When it comes to self-storage investments, many say that the most innovative in the industry is Cedar Creek Capital CEO AJ Osborne. He's been helping clients invest in self-storage projects for nearly 20 years. His latest ventures involve converting unused or underutilized spaces - such as out-of-business retail spaces - into lucrative self-storage facilities that make millions in passive income for his investors.
When most people think about making money in the real estate market, they might imagine the excitement of flipping houses or the glamor of high-powered real estate agents. However, Osborne's projects appeal to a larger cross-section of tenants and investors.
High-Level Deals
His latest venture - converting a retired newspaper factory into a high quality keyless entry climate controlled storage facility purchased for under $5 million - will likely be valued at $30 million. If numbers like that excite you, Osborne is a real estate entrepreneur you'll want to follow. The investor and businessman's current self-storage portfolio is worth over $300 million across his three companies.
You only have to look at his massive followings on social media, his top-rated self-storage podcast, and his bestselling book on the topic to be convinced of his authority. He's also been featured on nearly every top real estate podcast and is a go-to resource for self-storage investment advice on YouTube, TikTok, and Instagram.
His company started smaller, acquiring storage units across the country's northwest beginning in 2004. "For the first 15 years, we didn't take investors. We only began after a rare disease caused me to become a quadriplegic," explained Osborne.
Switching Gears
While he was in the hospital for months on end, he decided it was time to teach people what he'd learned and let them invest with Cedar Creek Capital. Word quickly spread about the upstanding, razor-sharp businessman that was helping both new and accredited, seasoned investors make terrific passive income from getting involved with converting underperforming assets into self-storage.
Today, the company offers investment opportunities across the nation with a new fund rolling out this fall, expanding their reach even further into new states and communities.
Post-accident, the CEO worked incredibly hard and relearned everything from walking to eating to get over his injury. Today, you wouldn't know he had ever been bedridden. But, he realized he loved working with investors and seeing their faces light up when they began understanding the self-storage business and the huge possibilities of investing in the sector.
Clients love working with Cedar Creek Capital because they put in a minimum of $50,000 and own a part of the deal. That means they benefit from appreciation, real estate, cash flow, equity, and more, a rare value in today's investment climate.
Understanding the Market
Among the most misunderstood aspects of self-storage is that investors assume it's predominantly used by tenants that rent apartments and don't have enough space for their belongings. Osborne knows differently, explaining that mostly single-unit family homeowners use his facilities.
But what's better is that, at some point, nearly everyone needs a self-storage unit.
"It's more like retail or a hotel than anything else. Because of the short-term contracts, people come in every day, month-to-month, and need our service. We get clients from upscale neighborhoods, small apartments, mobile home parks; they all use it differently," said Osborne.
He also noted that the income from self-storage units is truly passive. The nature of the business means investors and owners don't have to worry about taking care of pesky plumbing in multi-family homes or kicking out a single mom because she can't pay rent.
Assessing a Project
In their recent conversion, an old 100,000 sqft multilevel newspaper factory, they had to consider a wide range of implications and factors, from the cost of expenses and repairs to the risk involved and the quirks of the local market.
"We must be extremely cautious and considerate of all the different factors that go into an acquisition and the following conversion," said Osborne.
He explained one of the factors he considers when putting together a proposal like this as "two sides of a deal." The first side is the overall market and deciding if it will allow the deal to work. The other side is the asset itself and how much the conversion will cost from capital spending to selling prices and contracts.
Osborne and his team converted a Kmart five years ago in Reno. The layout was different from a newspaper factory, but similar enough that with some straightforward due diligence, forming a predictable conversion outcome was a much quicker task. One aspect of the local market for this deal was that the location is on a major travel corridor that is traveled by lots of people living in single and multi-family homes - a key demographic for Cedar Creek Capital's investors.
However, they also knew that the space would have an old and uncared-for roof and lots of bulky and out-of-date HVAC systems that would need to be replaced, meaning two huge expenses. Due to various factors, including some good timing, AJ was able to acquire the building for 1/5th the asking price, literally saving millions and expanding the budget to address the needed replacements.
Looking at the feasibility and reliability of a unit from a potential client's point of view is an important part of the assessment too. In this case, the trade area - or the 3-5 miles around the site - makes it ideal for commuters to stop by their unit.
In the end, after weighing all the important factors, the newspaper factory conversion was a no-brainer, adding massive value to the local economy through a brand new fully climate controlled facility while also putting plans in place to have the second floor renovated into state of art rentable office space.
Cedar Creek Capital is always taking on interested investors. For more information and current opportunities, please visit their website.
About AJ Osborne
AJ Osborne, CEO of Cedar Creek Capital, is the leading expert and voice in the self-storage industry with the No. 1 bestselling book and top-rated and listened to self-storage podcast. He has been featured on top real estate podcasts and is the go-to resource for self-storage investment advice across social media platforms, including YouTube. Accredited investors can find more information here: https://www.cedarcreekwealth.com/
