Welcome to The Big Mike Fund Podcast. Today, it is my pleasure and a privilege to welcome Jake Vanderslice to the podcast. Jake is a specialist in self-storage and is also a brother from the Freedom Founders Mastermind as well as the Collective Genius Mastermind. In this episode Jake and I talk about the process, benefits, and the state of investing in self-storage, how Denver is holding up in the pandemic, and interest rates and cap rates.
Minute Markers:
00:20 – Hello and Welcome
00:30 – Jake Vanderslice introduction and backstory
03:08 – The value in investing in existing self-storage facilities
04:00 – The length of time for the process of leasing a facility and getting it ready
05:00 – The benefits of self-storage
06:45 – Jake’s first and second fund
08:14 – Distributions on Jake’s first fund
11:54 – REITs and cap rates
14:50 – Rising interest rates
16:00 – Denver, COVID, and their status
19:30 – The risk of oversupply and the challenge of retail conversions
22:20 – Getting a hold of Jake
22:58 – Thank you for listening to the Big Mike Fund Podcast
Quotes:
“We got into the self storage business in 2015 with some institutional partners. We liked the space because it’s scalable, repeatable, and predictable. The data at the time suggested that it was historically resistant to downturns.” – Jake Vanderslice
“One of the main things we like about the asset classes, the granularity of the income streams, you’re relying on (in our case) thousands of people to pay us tiny bits of rent every month. Versus in retail projects, for example, we have a brewery paying us $15,000 a month and they’re going to pay or not.” – Jake Vanderslice
“The old adage that cash is king is still important, but I think today cash flow is king, and people just really want predictable repeatable dividends. If you can create that that’s compelling” – Jake Vanderslice
“Commercial banks are still lending. We really haven’t seen any other changes beyond just our maturity dates and that 4% on our interest rates.” – Jake Vanderslice
“The thesis is this as the interest rates drop, the cap rates should match. Directionally, we have COVID which is terrible. It’s a pandemic and we’re all suffering health-wise and economically, but on the other side, you’ve got drop rates. What the Fed has done is created an environment where investors are willing to take lower cap rates because the cost of capital is cheap.” – Mike Zlotnik
“We’re dealing with a yield-starved environment with rates having trouble to where they are. There are really no great alternatives to Wall Street. The fund yields are very low unless you’re dealing with really junk bonds and you’re buying into high-risk stuff, or if you are looking for conservative cash flow. It’s hard to find..” – Mike Zlotnik
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