Thread by @sweatystartup

I would put $300k aside for operating capital.

Raise $7MM from LPs.

With a $700k co-invest (my money).

And go buy $20MM worth of self storage at an 8 cap.

Increase NOI from $1.6MM to $2MM over 12 months.

Sell portfolio for $33MM at a 6 cap.

Take my $7MM and repeat.

https://twitter.com/creation247/status/1329035374522486785

Scale compresses cap rates and makes assets more valuable.

Because larger, less risky portfolios of assets are worth a lot more than smaller, more concentrated assets.

Institutional investors with access to cheaper debt, etc.

But the net operating income. How did it go up?

Because I would buy small $1-2MM properties from mom-and-pop operators.

They haven’t raised rents in 10 years. So that would be step one.

They also have a full time manager on site and a lot of labor. I would use software...

To cut expenses.

Thus increasing income and cashflow.

Thus making asset more valuable.

But I would only sell if I had to. Because the scale effect keeps working. Every 8 cap I buy and roll into this portfolio is more valuable right away.

I’d likely refinance at 60% LTV

And pull out a lot of capital to keep growing.