DIY Self-Storage Investing VS. Real Estate Syndicator

Key Takeaways:

• Pursuing a self-storage investment opportunity on your own puts you in the driver's seat, but it also poses a number of challenges—especially for investors who don’t have experience in commercial real estate.

• A real estate syndicator allows investors to benefit from the advantages of commercial real estate investing without having to be actively involved in the process of obtaining and operating a facility.

• Before going out on your own or working with a real estate syndicator, be sure to conduct your own due diligence and consider your investment goals. 

As someone who’s considering investing in commercial real estate, it’s likely you’ve come across a few possible options. You could invest in a real estate investment trust (REIT), work with a real estate syndicator (like Belrose), or pursue investment opportunities all on your own (DIY). These are the three most common options for investors, and they all come with their own sets of benefits and considerations.

REITs are SEC-registered companies that own, operate, or finance commercial real estate properties with the intent of generating income for investors. While REITs are considered alternative investments, they are still correlated assets susceptible to stock market volatility. If you’d like to learn more about REITs, you can check out our previous discussion on them here.

Below, we’re focusing on the primary differences between investing in commercial real estate, specifically self-storage facilities, on your own versus working with an experienced syndicator. 

The Challenges with DIY Investing

When pursuing an investment opportunity on your own, every single aspect of the process is in your hands—from finding the right opportunity to conducting due diligence, overseeing the new build construction or renovations, marketing, day-to-day operations, legal obligations, etc.

Depending on your level of experience, you may appreciate having total control over your investment property from start to finish. On the other hand, there’s going to be a steep learning curve and plenty of trial and error as you undergo such a sizeable project. With your own money (and perhaps the capital of some friends and family) at stake, there’s an immense amount of pressure to avoid costly mistakes and maximize returns.

Landing the Right Deal

There’s a common saying in real estate, “Money is made when you buy, not when you sell.”

For an investment property, this couldn’t be truer. Your opportunity to maximize ROI depends on your ability to obtain a facility at a good purchase price. The best way to do that is to participate in off-market deals. As an individual investor, this can pose a challenge.

It’s common for facility sellers, who are often small mom-and-pop operations, to bring their property to the market privately first. They’ll turn to their network of other operators, facility owners, or investors they’ve come to trust who they believe may be ideal buyers. This helps the sellers find someone they’re comfortable with selling their business to, and it typically means the price will be lower than if it gets listed with a broker on the public market. 

Until you establish a name for yourself and a good reputation as an investor, it’s difficult to break into these networks and get “first dibs” on property sales. You may be limited to finding properties on the public market (and again, likely at a higher price), at least for your first few facilities.

What It’s Like to Work With a Real Estate Syndicator

Most self-storage investors make their investments through a real estate syndicator, like Belrose Storage Group. We pool capital together from private investors to fund a single investment (in our case, a self-storage facility). A real estate syndicator does all the behind-the-scenes work to identify new opportunities, negotiate the best price, and conduct due diligence. This gives individual investors the opportunity to own a portion of a commercial real estate investment without having to fund or oversee the entire project on their own.

Working with a real estate syndicator is an ideal option for investors who would prefer to take a passive role in their commercial real estate investment, as opposed to being actively involved in every aspect (as a DIY investor would be). Instead of having to research and make all decisions on their own, investors can rely on an experienced team of professionals who follow a repeatable and proven process for investing in, operating, and selling self-storage facilities.

Real estate syndicators, like Belrose, work like well-oiled machines to help investors meet their investment goals. They have access to a greater pool of resources, a network of growing connections, and deep industry expertise that they can rely on to find the best opportunities for their community of private investors.

How to Find the Right Investment Opportunity as an Investor

As an investor, you’re putting a sizeable amount of your own capital on the line. It’s up to you to recognize whether an opportunity is the right one for you. How do you decide if an investment is going to meet your goals and objectives? By conducting your own due diligence or, in other words, asking the right questions.

If you’re looking to go the DIY route, think about your current lifestyle and how something like this will fit into it. Are you prepared to spend the majority of your free time researching properties, conducting feasibility studies, overseeing operations, etc.? Depending on how you plan on running your facility or who you bring in to help, it could quickly become a full-time job all on its own.

Do you have experience with commercial real estate? If you have questions, who will you turn to? There are plenty of “gurus” or “experts” online making over-the-top promises that are often too good to be true. How will you be able to tell who’s genuinely interested in helping you grow as an investor, and who just wants you to buy their online course? Without a network of support, it can be a difficult and lonely endeavor to pursue real estate investing on your own.

If you think that joining a real estate syndicator is the better way to go, you still need to do your own due diligence. There are plenty of sponsors out there, and not all of them operate with your best interest at heart or present opportunities that align with your investment goals.

We recommend following a process we’ve dubbed the S.A.F.E. method, which stands for:

• Sponsor

• Asset

• Financials

• Exit

To learn more about how to use the S.A.F.E. method when identifying investment opportunities, download our free Ebook.

Learn More About Investing with Belrose Storage Group

Here at Belrose, we take care of all the important details that go into a successful investment so our investors can spend less time managing their investments and more time doing what they love—being with family, traveling, exploring new hobbies, and more.

If you’re considering a syndication deal with a sponsor like us, it’s important to work with a team that you can trust to take care of your hard-earned money. Not sure what to look for in a sponsor? Send us a message, we’d be happy to share some resources and insights so you can continue to make educated investment decisions.