Self Storage Q16 REITs

In another video of mine. I mentioned REITs. So what are REITs? My name is Fernando Angelucci. I'm "The Storage Stud".

REIT stands for a "Real Estate Investment Trust". Usually these companies are large publicly traded companies that have shareholders as owners of the company. They also receive special tax treatment when it comes to how their income and expenses are qualified by the IRS.

How do REITs fit into the whole ecosystem of a self storage investor? Well, the REITs are usually going to be your top dogs. They're going to be the guys at the top of the food chain. They're usually buying the largest assets, you know, 10, 15, $20 million a piece, if not larger. And they're usually buying at very low annual returns or cap rates. They're usually buying in the four and a half to 6% range.

So how do I work with REITs or how do I work against REITs? So REITs are actually not something to be afraid of and they actually can work in your favor. Typically REITs will drive the market. These are the guys that have a ton of marketing dollars and spend all their time doing, you know, market segregation studies and looking at, you know, what is the max amount of rent that can be paid by an individual tenant? And usually as a smaller operator, what you can do is you can piggyback off of their marketing dollars and just undercut them on price by maybe 5 or 10 bucks. And actually steal all of their traffic without spending any money to acquire that traffic.

Another thing you can do to work with REITs is actually build for them. So REITs just because they are publicly traded companies and they need to return, you know, a solid 3% or 4% to their shareholders. They usually shy away from a lot of risk. So as an operator, what you can do is actually build these large regrade facilities, these 80 to 140,000 square feet facilities. Stabilize them. So get them up to 90% occupancy. So now all the risk is gone. And then sell them off to a REIT.

So a perfect example of a deal that we're doing right now, as we're building a $12 million self storage facility, we're building it at roughly a 9% internal cap rate or a 9% annual return. And then once it's stabilized in 36 to 48 months, we're going to go ahead and sell that to a REIT at roughly a 6% cap rate, which would equate to a value of about 17 million. So we built it for 12 million. We spend three, four years stabilizing it. And then we sell it to the REIT at 17 million and walk away with a $5 million profit.

My name is Fernando Angelucci. If you'd like to learn how to invest in self storage, feel free to drop me a line. You can visit me at www.TheStorageStud.com

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Fernando O. Angelucci is Founder and President of Titan Wealth Group. He also leads the firm’s finance and acquisitions departments. Fernando Angelucci and Steven Wear founded Titan Wealth Group in 2015, and under his leadership, the firm’s revenue has grown over 100% year over year. Today,
Find out more at
https://www.TheStorageStud.com


http://titanwealthgroup.com/

Titan Wealth Group operates nationwide sourcing off market investment properties for Titan Wealth Group’s acquisition as well as servicing a network of thousands of active real estate investors world wide. Prior to founding Titan Wealth Group, Fernando worked for Dow Chemical, a Fortune 50 company, rolling out a flagship product estimated to gross $1B in global revenues.
With an engineering background, Fernando is able to approach real estate investing with a keen analytical mindset that allows Titan Wealth Group to identify opportunities and project accurate pictures of future performance.
Fernando graduated from the University of Illinois at Urbana-Champaign with a B.A. degree in Technical Systems Management.
Titan Wealth Group was founded in 2015 with the vision of gathering individual investors that have the means to invest but lack either the time to find high-yield investment opportunities or the access to these off-market deals. All too often, founders Fernando Angelucci & Steven Wear came across investors who had deployed their capital only to regret the lack of consistency or degree of returns their investments were producing. In response, Titan Wealth Group provides access to highly-vetted real estate secured investments and off-market acquisition opportunities primarily in the Greater Chicago MSA. Today, Titan Wealth Group not only assists individual investors but has grown to support the acquisition goals and capital deployment of investment groups, private equity firms, and real estate investment trusts (REITs).
As a facilitator of wealth growth, Titan Wealth Group believes that success is not limited to the sum of our efforts and is infinite with what can be accomplished through partnership.
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