The SAFE Method for Passive Investing w/Tom Dunkel

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Episode Description

Welcome to the Freedom Point Real Estate podcast! Today's guest, Tom Dunkel, shares his perspective on inflation, belief in technology, and SAFE method for investing (Sponsor, Asset, Financials, Exit).

Tom Dunkel brings over 28 years of real estate, finance, and investing experience to his position as Chief Investment Officer. Working alongside his world-class team of professionals, Tom makes it his mission to find great investment opportunities for his clients while helping them meet their wealth-building goals.

CONNECT WITH TOM DUNKEL!

Website: https://www.belrosestoragegroup.com/

LinkedIn: https://www.linkedin.com/in/tomdunkel/

Email: tom@belroseam.com

CONNECT WITH JEREMY DYER!

Website: https://startingpointcapital.com/

Instagram: https://www.instagram.com/startingpointcapital/

LinkedIn: https://www.linkedin.com/in/jeremydyer

Facebook: https://www.facebook.com/startingpointcapital

Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12

Summary

Tip #1: Leverage Technology to Increase Efficiency

"We use a hybrid management model where we're leveraging technology, so we might not have a manager on-site, but the customer can scan a QR code on the gate to fill out their rental paperwork and get instant access."

Adopting digital solutions allows self-storage operators to manage properties remotely while improving customer experience. By integrating QR codes, online payments, and automated gate access, Belrose Storage Group turns traditional storage into a seamless process. This reduces labor costs and helps retain clients on recurring payment plans, creating more predictable revenue streams.

Tip #2: Understand the Demand for Specialized Storage

"We really like the boat and RV storage market... customers are driving 45 minutes or more because there aren’t enough facilities that can accommodate their needs."

Niche markets, like boat and RV storage, have unmet demand due to limited facility availability, especially near suburban or HOA communities. With homeowners unable to store large vehicles at home, offering these specialized spaces allows self-storage facilities to attract a unique customer base. Identifying and filling gaps in storage needs can increase occupancy rates and customer satisfaction.

Tip #3: Start with the Sponsor When Conducting Due Diligence (S.A.F.E.)

"Start with the sponsor—who are you handing your hard-earned money over to, and what is their track record?"

Knowing the sponsor’s background and track record is critical in real estate investing, as they directly manage investor funds. Evaluating the sponsor first allows investors to make informed decisions based on trust and accountability. This step emphasizes the need to vet management teams, as they set the foundation for the success and integrity of the investment.

Tip #4: Prioritize Location-Specific Knowledge of the Asset

"Once you're comfortable with the sponsor, then you move on to the asset... maybe you want to ask some questions about the market like Douglasville, Georgia."

Understanding the asset’s location, market dynamics, and competition is essential, as they influence profitability. Asking location-specific questions ensures the market aligns with current storage demand trends, especially when new development might not be feasible in oversaturated or slow-growth areas. This part of due diligence helps investors minimize risks tied to poor site selection.

Tip #5: Scrutinize Financial Projections Carefully

"Look at the financials—what are the returns, projections, and tax implications of this opportunity?"

Financial scrutiny helps investors distinguish between realistic and overly optimistic returns. By examining tax benefits, projected ROI, and cash flow estimates, investors can gauge the likelihood of meeting or exceeding their financial goals. Understanding financials ensures alignment with investment objectives and risk tolerance, particularly with long-term commitments like self-storage.

Tip #6: Plan for a Clear Exit Strategy

"In a private placement with Belrose Storage Group, it’s not like you can just go to Schwab.com and sell your position."

Knowing exit strategies upfront is crucial in private real estate placements, as these investments are often illiquid. An investor should know how their capital can be recovered and any timeframes involved before committing funds. A clear exit strategy also signals a well-thought-out business model and shows transparency from the sponsor.

Tip #7: Start Small When New to Real Estate Syndications

"An investor will come to us, 'Hey, this is my first deal, will you take 25,000?' Of course, we will."

Many sponsors are willing to be flexible on minimums for new investors, allowing them to get familiar with the process. Starting with a smaller amount helps first-time investors build confidence without risking too much capital. This approach acts as a gateway for investors, who might later increase their investments as they become more comfortable.

Tip #8: Consider Private Lending as a Low-Risk Entry Point

"A great gateway for a new investor is lending...I'm getting maybe 9, 10, 12% in a secured position as a way to get started."

Private lending provides a tangible introduction to real estate investing with secured positions, typically offering fixed returns without ownership obligations. This approach diversifies an investor's exposure beyond traditional stocks and bonds, offering potential returns while managing risk. For many, private lending combines the stability of fixed income with the security of real assets.

Tip #9: Identify Expanding Niches in Self-Storage, Like Pro Storage

"We have facilities with larger units where contractors, landscapers, HVAC professionals can store their equipment."

Identifying new uses for storage facilities, like contractor storage, enables companies to tap into growing markets beyond residential needs. Offering tailored storage for business professionals, such as contractors and landscapers, can diversify tenant profiles and create additional revenue streams. This strategy leverages demand from small business owners who need accessible storage for equipment and materials.

Tip #10: Cultivate Long-Term Relationships with Reliable Sponsors

"We have a nine-figure net worth investor who works with a select handful of sponsors that he's handpicked."

High-net-worth investors often prefer a focused approach, partnering with trusted sponsors who have a proven track record. This method emphasizes the importance of quality over quantity, as strong sponsor relationships can lead to repeat investment opportunities and mutual success. Prioritizing a few well-vetted partnerships can simplify due diligence and increase confidence in investment outcomes.