Frequently Asked Questions

Here you will find answers to frequently asked questions about QuickStart Self Storage. Click on a subject heading below to view questions and answers relating to your selection:

• General Questions
• Modeling Questions
• Reports Questions

General

• What is Market Value and how is it calculated?

  QuickStart Self Storage uses Market Value (MV) to reflect the most probable sale price of a property in terms of money in a competitive and open market. Prior to the construction period, MV is assumed to be zero ($0). During the construction period MV is simply the cumulative total of any investment expenditures to include land, construction, and financing costs. At the time the facility opens, MV is equal to 80% of the Capitalized Value of the Stabilized Net Operating Income. Market Value increases incrementally to the point where trailing twelve (12) month Net Operating Income surpasses the Capitalized Value of the Stabilized Net Operating Income.

• How do I send a copy of one of my models to another user?

  You can share a copy of a model with another user by either copying the model file to a disk or by sending it as an attachment to an email. To begin, save the model with a name that you will recognize. By default the program saves model to the My Documents folder but you can specify another location when you save it. To put the file on a disk, use Windows Explorer to navigate to the file and then copy and paste onto your disk. To email the file as an attachment, use your email program to navigate to the file and to attach to your email.

  How do I launch the Business Plan Template in Microsoft Word?

  You can access an editable version of this template in Microsoft Word if you have Microsoft Word installed. When you are viewing the Business Plan Template and while in the Business Plan Tool, you will see links that appear as (open in Microsoft Word). Click on any of the links and the program will automatically launch Microsoft Word and load your template.

  Can I modify or otherwise add additional content to my Business Plan?

  Yes. Once you have launched the Business Plan Template in Microsoft Word, it becomes a document file that can be modified in any way you wish.

Modeling

• I do not want the forecast of financing included in my model. What do I do?

  While using the Model It! tool and on the Financing page, go to the subheading section “Short-term Financing." You will be asked to specify the terms of your mini-perm loan. Go directly to the question “Select the percentage you anticipate financing”. Click on “Other” and input the number zero (0). Under the subheading “Long-term Financing”, respond to the question, “Do you want to establish long term financing?" by selecting No.

• How do I reflect a purchase of a site where I plan to sell off a portion that I do not need for my storage facility?

  You will need to determine the cost basis for the land that you will devote to the self storage facility. Calculate the cost basis of the land you intend to keep by subtracting the projected sales proceeds from the extra land from the original overall land purchase price. Enter this resulting amount as your model's land cost.

• How do I enter the amounts and sources for multiple additional miscellaneous income situations?

  QuickStart Self Storage was designed so that you can enter a combined dollar amount and then enter multiple sources on one line, separating the description of each source with a comma.

• How does the program calculate the amount of uncollected rent due to offering discounts?

  QuickStart Self Storage estimates the impact of discounting to equal 3% of the facility's gross rental income.

• How does the program calculate the amount of uncollected rent due to non-paying tenants?

  QuickStart Self Storage estimates the impact of uncollected rent to equal 2% of the facility's gross rental income.

• Why does the program not allow me to model the traditional approach of establishing a bridge loan followed by a construction loan?

  In nearly every case, the use of the mini-perm financing approach will result in the best overall terms available to finance your investment. We suggest that you continue researching financing options to identify a source willing to establish a mini-perm type of loan.

• How do move in discounts and non payments by customers factor into my model?

  QuickStart Self Storage projects the impact of move-in discounting and customer non-payments (aka collection loss) based on normal values, and calculates as follows:

  Discounts = 3% x Gross Rental Income

  Collection Loss = 2% x Gross Rental Income

• What is Construction Period Interest and how is it calculated?

  Construction Period Interest is the cumulative interest charged for financing during the construction period. Interest is calculated monthly by applying a monthly interest rate to the prior month’s loan balance.

• What is Absorption Period Interest and how is it calculated?

  Absorption Period Interest is the cumulative interest charged from the commencement of the loan to the point of absorption. Interest is calculated monthly by applying a monthly interest rate to the prior month’s loan balance.

• What is Absorption Period Operating Income and how is it calculated?

  Absorption Period Operating Income is the cumulative net operating income produced from the facility start date up to the absorption point. The operational income is used to partially offset the absorption period interest that is rolled back into the financed amount.

• What are my loan balances during the construction period?

  The beginning loan balance is the difference between the equity required and total preconstruction costs (including land acquisition costs). Total construction costs are distributed equally over the construction months. The loan balance increases each month by that month’s allocation of the construction costs plus the current month’s interest charge.

• What are my loan balances during the absorption period?

  The beginning loan balance matches the construction period’s ending loan balance. Each month the loan balance increases by any monthly operating income shortfall and the current month’s interest charge. Monthly operating income gains serve as payments toward the loan balance.

• How does QuickStart Self Storage Calculate IRR?

  QuickStart Self Storage considers the amount and timing of the investor's monthly cash outflows and cash inflows to calculate IRR. The Cash Flow Statement Monthly Schedule reports these as Investor's Cash Flow. However, to calculate, IRR we must include the assumption that the facility is sold at its Market Value at the end of the year for which IRR is calculated. The proceeds of the sale (less the sale cost and the loan balance) are added to the 12th month of the year for which IRR is calculated. The IRR rate is returned as an annual IRR rate.

Reports

• Why is there no negative ROI reported? I would think that this could be a condition during the early stages of the investment.

  QuickStart Self Storage calculates ROI once the dollars received from the investment exceed the dollars put into the investment.

• Why do some of my reports show a positive cash flow at the commencement of the construction period? The facility hasn't even opened yet.

  The investment funding method applied by QuickStart Self Storage reflects that the investor is responsible for all preconstruction outflows of cash. Under this circumstance, if the total of those outflows exceed the investor's required equity contribution, then that excess is reimbursed by the mini-perm loan, which is funded at the commencement of the construction period.

• Why is the program returning a loan amount of zero ($0)?

  If your investment scenario does not result in a positive net operating income at stabilization, then financing will likely not be available. This is a good indicator that your investment scenario is unprofitable.

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