All Forum Posts by: Michael Margarella

@Jef A. As others have said, the first step is determining whether you would like to be active or passive.  If active, spend time on education and mentoring.  If passive, find a good operator and a solid deal to invest.

As for asset class, we pivoted to self-storage a few years ago. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

You can create your own pro-forma using P&Ls, rent rolls, income statements, etc.  

The reality may be that, with less information, your offer will be lower.  And it is ok to tell the seller as much.

The other big issue is financing.  Most lenders will require tax returns and financials.  We've been in situations where sellers will not provide tax returns and had to rely on relationship lenders to get the deal done.  Lenders that we have not done business with previously did not want to touch it. 

There are some commercial wholesalers.  We closed a self-storage deal through a wholesaler earlier this year, and we've negotiated with several others on commercial properties.  

But, I agree with others in this thread that broker relationships are more important in commercial real estate than residential real estate.  Brokers are the gatekeepers of commercial deals! 

We pivoted to self-storage a few years ago. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

You can likely obtain a form lease from your state association.  But, a lawyer can draft you an ironclad lease agreement for a fairly nominal fee.  If you're planning to operate primarily in one market for now, having an ironclad lease tailored to your state is well worth the expense. 

Agreed! @Juwan Parker you would also want to check the supply and demand in the 3-5-mile radius. You can do this by looking at the existing square footage of self-storage in your radius and the population in your radius, and can secret shop facilities to try to gauge occupancy and demand.

We're still buying if the deal makes sense with more conservative assumptions.  There will always be a reason not to buy - whether it was the competitive 2021 market or higher 2022 interest rates.  But, a deal is a deal regardless of the economic environment.

We pivoted to self-storage a few years ago. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

We pivoted to self-storage a few years ago. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions.

And during inflationary times, our rental rates increase. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases.

The Storage Rebellion offers a free “boot camp” about owning self-storage and is a good place to start.

The Storage Rebellion offers a free “boot camp” and is a good place to start. AJ Osborne and Scott Meyers are industry leaders with actionable books and podcasts.

If you’re short on time, I'd encourage you to network with other storage operators and consider a partnership on your first deal to learn.

Generally, the property will at least need to be zoned to allow for outdoor parking.

We have properties that have traditional storage units with RV/boat parking on the property.  We like the mix of both because parking is not as "sticky" as traditional storage. Parking customers can simply move their vehicles after a price increase - assuming there is space elsewhere - as opposed to storage unit customers who cannot as easily pickup and move.  Packing up a large storage unit requires a truck and hours of loading and unloading.