Our self storage portfolio is growing fast.
Stats on December 31st 2019 (2 years ago):
- 7 properties
- 97,049 square feet of storage
- $4,510,000 purchase price
- $4,732,000 all-in cost basis
- Annual NOI: $452,000
- Employees: 1 (me)
At that time we had 1 full time employee in the self storage business. Me. I was answering phones, hunting deals and doing everything while my partner ran our student storage company.
In 2020 we acquired 3 more properties and 126,360 square feet for an additional $4,710,000. We also hired 3 employees to make 4 of us.
Stats on December 31st 2020 (1 year ago):
- 10 properties
- 223,409 square feet
- $9,220,000 purchase price
- $9,532,000 all-in cost basis
- Annual NOI: $925,400
- Employees: 4
2021 has been a wild year. We’ve hired and built out divisions of our company from acquisitions to maintenance to collections to capital improvements to customer service.
We’ve also had a hell of a year from an Net Operating Income growth perspective. What was $925k in NOI in 2020 became $1.6M in NOI (the same 10 properties we owned last year). The entire industry has absolutely crushed (with 25% street rate growth and 15% same store revenue growth).
(BTW, if you’re an accredited investor and you’d like to get on our investor list to see our deals and get to know us, fill out this form.)
And we’ve bought a lot of storage:
Stats on December 31st 2021 (including what we’ll close in the next 10 days):
- 42 properties
- 1,086,063 square feet
- $59,231,200 purchase price
- $66,132,236 all-in cost basis
- Annual NOI: $6,315,860 (projected yr 1 on new properties)
- Employees: 34
Mind blowing stuff. I can’t believe how fast we’ve grown and I’m the one writing this message.
The struggles:
Finding deals worth buying has been hard. I make it sound easy on twitter and on my podcast but I spent a lot of time this year building a dream team of 3 highly paid cold callers + 3 support folks. They work their butts off smiling and dialing and getting self storage owners on the hook for our team to acquire.
Then we built a system for underwriting them and getting offers out in an efficient manner. That was 3 more hires
I’ve worked on structuring our private equity deals in a way that both LPs and us as the GP make good money without selling assets as soon as we add value (which is actually pretty hard to do).
We’ve also structured our management fees in a way we can build a second profitable and sustainable company that works hand in hand with our RePe firm: our management company.
A lot of real estate firms outsource this part of the job – the task of actually operating the properties and dealing with customers. We’ve elected to do it in-house because its our competitive advantage and another lever we can pull to add value to our properties.
We have to do a hell of a lot of work with a lot of employees to keep our buildings clean, rented and our tenants paying on time. 20 of the employees at our company do that and they are divided into divisions with different focuses all working together.
My partner has focused on the operations of that management company – the hard part. I’ve played a role as well and we have some awesome team members who are beginning to do a lot of hiring and training themselves.
For every deal we do 3 parties need to make money – our management company, our private equity company and, most importantly, our investors. We’ve raised over $20m in outside capital this year.
This last quarter, Q4 of 2021, we will have closed on over $30m worth of storage. Our team is slammed and a bit stressed. But they’re stepping up to the plate and doing really well.
The fun stuff:
Our last business, student storage, was a hard effin business. We sold that business in January of this year and focused all of our energy (and capital) on real estate.
It turns out managing self storage facilities, while a lot of moving parts, isn’t as hard as convincing student employees to get out of bed to drive box trucks in major cities doing hard labor all day.
Self storage has less emergencies because nobody lives in our units. You have some time to solve problems before they become emergencies. Unlike if a boiler goes out in an apartment complex, for example.
We’re making money and the assets we’ve acquired over the past 12 months are performing well already, so our investors are excited and we’ve got the capital to go out and buy more storage and our management company is profitable enough to find / hire good talent.
That right there is the key.
We’re building a business that can self-sustain and pay the bills even if we aren’t doing deals. Which means we don’t need to sell assets to make money. Which means we can hold them for a long time and send tax-efficient cashflow to our investors.
Whats next?
We have 6 properties scheduled to close in January / February and I’m sure we’ll get a few more in Q1 before its all said and done.
I’ll be spending a lot of time chasing down talent and making hires and then training them.
And our goal is to buy another $100m worth of storage in 2022 while operating our portfolio better than any other operator in the country.
Happy new year and thanks for reading,
Nick