All Forum Posts by: Chris Koenig

@Joshua Chapin did you end up developing a container storage site?

what did you decide @Ricardo Fainsilber? 

If it was me, 1st: 1st deed of trust hard money lending

2nd: self-storage

I think MF is over valued right now with low cap rates and valuing based on 2-3year out rents assuming aggressive annual increases. No huge equity pop there and low cash flow.  

Good thread. With my old business partners/investors, I found a 4 acre industrial zoned property processed the entitlements for 100,000sf facility in Brentwood, CA and they raised the capital/debt to build it. The % wasn't a whole lot but gave confidence to do it on my own and ability to do more for a larger slice of the pie. Starting out, I talked to as many people in the industry as possible (owners, management companies, developers, builders, toured 100 facilities, talked to the managers onsite, etc.) and found you will get 1,000 different opinions on what works best and what you should do. Ultimately you have to make those decisions but it was helpful to have as much of the information as possible to make that decision. For example, we debated doing climate control (CC) units and spent hours talking & touring to ultimately decide not to pay to install CC. The main reasons were the additional up front cost but also the fact most onsite managers said they never turned it on and/or the owners told them to turn it off because the electricity bills were so high. Also, in a down economy those were the first to lose their potential rent premium.  What we did end up doing instead was prep the interior (larger/hallways) buildings to add a second floor later. These two had similar costs and we saw greater potential value in the prep for 2nd floor as that additional sqft would have significantly less cost to build than the ground up construction (ie land basis would be $0, no site work, etc.).

One thing I also did to determine fair % shares within the GP (I was not successful btw) was to break out the different roles (see below I hope) then allocated a % to each and then allocated to different people. This seemed the fair way to slice the pie. I did this on my second deal and everyone is happy.

@Brian Gunning, Congrats on entering the asset class! I would look into buying containers ($3k/160sqft container) or Janus MASS units (~$5k/200sqft unit) to easily add additional rentable sqft to your site. This will be far less expensive than building new unless you can go up.

I would talk to the planning (zoning for containers, etc), building and fire departments (do you need fire sprinklers). Every jurisdiction is different. For example, Stockton, CA specifically prohibits container storage in commercial zone but permits in industrial. Livermore, CA requires fire sprinkler to be installed but the California Fire Code does not. Ask for permission over begging for forgiveness with the City/County. 

@Jeffrey Holst there is a storage facility that added many to their parking lot in Burlingame, CA - Broadway Mini Storage in Burlingame, CA

Have not personally used these but they are affordable and have seen them in person at storage sites & trade shows. 

Janus MASS units

Down payment and first half of entitlements were my own  (about $100k). Getting seed capital and investors to take it to approvals and construction/development.

Self Storage with shipping containers or other prefab units like Janus MASS . Buy more containers, units as you need them to meet demand. Your out of pocket cost will be low and the return on your $ can be 1-2 years.