Commercial Real Estate Investing From A-Z

This is a transcript of our 4th Mastermind Call with a group of experienced investors to understand where each investor is and how they are dealing with the Covid-19 lockdown and its consequences. You can read this entire episode here: https://montecarlorei.com/mastermind-call-what-are-top-investors-doing-during-this-crisis-multiple-asset-classes/ Self Storage and Retail Going into month 7 of the quarantine in San Francisco, some places are being allowed to reopen at limited capacity such as nail salons and hair dressers, still there is no indoor dining allowed, although restaurants may be able to reopen at 25% capacity at the end of the month. A lot of restaurants and boutique gyms have permanently closed. There are a lot of vacant retail space for rent in all areas of the city. As far as housing, new, high end condos that are located near the large company offices are selling for 25% less than a year ago. Apartments for rent are between 15-30% cheaper than this time last year. Mobile Home Park Operator He is seeing that buyers are taking a little bit more time and there seems to be less frenzy about trying to acquire parks. A lot of people are looking, but they’re taking their time to buy. Part of it is that without that sense of a frenzy, people feel like they can take their time, it’s not as critical to get an offer out and to get a park under contract because they think it will still be there a month or two down the road. And that’s combined with some sentiment that people feel like they can wait for a little bit and hope that they might be able to find more motivated sellers over the next three to six months. Multi-Family Investor He is also taking it slow and being patient. He was starting to get a little bit more comfortable with everything around August and started to be a little more aggressive in the acquisition side, mainly looking in the Charlotte market. He thinks that the Charlotte market is really great long term, especially in light of everything going on. He thinks that the diversity of employment there is really good and sees that as a good long term market, but he stepped back a little bit when that CDC moratorium came down. Senior Living / Assisted Living They’ve been dealing with a lot of changes in the visitation front. As far as operationally, they are going to see a lot of interesting deal flow in the assisted living memory care, skilled nursing space. They’re at a demographic trough that’s going to exist for a little while. That’s where the baby boomers don’t need care yet. And their parents and people that are older than them are passing away faster than they’re being replaced. They’re at that point now for the next couple of years, where it’s going to be a little bit of a demographic challenge in this business, and then it will turn pretty sharply. Developer The past month has been definitely unexpected. They’ve a number of projects in Lake Charles, Louisiana, that got hammered by Hurricane Laura and they got to see how well the site would perform under heavy rain conditions and it performed well, including a tropical storm that came through recently. The last month has been dealing with that situation, and it has opened up more opportunities. So overall, it’s actually been good for them. They’re still seeing opportunity for new construction. They’ve three projects that they’re doing. It’s never a straight line, there are always surprises, like lenders doing the bait and switch thing pretty liberally, saying that they’ll give you amazing terms, and the loan committee comes back with this concern. So the interest rate is going up. Apart from that, it’s business as usual. They’re being very careful not to make major long term commitments unless they really see very strong market fundamentals. They’re still bullish in some markets.  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Nobody gets anywhere alone, everyone that is successful has gotten there with the help of many, many people. I'll also talk about how you can start your real estate career from zero and get your first deal done. You can read this entire episode here: https://montecarlorei.com/how-to-grow-your-real-estate-network-and-how-to-start-your-investing-career/ How to Grow Your Network: Join Meetups in your area, even if they’re only doing online events, start attending them and getting to know people in your area. Go to as many real estate events and conferences as you can. You want to meet as many people as possible, make a note on their business card of what they focus on, make a note on what you guys talked about, if they have kids or what are their hobbies. When you get home, transfer all your contacts to a spreadsheet, or a contact management app, and send them an email saying that it was great meeting them, and add them on Linkedin. Make a name for yourself, start to be active in any platform such as Linkedin, Biggerpockets, Facebook groups. You want to join real estate groups in any of these platforms. Spend a few minutes everyday commenting on posts, and sharing insights. Check in with your network every few months. This can be done via email, Linkedin, Facebook if you added them there, but the best of all is always a phone call. I’ve created a couple of partnerships simply by checking in on people on a regular basis and seeing how they are doing. How to Get Your Commercial Real Estate Investing Career Started: Become a commercial real estate agent. You can focus on selling or leasing properties. You can start working for a real estate investment firm. I met someone that literally started as a secretary and worked her way up to a partner. Start investing in syndications, this allows you to invest a small amount of money, and at the same time familiarize yourself with the paperwork, terminology, how companies evaluate deals, how they pitch deals, etc. If you know someone that is a successful commercial real estate investor, you can have them be your mentor. Just make sure that you add value to that person, like bringing them deals based on their requirements. Build relationships with commercial agents in the area. Start joining their mailing lists, start asking for OM’s (offering memorandum). This way they will familiarize themselves with your name and you’ll start to learn who may be a good broker to work with. Start playing the Cashflow game by Robert Kiyosaki, it’s a very good game for you to start understanding how real estate investing works and how you can grow your net worth. You can either buy the board game, and invite your fellow real estate friends to play with you, or you can play on their website for free. How to Make Your First Investment if You Have No money: After you find a good property, and have shown to your network that you are learning all you can, invite friends and family to invest with you. If no friends or family are interested in joining you, partner up with someone experienced. If you have a property under contract, you can always give a significant percentage of the deal to that person, just so you can have the deal under your name and you can show your future investors what you have done with that first property. Buy and/or Play the Cashflow game here: https://www.richdad.com/products/cashflow-the-board-game --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How are retail investors dealing with everything that is happening? What kinds of things are they looking at repurposing retail spaces for? How are they projecting revenues? Chris Ressa, COO at DLC Management Corporation shares some insights. You can read this entire interview here: https://montecarlorei.com/how-is-retail-performing/ What's going on in the retail space? There are certain places that are on fire and doing really well, and there are certain places that are challenged. Right now the most challenged is the enclosed mall. And we like to say we're in the same industry, but a different business. Most of my tenants today don't have a lot of exposure. They don't operate in a in a mall, we own either grocery anchored or what we would call power centers. A Walmart anchored, a Target anchored center with a TJ Maxx, Home Goods, a McDonald's on a pad in the parking lot. If you think about who the tenants are in those centers, they're very different than in those open air, strip centers. They're very different than the tenants you see in the enclosed mall. The enclosed mall was a destinational, retail fashion oriented shopping venue. That has shifted, it used to be driven by the department stores. the enclosed model is going through a massive transformation, the open air is going through some transformation, but there's a lot of positive transformation. What kinds of things are retail property owners looking at repurposing retail space for? In the pre pandemic, what you were seeing was this buzzword experiential retailing, which was theater and entertainment venues, but they were really going to iconic destinational retail properties, where that's not the everyday retail property in America. The everyday retail property is where someone goes and gets their nails done and picks up their groceries and grabs a slice of pizza and whatnot. And I don't know that there's going to be a huge transformation. I think that there's obviously going to be repurposing, you see a lot of the enclosed mall operators talking about maybe making deals with Amazon distribution, etc. There's going to be some of that mixed use stuff. I don't know that that's at scale. How are you projecting revenues? Are you projecting with additional vacancy in mind? The way we're looking at it is we're trying to assign a probability to the durability of the cash flow stream. When you're investing in retail properties, that's probably a key piece. If you think about any retailer, whomever it is, whether it's Walmart or TJ Maxx, or Starbucks, how successful is this location? How does that location fit into their grander plans? What do you expect will happen when they come up for renewal? Will they stay? Will they leave the market? Will they want to move down the road? How are you managing things through Covid? We had a three pillar approach through the pandemic. We called it the ate's: communicate, accommodate, and mitigate.ommunicate, accommodate, and mitigate. We need to do whatever we could to mitigate the virus, sanitize, clean our properties, and make them safe environments to shop. We needed to accommodate and work with our tenants where we could, and try to cut deals. And then we needed to communicate and continue open lines of communication. If there's anything that's positive that has happened through the pandemic is that we've had opened up the lines of communication with our tenants, our lenders, and everybody from a work from home environment more than they've ever been. Chris Ressa #ressa on Linkedin Retail Retold Podcast Join our facebook group here: https://facebook.com/groups/montecarlorei --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How do you start your career in commercial real estate, what kind of properties should you look for, and how to manage your properties during Covid-19? Eric Wang, a commercial real estate investor shares how he started his commercial real estate investing career and how he is successfully investing as a solopreneur. You can read this entire interview here: https://bit.ly/3lDR4j1 A lot of our listeners can relate to where you are, running your own business. I would love to hear how do you determine a good project to take on, especially in the Bay Area? Obviously today with the Coronavirus and people moving out of the Bay Area, it’s really difficult right now, but I just don’t want to be too forgetful of the history of the Bay Area. In the past 10 years, it was undoubtedly one of the strongest markets in the world. But as far as up until today, which have been my recent projects in the past few years, my approach has very much been influenced by the value investing, the Warren Buffett approach where, I don’t need to swing at every deal, I can just take my time. I don’t have 10, 50, $100 million in equity that I need to get out of the door. I can be patient and wait. Looking back, I ended up allowing a lot of good deals pass by, but the ones that I did pursue, I felt good about. Let’s take one or two examples from beginning to end. How did you analyze a particular commercial project? Why did you decide to take it on, what did you do with it? What were the scary parts? And how did you exit, if you have exited them? One good example is the live work loft project I invested in. It was multiple lofts, essentially multifamily, but it’s non traditional in the sense that these weren’t little apartment boxes. They were artist lofts. And at that time in 2015, Lake Merritt in Oakland was a really booming market. More attention was coming around the lake, it was starting to already get expensive. Just east of that in this quiet neighborhood, there wasn’t yet much attention there. The reason why I was able to get it early on was because there wasn’t as much attention in that neighborhood. And now in recent years, or today, there’s been focus and investment all over the Bay Area and further deep East Oakland. But at that time, it wasn’t that clear. So it’s this path of growth mentality, the location was in the path of growth, outside of Lake Merritt. I acquired that and the goal was to transition these very large units, these lofts from very cheap space used for artists, or for construction people, people who had all different sorts of crafts and hobbies in these spaces, and small businesses as well, to transition that into more lifestyle. We provided some of the basic things, like bike parking, put on a new roof, upgraded the kitchen interior finishes, they were just plywood type finishes. And we got a lot of great tenants. Was it zoned live work already when you purchased it? Yes, it was already zoned that way. And I didn’t need to change anything about the zoning. The major value add there was just upgrading the use, just making it more efficiently used and presentable for the market of people that were moving into the area at that time. And you didn’t do a ton of construction. You did not make these lofts smaller. No, we thought about that, but we saw the demand and we saw the rental pop already just from improvements that we made. So we didn’t feel the need to do that. It was mostly interior renovations and common area improvements and basic building upgrades. And then you rented it out, and then you sold it? Yes, he was another operator. Eric Wang eric@revprojects.com www.revprojects.com Subscribe to our newsletter here: www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How do you decide which opportunities to work on as we find stranded assets? We are continuing our conversation with Victor Menasce, he shares excellent insights into his methodology. You can read this entire interview here: https://bit.ly/327vMRL When you look at a property, what’s your thought process of figuring out how can I add value to this, and create something out of nothing? Whenever I look at a property, I’m always thinking in terms of highest and best use. I’m looking to see what are all of the assets. I’m looking at zoning, I’m looking at what zoning has been approved around it or across the street around the corner to see if there’s any precedent for changing the zoning on that particular property. The zoning is always what is the property right now. It’s not what it could be in the future. So if it was a corner store, it’s zoned commercial for corner stores. But across the street, there’s a 20 story building, chances are good that you might get rezoned for a 20 story building. So you have to look to see what else has been done in the area. One of my favorites is something called conservation easements. There is a tax regulation called IRC 170(h) that allows you to donate a piece of land to conservation in perpetuity. And in exchange for that you get a tax deduction. Not what you paid for it, but for its value according to its highest and best use. Now, remember, this property has to have real wilderness conservation value, you're not going to take a parking lot in Pittsburgh and return it to wilderness ever. It has to be something that has real legitimate conservation value. But imagine it has minerals underneath it, maybe it has oil. What if you could get a tax deduction, you could say, It has a nice lake on it, I'm going to donate this to conservation. It has to be donated to a 501c3 land trust. And then you get a tax deduction for the oil that you never pump. How do you pick which ones to take on? You have to be selective. I'm looking at an opportunity right now, in our market there's a shortage of industrial land. And there's an acute need for contractors, and builders to store building materials. A place where they can put down a half dozen C Can containers and they can store lumber. If they can get a deal on building materials, whether it's siding, or lumber, anything that it's going to be in short supply that they need over the next 8, 10, 12 months, because we're definitely in a supply chain constrained environment. They need that space. I'm in the middle of striking a deal right now with a landowner who has some land, they don't know what to do with it. I'm probably not even going to buy the land, I'll probably end up just leasing it. And then put security fence around it, put down some C Can containers, provide secure access and lease out these spots to different builders as an outdoor storage facility. It doesn't have to be climate controlled, they can drive in with their trucks and trailers and load up. And I'm solving a business problem for a very low startup cost. Do you have a process of how you go about your day? These things come in when they come in and you look at them and try and give a quick no if you can. I don't spend too much time looking at things. If there's too many moving parts, if there's too much risk of it coming together, then we'll pass on it and pass on it very quickly. As far as the other ones, we'll get with the team and we'll see how would we put this together. They literally come in every day of the week. So we have to dispatch them fairly quickly. And some of them have a gestation period. Sometimes they come together in a matter of weeks, and sometimes in months. Victor Menasce victor@victorjm.com http://victorjm.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are some ideas of how to think outside the box and negotiate real estate deals during these times? We asked Victor Menasce, host of The Real Estate Espresso Podcast, author of Magnetic Capital, and experienced investor and developer. You can read this entire interview here: https://montecarlorei.com/what-is-a-stranded-asset-how-to-look-for-opportunities-in-stranded-assets/ What is a stranded asset? And then we can jump into some examples of stranded assets. I'd like to make a distinction in defining the stranded asset. Most of the time people are thinking about distressed assets. Now, in a lot of cases, those distressed assets haven't appeared on the market yet, or if they are, it's really just the very beginning. We're in the midst of a moratorium on evictions, a moratorium on foreclosures. But we know there's a backlog at this stage of millions of distressed properties. I read a report last week that showed that 4.5 million homes in the United States are in either in default or in forbearance. And that happened literally in a very short time period. Now, if you think about the entire financial crisis that took five, six years to play out, a total of 10 million distressed properties, we have gotten half of that in just a few months. So the speed with which this market is gone into distress is unprecedented. A lot of money's sitting on the sidelines today just waiting for those distressed assets, whether it's single family homes, hotels, office buildings, retail, there's going to be a ton of distressed assets on the market and all the money will be chasing those distressed assets. Now the stranded asset is an asset that is a perfectly good asset. What makes it stranded is you can't get to it from here. One of the examples that I give is the following, there's a there's a lighthouse in Prince Edward Island called the Baywatch lighthouse. And you can actually book this lighthouse on Airbnb, and you can stay in it on for the weekend. It's in all the tourism brochures and that would be a wonderful income producing asset. Now, if you take that same lighthouse and you put it out in the middle of the Atlantic, and it's a little bit stormy, and it's not very safe to get to, it might be another very good asset from the perspective that it would be great to spend the weekend, that would be a unique experience, but it's stranded because you can't get to it from here, where it's difficult to get to it, it's inaccessible in some way. And that's what distinguishes a stranded asset. Now, we know that there are a lot of restaurants out there that are shutting down, because they've gone through several months now with no revenue, or insufficient revenue. In some cases, the owners are simply tired. I've come across several restaurants just in my own home community, where there's no reason for them to shut down other than the owner is 75 years old, and he doesn't want to go through the energy of restarting again.  there are going to be a lot of commercial kitchens for sale, those are maybe distressed assets. Maybe they just shut down because they decided that they're getting out of the business. Those aren't distressed assets. They're just stranded assets. But there's an even more important stranded asset, and that is the relationship between the customer and the menu. You pay them a royalty for every sale, and you deliver their favorite items. Victor Menasce http://victorjm.com/ Subscribe to our newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Today we learn what is CMBS, how are the delinquency rates of CMBS loans in each asset class, how does it differ from the 2008 rates, and what can investors do to prepare to take advantage of commercial real estate deals in the future. Jyoti Yadav, CMBS analyst at Trepp shares insights. You can read this entire interview here: https://montecarlorei.com/what-is-cmbs-how-are-delinquency-rates-today-what-can-investors-do-to-take-advantage-of-commercial-real-estate-deals-in-the-future/ What is CMBS? CMBS stands for commercial mortgage backed securities. It's essentially a financing vehicle to provide loans, or financing to commercial real estate property owners. This is not the only option available in the entire universe, CMBS accounts for 15 to 20% of the lending universe. It competes with insurance companies, banks and other financial institutions to provide loans to the commercial real estate industry. What happens in the market is that a bank, let's suppose entity A will provide, let's say, 10 loans to property owners across America, different property types, different geographic locations. That bank, if it has provided, let's say 100 million dollars worth of loans, will pull all of those loans together, that means the monthly mortgage payment that the borrowers are making to lenders. They'll pull all of that together and issue bonds which will be sold to investors. What is the current state of CMBS today? Since COVID, whatever happened before March 2020, was a completely different story. The market was performing in a completely different way. And now after let's say late March, the situation has drastically changed. What is really happening is that there isn't as aggressive lending out there in the commercial real estate space. Lenders are extremely cautious. They want to really analyze the property. Let's suppose I am lending to office space in Houston, Texas. Before this crisis when oil prices were not that low, and the market was doing okay, they would look at the tenant roster, they would see who the tenants are and, most of the time there were no issues. Now in Texas, energy companies have been battered and the credit quality of the tenant has become an issue, you do not know if the current tenant of the property will continue its lease. You do not know if they will continue to make payments and that is really making lenders take a step back and understand who should they lend money to, and all sorts of analysis they need to do. Because of that, we have not really seen a lot of lending for hotels, of course, because hotels have suffered a lot and are still suffering a lot. So, there is a lot of hesitation in lending. And even when there is lending, there's a lot of analysis that's going on, and this also has increased the cost of borrowing for borrowers. How are the different asset classes doing, the different property types performing in the CMBS world? The June delinquency report that we published had a delinquency rate of 10.32%. This means that more than $50 billion worth of loans are behind on their payment, and there is distress in the sector. If we compare it to an earlier crisis, in the last financial crisis, the number was 10.34%. So we are fairly close to the peak that we have ever seen. How long did it take to get to this 10% in 2008 because we are just four or five months into COVID? 10.34%, was in July 2012, the crisis started in 2007/2008, so it took some time for us to reach that number. Fast forward to April 2020, that number was 2.29%. And now in June of 2020, it's at about 10%. So it was a very fast increase. Jyoti Yadav info@trepp.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

For the first time ever, we recorded our monthly Mastermind Call with several experienced real estate investors across multiple asset classes. Joining us in this month's mastermind were Beth Azor, Victor Menasce, Andrew Lanoie, Todd Sulzinger, Christian Cascone, RK Kliebenstein. Each investor shares what they are currently going through in their specific situation, market, and asset class. Watch the entire recording here: https://youtu.be/-HUUIv1hDmA Read the entire transcript here: https://rb.gy/frif7o Steff Boldrini, Retail, Self Storage San Francisco is a ghost town. Nobody wants to quarantine in four walls with no access to work at a coffee shop or in common areas of their buildings. There are deals in the rental space that are completely unheard of and we would have never imagined they would be happening like one to two months off, and as much as 30% rent decrease. Andrew Lanoie, Mobile Home Parks In general have been down a little bit, not too bad. A lot of parts of our business have have been frozen, we sent our construction company home. And as everyone knows, some of the lending dried up a little bit, some lenders are back, and some stayed the same through all this. We're just figuring out how to get back into acquisition mode, and all of the Capex and all the projects and things that we have in our world for our portfolio. Todd Sulzinger, Mobile Home Parks In our parks, we've had some struggles with collections as well, I have parks in Georgia and Tennessee and we've had more issues with collections in Georgia. It has been a combination of some tenants who were affected by COVID related situations where they lost their jobs due to the pandemic. And in those situations, we reached out to them and said, If you actually were then please fill out this form, and get proof from your employer that your job was affected by the pandemic. In other cases, we've had people really take advantage of the fact that the courts have been closed. Beth Azor, Retail I own six retail shopping centers, we've had a ton of retail bankruptcies from Tuesday Morning, Pier One, Ascena is about to file, 24 Hour Fitness, GNC Gold's Gym, Starbucks will close 400 stores. The national dealmaking will be on hold until 2021 because of the inability to travel, anyone that owns shopping centers looking to fill retail space in the next 6-9months, will be focusing on local and regional players.  Victor Menasce, Developer We are making some progress on getting debt for new construction and even some equity as well. It's tougher than it was. We're not doing anything in retail or office, thankfully. But in the multi-family and senior housing asset classes, we are able to find both debt and equity. For the moment, it appears as though rent collections in multi-family are pretty strong. RK Kliebenstein, Self Storage Our industry has always been regarded as recession resilient. Delinquency is now hovering somewhere between 5 and 7%. We look at it as not being devastating, but certainly as being cautionary. When money from the Cares Act runs out that will be a better tell. Christian Cascone, Developer, Multi-Family The market just has gotten too unpredictable at this point. There's capital being injected in the wrong places and we feel like it's causing some problems as far as the free market is essentially dead at this point. We're trying to see if there's going to be some opportunities down the road for high quality assets and great locations in the US, 12-18 months from now. We're seeing opportunity zones get hot again, as people have huge capital gains that they're able to deploy into, Join our newsletter here: www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What does it entail to invest in land? Where are the opportunities and how can you monetize land investing? Today we are talking with Ryan Pettitt from Prosperity Aid. You can read this interview here: https://montecarlorei.com/how-to-invest-in-land-and-what-are-the-pros-and-cons-of-land-investing/ Tell us what your experience has been with regards to investing in land. When we first got started we were introduced to some folks in the industry. One Mark Podolski with the Land Geek, and then also to Jack and Jill with Land Academy, understanding the premise behind investing in land and creating a business around it. And this is undeveloped raw land specifically, and looking for those opportunities to resell and generate cash flow from it. Like any investments, you can either do it actively or passively. So we had the passive experience and our goal was to expand into active investing and creating a business structure around it, so that was the first venture into doing that. But we first got started with finding opportunities to buy vacant land below market value, and find an end buyer and continuing to sell it below that market value to be competitive in the marketplace, and ultimately being able to sell it to them as a flip transaction, or creating cash flow by fronting the capital and collecting monthly payments. So that's how we get started with the business. And then there are opportunities within land to expand beyond just the parcel itself, because you can look at ways that you can turn it into a more productive and sustainable piece of property and doing things like a better use with agriculture, potential developments, a lot of people land bank and so there's a lot of different routes that you can go within the land that can be considered an investment, either from an active or passive standpoint. Are there any tax advantages of holding land, as there are with commercial properties? If you talk about land itself, it's actually not an incentivized asset, you can't collect appreciation on it. And the purpose of the land being vacant is that there are no structures on it. So there's nothing that you could utilize from a taxation standpoint. However, as you look into different opportunities to change the use or classification, for example agriculture, you can always make those improvements to the land and create some tax incentives. Right now, there's actually a huge push in the marketplace to continue to focus on agricultural land, farming use because of the need of our surrounding communities and access to those fresh fruits and vegetables. The government is actually providing grants and low interest loans as an incentive to develop those properties and create something that is sustainable. The land itself is not but then you change it into a better use, and then you can realize some tax advantages from that. What are the potential downsides of investing in land? It's not a tax advantage asset on its own. You have to create those opportunities, and especially as we talk about cashflow, that's not something that resonates with a lot of folks that invest in structures. But you can generate that cash flow by holding that property and being able to collect monthly payments.  The other thing is that a lot of folks believe that this can be set up very passively from a business perspective. And I'd say that there are a lot of moving parts and there are a lot of intricacies to the business that it takes some time to establish those structures, those processes, and it's definitely a very active business and a lot involved with it. Ryan Pettitt ryan@prosperityaid.com Subscribe to our newsletter here: www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How to evaluate a self storage property? What do self storage REITs look for when buying new properties? Kris Benson, Chief Investment Officer for Reliant Investments shares some insights into this recession resistant asset class. You can read this entire interview here: https://montecarlorei.com/how-to-evaluate-a-self-storage-property-what-do-reits-look-for-when-buying-new-properties/ What are some of the things that you look for in a property before making an investment? Where we start is the market and we’re looking at very similar demographics to what you may look for any asset class. Traffic count is a big one, understanding how many cars are going by per day in storage is interesting in that the market is really the one, three, and five mile radius around your facility. That’s the data that really matters. Because people typically are not traveling too much farther than that to come to a storage facility. We don’t have amenities, it’s a garage. There’s not necessarily specific amenities people will travel to like they may for a multi-family property or an apartment. Population growth, job growth, average income, median household value, those are some of the pieces that we’re looking at to understand who the potential tenant may be, and the strength of the market. And then, a big component of it is understanding the competitive set in that particular market as well. Who are the competitors going to be? Are they going to be institutional REITs or is it going to be a mom and pop competitive set? So we try to build a story around each one of the properties we’re purchasing. So it’s a number of different data points that we bring together. What are some of the ways that you add value, or look at adding value in a particular property? On our side it’s different for each property that we are looking at. We don’t go into a particular value add strategy and it’s the same for every property. We’ve sold 36 properties, and the majority of those have been sold to the REIT’s. So we look at each property with a lens of what our exit could be. Sometimes we may go into a facility that’s cash flowing currently, and maybe it’s been operated by a mom and pop owner and they have some additional acreage that they’ve not capitalized on and we may build it do an expansion. We could build an additional 15,000 square feet and get that leased up. Our goal is to try to grow the NOI on that particular property. That can be one value added strategy. What’s interesting about storage is that the marketplace is very fragmented. The REIT’s own about 20 to 25% of the market and the rest is very much fragmented between regional operators like us at Reliant, and operators, like mom and pop shops who have one or two facilities. And usually in those mom and pop operated facilities, there’s a lot of low hanging fruit to glean additional revenues. And so sometimes the value add is building out some ancillary income streams like doing U-Haul truck rentals, or a retail component where we’re selling locks boxes, those types of items where maybe the mom and pop operator just didn’t capitalize on that opportunity. So, we look at each property differently and then as we underwrite we add what that value add is, or business plan may be. When you look at exiting to a REIT, what do they look for in your properties when they are purchasing them? Typically they’re looking for a market presence in an area that they think has upside, that will help them grow their portfolio, where they don't take construction risk. Kris Benson https://www.reliantinvestments.com/ Subscribe to our newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support