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Resources
NAREIT: Annual Index Values & Returns
Contact
Website: www.reliantinvestments.com
LinkedIn: Kris Benson
Ep 090: Can you strike gold in self storage investing? | Kris Benson
05:35 – “Big deals and small deals are the same amount of work. You just make less money in small deals”, this quote brought Kris into Commercial Real Estate
06:30 – Kris mentions data points for reference.
NAREIT – National Association Real Estate Investment Trust
1. They have historical references on essentially every publicly traded REIT across every sub-sector. Everything that is REIT, and you can compare them to 25 years of data if they existed in that one.
2. Storage out performed the 4 major groups that everybody thinks of; like office, apartment, retail, and industrial. In the last 25 years storage did just under 17% in the REITs which is an incredible number. In 2017, storage REITs lost less than 4% of their value. Ultimately, people don’t get rid of stuff. Storage is driven by change. Demand for storage is driven by change, says Kris.
3. The market is very fragmented as far as who owns what. 20-25% of the market is owned by publicly traded REITs and the rest is all over the board. There’s still a lot of mom-and-pop operators out there which leaves opportunity for value-add type deals.
107:19 – In 2017, storage REITs lost less than 4% of their value.
07:49 – Ultimately, people don’t get rid of stuff. Storage is driven by change. Demand for storage is driven by change, says Kris.
08:30 – The market is very fragmented as far as who owns what. 20-25% of the market is owned by publicly traded REITs and the rest is all over the board. There’s still a lot of mom-and-pop operators out there which leaves opportunity for value-add type deals.
11:06 – In storage, you are collateralizing the rent with people‘s stuff. If you don’t pay, they can auction your stuff off.
13:54 – Just like any commercial real estate asset, storage is all valued income or NOI. Just take NOI divided by Cap Rate and that is where the values are coming from. Kris’ goal as an operator is to grow NOI just like if you are buying a house and you’re trying to increase rent.
16:51 – What is unique in self storage is that the lease is 30 days, Kris said.
22:55 – Typically there’s three categories of returns for a stabilized deal. For low execution risk, it is 8-11ish returns a year. For value-add deals where there are some risks, those are probably midteens returns a year. And for ground-up development or high risk, it is highteens returns a year.
25:18 – As you get into the larger opportunities, the stakes just get higher.
27:00 – To learn more about Kris‘ platform, you can go to www.reliantinvestments.com/. If you want to connect with Kris personally, he is most active on LinkedIn.
28:15 – At some point, educate yourself and make a smart decision to jump in and you just have to be comfortable that you’re not going to know everything. But the way to learn is to get in the middle of it.
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