All Forum Posts by: Clint Harris

Quote from @Drew C Grossman:

Quote from @Clint Harris:

Lots of driving the last 2 days, but blessed to have great weather, great company, and unbelievable things to celebrate. So cool to see the first two KMart to self storage conversion projects taken on by Erik and Levi of Nomad Capital opening within months of each other. 87,000 sf KMart conversion in Reidsville, NC is now Open and booking up with 43 units rented! Really cool to see that in person with the drive aisle right through the building making it a legit drive-in climate controlled project that just started as an idea in Erik's head. Additional signage, advertising, touchscreen kiosks, and marketing on the way. The KMart conversion in Danville, Va was crazy to see as the units were popping up every few minutes while we watched the crew. 97,000 sf is A LOT of space, luckily the drone made quick work of filming and kept me from jogging it and passing out before I got to what used to be Sporting Goods. We made the rounds in NC and VA, and walked the next 3 in the pipeline with one opening within days, one set for demo and permitting, one under contract closing soon, and even threw in a great evening in Greensboro networking at the Pints&Properties event. Worth every mile. Posting this so this hits my FB timeline every year and I get to look back on the journey with a lot of gratitude and respect for those involved.

Cool project, thanks for sharing!

What was the biggest hurdle of this project? Acquisition? Zoning? The conversion itself?

43 units booked up already..?! Heck that’s more than what I have in total in my first facility lol. Currently working on being about 70 more units online with another buy. 


 

 Good question, on the first conversion in Reidsville, NC, it was just being sure of the underwriting, and raising the capital because it was our first syndication deal. We didn't know what we didn't know, so a lot of just figuring it out. That facility is rocking and currently at 165% of Pro Forma occupancy, and gaining more units rented weekly! 

On the facility in Danville, VA, the issue was permitting! If you aren't aware, Danville VA is EXPLODING at the moment with the new Casear's Casino under development. It's a $560 million development and the build site is incredible. Our location is a mile away, and as you can image when half a billion dollar development comes to town, the money pours in behind it, and there have been thousands of permits filed for development. Luckily that project is nearing the finish line and will be opening in a few weeks, beginning of May!

Since then we have moved on and completed 5 projects, have 2 more under contract, and have plans for 8-10 projects this year. I handle Capital Raising, and have a $25 Million Fund to fill this year. We put $75 million in stabilized commercial assets under management this past calendar year, and are shooting for $125-150 million in the next 12 months, with a goal of $500 million in stabilized assets under management in a 5 year time frame.

Lots of driving the last 2 days, but blessed to have great weather, great company, and unbelievable things to celebrate. So cool to see the first two KMart to self storage conversion projects taken on by Erik and Levi of Nomad Capital opening within months of each other. 87,000 sf KMart conversion in Reidsville, NC is now Open and booking up with 43 units rented! Really cool to see that in person with the drive aisle right through the building making it a legit drive-in climate controlled project that just started as an idea in Erik's head. Additional signage, advertising, touchscreen kiosks, and marketing on the way. The KMart conversion in Danville, Va was crazy to see as the units were popping up every few minutes while we watched the crew. 97,000 sf is A LOT of space, luckily the drone made quick work of filming and kept me from jogging it and passing out before I got to what used to be Sporting Goods. We made the rounds in NC and VA, and walked the next 3 in the pipeline with one opening within days, one set for demo and permitting, one under contract closing soon, and even threw in a great evening in Greensboro networking at the Pints&Properties event. Worth every mile. Posting this so this hits my FB timeline every year and I get to look back on the journey with a lot of gratitude and respect for those involved.

Circling back to give an update on our most recent acquisition to end 2022! With my partners leading the charge and me tagging along, we closed on the Gastonia Sun Drop bottling warehouse in Gastonia, NC along with a great group of investors. Purchase price plus the cost of the renovation is $5.1 million. Loan is at 6.5% interest, 70% LTV, so $3.56 million financed, and our capital raise on this one was $1.55 million, raised in about 4 weeks. The facility is 70,181 sf, which will be converted into 50,000 sf of net rentable climate controlled storage. The average blended rate per square foot for climate controlled storage in the market is $23.32. With our average price set at $20 per square foot, that gives us gross potential income of $1,020,000 in year one of full occupancy. We schedule 1 year of Reno, and another year to fill it up, and offer a preferred return until the cashflows coming in eclipse that preferred return. Based upon a desktop feasibility study (Bob Copper, SelfStorage101) this is an underserved market with high demand for storage, and there are 57k residents in a 3 mile radius.

This property is in a Qualified Opportunity Zone, so any capital invested as a Capital Gain, does have the option to come out tax free after a 10 year hold!  Obviously we don't expect investors to leave capital in for 10 years, so there is a preferred return in years one and two, then cash flow equal to each investors percentage of equity, then a return of the initial capital investment in year 5 by way of refinance, additional cashflow in years 6-10, and then a big pay off in year 10, potentially tax free if the initial capital invested by the investor was a capital gain.  On a $250k investment, it comes out to a 4.4x multiplier, with a total payout of $1.1 million, and on a $50k investment, it's 4.24x, total payout of $212k.  the value-add that comes from conversion projects is really mind-blowing.  For the commercial valuation for Refi at year 5, or sale at year 10, it's as follows.

7 Cap, $12,071,802 (5 yr), $15,076,705 (10 year)

6 Cap, $14 mill (5 yr), $17.5 mill (10 yr)

and if we get lucky and are still around a 5 Cap in 5 years...

5 Cap, $16.9 mill (5 yr), $21 mill (10 yr)

Great way to end 2022, hoping for 8+ projects in 2023, and very excited to be a small part of this team!

 Love it!!!  We do the same thing, we've bought 2 Kmarts, this grocery store, and an old bottling warehouse across the southeast this year for storage conversion conversion projects, and one storage facility that is an expansion project. Big Box retail is dead, and often the buildings have been sitting empty for years, but are still in high residential density areas that are often undeserved for storage!  The purchase of the brick and mortar is often pennies on the dollar compared to the replacement cost of ground up construction.   Hoping to do do 8-10 more projects this years and make all of our investor partners very happy!

Latest update on our 4th project of the year!  We bought a Piggly Wiggly grocery store in Macon, GA, in an opportunity zone, and are converting it to Climate Controlled self storage, here are the numbers.

The building had sat empty on a great intersection for years, and we picked it up after a significant off-market price drop for $800k. In-house, and third party feasibility study showed a very under-served market with high rental rates, blended price per square in Macon is $23.34, and to be conservative, we capped our rental rates at $20.98. The building is 62,000 sf, with potential for 46,500 Net Rentable sf as climate controlled storage. Total cost of the building, rehab, conversion, etc was $3.86 million. We raised $1.1 million from our investors, and financed $2.7 million at 5.25% (obviously that was locked in several months ago, we closed this deal last month), 20 year note, 70% LTV. With those below market rental rates, the Gross Potential Income in year 1 of operation is $975,719, and we implement rental increases once we hit 60% occupancy. Our investors got a preferred return of 6 or 8% depending on size of their investment, then we start paying out cash flows once the property hits 40% occupancy. Most of our projects are 5 year hold max, this one is a 10 year hold because it is in a Qualified Opportunity Zone, and any money invested as a Capital Gain has potential to come out tax free after a 10 year hold. Obviously it's sometimes a tough ask to expect investors to leave cash in for 10 years, so in addition to the preferred return and really strong cash flow, Investors also will have their initial investment returned in year 5 by way of a refinance, continue to receive cash flows years 6-10, and then get a large (potentially tax free) pay out at year 10. At refi in year 5, Gross Potential Income should be $1.14 million, at sale in year 10 GPI is $1.38 million with cash flows of $796k. At a 6 Cap, the valuation on the property at refi in year 5 should be $13,500,000. In year 10 at sale, at a 6 Cap, evaluation should be $16,900,000. Man, I love storage, and love conversion projects even more!!! ON TO THE NEXT!!!

All are welcome, please come join us for casual networking over beers.  The

focus is on syndication, capital raising, multi family, development, and all things commercial real estate

It's been a wild ride this year!  My partners and I started the year with what we thought was a pretty ambitious goal of trying to put $100 million of commercial real estate under management in a 2-3 year time frame.  I've already posted about the two K Mart facilities that we have purchased with the help of our investor partners, and are actively renovating and converting to Drive-In, Climate Controlled self storage, but this one is a little different, because there is finally some instant gratification!  We bought this brand new self storage facility in Holden Beach, NC, and opened the gates 6 weeks ago.  Our Pro Forma was conservatively written to onboard 15 rental units per month, and we are beyond excited that as of today we have 78 units rented in the first 6 weeks!  Very excited to be 4 months ahead of schedule, and 26% occupied in the current units.  The real Value-add for this property is the addition of Building E, which we are breaking ground on very shortly!  That takes this property from 280 up to 440 rental units, as well as an additional 2 acres of boat and RV storage being added as well.  Just like all of our projects, our goal is to double our investors money in 5 years or less, but this one has an awesome twist to it.  Because of the significant value-add, our investors start making strong Cash Flow very quickly, in fact its going to out pace the Preferred Return in no time, and then instead of selling this property, its going to be part of our Legacy Portfolio.  We will double the investors initial investments via Refi at, or before year 5, and then each investor will keep their percentage of equity, and will have an unlimited return in the form of cash flows and future cash events.  Because the value is being returned to the investors as a Refi on a property they already have ownership in, that makes this a non-taxable event, and then when there are future cash events, say another refi 10-15 years down the road, they will continue to have non-taxable cash events in the future.  With what we have currently closed and have under contract with our team, we are well over halfway to our $100 million goal of stabilized assets inside of our first year.  Our goal is to try and build a portfolio of legacy projects, and this one is a big step in the right direction!  Very excited about our past deals, and its going to be a great year ahead!

I’ve got a good friend that approached me recently asking for help finding some lending, so I’m bringing it to my BP Braintrust for networking help.  My friend is a very successful custom home builder and investor in NC, he has a large portfolio of rental properties that he owns free and clear, and has had a line of credit on the portfolio with unbelievable terms for 10 years+.  Wells Fargo was giving him a $5 million line of credit, interest of 0.75% below Prime.  He used this to fund various builds and projects through the years and always paid it back.  Last week, they reached out to him and let him know they would be Sunsetting that product and it was going away, with no other clear alternative.  He went and met with Corning Credit union, but they are capped at like $2 million.  His plan is to just have the equivalent of cash on hand so that we can do some deals together over the next few years, especially as there is a looming recession on the horizon, his belief is that cash will be King.  his portfolio has appreciated quite a bit, and he’s looking for a lender that can do a $5-10 million line of credit that’s secured against a large portfolio that is free and clear and cash flows very well.  Refinancing into a portfolio loan is not ideal, we’re specifically looking for a line of credit that can be invested and paid back, and invested again, he has some pretty big goals and is extremely talented.  Anyone have any strong leads or products to offer?