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2021 in Review
2021 was a wild year, and it’s incredible how the business has grown compared to where we were twelve months ago. We have 42 self storage properties, 32 of which were acquired this year for a total of $50 million. We reached a million square feet of total storage and have 34 employees working across eight states. Self storage has been one of, if not the, hottest real estate assets over the past few years and it has driven mind blowing growth.
Struggles and Worries
There were struggles along the way; real estate is difficult and finding deals is the hardest part. In July of 2021 we made major investments in our acquisition team, hiring six employees to cold call self-storage owners and a team to underwrite potential deals and find out how much they’re worth. It’s been a tremendous success, and over half of our deals in 2021 were acquired off-market. Structuring deals financially has grown difficult as well, as a lot of parties need to make money and we have more mouths to feed as the business grows, so we’ve continuously sought after and landed more valuable deals so that the business remains financially sound.
Despite our growth, we still have our worries going forward, and I’m constantly thinking about how I can mitigate our debt risk. We have a lot of term debt right now due in two or thre years, and we need to secure longer-term debt to reduce that risk. During the financial crisis businesses that were stuck with short-term debt were crushed by banks, so part of the Q1 2022 focus is to reduce that risk in case the market cools off.
The Fun Stuff and Up Next
Our last business, student storage, was a hard business; it took a lot of energy, stress, capital, planning, and execution for things to operate smoothly in twelve cities in eight states with 150 part-time employees who didn’t care much. Self-storage facilities are still tough, but there are far fewer daily emergencies and we are having a ton of fun. I believe wholeheartedly that everybody should make their way from a really tough business to easier and easier businesses as their career progresses.
There’s a lot to be excited about in 2022; we could very possibly pick up $100 million in assets, have a strong deal pipeline, and the team is bursting with confidence. But my job isn’t to be a perpetual bull, my job is to protect our downside. My main focus is thinking about what could go wrong and mitigating risk.
I don’t know yet what our 2022 goals are, we have to take what the market gives us and we aren’t going to push it. But we’re having a ton of fun, and the growth and success has been overwhelming.
Three Key Takeaways
- The self-storage space might be the strongest real estate asset over the past few years.
- Entrepreneurs should focus on moving from hard businesses to easier ones as their career progresses.
- At a certain point, an entrepreneur’s focus should be less about chasing growth and more about protecting downside.
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