Unlocking Self-Storage Success: Navigating Market Trends with Tom Flannigan

What are the key differences investors should know about when considering self-storage opportunities - from small "mom & pop" facilities to large portfolios owned by REITs?

 

Self-storage expert investor Tom Flannigan shares his deep knowledge of the self-storage investment landscape, including the pros and cons of small versus large operators, how to evaluate market supply and demand dynamics, passive investing considerations, and more.

 

Tom Flannigan is the Argus Self Storage Advisors affiliate for Minnesota, Iowa, and the Dakotas. Since 2012, he has specialized in the ac­quisition, disposition and evaluation of self storage properties of all types and sizes. Tom has successfully represented sellers and buyers of properties ranging from $300K to over $18 million. Tom is the Managing Director of Area CRE Services in Minneapolis and leads a team of Storage Advisors responsible for selling over $500 million of self storage facilities in the Midwest.

[00:02:00] Types of Self Storage Owners

 

REITs focus on major markets and stabilized assets in large portfolios
Deals under $10M are common, with many under $3M - good for smaller buyers
Direct investing requires operational capabilities - rentals, maintenance, etc.

 

[00:05:00] What REITs Look For

 

REITs pay top dollar for stabilized deals in big portfolios
Not interested in heavy lifts or value-add deals
Creates opportunities for mid-sized and smaller operators

 

[00:09:00] Evaluating Market Supply

 

Focus more on achieved rental rates vs. supply metrics
Do rental rate surveys to estimate actual market rates
Be wary of posted web rates vs. actual rates

 

[00:13:00] Why Invest Passively

 

Hands-off wealth building compared to direct operating
Don't have to deal with maintenance, tenants, etc.
Can get exposure alongside experienced sponsors

 

[00:16:00] Evaluating Passive Deals

 

Deal terms - return splits, fees charged matter
Sponsor track record essential
Total package - deal, terms, sponsor
Book recommendation:  The 7 Habits of Highly Effective People
Who inspires Tom?: His mentors

Quotes:

 

"At least half of [self-storage] transactions across the country are going to be under $3 million and a lot of those even under $2 million." - Tom Flannigan

 

"I would be much more fixated on whether the market is achieving 60, 70. 20 per square foot versus like a dollar, 1. 20 per square foot. That's a huge difference." - Tom Flannigan

Connect with Tom:

Website: https://www.selfstorage.com/

X: https://twitter.com/TomStorage

Apply to Invest with Taylor at www.investwithtaylor.com

Track your wealth for free with Personal Capital, go to www.escapingwallstreet.com

Please leave a review and help others escape Wall Street and build wealth on Main Street!