Buying, Building, and Adding Value in Self Storage with Fernando Angelucci

·1 hr 9 min·5 clips

Fernando Angelucci explains how he decides whether to build a self-storage facility before competitors eat the pent-up demand.

The episode begins with hosts Jason and Tom introducing guest Fernando Angelucci, who runs a self-storage investment company. Angelucci shares that his portfolio has grown from $50 million to $230 million under management since his last appearance, with 54 facilities across 24 states and over 900 investors. He explains that deal sourcing requires building rapport with sellers through state association events and thank-you letters, often taking years to close. The self-storage market consists of about 72,000 facilities nationwide, with 65-70% owned by mom-and-pop operators, presenting a consolidation opportunity. Angelucci's team uses a lean structure with 12 executives and outsourced operations, leveraging technology like AI for underwriting. He details the importance of third-party feasibility studies, which cost $8,000-$16,000 and analyze competitors, pipelines, and demand. Financing options include traditional bank loans, SBA loans with up to 90% leverage, and creative structures like seller carry, split financing, and master lease agreements. A master lease allows Angelucci to operate a facility, take bonus depreciation, and have a purchase option, benefiting both seller and buyer. He discusses turning around facilities by raising rents, reducing expenses, and implementing AI software like Veritech, which increases NOI by 16-30% through dynamic pricing and tenant scoring. Angelucci also converts former big-box retail stores like Sears and Walmart into self-storage, leveraging their prime locations. He explains that self-storage is hyper-local, with tenants typically coming from a 5-15 minute drive, and saturation is assessed by trade area, not city or state. Municipal approvals can be challenging, requiring strategies like offering increased tax revenue or adding water-intensive uses like car washes. Angelucci prefers phased construction, building in stages to reduce risk and use equity from earlier phases to fund later ones. His long-term goal shifts from scaling to owning facilities free and clear for wealth preservation, aiming to reduce reliance on investors and bank debt. For beginners, he suggests starting with a small facility using SBA financing and investor capital. Angelucci attributes his success to separating his business into marketing, operations, and investor relations companies, and using podcast content for multi-channel marketing. He recommends the book 'Vagabonding' for lifestyle design and credits cost segregation specialist Kev for tax benefits. The episode ends with a Chicago trivia segment and Angelucci sharing his contact information.

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