Tom Dunkell 0:00
We’ve found a lane that we’re really good at. And that’s that’s where we’re gonna stick. We’re very selective about the facilities that we buy are not out there trying to cobble up every every single facility that’s for sale. As everyone out there knows it’s easy to buy real estate right? You can be paid cash, pay the asking price and close tomorrow you can buy as much of whatever real estate class you want. But for us, that’s not the that’s not our approach. We’re very diligent. We’re very disciplined about the kinds of facilities that we acquire. And it’s all because we want to do the best job we can do for investors want to reduce their risk increase their cash flow increase their returns.
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.
J Darrin Gross 1:00
Welcome to commercial real estate pro networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversation with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Tom Dunkel. Tom has a background in corporate finance, and over 25 years of real estate and investment experience. Tom brings extensive experience to Belrose storage group, taking the company from a startup to a world class organization. And in just a minute, we’re going to speak with Tom about self storage syndications. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. And you can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest, Tom, welcome to CRE PN Radio.
Tom Dunkell 2:25
Thank you, Darrin, it’s great to be here. And I do hope listeners go to you too, because I wear my favorite shirt today and in honor of our conversations.
J Darrin Gross 2:34
That’s awesome. I appreciate you doing that. And I hope they do too. Hey, Tom, before we get started here, if you could take just a minute, and share with listeners a little bit about your background.
Tom Dunkell 2:50
Sure. So I was one of those annoying MBA guys. I got my MBA in finance and accounting and went into corporate America did CT corporate mergers and acquisitions and raising capital in the aerospace and some other industries. It was great training, I worked with some amazing people. It really did. And I and even though it was getting to be a long time ago, now I still reach back to that time for lessons learned from leadership and you know, just how to grow a business the right way and those kinds of things. So So I ran that out for a while and but always wanted to go and do something on my own. And so in 2006 My timing wasn’t great, but I left corporate America actually kind of abruptly because I got fired from my corporate job. But it was just the kick in the pants that I needed to go out and do what I had been wanting to do. And I and I feel like what I am meant to do.
So 2006 Obviously my timing was horrible. So learned a lot of tough lessons in his first few years in real estate. So I definitely still have the the battle scars and the lessons learned from from that tough time. But just had to keep battling through and grinding. And so I reinvented after spending some time in residential real estate started. When I had rentals and I was doing fix and flips and wholesaling and those kinds of things. I went into distressed mortgage debt, which ended up being a great business, just kind of the right place at the right time. I connected with my business partner, Joe downs, in 2010. And we started us mortgage resolution, which is still thriving today. Over the past 12 years, we’ve generated over $50 million of revenue in that business acquiring over $800 million of distressed mortgages. That’s on paper. It’s well balanced so, so we had a great run with that business which allowed us to do some other things including hard money lending. We have a we have a real estate, we have a rental portfolio, short term rental portfolio, and a vacation spot here in Pennsylvania and called the Poconos Pocono, mountains, with lakes and such up there. But our, our, our big push right now, and really what we’re most passionate about at at Belrose is storage. So we’ve we’ve gotten into storage, we started buying facilities, back in 2020, leading into 2021. And now we’re up to we’re about to acquire our 10th facility, we’ve got about a quarter million square feet of storage, and we just are big fans of this asset class.
J Darrin Gross 5:56
Awesome. So you mentioned kind of your start, and you would did you do single family? Start with? I mean, I heard that you got into the hard money or not the hard money, but the mortgage is is that but that your your initial start? Were you doing single family? Or did you jump into a different asset class or what?
Tom Dunkell 6:17
It was mostly single family, a few small multifamily duplexes, triplexes, quads, that kind of thing. But interestingly, I did start investing as a passive investor in multifamily in 2013. So, so I’ve had that’s been a great run as well, and a big, big fan of that industry. But just as a, as a passive investor there.
J Darrin Gross 6:40
Got it, got it. And how did you guys arrive at self storage? What What was the attraction?
Tom Dunkell 6:48
Yeah, great questions. There’s quite a laundry list of things that we really like about it. But the the highlights are. I mean, first of all, it’s real estate, right? So it’s a hard asset, it’s not going to zero. And like the old adage, says, you know, don’t wait to buy real estate, buy real estate and wait, so so we love that about it. And it comes with all the the tax benefits of being in real estate as well. Second, big thing is is cashflow. Our operating expenses at a facility are are very modest, typically around 30% of our revenue, give or take. So that gives us a lot of cushion to generate cash flow. And you know, in the uncertain times that we’re in right now, that gives us cushion. If the economy were to take a dip, we can we can adjust our rates, and still be okay and cover our debt and that sort of thing. So we love the cashflow aspects.
One of the other big things we like about it is is the capital expenditures are usually very low. When I know when I do invest in multifamily, I know there’s a lot of times that a big capital expenditure budget set aside to account for turnover in units because they need to go in and upgrade the lighting package or the countertops or the appliances and paint carpet what have you. In Self Storage, when a customer moves out, we can roll up that door and just sweep it out and put it back. For Rent, that’s pretty much that same day. And that does happen. So we do like to have our facilities looking nice. So we do spend a little money on landscaping, and of course keeping keeping the trash picked up and all those kinds of things. But those are relatively low dollar. We do for sure spend money on security, because we want our facilities to be secure when our customers feel comfortable doing business there. So we’ll put up video cameras and make sure that the the game is up to par. And that’s all working and all the fences are, are taken care of. But those are the big primary things we like about real estate, or about self storage if I could maybe throw in one more thing is that it’s becoming more and more mainstream self storage. It used to be that self storage facilities were these rusty dusty old boxes stuck in the back of, of a of an industrial area. But now it’s becoming more mainstream. You’re seeing like old Sears buildings, old Kmart buildings being converted into storage. You’re seeing new storage facilities being built in more retail convenient areas. And that’s all because self storage is becoming more and more utilized and more and more mainstream.
J Darrin Gross 9:56
No, I gotta get all that’s good stuff. Did I hear you right? Did you say that your expenses for on your cash flow for the Self Storage runs about 30%?
Tom Dunkell 10:09
Yeah, that’s about right on on smaller facilities and might be more like 35. But on larger facilities that can even be it can even be less than that.
J Darrin Gross 10:17
And does that include the? Are you guys actually managing these directly? I mean, do you have like the staff for that? Or do you do?
Tom Dunkell 10:30
We do? That’s a great question, Darrin. So one of the ways that we do keep our expenses down as we are shifting to more of a remote managed model. In some cases, it’s kind of a hybrid situation where we do have boots on the ground in that market, but they’re not spending all day every day, at the facility, they might be, you know, an hour to drive away in silico, by the facility, maybe once a week. But they’re still managing the facility from afar, because they’re fielding the calls from the customers. And of course, today, most customers are, you know, wanting to just do business on their, on their smartphones. So they can rent a unit on their smartphone, and then just move in at their convenience. So we’re finding at least the the way that that our management strategy works is that we don’t need an expensive body on site all the time. So we’re able to really keep that piece of the expenses down, which is everyone knows, headcount in any business is probably your biggest expense.
J Darrin Gross 11:40
Got it? With that are you guys able to do upsells? Or whatever? I know, like, I’ve talked with others about this. And whether it be the U haul vans, or the boxes, or the, you know, whatever. Additional things, do you have any kind of a storefront that allows for that? Or was it more of just the space? Rental?
Tom Dunkell 12:08
Yeah, our model Darrin, as far as upselling, we, we haven’t gotten into the U hauls, and the boxes and those kinds of things. That because that does take more, you know, attention and personal attention, meaning and other body kind of thing. And the boxes and those kinds of things is not a not a ton of margin there. But one thing we do apply is one of our value added strategies is protection plans. So we require our customers to purchase a protection plan from us and allows us to make a few extra bucks per month per unit. But as everyone knows, and if you’re familiar with commercial real estate, every dollar of revenue that you can increase or increase the net operating income, you get that multiplier effect on the value of the business. So you know, so a medium sized or smaller facility that where you’re offering tenant protection on top of your regular rent, it might increase the value of that facility on your noi. Because you’re getting that in a wide multiple by quarter million bucks with not a lot of headaches. No, it’s It’s pretty nice.
J Darrin Gross 13:22
That’s awesome. So your Self Storage asset class, is there a particular territory? Are you guys nationwide? How are you selecting where you locate these?
Tom Dunkell 13:37
Yes, so we’re trying to ride the the demographic trends, of course, we’ve got the Baby Boomers are selling their big houses up in the Northeast, and they’re moving to this to the southeast and salmon to store their stuff. So, so we’re focused on the Eastern US. Our facilities today are in Maryland, Virginia, and North Carolina, Georgia and Florida, are currently looking at a deal in New York State, which is like a super thriving growing market and wherever this you know, real estate’s all very local, right. So this particular area has a big Costco retail center that’s going in, it’s going to draw a lot of traffic to that area. And the facility we’re looking at is right across the street. So we’re excited about that one. And we’re looking to look the deals in Alabama, Ohio, but we’re very selective. We’ll make sure that our there’s a lot of value to add there. So that’s that’s our primary strategy is acquiring existing facilities and just running them better.
J Darrin Gross 14:42
And is it as far as the kind of the investment strategy are you do you have a particular hold time that you’re, you’re looking to hold these or is this forever hold or what’s your what’s your plan?
Tom Dunkell 15:00
Yeah, good question. So, first and foremost, when we go into a facility, like I say, we want to have a lot of value add strategies. And those are all meant to really increase the cash flow of the of the facility. And what that gives us the ability to do the luxury to do is, is be selective about our exit strategy. So if we’re if the facilities are running, the way that we want it to be running, we can hold it until there we maybe we see there’s an optimal time to sell. Or maybe it’s part of our portfolio, we sell the whole portfolio at once. But our in general, we’re, we’re not super long term hold guys, we’re typically in the, you know, I would say the two to five year range. Again, because we are acquiring existing facilities that are poorly run. So once we turn those facilities around, that’s our opportunity to capture the best return for our investors. And so we’ll typically look to be exiting at that time.
J Darrin Gross 16:10
So let’s talk a little bit about your your syndication model. Are you guys are the the GP that are finding the deals and then raising the money, LPs? Is that pretty much the strategy there? Or?
Tom Dunkell 16:28
Yeah, no, in a nutshell there. And that’s exactly right. So my partners, and I act as the as the GP’s, and we bring in the passive investors to be our limited partners and our passive partners. And so we do, we spend a lot of time and effort finding the deal we have, we probably look at hundreds of deals for every one that we buy. And then we’re doing all the upfront due diligence, we’re arranging for the debt financing, which me and my partners signed for personally, at least at this stage of the game, we’ve been using recourse debt, through credit unions and small local banks. That’s where we’ve been getting the best execution. And then once the deal is closed, we’re handling all the back office operations, all the investor reporting, everything lives in our investor portal. So our investors can have full transparency with what’s going on, we post all the management reports there and move ins and move outs and rent rolls and occupancy reports. And all those things live in our in our investor portal. And that’s where all of our investors get their, their key ones and their distributions are made out of out of our portal as well. So we’re really happy with that. It’s pretty slick feature that we just added in the past year. So we’re really liking that. But yeah, that in general, that’s, that’s, that’s the model.
J Darrin Gross 17:58
So one property one raise one, one syndication is that, as opposed to a fund where you basically have multiple properties under the same fund that that’s in there in that,
Tom Dunkell 18:13
Yeah, that’s exactly where we are, we’re a deal by deal shop. We seem to like it that way, we’ve kicked around the idea of maybe doing a fund. However, I know, as an investor, I’m more comfortable if I’m investing in a deal where I know exactly where the money’s going. And, and I can I can look at that specific property and make my own decision. So that I like that personally. So it seems to be that that’s the way that we’re heading with Belrose resource group is doing one one deal at a time.
J Darrin Gross 18:48
No, I like the monolight. Just curious, I know, I’ve talked to some people, and they it seems like some of graduates are and I say graduated, they if some, I guess it’s the issue of if you’re raising capital and you have deals, or you don’t have deals and you’re trying to you know, trying to match that up kind of thing, as opposed to there’s the opportunity to get in, you know, before it’s gone, kind of the thing is, is more of what I think the syndication model is, and if you’re producing results, I would think that it doesn’t really matter. If you’ve got Do you have investors and you’re producing results? I’m, I’m guessing, you know, what’s the problem here?
Tom Dunkell 19:30
No problems. Yeah, we I think if you get to a certain scale, you know, fun might make a lot more sense, but we’ve never wanted to be a big company. Darrin, we’re, we think of ourselves. In fact, one of our core values is here at Belrose storage group is SEAL team. And so we just want to be an elite, Premier fighting force that’s, you know, smaller but we go out and we execute with, with passion and excellence and And so we’re not looking to be the biggest but you know, we we certainly, to this point have executed really well. And investors are quite happy and they keep bringing in their friends and family to our deals, which is a great testimony for the what we’re able to deliver for them. So we’re really proud of that.
J Darrin Gross 20:19
You and you mentioned the lenders, you guys are currently using it your your, I mean, the partners are actually signing on the loan. What is the the lender appetite for? Self Storage? Is it pretty robust? Or is it pedal lender by lender?
Tom Dunkell 20:41
We’ve had lenders come to us for saying, Hey, I’ve got a mandate to fill up, you know, our portfolio with self storage. So you know, send everything you got to that. So now, those are those seem to be the kind of the more smaller regional lenders, like actually a good friend of mine is, is a is a commercial banker at Bank of America. But we’re just, it’s just too, I guess, too small for him. He’s used to doing these massive loans. And so I was given him a hard time about it one night, and he actually called his boss, and was like, Hey, how come we’re not lending and self storage. But I guess it was just just a scale thing like is typically Self Storage deals, there’s some big ones out there. But a lot of times they’re, they’re more on the on the smaller end of the scale, if you’re a Bank of America working to fill up your portfolio with, you know, 100 200 half billion dollar loans, and that’s just not going to happen in the Self Storage deal. Typically.
J Darrin Gross 21:44
All right, that’s, that’s pretty big self storage, I guess. Unless you had like a portfolio kind of thing. But even that, and I don’t know, that makes much sense. But so in your, your deals, what is an average deal size? For? You mentioned what I think he said, 10, you’re focusing on your tenant? And you said 225,000 square feet? Is that total? Or is that the one deal that you’re you’re focusing on focusing on right now?
Tom Dunkell 22:16
Yeah, so we’re at about 250,000 square feet across our portfolio. Right now, our average deal size is about two, two and a half million. So these are smaller kind of mom and pop run facilities. But that’s where we’ve been finding the best turnaround and value add opportunities. So that’s, that’s what’s driven us there. And we’re not running into, you know, any of the huge private equity firms that are, you know, thrown around huge money and, you know, super low cap rates. So we’re happy to just, you know, stay in our lane and stick to those types of properties. And just, if I can go back for a second make another point about what’s happening with the lenders, Darrin is self storage has quietly been the best performing asset class in commercial real estate for many years. And the default rate is super low. So lenders typically loving to lend on self storage properties.
J Darrin Gross 23:19
No, I would think that if the bank wants to lend you money, and and they recognize it’s a good thing, and I mean, your number, your 30% expense rate I’m selling Wow, that’s that’s pretty impressive. You know, and just the the easy turn. I mean, is there any kind of eviction? I mean, are you are you beholden any of the eviction laws that like multifamily house or, or things like that?
Tom Dunkell 23:48
No at all, not at all. And that’s, I mean, if at the beginning, if I can, you know, kind of gone on with my laundry list of things that we love about self storage that would have popped up pretty soon, but we live in the lien law world, not in habitational real estate, where it’s a landlord tenant situation. And as a lot of landlords out there know, like, I used to be a landlord, you know, the SU evict a tenant, you gotta get a landlord, tenant court. And in a lot of places, that court is very much slanted in favor of the tenant. And I lived through that personally. And it was it was no bueno for me. But in, in self storage, there was no eviction moratorium during COVID. And the lien laws are very, very clear. You are able to give notice, and then short time later depends on the state could be 30 days could be 60 days, you can put that facilities contents of that units contents up for auction, sell it online, that buyer comes over and they have to clean it out. And then we have now have a unit available for rent again. It’s really it’s not a big it’s not The big to do like it is in habitational real estate.
J Darrin Gross 25:03
So when you do have one of those, I’m thinking of that, what’s the reality show The Storage Wars there, whatever we’re the you sell the contents, who who owns the contents at that point, it’s still the tenants and then they they get the proceeds or you know, the owner of the contents.
Tom Dunkell 25:23
So what happens is, and this actually never happens, but it what happens is the proceeds first go to pay the back the delinquent payments, and then if there’s anything leftover, it would go to the customer, but that the unit’s contents go for very, very little money, and it usually doesn’t cover what’s owed to the facility. So there’s never any money left over for the customer. In my experience, in my experience,
J Darrin Gross 25:59
Yeah, no. And in those situations, is it kind of a blind auction? Or do people kind of look at us? Again, I mean, are they think it’s go through it? Or?
Tom Dunkell 26:11
Yeah, it’s honestly, it’s, it’s pretty crazy if you ask me, because, again, everything’s done online now. So our managers will go in there, and they’ll take, you know, a handful of representative pictures, but they’re certainly not pulling out all the content. So the buyer of the contents of that unit is really going on very little information. They might be able to zoom in on the picture and see something valuable, you know, piece of equipment or a tool or something that maybe they don’t extrapolate from, they’re like, hey, there’s tools in here, I’m going to invest in I’m gonna, I’m gonna bid more. But it’s it’s pretty risky. Because you roll up the door, and it’s full of stuff. You don’t know what’s tucked away in the back. Yeah, I don’t know.
J Darrin Gross 27:01
Definitely a bargain hunters. Doesn’t really interest me, but Me neither. Yeah. Not I like the tenants of pay there. There are the storage, you know, the people that pay their rent, and they keep their stuff. That’s, that’s the best one. What is the just kind of curious, talking about, you know, the how you recoup on somebody who doesn’t pay? What is the default rate of tenants, his fair national number for tenants who don’t pay their storage bills?
Tom Dunkell 27:38
Yeah, there are national statistics on that. And again, at Belrose storage group, one of the things we really focus on, because it is in our control, you can’t really control interest rates, cap rates, all that stuff going on out there. What we can control is how we run our facility. The national average for delinquencies is 10%. Across our portfolio were about 3.5%. And so what that does is that further increases the cash flow that we have available for our investors. So we’re very, very proud of that figure.
J Darrin Gross 28:10
That’s awesome. I’m in such a low delinquency percentage. And if you do have somebody that goes, delinquent minutes, I’m assuming is that 30 days? Is that kind of the what’s the what’s the point when they’re, they’re delinquent? And they do?
Tom Dunkell 28:26
Yeah, 31 days, they get a notice.
J Darrin Gross 28:29
All right. And so at that point, do they lose lose access to their I mean, with digital, you don’t have to, like go in and rekey the thing you undo their code or whatever kind of thing or so they can’t, can’t access their stuff until they make payment is that basically the
Tom Dunkell 28:46
That’s right, yeah, the, their gate code won’t work at the gate, and then they’ll also be an overlock on the, on the actual unit. So you’ll, they’ll have their lock on there, and then we’ll put a lock on top of that. And then they need to talk to us and get paid and get caught up before they can access their unit.
J Darrin Gross 29:08
I love that model. Just the the ease of compliance there as opposed to you know, being strung out for months or with COVID years or whatever it could be for you know, particular you know, yeah, get get back I think so. That’s awesome. So, the future here, what’s your guys’s plan? You mentioned you’re not looking to compete against the big funds and stuff but kind of the smaller Asia basically continue to find deals on the east coast there and and try and grow your portfolio or is that what’s the long.
Tom Dunkell 29:48
Yeah, absolutely. No, that’s that’s hit the nail on the head. Oh, we’re we’ve found a lane that we’re really good at. And that’s, that’s where we’re gonna stick. We’re very selective. About the facilities that we buy are not out there trying to gobble up every, every single facility that’s for sale. As everyone out there knows it’s easy to buy real estate, right? You can do you pay cash, pay the asking price and close tomorrow, you can buy as much of whatever real estate class you want. But for us, that’s not the that’s not our approach. We’re very diligent and very disciplined about the kinds of facilities that we acquire. And it’s all because we want to do the best job we can do for our investors want to reduce their risk, increase their cash flow, increase their returns.
J Darrin Gross 30:34
So it’s great. Your team who who was on your team, for your your partners?
Tom Dunkell 30:42
Yeah, so the core team is myself, my business partner, Joe Downs. For our self storage venture we brought in Tim Kaine, he’s an expert at lead generation, and also is really good in the in the expansion and construction aspects of our of our properties. We don’t, we don’t do big developments or anything, but we will do small expansions, if it’s warranted. So that’s where that’s where Tim comes in. He’s an extremely valuable resource there. And then, you know, we have the glue, every good company, you got to have the glue or glue has Gretchen for Shala. She’s our Chief of Staff, she makes sure that everything’s running smoothly, everything’s communicating, well, everyone’s sticking to our core values. So she’s been a great resource. And then we, we have a great accounting team. Cuz with every facility that we have new entities that are formed new bank accounts that are open, so that accounting aspect gets pretty heavy pretty quickly. So we’ve got a great team there. And then on further on the operation side, we have an outsourced expert counsel consultant that we work with, they’re named Katherine ease, she’s with elite Self Storage advisors. And she’s been in the self storage industry for 16 years now, and has managed and done turnaround and auditing work on self storage facilities around the country. So she’s a tremendously valuable resource as well. And she, what she does for us is she helps to transition the property from the prior owner, moving everything over to our systems and processes and methodologies. And then, as I mentioned, she does the auditing, and gets the marketing up and running and rolling. And then she also brings in someone from her team to manage the facility as well, or she’ll hire someone if there’s no manager convenient to that location. So she’s an outstanding resource as well. And that’s pretty much the core team.
J Darrin Gross 32:48
Call. You mentioned marketing a little bit there. Do you guys is the marketing outbound to prospective sellers? Or is this also marketing for investors to raise capital?
Tom Dunkell 33:03
Yeah, great question. It’s really all the above. So we have the lead generation and marketing engine that we turn on for reaching out to facility owners. So we have a VA that helps out there, and we’re reaching out to hundreds of facilities a week. And so there’s a whole process there. And that’s Joe Downes, my partner, he is pretty much running that aspect. On the what we call the capital servicing side of things, that’s when it comes over to my area of responsibility. So we do have a marketing program there as well are reaching out to investors and making sure we’re trying to add value all the time. So we anyone who signs up at our investor portal, I’ll be sending out articles that I think are interesting about, you know, what’s happening with inflation, what’s happening with cap rates happening with interest rates, how are rents, you know, trending in self storage, and even other markets, other commercial real estate markets just to try to be a thought leader and be have a finger on the pulse kind of thing. And then, and then at the facility level, there’s marketing going on there as well, because we’re reaching out we want to be in the top three on the Google search or that market. And we want to make sure that everything’s smooth for the, for the customer to rent that facility on their on their smartphone. And so we’ve got a lot of different ways that we’re reaching out to our different constituencies.
J Darrin Gross 34:39
Now, it’s important I mean, you got to you know, I, I’ve always been kind of reluctant to do the horn tooting, but if you don’t toot your own horn, you know, likely nobody’s ever gonna know you have a horn so
Tom Dunkell 34:54
well, it’s a good thing for us, I think on the cinema in my particular area of responsibility, the Capitol service thing. Like I mentioned earlier, our our investors tend to refer people to us, which of course, is the best way to get business, right? It’s, I’m sure it’s the same way in your business and insurance, you get that referral from someone who’s already done business with us that that has huge weight, right, so. So that’s why I really tried to go the extra mile and make sure our investors are having a good experience with us.
J Darrin Gross 35:25
That’s great. Hey, Tom, if we could, I’d like to shift gears here for a second. As you just referenced by day, I’m an insurance broker. And I try and work with my clients to assess risk and determine what to do with the risk. And there’s a couple of different strategies we typically consider, we first look to see if there’s a way we can avoid the risk. And when that’s not an option, we’ll look to see if there’s a way we can minimize risk. And when we cannot avoid nor minimize the risk. And we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests if they can look at their own situation, could be clients, investors, tenants, market politics, you name and however you would like to define the biggest risk? And for clarification, I’m not necessarily looking for an insurance related answer. So if you’re willing, I’d like to ask you, Tom Dunkel, what is the biggest risk.
Tom Dunkell 36:38
Like lots of business owners out there daring and we have a number of different different risks that we’re faced with on a daily weekly annual basis. In the, like, in storage, as I, as I mentioned earlier, we’re avoiding development projects, because we just see a lot of risk in those right now with with supply chain issues, labor issues, material cost issues, and it’s just not really in the DNA of our company. So we’re avoiding that one entirely. On the facilities that we do buy, we minimize risk by not over leveraging by being conservative with our projections. And of course, we use insurance to make sure that the physical plant is properly insured. But as far as our biggest risks our business there, and I would say, it’s really, it’s really me, it’s really me and our leadership team. The business can only grow and go so far as we’re able to take it. So we have to be the best that we can be we have to be we have to be educated and smart and and hire the right people and bring in the right partners. Because if any of those things get out of out of whack, you know, we’re not going to reach our potential and that’s what we’re we’re here to do or reach our potential and provide value to our investors. So we’re always looking for ways to improve ourselves and improve our business. As I mentioned earlier, we do have core values, we do have a purpose. And so we use those as our guideposts every day in our decision making. But you know, we’re always looking for better ways to do business to take care of our investors and just be good good members of our of our business community.
J Darrin Gross 38:36
Like it, that’s good stuff. Hey, Tom, where can listeners go if they’d like to learn more or connect with you?
Tom Dunkell 38:43
Yeah, so again, I’m Tom Dunkel, Managing Director and Chief Investment Officer at Belrose. Self store Belrose storage group, you can go to Belrose storage group.com. That’s b e l r o s e storage group.com. And belrose storage group.com. And I would encourage folks together whether you’re interested in ours, participating in our self storage, syndication deals or not, we do have a free resource there for investors. It’s something that I’ve developed over my years of investing, actually started investing as a kid but I’ve been high net worth investors since 2006, accredited investors since 2006. So I’ve made some mistakes along the way and learned some lessons and I’ve done some good things done some not so good things, but we compile them in an ebook that we call Safe Investing. And safe is is an acronym, s a f e. S is for sponsor gives you a list of questions to ask about who’s sponsoring the deal. What’s their background? What’s their track record? Are they criminals? Have they done this before? How long and then A is for assets? So what is the asset you’re investing in? It’s It’s incredible to me, sometimes people invest in things and you don’t really understand the asset they’re investing in. So here’s a list of questions to ask about that particular asset to make sure you understand it. F is for Financials, gives you a list of questions to ask about the projections, the returns, and also personally like, how much of your portfolio? Are you putting at risk here? And are you okay with that? And then E finally is for exit. How do I get out of this thing, you can’t go to schwab.com and click, click, click sell your position in a Belrose storage group storage deal because that money is going to be tied up for 2345 years, and you need to know that going in and be comfortable with that as an investor. And ultimately, they’re these all these questions are really designed to help an investor feel good about what they’re investing in and be able to sleep at night, knowing that they have their money tied up with this sponsor, and that asset and these financial characteristics and when they’re gonna get out of this, so I think it’s a it’s a valuable resource. I hope everyone goes to get it. It’s free. You don’t have to give me your name, email address or anything. It’s just, it’s just available for download on our website.
J Darrin Gross 41:17
Awesome. Well, Tom, I cannot say thanks enough for taking the time to talk today. I’ve enjoyed it. Learned a lot, and I look forward to doing it again soon.
Tom Dunkell 41:29
Thank you, Darrin. It’s been great. Appreciate it.
J Darrin Gross 41:32
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