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By Tim Houghten
Featuring Tim Soto
Blending trends in real estate crowdfunding and the need for sustainable cash flowing properties RealCap offers investors a new opportunity for putting their capital to work.
Real estate crowdfunding has been growing at an incredible pace thanks to increased awareness of the option, and the ease of investment it offers. This is a trend only likely to surge over the next year as the Wells Fargo scandal plays out, and investors seek safer and more profitable places to put their money than the old banks. So far much of this action has been focused on the residential sector. RealCap brings something new to the table.
Real estate may still be the best investment option on the landscape, but it is no secret that some questions about the sustainability of home price growth and affordability have been emerging. Overall sensible investors are still seeking sound investments where their capital will be safe, and which provide attractive yields, with a great outlook for ongoing performance. RealCap’s founders Tim Soto and Matt Schuberg believe they’ve found the ideal fit in self-storage.
Self-storage may not jump out at most investors as the most prestigious asset to brag about to friends at dinner. Yet, Matt and Tim are bullish on its advantages. No one wants to be caught holding residential at the top of the market. We’ve already been hearing about excess inventory and slumping sales in some destinations, while other areas are feeling intense competition which keeps driving housing prices sky high.
Matt Schuberg points out that “the self-storage sector remains undersupplied, even with 3,000 potential new developments on the horizon nationwide.” Less competition in this sector means more value to be found, and “returns that can be as high as 8% to 15% per year.”
Self-storage is also one of the few recession resistant sectors which can often perform even better in tougher economic periods. When foreclosures are up and more people are moving, they need storage more than ever. Despite the popularity of reality TV shows showing the auctioning of the contents of some of these units in default, Tim Soto says that in their experience default rates are very low as people really want to preserve their belongings. And it’s clearly a lot easier for a tenant to find $50 a month to keep their prized possessions and heirlooms versus $2,000 a month for a house payment.
Image from Pixabay
Low management burden is another great perk of this asset class. Now, with the ability to partner with others via crowdfunding, the risks and demands of investing are even lower. With RealCap investors can get started with as little as $10,000, and benefit from being invested alongside other savvy investors, and an experienced management team who in invested in their success too. RealCap invests alongside its clients in every deal to ensure motivations and interests are aligned.
However, where the RealCap team really makes a difference appears to be in its diverse and creative arsenal of value-add options. In one recent deal in California the team acquired an undervalued facility, and within 3 months had increased occupancy by around 20%. Then Tim Soto explains they dug in and improved cash flow by challenging the tax assessment and cut the tax bill by 70%. They optimized the insurance premiums, and have been leveraging extra acreage on the parcel by adding solar ports to create more income, and are looking at leasing space for cell towers.
Together the executive team brings together an immense amount of experience and disciplines. Tim Soto has been involved in real estate investment since 1995 and credits much of the success to the organizational and team skills developed during his service with the Marines. CEO Matt Schuberg comes from a background as a financial advisor. Though after becoming disappointed in the stock market world of vast diversification, with little real security or solid performance expectations among brokers and clients, found he could best serve others through offering solid real estate investments.
RealCap provides a Regulation D filed investment opportunity for accredited investors seeking cash flow and attractive, sustainable yields. Find out more online at www.RealCapInvest.com or simply call to have a conversation to get the details and see if crowdfunded self-storage is for you.