Explore the changing landscape of storage rents, financial considerations when investing, and the benefits of single asset syndication and funds for LPs. Get ready for a deep dive into the self-storage sector with an experienced investor with Jacob Vanderslice, co-founder of Van West Partners.
About Jacob Vanderslice
Jacob Vanderslice is the co-founder of VanWest Partners, which focuses on commercial real estate, including adaptive reuse retail and multifamily properties. Since 2015, they have specialized in self-storage acquisitions and development, with Jacob leading the investor relations team and leveraging his 15+ years of experience in investing and operating self-storage facilities.
Here are some power takeaways from today’s conversation:
[06:21] Self-storage performance during economic uncertainty
[13:18] Considerations for acquisition or development decisions
[26:07] Consider your financial goals when investing in storage and other fund vehicles
[27:55] Why analysis for storage is complicated
[29:07] The changing landscape of storage rents
[31:56] The pros and cons of the fund to the LP
Episode Highlights:
[26:07] Consider Your Financial Goals When Investing in Storage or Other Private Fund Vehicles
When investing in storage or other private fund vehicles, consider your financial goals. Quick exits for high IRR and low multiples may be appealing, but relying on short-term exits in the current market conditions requires caution. The past trends of compressing cap rates, rising rents, and low cost of capital may not be sustainable. Instead, focus on long-term cash flow, depreciation benefits, and potential capital appreciation. Seize opportunities without banking on immediate sales and be prepared for a longer investment horizon.
[29:07] The Changing Landscape of Storage Rents: A Cautionary Tale
When evaluating storage investments, it's important to be cautious about relying on historical rental rates. Traditionally, investors would analyze T12 rental data, but with evolving consumer demand, this approach is no longer reliable. Acquisitions are now based on more recent data and current market conditions. For example, in Lakeland, Florida, there has been a softening in the market, leading to anticipated rent decreases. It's crucial to access up-to-date information and adjust expectations as historical benchmarks may not reflect the current landscape of storage rents.
[32:56] Exploring the Pros and Cons of Single Asset Syndication and Funds for LPs
- Single asset syndication provides control and focus for investors who prefer choosing specific deals and markets. However, if an investment underperforms, there are no other sources of value creation to offset the negative performance. Funds, on the other hand, offer geographic and cash flow diversification through multiple properties, balancing out underperforming investments with successful ones. LPs have limited say in deal selection and market decisions in funds and may face challenges such as filing multiple state tax returns. While single asset syndication allows for precise deal selection, it carries higher risk. LPs should consider their preferences and risk tolerance when deciding between these investment options.
This show is for entertainment purposes only. Nothing said on the show should be considered financial advice. Before making any decisions, consult a professional. This show is copyrighted by Passive Investing from Left Field and Left Field Investors. Written permissions must be granted before syndication or rebroadcasting.
Resources Mentioned:
VanWest Partners
Email: jacob@vanwestpartners.com
Use this for book links: https://www.leftfieldinvestors.com/books/
Avoiding Rookie Errors as a Left Field Investor: 20 Lessons Learned From 14 Years of Passive Investing in Private Syndications by Steve Suh
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