Self Storage Q25 Multiple Storage Facilities

Hi! My name is Fernando Angelucci. I'm "The Storage Stud". The question I get off from potential equity investors, as well as owner operators in the self storage space is, How are you able to package together multiple smaller facilities? And how do you get and attract investors to those packages?

Well, one of the things that we usually do is we'll use a local bank to close on the facilities, initially. Usually they come along with, you know, pretty good terms anywhere between 20% to 25% down. We'll put together multiple of these properties under one roof. So maybe 5 to 10 of these self storage facilities. And then once the cash flow is at a point where it is somewhat stabilize, maybe 6 to 12 months after purchasing the property, some properties all the way up to 18 months, then what we're able to do is go out and get a loan from a life insurance company.

The life insurance companies, they offer really great loan products, but it has to be very stabilized income. They don't want any fluctuations in that net operating income because that's a portion of how they're paying out their premiums to their, you know, to their customers. So what we'll do is we'll stabilize say five to 10 properties and we'll contact the life insurance company and they'll say, Hey, Fernando, we really love the income that these properties are spitting out. We're willing to give you a 25 year loan. It's a nonrecourse loan, so you don't have to sign any type of guarantees on the loan and we'll give it to you for, you know, 4% interest with 30% down. Now, because I already own these properties. I'm actually able to refinance them into a life insurance loan. And that usually allows me to pull cash out of those deals.

Now, once they're all under one roof, there's one loan on all 5 to 10 of these properties. Now you have stabilized income with a stabilized debt service on that deal, and you're able to go and raise equity from investors that would like to participate in those types of deals. Recently with currents of COVID-19, we've seen a lot of investors fleeing from the stock markets because they've taken, you know, substantial hits and losses. And are now looking for something that's a little bit more concrete. They're looking for cash flowing assets that are backed by real estate. They have hard collateral. And these investors, they're looking for something that's going to be a little bit longer term. So when we put these loans, when we refinance all of these properties into the life insurance loan, we usually have somewhat of anywhere between a 10 year, 5 to 10 year balloon.

Usually the 10 year side is going to be more common. And that allows our investors to come in. Place their capital in the deal. Receive a solid return. Usually it looks like maybe 6% preferred return with a 50-50 split of the equity on the back end. And they can collect cash flow for 10 years. Usually their capital be returned to them within five to six years. And then the remaining four to five years left on that fund, they will just get free cash flow is what I call it. Because they've taken all of their basis out of the deal already.

So that's one of the ways that you can package up multiple properties that may come from different sellers or in different geographies. Stabilize them slightly. Put more longterm debt on them and then raise equity from investors to allow them to experience a solid return that's backed by real estate.

If you'd like to learn more about self storage, feel free to drop me a line. Or you can visit me at www.TheStorageStud.com. You can also link to any one of my social media profiles at The Storage Stud. Talk to you soon.

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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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