All Forum Posts by: Clint Harris

Hope you can join us for the monthly meeting of the Alternative Investing Mastermind in Wilmington, NC. This is a meet-up for anyone curious about investing in alternative strategies such as self storage, commercial development, multifamily, tiny home villages, etc. Free and all are welcome, this months speaker is author and professional investor Chris Odegard. Hope to see you there!

Investment Info:

Other commercial investment investment.

Purchase price: $850,000
Cash invested: $3,200,000

Want to see what buying an old abandoned grocery store for $850k, and converting it to a Class A climate controlled self storage facility wirth $13.5 million looks like?

What made you interested in investing in this type of deal?

Massive forced appreciation means that at stabilization we are usually sitting at 30-35% LTV, meaning we can refi to pay out all investors and ourselves without selling the asset. That means no Capital Gains, which means tax free. We keep the assets and allow them to continue to cash flow, thats the Nomad way.

How did you find this deal and how did you negotiate it?

Vacant for 15 years, been for sale for years, MLS

How did you finance this deal?

Capital raised through 506(b) syndication, friends and family

How did you add value to the deal?

Asset class conversion, when you change the asset class, you change the formula by which the asset is valued.

What was the outcome?

$13.5 million 5 year stabilized value

Lessons learned? Challenges?

Asset class conversion combine with vertical integration is key.

Investment Info:

Other commercial investment investment.

My partners and I have purchase 2 KMarts, 4 warehouses, 2 mills, and a grocery store that have been converted to Class A Climate Controlled self storage facilities across the southeast, currently $160 million in assets under management at stabilization. Commercial and asset class conversion are the way, no more AirBNBs for me.

Typical deal is to buy a property for $2-3 million, put $1-2 million into it, all in for $3-5 million, stabilized asset is worth $13-17 million.

What made you interested in investing in this type of deal?

Asset class conversion creates an opportunity for Massive value-add, creating enough value for a cashout refi, allowing for millions to be taken out without a sale, which means no Capital Gain, which means no taxes. We keep the asset and allow it to continue to cash flow. It's a BRRRR on a massive scale.

How did you find this deal and how did you negotiate it?

Off market KMart was the first one, empty for a decade, purchase price $1.5 million, replacement cost just for the brick and mortar shell was $6.5 million.

How did you finance this deal?

Raised capital from a small group of investors as a 506(b) syndication

How did you add value to the deal?

In-house construction, converted an 87,000 sf vacant KMart to Class A climate controlled self storage in Reidsville, NC, then 8 more projects

What was the outcome?

$160 million in stabilized AUM.

Lessons learned? Challenges?

Asset class conversion combined with capital raising and syndication, vertical integration, and in-house construction is the way.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We have a team that we love

 Hi Philip, my name is Clint Harris and I’m one of the owners of Going Coastal Property Management, we are a boutique style property management company that covers Carolina beach as well as Kure beach. My wife and I moved to the area in 2018 and started posting about our journey buying STRs. We own 14 short term rentals on the island, my wife and I are also realtors, and I retired from a career in medical sales last year and am now a full-time real estate investor, focusing on building our portfolio in the direction of self storage to diversify away from our 14 short term rental listings on the island. Happy to connect with you, the properties managed by our company are managed the same way as my personal properties. Going Coastal currently has 75 listings under management. Feel free to reach out if you think it’s something you would like to discuss, and I can put you in touch with our operations manager if it seems like a good fit for both of us. I own a quadplex on canal, and we manage another dozen or so properties on the north end, with two of them being on the water on Canal. 

Best regards,
Clint

910-515-1785

We just closed on our 6th self-storage conversion project! This one is a 65,000 sf old textile and hosiery warehouse in downtown Burlington, NC! We are converting it to 45,000 Net Rentable Square Feet of climate controlled self storage. Thought I would post the details all in one place for those that have messaged and asked us about here, so here goes!

We purchased the building for $1.3 million, with the construction costs of converting that much space to storage and with interest reserves, we are all in on the project for $5 million. We are converting the the space to 525 climate controlled self storage units, upfitting with LEDs, already sprinkled, 65k SF gross, converted to 45,000 Net Rentable. Average NRSF price for the market is $19.53 per square, we typically price 15% below market average at $18.18 blended rate per square foot. Feasibility study and 3rd party verification shows extremely high demand in a very underserved market.

Financing on this deal is $1.5 million raised from investor partners, all in for $5 million, $3.46 million financed at 65% LTV, 6.25% interest (banks still have funds earmarked for storage that are lending at competitive rates because it is considered to be a very stable asset class), 3 years of Interest Only payments, 25 year amortization.

That puts our Gross Potential Income at year 2 at $946k, and we typically increase rents once we hit 60% occupancy. The Gross Potential Income at year 5 is $1,094,946. At a 6 Cap, this puts a stabilized valuation on the property of $13.3 million. The 10 year valuation with GPI of $1,397,460 at a 6 Cap comes in at $17.5 million. 

The beauty of that kind of Value-Add is that we can typically Refi at 60% LTV and double our investor money and pull out several million for ourselves, all of which is a Non-Taxable event because it is by way of refinance. That way we don't stress the asset and it continues to cashflow with an unlimited return. Next one under contract is closing in August, 3 Letters of Intent out, and hoping to do 6-8 projects this year! We just passed the $100 Million Assets under management mark, and shooting for $500 Million in stabilized assets under management in 5 years. Hope this helps.