182. Self Storage Investing in 2024 with Ian Horowitz
Jan 1, 2024
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Ian Horowitz, a self storage investing expert, discusses the benefits of hiring an asset manager, turning around underperforming properties, and evaluating financials when onboarding a new asset. The podcast also explores the tech-forward nature of the self-storage industry and niche storage ideas. In a lighthearted chapter, the speakers share humorous anecdotes about facial hair growth. They also discuss the use of 360 tours in real estate and give advice for a cash investor. Wrapping up, they emphasize the value of casual conversations and ask for feedback from listeners.
Hiring a third party asset manager allows owners to focus on other goals and investments while overseeing the property's finances and holding the property manager accountable.
Turning around an underperforming property requires addressing maintenance issues, improving marketing, and ensuring the property manager's efficiency.
The self-storage market offers opportunities for creative deals and growth, with a focus on accommodating larger units for businesses and offering a mix of traditional storage and flex space.
Deep dives
The Rise of Self-Storage: Growth and Technology
Self-storage has experienced significant growth in recent years, with more operators entering the market and adopting innovative technology. One key factor driving demand for self-storage is the ability to acquire mom-and-pop facilities at attractive cap rates. Additionally, advancements in technology have allowed for greater automation and remote management of facilities, reducing staffing costs and increasing operational efficiency. The convenience and flexibility of self-storage have also made it popular during times of downsizing, moves, and the need for extra space. While niche storage ideas exist, such as wine storage or on-site apartment storage, the focus is shifting towards accommodating larger units for businesses and offering a mix of traditional storage and flex space. Overall, the self-storage market continues to offer opportunities for creative deals and growth.
The Impact of AI on Real Estate Brokerage
AI technology is disrupting the real estate brokerage industry, raising questions about the future of traditional brokers. With the emergence of chatbots, AI can handle initial customer interactions and automate tasks like generating marketing materials, 3D renderings, and answering common questions. While AI offers efficiency and convenience, there will always be a need for a human element in real estate transactions. The emotional aspect of buying or renting a property, such as viewing the space, experiencing the environment, and interacting with a broker or agent, is unlikely to be completely replaced by AI. However, AI may play a larger role in streamlining processes and providing support, especially in areas like property management and lease administration. There is still uncertainty about the long-term impact of AI on the industry, but a balance between technology and human touch will likely be key in the future.
Navigating the Commercial Real Estate Market in 2023
The current commercial real estate market presents challenges and opportunities for investors. While interest rates are high and inflation is a concern, there are still deals to be found. Legacy operators, sophisticated investors, and those seeking creative financing options may find opportunities to acquire properties. The market may experience a shift in favor of those willing to negotiate seller financing or explore alternative debt options like private lending. It is important to approach deals with a long-term perspective, as uncertainty and market fluctuations are expected. The key to success in this market is creativity, persistence, and a willingness to explore non-traditional financing and deal structures. Despite the challenges, the current market offers a unique buying opportunity with potential for growth and value creation.
The Rise of Private Lenders in Real Estate Financing
Private lending is expected to become a larger market in real estate financing, filling the gap between traditional banks and hard money lenders. These lenders would offer faster underwriting and funding, potentially with a premium on interest rates. The speaker also highlights the importance of creating amaturizing products and introducing lower interest rates to make financing more attractive. Such lenders could target friends and family investors who are looking for consistent returns in commercial real estate.
Desirable Locations for Storage Units and the Importance of Market Demand
When choosing locations for storage units, factors like vehicle count and good frontage are considered desirable. However, it can be challenging to find affordable land in prime areas due to land use issues and competition. The speaker suggests that out marketing a bad location is possible, but it requires a significant investment. Convenience is key for consumers, so storage facilities near residential areas or along common commutes tend to perform well. To make informed decisions, feasibility studies and understanding market growth patterns are crucial when investing in storage units.
- Hiring a third party asset manager can allow an owner to take a step back from day-to-day operations and focus on other goals or investments
- An asset manager acts as the CEO to oversee finances and hold the property manager accountable
- It makes sense to consider an asset manager once a portfolio grows to around 100-200 units
- When onboarding a new asset, an asset manager will evaluate financials, goals, timelines, team members, and identify any issues or opportunities
- Turning around an underperforming property requires fixing maintenance issues, improving marketing, addressing tenant complaints, and ensuring the property manager is actually completing tasks
https://www.tylercauble.com/podcast/episode182
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