Caution, long post, but worth it!
I’ve posted on here in the last few years about our journey into Short Term Rentals, and the way that it has drastically changed the velocity of our financial future. From those posts, I’ve met and networked with some incredible investors, and built some lifelong friendships, so I decided to take our latest adventure and post about it again, because I know it might help someone, but I also know it will help us in the long run. Real Estate is really the people business, so here we go.
We bought a Kmart! Here's the short version of Why, my wife and I own 14 AirBNB units in Carolina Beach, NC, and a property management company that manages another 70. We live on a beautiful little island right outside of Wilmington, NC, but along with that comes hurricanes! We had 3 in the past 4 years, and I knew that I needed to diversify outside of our area. Its not a good thing when your entire portfolio can get shut down from one storm. The market is crazy hot, and I don't trust anyone else to mind my business the way that we mind our business when it comes to STR units, so we wanted to diversify away from that as well. That's why we settled on Self Storage facilities, it's extremely inflation resistant, as well as stable during economic downturns, and even the pandemic. It's a very long and data driven explanation, but that's what we decided on. Here's the summary, and hope it helps someone else go big!
About a year ago, I joined some partners in starting up Nomad Capital. We’re a Self Storage Syndication, and we specialize in buying old big box retail locations and converting them to Drive-In, Climate Controlled Self Storage. My partners already own and operate 4 self storage facilities, so this is a space we know well. For our first deal, we bought at 87,000 sf Kmart building in Reidsville, NC, and are converting it to 485 units! As you can imagine, there is very little appetite for big box retail with Ecommerce really doing a number on that industry. We bought the building for $1.5 million, and the replacement costs just to build the same structure was $6.5 million! It’s a $2.5 million renovation, so we’re into the project for $4 million, and when stabilized, the bank says its worth $7.6 million. Pretty cool! We took the deal, created a Pro Forma, PPM, and an Offer Memorandum, and then looked to raise money from investors for a piece of the equity. We needed to raise $680k, which at first sounded like a daunting task, but the end result was that we raised the full amount in 6 weeks. It was my first time raising capital, there are a lot of rules that go along with a 506B offering, but it went well, and I ended up raising $640k of the $680k. Our investors are going to end up with a 20% annualized rate of return, and our goal for every project is to double everyone’s money in 5 years, or less! That project is rolling right along, and so we picked up another one! We are closing on another Kmart facility in Virginia in 3 weeks, and I just finished raising $1.35 million along with the help of my partner and good friend Neil Henderson. We will be all-in on that deal for $5.5 million, and the stabilized valuation is $12.6 million! We’ve got a third facility that we are closing in NC in May, and just went under contract on a grocery store conversion in GA, and I’ve never had so much fun in my life. This is helping me to diversify across the Southeast into a stable asset class, it’s pushing me to learn and become a better investor every day, and I’m having fun and building great relationships along the way. I am so thankful for this investor community! Our goal is to create a lot more Real Estate Nomads so that our investors can go where they want, when they want, and do what they want! When you combine Location independence along with Financial and Time independence, it creates independence of Purpose, and that’s when life really starts to get fun! Keep your ears open for Nomad Capital, we are doing big things!
PS, for anyone in or near Wilmington, NC, we just started a BP Meet-up on the first Thursday of every month with a focus on Commercial Development, Self Storage, Multifamily, Syndication, and Capital Raising! Come join us this coming Thursday 4/7 at 6pm at Flying Machine Brewery on Randall Parkway for some beers and networking!
