All Forum Posts by: Michael Wagner

I hope you sit with the answer above! It's riddled with GOLD. I'll just add that, from a financial standpoint, when it comes to horizontal vs. vertical, it really just comes down to the cost of land in the market. In Manhattan you build UP because the cost to do so is cheaper than buying more land to build out. In small town, USA, you build out because the land is cheaper than building up.

So some quick (and very generic math) would allow us to compare. If we can put roughly 15k of square feet of "horizontal" storage on each acres, we can use our knowledge of costs for building OUT plus our cost per acre of land to get total cost.

Then we can look at how that compares to building up. No "extra land to buy" but if our construction costs increase by 50% per square foot, we can easily figure out which option (UP or OUT) makes sense in that given market.

We push auto-pay but do not make it a requirement.  We do however NOT accept cash or check and require all customers to pay by CC over the phone or on our web portal.

Crexi.com is a good one.  Generally speaking, its tough (not impossible) to find listed deals these days with the whole world loving storage.  As such, direct to seller is a great strategy right now.  Networking is also a huge resource for finding deals.  With brokers as well as with other investors.  Some of my students are so good at finding them that they end up wholesaling half of what they find!

 I love everything you say about GRIT.  And I also have to respectfully disagree that MF is superior to storage.  Storage has a better income to expense ratio (33% compared to 50% in MF), lower default rates than any other asset class on the planet and falls under lien laws which are far favorable to eviction laws.  This has always been true but is even more true today given the widespread moratorium on evictions!  While the government continues to make it HARDER for MF investors to operate, they are surprisingly making it easier for storage owners to deal with delinquencies. I'm not suggesting that you can't make money in MF, many do!  But the idea that MF is a more efficient way to do so, just does not ring true when you look at the underlying fundamentals!

I'm of the opinion that those aggregator sites are worth using ESPECIALLY when in ramp up (or below stabilized occupancy).  Your biggest expense is an empty unit.  As such, it doesn't really matter "if you would have got that customer anyways"...if they can get you that customer faster, then its worth paying the premium (to a point!).  Once stabilized around 85-90% occupied, you can then eliminate the sources that "cost the most per lead" one at a time.  Eventually you will find the "cheapest" way to stay full. 

While you are wise to take all of the above into consideration, I would suggest that storage is such a MICRO market industry that all of these considerations do not mean you can't find a good project to invest into.  The truth is, individual storage assets are pretty well buffered against the "market/sector" unless they are in a micro-market that mirrors the unfavorable characteristics that you mention above.  The rub for you is that the "most prominent" syndicators are quite likely to be in those kind of markets.  With that, if you're looking to be passive, I would suggest that buying equity in properties in smaller markets might be the better route when we find ourselves at the high end of cycle.

My expertise is limited to Self Storage and I'd be happy to share a few of the formulas that I use to valuate them if that's an area that you are interested in.  There's several "back of the napkin" formulas we use as well as more in depth spreadsheet models that I lean on. Just let me know.

Welcome!  Fellow self storage guy here. And I helped one of my students buy a storage facility in Evansville a couple years ago.  Went really well. Small World!

I'd encourage you to take a very CLOSE look at storage!  Its not for everybody but if it does jive with your objectives, I don't think there is a more efficient wealth building asset on the planet.  Especially when you talk about deploying a value add strategy.  The income to expense ratio and lien laws (vs. eviction) create an added margin of error that other asset classes simply can't match.  That's why storage loans default less often than any other loan! Its incredibly forgiving and very profitable so it makes a great 'first" commercial property for many!