Long before John Manes and Robby Dunn launched Pinnacle Storage Properties and eventually partnered with Erik Osterhus, they both owned single-family and multi-unit real estate investments. Like many novice investors, they spent a great deal of time fixing toilets, rehabbing units, cleaning carpets, and investing time, energy and effort into working in their business. The work was rewarding, but all three found the hours long and hard.
Eventually, Manes, Dunn, and Osterhus all made their way into self-storage. Manes entered the sector as an employee with Uncle Bob’s Self Storage (now Life Storage), a top publicly-traded REIT within the industry. He progressed from a district manager responsible for a handful of stores to regional vice president responsible for more than 120 properties. Dunn started out in single-family and multi-unit investing, then added self-storage to his portfolio and, by 2015, had sold his first facility on a large enough margin to purchase four more. Two years later, he had exited all but one of his single-family investments completely. Osterhus, who first became interested in self-storage in 2013 when he was looking for a place to store his boat, leveraged his background in land purchasing and pre-production construction for the oil and gas industry to develop several facilities from the ground up. Together, the three founded their self-storage company, Pinnacle Storage Properties, in 2016.
“We wanted to handle all aspects of self-storage, from acquisition to development to management of these valuable assets,” said Manes. Since its inception, the company has purchased nine properties, expanded three existing facilities, and opened a ground-up development in Round Rock, Texas.
BY THE NUMBERS
Purchase Price: $1.85 million
Capital Improvements: $165,000
Soft Costs & Fees: $175,000
Gross Income at Purchase: $225,549
2018 Gross Income Trend: $359,556
2018 Projected Value: $3.5 million
Case Study: Houston Texas
The key to a successful self-storage investment is an effective comprehensive plan for the facility. For this facility, the team used a five-pronged approach that included implementing top-notch management programs focused on positive customer service and efficient property management, increasing rental rates after completely rehabbing the facility and updating security and gate systems, reducing expenses by 5.6% thanks to economies of scale, adding retail merchandise and tenant insurance, and overhauling marketing programs and curb appeal.
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