates - if you are hiring the company to move your household, make sure they will come to your home and give you a free estimate. When they do, be sure you show them everything as large items like pianos and pool tables can have a big effect on the moving bill.

2. Insurance - make sure they have a good insurance policy in case your items get lost or damaged during transit. If you are storing items for any length of time, be sure you find out about the insurance while in storage.

3. Packing - some moving and storage companies will pack the items for you so if you want this service, be sure to find out up front if your company provides it. This, of course, will be at an added cost.

4. Transport - be sure you get the particulars on exactly what the moving company will do. It may seem obvious to you that they will remove it from your old house and bring it to your new house but you want to get specific to make sure you’re both on the same page.

5. Placement - find out in detail where your items will be put when you get to the new house. You should have all your boxes marked as to the room you want them in and be sure that the movers instructions are to place them in those rooms as well as the furniture that goes in each particular room.

6. Protecting your furniture - be sure the movers will take every effort to protect your furniture from scratches and dings including using protective coverings while in transit.

7. Storage - there are basically two types of storage, self storage and containerized storage. If you are requiring storage, you need to decide which type you want and then be sure that your moving and storage company provides it.

8. Recommendations - it’s always good to go with the company that someone else has used and recommends favorably.

9. Cost - find out if there are any discounts for moving at a certain time. Usually movers will charge the highest prices if you’re moving on a Friday or at the end of the month. You may be able to get your move done cheaper if you do not move at these peak times.

10. Staffing - make sure you know how many people will come to your house to help with the move.

11. Storage Access - if you are storing your goods in between moving from your old home to your new home and you want to be able to access them be sure that you make this known to the moving storage company. Some companies store stuff in containers that are stacked and getting to them is not easy. You have to be sure to contract a company that provides access to storage.

12. Shop around - be sure to get quotes from three different moving companies but you might not always want ago with the lowest quote as they may provide low quality service. It’s important when doing this, to be sure that you are comparing apples to apples so be sure that you tell each moving representatives exactly the same thing.

13. Visit the company - if you will be storing your items, be sure to visit the storage facility so you can assure yourself of the security and environment that your household items will be held in.

14. Self storage access - if you’re using self storage, make sure that you find out what hours you can access your storage unit as not all places allow 24-hour a day access.

15. Itemize - if you are using containerized storage you’ll want to make an itemized list of everything that goes in the storage crates and be sure you have a representative from the moving company signed the list.

Choosing the right moving and storage company can make your move a little easier and if you follow these 15 tips, choosing the perfect company will be a breeze.