There is no doubt that competition in multifamily is increasing. With compressed cap rates and rising numbers of syndicators, the space is becoming severely crowded. This makes finding an unsaturated niche a great option if you are still wanting to invest in real estate. Our guest for today is Scott Krone and he has found such a niche – one which we have not talked about on the show yet either.
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What Scott does is converts distressed buildings into self-storage units, primarily in rural areas throughout the Midwest. In this episode, we discover that this niche is both environmentally friendly and profitable too. By utilizing existing buildings, these projects decrease much of the waste that is synonymous with construction. There are also financial incentives for being involved in projects that lower the carbon footprints of buildings and increase their energy efficiency. Scott talks about how he ensures that his self-storage units will succeed by going into areas with heavy demand and very little supply. We also learn why self-storage is as close to a failsafe investment as is possible, some of the creative financing he uses to fund these projects, and much more. We love hearing about new niches and hope you will too, so don’t miss out on this great discussion!
Key Points From This Episode:
- An introduction to Scott and the work that his two firms are currently involved in.
- Why Scott works in the Midwest: it’s underserved and there are development incentives.
- Criteria Scott looks for in buildings: size, competition, and more.
- A ‘look green’ concept that underpins Scott’s self-storage conversion projects.
- How long a deal on these types of buildings usually takes to close.
- PACE Funding: the federal program that looks to reduce a building’s carbon footprints.
- What motivated Scott to pursue his niche.
- How the market is not the biggest hurdle in self-storage.
- The two biggest self-storage mistakes: not knowing your competition or your market.
- Creative ways of increasing investor returns: historic tax credit, opportunity zones, and PACE.
- The markets Scott is looking at buying in and how he locates properties.
- Challenges in Scott’s journey with real estate: getting people to believe in him.
- How Scott has used the Enneagram to improve his business recently.
- Why Scott understands investors well: he does the design, development, and the build.
[bctt tweet=”Self-storage historically has done better in a recessionary market than an expansion market. — Scott Krone” username=”whitney_sewell”]
Links Mentioned in Today’s Episode:
About Scott Krone
Scott Krone is a Chicago native whose career in architecture began in 1991 by pursuing his Masters of Architecture from the Illinois Institute of Technology. While obtaining his degree, he also worked as a Project Manager for Optima, Inc. During his time at Optima, Krone’s responsibilities included such notable projects as the 400 unit Cormandel in Deerfield, IL, the 40 unit HedgeRow in Winnetka, IL, and the 51 unit Optima Center Wilmette in Wilmette, IL. In 2012, Krone co-founded SSSK Capital Fund – a firm that specializes in managing real estate assets. Since its inception, SSSK manages a wide range of real estate including single and multi-family homes, retail, commercial, warehouse, self-storage, and multi-use flex athletic spaces. Currently, the platform of investments is over $30 million. In 2018, SSSK Capital Fund was re-branded to Coda Management Group to complement his design-build firm, Coda Design + Build. Krone founded Coda in 1998. Coda Design + Build is an international award-winning design and build firm that specializes in sustainable building practices.
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