Taylor sits down with veteran self-storage investor John Manes to discuss how the current rise in interest rates has impacted the self-storage industry. John shares his story of growing up and how he used his resources to build wealth through self-storage investments. He talks about different strategies for maximizing returns for investors, such as buying existing facilities, adding value to them through renovations, and then selling them to REITs. They also discuss what a REIT looks for when they buy a property, how investors should have realistic expectations in terms of returns, and recommend changing an exit from five years to ten years if necessary. 

 

Tune in as we explore the self-storage industry and get insights into how you can make money in it, too!

 

[00:00 - 08:55] Opening Segment

Introducing John to the show

Investor demand for self-storage has grown considerably in recent years

John advises to attach oneself to a solid operator, not just going out and doing Wall Street deals

Developers underestimate construction costs, expenses, lease-up time; stealing demand leads to a longer lease up time frame

 

[08:56 - 16:50] How to Make Money in Self Storage

Storage is a three to five-mile radius investment

Buy existing facilities and add value to them

Repositioning facilities for REITs involves new office remodeling, new gates, new cameras, new lights, new HVAC units, and new paint

Self-storage has historically had a two percent foreclosure rate

Distress in self-storage space is not expected due to the mediocrity of operations

 

[16:51 - 21:55] The Best Way to Learn is to Teach Something

Put yourself in the right room and shut up and listen

Take notes of where your resources are in that room

Utilize those resources and add value

 

[21:56 - 28:33] Closing Segment 

Best investment: a $250 jacket, which opened more conversations than he could ever imagine.

Worst investment: an 11.97% return on investment when they were projecting 21s or 22s

The most important lesson learned: being open with your investors and your banks

Quotes:

 

"If I'm the smartest person in the room, then I'm in the wrong room. Put yourself in the right room, and then shut up and listen. Take notes of where your resources are in that room. And then, utilize those resources." - John Manes

 

"Many developers out there have this pie-in-the-sky type of thing. We do some third-party management, so we coach people. And what I've found is that they underestimate their construction costs. They underestimate their expenses. They overestimate their lease up time." - John Manes

Connect with John!

Website: www.PinnacleStorageProperties.com 

Email: [email protected] 

Invest passively in multiple commercial real estate assets such as apartments, self-storage, medical facilities, hotels, and more through https://www.passivewealthstrategy.com/crowdstreet/

 

Track your rental property's finances with Stessa. Go to www.escapingwallstreet.com.

 

Join our Passive Investor Club to access passive commercial real estate investment opportunities.

 

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