Topic: Making Money off of Obsolete Buildings by Turning Them into Climate Controlled Self-Storage with Scott Krone
In this episode, Scott Krone joins Brian Hamrick, host of the Rental Property Owner & Real Estate Investor Podcast where they discuss the adaptive re-use of commercial space and how it can be turned into an asset class that is very attractive and extremely profitable.
Scott Krone is the managing partner of Coda Management Group, a company that teams up with investors to purchase and convert undervalued warehouse space into climate-controlled self-storage facilities. Scott has a Masters of Architecture degree from the Illinois Institute of Technology and he's created 47 syndications and has over 400,000 sq. ft. and 2,759 storage units under management, along with over 25 years of development and design-build experience.
Scott shares the process he goes through in converting old warehouse space to self-storage, including his typical costs per sq. ft. for acquisition, construction, and soft costs. He discusses the financing that's available for these projects and how Coda builds and sells their developments to REITS.
Scott and Brian discuss the importance of mentors, whatever happened to the original 'Lincoln Log' factory in Chicago, and how he uses personality profiling techniques to build his team and understand his clients better.
Some key takeaways from the interview include:
- Things to look for when purchasing a property:
- Demographic: hire a feasibility consultant
- Size: look at the size that the end buyer wants
- If your cost structure is lower than your competitors, it gives you more flexibility in the pricing.
- The more open and flexible the space is, the greater ability we have to put functional units.
- Look to maximize the investor's rate of return.
- PACE financing is through the department of energy. If you are using green energy and it can be paid out through the property taxes.
- Structure your debt so it’s interest only and through the interest reserve.
- If there is too much product in a market place, that will impact your pricing. Know where you stand in the supply and demand.
- Take education from outside businesses and apply them to your company.
- Ask yourself and your business, are you solving a problem.
Listen to the full interview and read the complete show notes here!