In this episode, Josh Cantwell sits down with Scott Krone who's company Coda Management Group moved into storage units after seeing a tremendous amount of volatility in the single family area of real estate and a cap rate on multi-family units in their area.
Scott and his company currently manage over 400,000 square feet of storage units across the Midwest, and they are actively looking for more warehouses to convert to self-storage and flex space.
Death, divorce, and down-sizing are three reasons people rely on self-storage. In addition, as people move to a more urban setting, they lose the garage, attic, or extra bedroom where they may have stored their extra stuff. And if they need to downsize for a while, as most people do during a recession, then a storage unit is a lot cheaper than renting a bigger apartment or house.
Using PACE funding, which stands for Property Assessed Clean Energy Act, Scott has been able to fund these projects in opportunity zones (OZ). This federal program has to be state adopted and implemented at the local level, but it’s designed to help buildings become more energy efficient. Instead of paying this back like a debt payment, it gets applied to your real estate taxes through a special assessment. There are huge and exciting benefits to utilizing the PACE funding on your properties.
Typically, Scott is looking to convert warehouses that are between 80-110,000 square feet, and he prefers warehouses in a growing urban market. If you’re interested in bird dogging a deal for him, he would love to connect with you.
Some key takeaways from the interview include:
- Some of the really cool tax benefits of PACE funding for properties.
- Why self-storage is an attractive addition to your real estate portfolio.
- The perfect kind of warehouse to convert into storage space.
- Scott’s current model for investors, and how long it takes to turn a profit.
Listen to the full interview and read the complete show notes here!