Is it still possible to find undervalued commercial real estate investments?
I believe it is, and I’ll prove it by telling you a remarkable story about a recent investment we made in a Nevada self-storage opportunity.
We’re in a Transitioning Market
We are in a time of transition. From a booming market to a shaky market. From historically low interest rates to the highest we’ve seen in years. From eager buyers, sometimes willing to overpay, to sidelined buyers, waiting to see where the falling knife lands.
Great cash-flowing deals have gotten hard to find. And with higher interest and cap rates, even harder to pencil. Times like this require more due diligence than usual and a dedicated acquisition team turning over every stone.
I believe acquiring underperforming assets from mom-and-pop operators is more strategic than ever. Deals like this may present attributes to overcome challenging interest rate environments and recessions.
The Deal
So let’s take a look at this self-storage deal.
A question for residential real estate investors: What if you could acquire a house with below-market rent of $600 on a street where similar homes currently rent for $1,480? That would be quite unlikely, right?
My firm manages a diversified fund of recession-resistant commercial real estate assets. This includes self-storage, RV parks, mobile home parks, and more.
BiggerPockets published my book on self-storage investing a few years ago. This book outlines a strategy to acquire struggling facilities from mom-and-pop owners, upgrade them, and eventually sell them to an institutional buyer.
This is one of the best examples of this strategy I’ve seen.
This self-storage facility is in Henderson, Nevada, adjacent to Las Vegas. It was owned by the original 1982 builder for over four decades. The facility came with over 40 years of handwritten records and no online marketing presence or management technology.
The manager…