Investing in Self-Storage

For me organically real estate was always a side hustle and I still had a day job where I was surrounded by essentially surgeons and hospital executives and other guys and girls like me who had a little bit of disposable income. They knew what I was doing and I was investing my own money at first. And slowly but surely, people started asking like, “hey, next deal, I’d like to know about it.” That grew organically. As it did, it gave me the opportunity to bring a little bit of leverage to negotiations where I could go to an operator, either on the multifamily side or storage and ultimately, that’s what happened to both and say, “hey, I can bring a little bit of equity to the table, can I have some back-end ownership if I do that?” I wanted my own money to be deployed and then people were trusting me with bringing them opportunities as well. So, I got really good at underwriting and understanding another operator’s, underwriting so that essentially, I could make sure I was making good decisions for my own family and then other people who are trusting me to do the same. So, yeah, I mean, on the self-storage side of things, it appeals to my skillset. So, I’m a salesperson by heart. I just happen to understand real estate at this point. So, how I got connected with Reliant first was I wanted exposure to the asset class to self-storage and literally I just started calling the list of self-storage operators, there’s a top 100 list that comes out every year and I just started calling them, until I found a few that would meet with me basically saying, “hey, I have some equity, I’d like to go meet you and see what your platform is and if I’m able to deploy some capital, can I earn some back-end ownership?” That’s what we did, that worked out really well, I found love with Reliant and the guys who founded it and probably like many readers, especially if you're looking at syndication, I’m a big believer that it’s about the people. You’re investing in the platform, the real estate certainly, but for me, it’s always guided me well to invest in the people first. Usually, everything else takes care of itself. I think that’s a good tip that everybody can take with them because you know, when things are going well, everybody’s friends. It’s when things hit the fan and if you're in real estate long enough, it’s inevitability, that’s when you find out who you’ve really partnered with.

I’ve partnered with a very successful operator who has a strong track record. As a sales person, it’s pretty easy to sell things that basically sell themselves. I’m trying to find people who have a desire to diversify their asset class and what they’re investing to a non-correlated asset. I think for me, the big shift has been for us is going from sort of individual investor, individual high net worth accredited to some of the larger family office institutional type money. We had an opportunity to meet with a few of the university endowments, I’m going to throw a statistic out there for you. Do you know how much money the top 20 university endowments in the United States manages? $500 billion dollars. So, there’s a quote that I love and I’ve used it on – I’ve been on a bunch of podcasts and I’ve used it a bunch. I wish I could get credit to who said it but I don’t know. The answer in what it was is big deals and small deals are the same amount of work, you just make less money on small deals. So, with the endowment thing has been a goal for us this year at Reliant, just start to understand what they look for. We had the opportunity with Harvard and Yale, who is number one and number two in the country. Harvard just as on the side, manages 38 billion dollars and Yale manages just under 30. So, it’s been really interesting to see how they look at investing and what’s interesting is the time frame. They look at it with a horizon of forever. Because the institution of Yale, for example will be there forever. They believe so will be the endowment and the in dominant has to exist forever. It’s a different opportunity than when you’re talking to an investor who says, “I have this three to five window, I want to see a turn on my money.” When you’re thinking 10 to 30 years, it opens up a whole different world of opportunities. So we have a balance of individual investors, we have some syndicators who work with us as well and then we have sort of I would call this institutional bucket, where we have a number of family offices and we’re working on that university endowment to help us grow our portfolio. Because on our end, we have the ability to deploy equity, last year we redeployed just under 40 million in equity. This year, we’re raising a $50 million dollar fund, if we get that complete, we’ll be close to 60 million in equity deployed this year so the opportunity still exists in self-storage, to meet our underwriting standards and so we’re trying to take advantage of that by making sure that we have the equity there when we need it.

Listen to full episode: https://lifebridgecapital.com/2019/09/ws343-investing-in-self-storage-with-kris-benson/