All Forum Posts by: Paul Moore

Hi @Jason Sung. You got some good feedback above. This might be a good opportunity…or it might not. It’s pretty hard to tell. Feel free to PM and I will introduce you to my friend Andrew Leedom, or you can look him up yourself on BP. I think he would be glad to speak with you about his experience buying small self-storage and I think that would be a helpful conversation. You might want to consider automating the facility if it’s not already done. And here is a novel thought…I know one guy who added a second storage to all of his units which was accessible because they were built on a hillside :) I doubt if that is the case in your situation but keep your mind open to possibilities for expansion. Good luck!

Hi @Travis C wright. Self-storage investing, like almost anything else, has great deals in bad times and terrible deals in good times. There are overcrowded areas in deals that are already optimized and overpriced. Avoid those. There are other deals that have tremendous upside potential and you need to find those. I’ve written a BiggerPockets book on self-storage (Storing Up Profits) that might help you sort this all out. Buying self-storage and other real estate assets from mom-and-pop investors can provide significant profit and wealth creation opportunities in any market, and if we are facing a downturn, there will be more opportunities than usual. Good luck and happy investing!

Hi @Tanveer Ahmed you got some great commentary above. It really depends on the investor as it always does. If prices adjust, those who are over leveraged with floating rate, short-term debt could get crushed. It comes down to speculating v. investing as it does in so many areas of life. Investing is when your principle is generally safe, and you got a chance to make a return. Speculating is when your principle is not at all safe and you’ve got a chance to make a return.

I used to be a speculator and I made a lot of money in good times and lost a lot of money in bad time. As an investor, as @Mike Dymski said, there are always opportunities in any market. That’s not to say I couldn’t lose money or anybody couldn’t’ lose money, but even in a crash…especially in a crash, there are great opportunities to get wealthy.

Howard Marks has a fantastic book, Mastering the Market Cycle. I highly recommend everybody read this book, especially if you are trying to understand how market cycles will impact your investing. Good luck!

Hi @Jason Sung. I am glad to hear you are interested in self-storage. I wrote a book on self-storage for BiggerPockets last fall (Storing Up Profits).

@Henry Clark is the expert on this topic for sure! You can use Raidus+ (website link) is designed for exactly what you are looking for. You can get a free trial if you sign up and it will really help you. Happy investing!

Hi @Duke Giordano. First of all, I love what @Brian Burke told you above, great advice.

The issue Brian is putting forth is that if there is significant intrinsic value in a deal and it can be harvested by an expert operator, then mining this intrinsic value can make an apparently slim deal into a fantastic deal. Check out AJ Osborn's July 3rd, 2018 podcast

(AJ Osborn Podcast) about buying a Super K-Mart in Nevada. Note that he said on the podcast that his $7.5 million investment would eventually be worth in the low-$20 millions, if I recall correctly. AJ has turned down offers north of $30 million.

Also note that if there was a rule of thumb, it would need to take into account the LTC (loan-to-cost) ratio. So if someone only borrowed 40% versus someone borrowing 80%, heaven forbid, on a deal, that would play into your analysis. That’s why it’s so important to analyze every deal. Good luck!

Funny, right after I made this post, I got an opportunity to buy a large piece of land for our family to build a home on. It turns out that it had a few rental properties on it, so I went to my very small local lender. Though I would not be able to qualify for agency debt with my approximately zero income, due to paper losses, I was able to easily qualify for a commercial loan based on the value of the property since it had rental units on it. It pays to know a small local lender!  

Hi @Eric James. Great question and you got some wonderful responses above. I will add this into the mix...

Wall St. suffers under the Efficient Market Hypothesis. This theory is based on the fact that there are millions of eyeballs on assets and operators and the thorough analysis from a wide spectrum of players means that the price is exactly what it should be. In other words, it's very hard to get a bargain. 

In real estate however, the market is incredibly inefficient which means that even if real estate is generally priced at a certain level, it is still possible to get great deals depending on the location, the seller and a hundred other factors. 

Specifically, as a commercial real estate investor I like to look for operators that are experts at locating and harvesting intrinsic value. Which means potential value that is left on the table by prior operators. Typically, these are mom-and-pop operators who don't have the desire, knowledge or resources to improve the properties, increase income and maximize value. Acquiring assets like this or investing in them is another path to significantly outperform inflation. Happy investing! 

Hi @Sheri Fluellen. Congratulations on your success and your critical thinking. This could be a great move for you. 

As a fund manager, we have to turn down investors who need 1031 exchanges quite often. It happens so much that we have developed a short list of alternatives. I would be glad to share them with you if you want to reach out to me. 

One of our investors sold over 60 single-family rentals last year and came up with a strategy to avoid a 1031 exchange, but still avoid the capital gains tax, at least for a very long time. I can introduce you to him if you wish. 

I also know one of our competitors in the syndication space allows TIC investors which would allow you to preserve your 1031. I would be happy to introduce you to them as well. Good luck and happy investing!

Hi @Frank Granata. If I was starting over in real estate, I would get into commercial real estate as soon as I could and I would certainly consider self storage as one asset class. Like @Ronald Rohde mentioned above there are not little boxes that spit out cash, this is an actively managed retail business as well as a real estate investment. Feel free to reach out to me and I can send you a free report on self storage.  Or you can buy my book published by BiggerPockets last fall: Storing Up Profits.  Happy investing!