Episode 268: Is Solar-Powered RV Storage the Best Investment Strategy Right Now?

Announcer (00:03):

This is the Self Storage Podcast with the original self-storage expert, Scott Meyers.

Scott Meyers (00:12):

Hello, everyone. Welcome back to the Self-Storage Podcast. I’m your host, Scott Meyers, and at today’s special guest on this episode, we have Chris Koenig, who is going to be talking about solar power to covered RV and boat storage. Chris, welcome to the show.

Chris Koenig (00:26):

Yeah, thanks for having me Scott, I’m excited to be here.

Scott Meyers (00:28):

Glad to have you here. We’ve been seeing and hearing an awful lot about what you’re doing out there in the space. A little bit unique. And man, this niche within the asset class, this niche within our niche in commercial real estate has been on fire. I think a lot of people, anybody that’s really paying attention, they’ve seen since COVID, the amount of boats and RVs purchased because people had to do staycations. As far outpaced the amount of demand for it and the amount that’s being produced far outpaces the development that we’ve seen in the boat and RV space and then adding the solar piece to that, I mean, that’s just a win-win. So give us your background, your story. How’d you get into this side of the business and what are things looking like for you guys today?

Chris Koenig (01:07):

Yeah, it’s pretty wild. So I got into self-storage originally. I started back in 2010, so our great recession. I started a business lowering people’s property taxes in California. So I would fight. California allows you to lower your property tax. Basically, it was people who bought a building in early 2000s. An office building in Sacramento is my biggest success was they bought it for 20 million. I got it down to five million. They paid property tax based on 1% of that value, and I changed a percentage of the reduction. I created a business on that.

Announcer (01:47):

Nice.

Chris Koenig (01:48):

And I got to see everyone’s P&Ls. And every asset class, I was doing assisted living, I was doing wineries, office, you name it. And the self-storage guys were the only ones in the recession whose NOIs were profitable. And they went down maybe 10, 15, 5%. And I was like, “This is a recession proof or recession resilient business.” And so got into it, was that 2016, 2015, built my first self out in Brentwood, California, which is full, been just cash flowing great. And then found out about this solar covered RV boat storage from Bob Hayworth with Baja Construction who was building, he just built his facility down the street from me in Oakley, California. And I went to Vegas that year and saw him speak in front of 200 people. I was like, “This is the business model. This is what I did in Oakley. I’ve got the solar, I got revenue from that.

(03:01):

I’ve got the covered RV boat storage underneath that I rent for premium because it’s covered.” And I was like, “This is a no-brainer. You’re double dipping. You get revenue from the solar.” So for every square foot, you have two sources of revenue. I’m making money selling the power and I’m getting a premium for the RV boat storage. And I said, “To me, that business model makes

Announcer (03:24):

Sense.”

Chris Koenig (03:25):

And so actually Bob and I partnered with a few other people. We built one out in Rio Vista, California. This is about five years ago. And right now I’ve built one in Pittsburgh that’s leased up. That leased up and we finished that in July last year and it’s 85% full right now. It generates about 120,000 in NOI a month. And we make about 300 grand selling the power to PG&E. And about 85, 90,000 a month renting the covered premium spaces. And these people don’t leave. It’s not like conventional self-storage where there’s turnover, people are moving, divorce, use self-storages and there’s the host of it. Once these people find a spot, they stay. Unless they move or sell their RV, they’re pretty sticky, which is good from a rent increase perspective. Absolutely.

Scott Meyers (04:35):

Yeah. Right.

Chris Koenig (04:39):

But what I found and what we’re doing, I say we, it’s really more me and my wife. We have different partners on each project. It’s kind of just fine-tuning the amenities that people want for this type of asset class and this product. It’s a little bit different than mini storage where right now I’m putting in power for all my units that people want. And you kind of don’t know. It’s like a boat doesn’t really care about that, but we’re spending the money and we back charge for it and so we make it up pretty quickly. But it’s one of those things, I think for self-storage, for example, I don’t want to provide power tank units. Absolutely not. I mean, as you probably know, but it’s a different mindset. Yeah. So we’re jamming on that. The unfortunate thing is solar right now coming as of July 4th this year, the tax credits are going away.

(05:49):

So any projects of mine that haven’t started, which is none, all of them have started, so I’m fine. The solar tax credits are going away, which was unfortunate. I think that’ll change. Everyone I talk to in the industry, no matter the party, finance groups, tax credit people, they’re all like, it’ll change. It changes every few months, six months here.

(06:15):

So that’s the only kind of unfortunate thing right now currently.

(06:20):

But yeah, just so rough numbers though, the tax credit’s a big component of why I do it. So my project in Pittsburgh was, so it’s 400 units, about 200,000 square feet of covered space, costs me about $20 million to build. And like I said, that was just completed in July. And economics on that is I will sell hopefully in the next month or two, the tax credit. So you get to take all your solar costs. I used a prevailing wage, domestic content panels, and I’m in an energy city, so I get these tax credit adders. So I’m going to sell my tax credit to a third party for about $10 million. That’s amazing. Yeah.

(07:20):

Yeah. So they literally write me a check for 10 million bucks. I fill out a form, they fill out a form. I have to have a third party. Novogratic is a national accounting firm that does all solar related stuff. And they basically file their tax return and say, “We owe 50 million in taxes minus 10.” Minus 10. So then that’s on them. And then for me, now I’m 20 million, I just pay my debt down to 10. So I owe 10 million on this project that’s probably worth 20 out of six cap is worth about 20 something million. So it’s a great kind of hedge and way to- Well,

Scott Meyers (08:07):

Sure. I mean, either enjoy the cashflow or tap into that equity and put a second mortgage on it or put a line on it to be able to go out and grow the next one. It gives you lots of flexibility built in and certainly a buffer for if there is a lean time, which doesn’t seem like there has been recently for Boat and RV.

Chris Koenig (08:26):

Yeah. And we’re seeing, I mean, we leased up super quick. What’s crazy about the boat and RV market, which is tough to wrap your arms around when you’re in the mini storage background is the … I have people that are driving that live in San Francisco that are storing like me, which is a 45 minute drive. You wouldn’t see that in self-storage.

Scott Meyers (08:51):

No, no. I mean, you’re almost site agnostic because, as you mentioned, these folks don’t … They know they can’t get the space and they don’t need their boat in RV very often. I mean, depending, but especially the RV stuff, they’re going to go grab that. So it doesn’t matter if they drive 45 minutes to go on a trip for the next five months. I mean, that’s a drop in the bucket compared to the time that they’re going to use it. So yeah, we don’t have to fret over being as close to the MSA as we normally would or to be in the middle of the neighborhood like we would with storage. So that’s been obviously one of the benefits. I wanted to ask a question, Chris. So a couple things I want to pull the thread on. So one of the tax credits that you received are on American-made solar panels.

(09:31):

And one of the challenges that we and many other developers have is that for us, we’re raising capital, raising private equity. For our projects, we need to turn these things usually three to five years. And in the past, it seems like the ROI on solar has been about five years before you see that payback and then having the ability to pay it back to the power company, which is the second question I want to get to. But what are you seeing right now in terms of the technology and a true ROI on putting the panels up in place of just, I guess just not, or using just a standard roof in a boat and RV facility?

Chris Koenig (10:10):

Yeah. So I looked at … It’s a good question and that’s a frustrating one because the ROI, when people talk about ROIs three years, five years, whatever, I would argue the ROI is month one, is immediate. And I say that because if I’ve looked at doing it and I’ve done it on conventional self-storage facilities, so you can finance 100% of the cost of the solar panels. So my out of pocket is zero and once I install it, let’s say I spent half a million bucks to put a … Or not, you wouldn’t spend. Let’s say I spent $100,000 to put up a solar farm on my conventional self-storage. I’m zero out of pocket. My monthly payment on that, if I just got an equipment loan or what have you, is $5,000 a month. So let’s say month one, my payment’s 5,000 a month. I’m offsetting my usage, so I’m saving myself $10,000 a month.

(11:22):

So I’m immediately saving $5,000 and I take, let’s say I take a 40% tax credit because I’m not in an energy community. So I got $40,000 in my pocket because I did 40 … So year one, I put 40,000 in my pocket. I’m zero out of pocket, 40,000 in my pocket and I’m saving 5,000 a month.

(11:42):

So I’m to the good year one, month one. So the ROI is infinity. If you do it that way, if I paid cash for it, then I’m still net positive month one. So when you say ROI, the ROI is insane. Yes, it might take three years to pay it off, but that’s a 30 cap. That’s a 33% return. So that’s kind of what I’m seeing, but no one pays … You’re not typically going to pay cash for it. And so that’s kind of what I’m seeing where I feel like that three to five year, what people talk about is misnomer a little bit. It’s deceiving because the cash on cash return can be month one, year one. And it is a little unfortunate, the solar … They call it the solar coaster companies. An example, for my facility I did in Rio Vista, which I’m doing the same program, selling the power to PG&E, I was told a hundred solar companies, you can’t sell the power back to PG&E.

(12:58):

Can’t do it. They’re not doing it anymore. And I talked to one solar company down in San Diego

Announcer (13:05):

And

Chris Koenig (13:05):

He’s like, “Yeah, yeah, there’s a program. It’s called a Remat and you have to fit within these five different boxes and as long as you do a certain size, whatever they need to again.” And I’m the only one in … Well, Bob’s doing it on two facilities. Bob and I are the only ones in the state of California doing this program selling power to PG&E. So there’s these weird nuances and niches within solar that a lot of even the solar companies don’t know. But I would say unless you’re in a state where your power … California our power is 40 cents a kilowatt hour. It’s ridiculous. I built one, I own an RV storage in Florida, which we could talk about too, Ocala, Florida, and power there is six cents a kilowatt hour. So it doesn’t make sense. That’s kind of your cost to build, so why would I?

(14:10):

But yeah, back to what we were talking about before in terms of location though, what’s interesting, I wrote an article about this a couple years ago. I thought because there’s not so much covered premium RV boats in the market, I thought it was like if you build it, they will come.

(14:32):

Really not the case. What I found is you really want to be on the path of where the recreation is, if that makes sense, which is different than storage. Sub storage is where I live of my house. And for the RV boat store, I don’t know just RV boat storage in general, but just the covered for sure kind of like on Interstate 80, Interstate 101, on the main kind of thoroughfares of where from my house to where I’m recreating, I want to be no more than five, 10 minutes off the freeway to get my art and then continue on, if that makes sense. So it’s a hard, especially from a feasibility standpoint, it’s definitely hard to analyze that component. So I know I’m getting off topic on the solar stuff, but-

Scott Meyers (15:38):

No.

Chris Koenig (15:40):

Our project in Rio Vista, it’s near the water, it’s on the Delta where people boat, but unless you’re going specifically to … So that’s isolated to where I recreate. If you don’t recreate there, you’re not going to go to that visit.

Scott Meyers (15:59):

Go there.

Chris Koenig (16:00):

And I’m not going to want to drive 30 minutes off the freeway to there to then come back, even though I’m driving from California to Wyoming, it still is kind of like an

Scott Meyers (16:10):

Annoying

Announcer (16:12):

…

Chris Koenig (16:12):

Whereas my project in Pittsburgh, California, which is kind of San Francisco Bay Area, it’s right off the freeway, it’s 20 minutes from … I have folks that live, like I said, San Francisco, but the majority live within 20, 30 minute drive and the population within a 20, 30 minute drive of that location is tremendous. So I don’t need that. I have 350 customers out of 400 right now. They all live. Most live in Pittsburgh, lot in adjacent cities, but 20, 30 minute drive, no big deal. And what’s interesting is I had to do a study of this for traffic study, unfortunately, for a project to title it, is they only use it like six, seven times a year on average. So I mean, six, seven times a year, I got to drive out there. It’s nothing.

Scott Meyers (17:15):

Yeah.

Chris Koenig (17:16):

Wild, inconvenient.

Scott Meyers (17:18):

Yeah. Yeah. So in your site selection, and I would say even by state, I mean, you talked about the difference between Florida and California in terms of a kilowatt hour and being able to sell it back or not. Tell me how you look at that. I imagine it’s a combination of people want … First of all, they want to cover boat and RV, and especially in the smile states and the sunbelt states, otherwise the sun’s going to beat the crap out of their boats and their RVs. It’s got to have enough sun in terms of sunny days per year to make it worthwhile, but then also the kilowatt hour. I mean, there’s a lot that goes into that that I would say determines whether you’re going to put solar up on the rooftop versus just a covered boat and RV. So tell me a little bit about how all of that works in the math and how you reverse engineer everything.

Chris Koenig (18:03):

Sure. Yeah. So let’s take Ocala, Florida as an example. So

(18:07):

Selling, it’s kind of state by state and utility company by utility company. So Ocala, Florida, as an example, I forget the utility company there, but they don’t have a program where they buy the power back. Some states or some utilities have a program, they call it a feed in tariff where if I want to solar, whether it’s on a ground mount solar field or wherever, most utility companies, some utility companies have programs where here’s the process to sell the power back to us and here’s that roadmap. And so for PG&E, for as an example, Southern Cal Edison and San Diego Electric in California, they have by the state, the CPC, the California Public Utility Commission has a program that said,” We want you to buy power locally from small utilities. “And like I said, no one’s really doing it,

(19:09):

But they have this program. Okay. And you’re going to buy it at this rate. And so as long as, like I said, as long as you fit these boxes, certain size and what have you, then it’s kind of like, it’s not discretionary. As long as you can check all these boxes, then PG&E or you have to do this. And so that definitely changes and helps the underwriting. It’s an incredible annoyance and pain in the butt to work on the solar financing. It’s not as straightforward as getting a construction loan or whatever for building storage. Companies come in and out of the business, so it definitely adds a layer of annoyance and complexity. So then we go to Ocala, Florida, and the utility company didn’t have a feed and tariff. What they would’ve bought the power for, there wasn’t a mechanism or program to produce this much power, like a thousand times what I would consume to sell to someone or the grid.

(20:23):

There’s others called community solar. So Massachusetts is a huge market for that. They pay a lot of money. I could produce a solar on the east side of town and sell it to a Amazon warehouse on the west side of town.

(20:41):

We’re not connected, but I could have an agreement with Amazon. So it depends on the utility company and what the state and local rules are in terms of what is allowed for selling power. So yeah, just depending on … I haven’t ventured out of California outside of this Ocala, Florida project, so I’ve kind of tried to stay in what I know where I have built five now in Cisco Bay Area, so I need to. I think Arizona, I was looking at Arizona, Colorado. Like you said, those Sunbelt areas are intriguing and those are high demand. Devin Beasley’s a friend of mine. He’s part of our toy storage nation group and he’s real heavy in that, like Arizona, Colorado. And he keeps saying,” You got to look out here. “And those are high demand for the RV boat stores because that’s where people are recreating.

Scott Meyers (21:45):

Oh, they sure are. Yep. Yep.

Chris Koenig (21:49):

But yeah, as far as the underwriting and then also goes for the solar stuff, like I said, imagine you built the self-storage and half of your project cost is paid off day one once you open it.

Scott Meyers (22:06):

Huge. There’s no strategy. There’s no arbitrage like that in just traditional self-storage. I mean, that’s unique to this, period.

Chris Koenig (22:14):

Yeah. It’s very unique. It’s why I have some gray hairs already for now.

Scott Meyers (22:24):

But once you learn it, we can replicate it.

Chris Koenig (22:27):

And like I said, 10 years ago, Bob Hayworth was out at Vegas. I remember very specific explicitly a venue of few hundred people is like, ” Here is the recipe. “He was selling aha, his incentive to get the carports, use us to do the ports, but it was like, here’s the math month one, and this is the deal, month one, I’m making 25,000 a month selling the power to PG&E. So that reduces my debt service, my interest reserve. I’m cashflow positive at about 50% after service.You don’t get that in self-storage.

Scott Meyers (23:12):

No, no, no. I mean, depending upon where you’re at in new development, you’re a year building it and then you’re every bit of over 12 months, if not 14, 16, 18 before you break even. And it’s all about speed. I mean, it’s all about getting to that breakeven as quickly as possible because that’s when you generate the returns. So to be able to get checks coming in right out of the gate, especially if you’re selling power back, that just doesn’t exist on the true just plain real estate play side. And I mean, as you said, Bob was selling Baja, he was selling equity that day when you listen to him. I mean, that’s really what he’s selling. I mean, just a pure equity play. So let’s talk about the balance of 2026 for you or in the future. It sounds like you’re looking in other markets.

(24:08):

We’ve talked about some of the numbers out there and the demand for this. Is this sustainable? Is this a run? Is this going to be a land grab for you for the next five to 10 years? What does it look like for you personally and what does it look like for other folks that are out there trying to play catch up and provide some of the storage for the massive amounts of boats and RVs out there that are searching for covered parking where it doesn’t exist right now?

Chris Koenig (24:32):

Yeah, sure. So I think for the cover, I still think there’s demand for covered RV boat storage. The solar part component of it, given just current political environment with the tax going away in July, unless you’ve started, which I’m doing one in Chico, which is up Northern California, and we’re going to be tight. And that’s already on the land, entitled. We have to spend of the solar costs to, so they call it safe harbor,

(25:02):

The solar. It’s going to be tough. So for me, I think the solar RV boat storage business model is kind of taking a break, if you will. But I’m still looking at covered, so I’m kind of looking at a little bit Northern and Southern California. Our Florida one has kind of stalled on lease up a little bit. And again, it’s kind of like location wise. I was talking with Mark, my partner over there last week about it is it’s just like, you can’t force people to come here. So how do you just make people aware of here we are? I think with the projects that I have going, I’ve got four under construction right now. Those are $20 million projects. So that’s $80 million of real estate under construction right now. That’s going to keep you for the next couple years.

Scott Meyers (25:59):

Sounds like it.

Chris Koenig (26:00):

Yeah. I hope in the next year something changes with the tax credit. I think something will. Residential solar was just obliterated. If you hadn’t installed your solar system for residential by the end of last year, there was no tax credit. The tax credit really drove incentive, like you said, a three to five year. Take the tax credit away, now it’s like 10 year PayPal, using that same number. I mean, it’s still kind of pencils, but math doesn’t math. And so I think that’ll come back. So I’m holding tight on that. I’d love to do some projects down in Southern California, kind of that 101 corridor that goes along the coast. It’s very, very popular. I know this totally aside, but I’m getting into safe deposit box and private vaults too. I’m building a self-storage in Danville right now at Danville, California and both a basement and all concrete, whatever.

(27:09):

And we turned about 2,000 square feet of it into a private safe deposit box room with a bank vault door. And then we have private vaults. Imagine turning these little storage units all complete with heavy steel doors. Getting into that, that’s very recent. Our local bank-

Scott Meyers (27:35):

How do you do a feasibility study on that, Chris?

Chris Koenig (27:37):

I have no idea. Feasibility study is going to Bank of America downtown and going to these different banks and they’re literally like, we have a vault and we are getting out of the business. We are being told-

Scott Meyers (27:53):

Yeah. Interesting. Yeah,

Chris Koenig (27:55):

It’s really interesting. So there’s a few down in Southern California. There’s a few in Texas private vaults and we’re finding out … I have this maybe for a different day, but like an AI receptionist who answers the phone calls because I got tired of doing it and part of them was going to my wife’s cell phone. She’s like, “This sucks.” The woman said, “I called every bank within Livermore to Walnut Creek, so probably a 20 mile radius of you. ” And they either said, “We don’t have safe deposit boxes, we’re turning away customers, or it’s only for existing customers.” So the banks are getting out of that business.

Scott Meyers (28:38):

They’re getting out of the lobby business. They don’t want clients in their banks anymore. I mean, if you notice, if you walk in, they’re just moving away from having anybody walk in to do any type of business, period. So that doesn’t surprise me.

Chris Koenig (28:50):

Yeah. So I get probably 10 calls a day. Actually, just I made a flyer. So Citi National Bank, who I bank with for one of the projects, they have a vault. They’re in downtown Walnut Creek. City National is a global bank. They said, “We have a vault. We are told no more safe deposit boxes, don’t run them out. ” And they said, “Bring us a flyer. We get 10 to 15 people a day.” No kidding. Yeah. A day coming in here asking for that.

Scott Meyers (29:22):

Wow.

Chris Koenig (29:23):

And so I’m like, okay. So to me, it’s like ultra premium micro self storage. No kidding, that for sure. Renting a shoe box instead of a 10 by 10. And then it’s just enhanced security. So I mean, just quick math, we’re going to buy a thousand, we bought a thousand safe deposit boxes, various sizes, somewhat like a three by five, just for whatever, someone a 10 by three by five, three inches by five inches, by the way, not feet. So 10 by 12, it Inches. And about a thousand, they average about just competing it out from banks about a thousand a year, which is a thousand a year is not a big deal, but that’s a million dollars in annual revenue for a 2,000 square foot space. That will match my revenue for the 30,000 square feet of self-storage. So that’s where my 2026, that project’s going to open in August.

(30:33):

The basement’s done, we’re framing the first floor now. We’re going to pour what would be the second floor pan deck next week. So you asked what my, that’s my 2026.

Scott Meyers (30:46):

Yeah, very cool.

Chris Koenig (30:47):

Which I like. I love the solar. I don’t get the tax credit, but it’s like I’m less dependent on government regulation on the solar part. You’re very dependent on that with the tax credits and the banking. So we’ll see. If it’s wildly successful, you’ll never hear from me again and I’ll not talk about it. I’ll be going and doing it on my own and saying … But no, I kid. But you look at it for that part of the business, banking wide, they’re actively getting rid of them, but the demand’s still there and continuing, especially with gold and gold doing what gold’s doing. Exactly.

Scott Meyers (31:32):

Yeah.

Chris Koenig (31:32):

There’s still tangible assets that people have that I don’t store that in my house.

Scott Meyers (31:37):

It’s

Chris Koenig (31:38):

A risk and it’s a liability to have this stuff at my house. If I’m gone, someone could break in. If I’m at work, someone comes at gunpoint to my life. So to me, it’s like self-storage on steroids a little bit. Yeah. So I could see that’s where my 2026. I love it.

Scott Meyers (32:00):

Yeah. Yeah.

Chris Koenig (32:01):

It’s a little bit of reboat storage, solar stuff. Don’t do five projects at one time because it’s very difficult.

Scott Meyers (32:08):

Too late. It sounds like you run it.

Chris Koenig (32:11):

Well, COVID kind of screwed that up. It caused this major traffic jam and then, okay, the traffic lane’s open. So that wasn’t the plan. I would never say never. I would never want to be doing four or five projects at one time with just me unless I had a staff of 10 people.

Scott Meyers (32:29):

Yeah. Yeah.

Chris Koenig (32:31):

But yeah, so that’s where I could see 2026, 2027 with Christian. Yeah.

Scott Meyers (32:37):

Awesome. Well, the old adages of the riches are in the niches and that’s why I got into self-storage anyways. And gosh, when I got in 20 years ago, it was considered a niche within commercial real estate. And certainly there’s other facets. And now we’re seeing all types of … The other niches within the asset class of late industrial is now becoming a very popular, not only in demand, but in terms of developers that are pivoting. So getting into small Bayflex. And more folks that are looking at RVN boat, you’re looking at storage condos. We’ve got a storage condo project, two in Texas right now. One is storage condominium project where we’ll sell some, we will lease the rest and then we hold the HOA. And then we got a traditional three-story ground up class A facility in Austin, Texas that we’re still building, which it’s in a fantastic area.

(33:26):

But the beauty of the condos is that we’re already pre-selling. We’ve pre-sold 40% of the project before we’ve even opened the doors against certificate of occupancy yet. So that and the man caves and a little bit of everything. The aviation side, we’ve looked at and started a project and then sold it off in terms of there’s not the same as boat and RV, but there’s a whole lot of folks that have planes and there’s not enough hangers for them. There’s a whole bunch of nice planes that are sitting outside just like these boats and RVs. And so there’s a number of them if you’re willing to take a look and do the due diligence. And yes, feasibility is big in all these areas. And then the rest of it is just doing the same reverse engineering of the math, what are the rental rates or what can we sell these things for versus what it costs to build it and just modeling it out.

(34:08):

So if you understand that piece of it, there is, I don’t want to say the worlds are oyster, but boy, there’s lots of opportunities within these other niches, which as you stumble across another one, that if you’re willing to put in the heavy lifting and learn it and be the first into it. Chris, we have this education company in addition to our podcast and our mastermind where we’ve been telling people for 20 years that the model of build it and they will come is don’t ever do that. And by the way, the banks won’t finance it and neither will private equity. You can’t just do this without a feasibility study, but congratulations, my friend. You’re going after it and you’re building it and see if it’ll come. And I love that. That is that pioneering spirit that we still like to see that it’s okay.

(34:52):

It’s certainly not a foolish venture by fool’s errand, as they say by any stretch, but I think you may be onto something here. So I applaud you for that and can’t wait to hear about it.

Chris Koenig (35:02):

Yeah, appreciate it.

Scott Meyers (35:03):

Well, Chris, as we wind up, and thanks so much for your time. I appreciate it today. Tell me, what’s on the bookshelf right now? Do you have a few books that you’re working on, audio books or reading, or what do you like to read that keeps your mind fresh and looking into different directions like we find you doing?

Chris Koenig (35:21):

Yeah, it’s funny you say that. So John McNellis, Making It in Real Estate is the book that I would highly recommend. Coincidentally, I just went, he’s been like a mentor friend of mine for probably 10 years now. And I coincidentally yesterday when he released his third edition of that book and a speaking thing at Menlo College in Atherton, California. And I went yesterday, chatted with it about it. So I read that book, I want to say 15 years ago, right when I was getting into real estate development. And I read it and I just out of the blue, emailed him, was like, “John, every other chapter hit home to me. ” And that was 15 years ago. I didn’t know what the heck I was doing. Now I read it. I’m like, “Oh yeah, yes, perfect.” Spot on. And I didn’t know what a personal guarantee was 15 years ago.

(36:25):

Now I’m very deep in personal guarantees on debt.

Scott Meyers (36:28):

And your wife knows. And

Chris Koenig (36:29):

My wife knows, yes. Yes. And capital calls. I didn’t know what that was. But that created a great friendship, mentorship somewhat with John. And yeah, making it in real estate with John … Now, it’s on Amazon book. I have a hard copy and an audiobook. I listen to it while I’m driving every once in a while. If I get frustrated or I’m depressed about some … All the county said I’m not going to do it. I just played chapter 12 or something. And it’ll get better. But yeah, that would be top reading material for, I would say any … And he’s a retail neighborhood commercial retail, so it’s not even in the same … But all the same principles or rules and theories apply. It’s very interesting. So that’s my top, huge fan of that book.

Scott Meyers (37:32):

Yeah. Read it a long time ago as well. I haven’t picked it up again and I should, but it’s bringing back the memories as everything you’ve said at those times when you think, “Oh my gosh, I can’t believe this is happening right now.” And what he focuses on and that he had to in the retail side is much more susceptible to market swings, economy swings and his sector than anything else. And so he can probably see those things coming down the road a little quicker than the rest of us could, but

Announcer (38:00):

It just

Scott Meyers (38:01):

Helped for me to just bring that awareness that, oh, this is a cycle and it sucks, but it’ll change. And now I’ll be stronger to know what it looks like the next time and I’ll see it coming a little bit sooner than maybe the rest of the folks or at least sooner than I did in my earlier years.

Chris Koenig (38:16):

So here’s what was interesting. I tried to get him to be a partner in a mini storage I built in Rio Vista, California, because we were going to build a grocery outlet out there. And at the time I was building the RV boat storage and then I was entitling a mini storage. I was like, “John, I’m looking for partners. Do you want to be my partner? Do you want to invest in this mini storage?” So we go out there and he drives around and he’s like, “I’m a retail guy. I could do that all day, every day.” Just fundamentally, I’m having a hard time understanding how there’s 500 people, mini storage customers just waiting, waiting with beta breath to jump in. That works for retail. I get that. I just am not fundamentally understanding. And I was like, I couldn’t answer that question. And he’s coming from this retail perspective, just looking at it just as a, take a step back, a little bit of see the forest through the weeds.

(39:21):

And I was like, “Yeah, John, I don’t have an answer for that. ” It’s kind of like, right, Scott, you know, if you have a feasibility-

Scott Meyers (39:30):

It’s demand based.

Chris Koenig (39:31):

He’s just like, “Is there a thousand homes that are being built here that I’m not aware of that’s going to create this

Scott Meyers (39:39):

Demand?”

Chris Koenig (39:39):

And it’s taken us almost three years to get to 80% full.

Scott Meyers (39:47):

So

Chris Koenig (39:48):

I mean, the gap is right. It will absorb. It’s just, is it a year, five years, 10, right? And at what rate rental? So yeah, anyways, that was kind of an interesting …

Scott Meyers (40:03):

It is. I mean, our market is needs-based. And so first of all, for retail guy to come in and take a look at that, I mean, it’s a little more secure for him to probably take a look at what this looks like historically, plopping a grocery store down somewhere, here’s what they’re going to buy. They need to buy it somewhere. Here’s the next closest grocery store. You can map all that out. So storage just needs based demand based, and it also depends on demographics. And so it is a simple, predictable business model, but it doesn’t mean it’s 100% spot on. We don’t

Chris Koenig (40:30):

Always- I see that. And then we had lunch a month ago and he’s like, “Hey, I own this property on University Avenue in downtown Palo Alto. Can we put a safe deposit box and vault in here? I think this tenant’s going out. “

Scott Meyers (40:45):

Yeah.

Chris Koenig (40:45):

I’m like, let me- He

Scott Meyers (40:46):

Can see that though.

Chris Koenig (40:47):

He did see that. I get that. Palo Atherton, he’s like, “This is the only model that I’ve seen makes sense in today’s world.” And I was like, “John, can we prove it out in Danville first and then we can … ” You get a guy who’s made millions in real estate and probably down in his career who’s like, “Okay, I get it. ” And I tried to get him in the solar stuff. He got that. They did some housing tax credits and new market tax credits. It’s like you talk to guys that are in that world and they get it. But yeah, John McNellis making it in real estate, book of the century.

Scott Meyers (41:30):

It’s a good one. Absolutely. Yep, yep, yep.That’s a good one. It’s got to be on the top shelf. Beautiful. Well, Chris, thanks once again. It’s so good spending time and getting caught up in what you’re doing. And yeah, keep those balls in the air with the four to five that you’re working on right now. And can’t wait for an update if we get an opportunity to hear an update on the new venture. But if not, if you’re keeping it close to your vest, then we’ll all know that it was successful and we should look at it anyways. All right, Chris. Well, love to have you back on a round two. And good luck once again, get everything going. And so with that, Storage Nation, you’ve been hanging out with Chris Koenig. So Chris, thanks so much. Appreciate your time today. Good luck keeping all those storage and development balls in the area, and we’ll catch up with you next time.

Chris Koenig (42:16):

Cool. Thanks, Scott.

Announcer (42:24):

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