Inside the World of Self-Storage: Profitable Deals, Risk Mitigation, and Raising Private Money with Bill Kanatas and Benjamin Salzberg
When people think of real estate investment, their minds often drift to residential or multifamily properties, maybe even commercial buildings bustling with tenants. Yet, beneath the radar, self-storage has quietly established itself as one of the strongest and most resilient asset classes available. In a recent episode of “Raising Private Money,” host Jay Conner sat down with seasoned developers Bill Kanatas and Benjamin Salzberg to unpack what makes self-storage such a powerful and reliable investment — and why astute investors and lenders keep funneling capital its way.
Simplicity and Security: The Self-Storage Advantage
Unlike sectors like multifamily housing, self-storage benefits from a much simpler operating model. Managing self-storage units doesn’t require dealing with traditional tenants, midnight maintenance calls, or lengthy eviction processes. Instead, storage facilities operate with a customer relationship that is more transactional and less risky. When a customer stops paying, owners initiate a lien process rather than a drawn-out eviction, streamlining revenue recovery and reducing legal headaches.
This streamlined setup not only boosts operational stability but also mitigates unexpected costs or drawn-out disputes. For many investors, this lower barrier to operational complexity is a strong attractor, allowing them to benefit from a stable cash-flowing asset without the typical headaches and liabilities present in other real estate ventures.
Data-Driven Development and Value Creation
Building a profitable self-storage portfolio requires more than just buying the nearest vacant lot and erecting some buildings. According to Bill Kanatas and Benjamin Salzberg, successful development hinges on a meticulous, data-driven approach. Their process starts with analyzing key indicators like population density, income levels, competition, and traffic counts. Barriers to entry, such as restrictive zoning or competitive saturation, are also carefully assessed.
Once a lucrative site is identified, the team works closely with local authorities and communities, often negotiating tax incentives or revitalizing underutilized properties to unlock additional value. For example, they have transformed blighted properties, like a closed-down retail space, into vibrant, income-producing self-storage facilities, breathing new life into both the property and its surrounding area.
Raising and Protecting Capital
A major focus of the conversation was about ensuring investor safety. Bill Kanatas and Benjamin Salzberg shared that their group invests its own resources upfront to handle entitlements, secure permits, and conduct necessary due diligence before any outside investor money enters the deal. Only after the groundwork has been meticulously laid do they invite private capital, thus protecting investors from unnecessary risk.
Transparency, trust, and consistent communication are the foundation of their relationships with investors and lenders. When issues arise, direct and timely communication ensures that challenges are addressed together, fostering strong, long-term partnerships. Their approach has attracted capital from family offices, funds, and private individuals who want the security of knowing their investments are handled with care and guarded by experience.
Operational Excellence and Long-Term Profitability
Once a storage facility is up and running, operational efficiency becomes key. Many smaller operators, especially those managing just a handful of locations, lack the robust systems and processes needed to maximize profitability. The self-storage leaders featured in the podcast emphasize the power of process — ensuring seamless customer onboarding, fast responses to inquiries, and rigorous property maintenance. By instituting clear, repeatable procedures, they close the financial leaks that can gnaw away at profits over time.
Additionally, by partnering with large, institutional management companies, they benefit from economies of scale, tighter cost controls, and enhanced purchasing power that further boost long-term financial performance.
The Future of Self-Storage: Resilience and Innovation
Self-storage remains an attractive sector in both strong and challenging economies. It is fueled by persistent life events: downsizing, dislocation, business transitions, and other major changes create steady demand regardless of market cycles. Even as concerns about market saturation arise, there are still untapped areas — especially tertiary markets — that require new facilities to meet continuing demand.
Looking ahead, innovation is on the horizon. Mixed-use concepts and partnerships, such as combining storage with residential or commercial uses, are expanding possibilities. As society evolves, so too does the role of self-storage, ensuring it remains a pillar of real estate investment.
10 Discussion Questions from this Episode:
- Jay Conner opens the episode by questioning the “boring” reputation of self-storage. Why do you think self-storage is often undervalued as an investment, and what qualities make it stand out compared to other real estate assets?
- Bill Kanatas claims self-storage is a “simpler solution” compared to multifamily properties. What are the biggest operational differences between self-storage and traditional rentals, and how do these impact risk and workload for investors?
- Benjamin Salzberg emphasizes that self-storage provides an essential service during life events like divorce, downsizing, and moving. How does serving these life transitions give self-storage unique economic resilience?
- The guests talk extensively about being “data-driven” in site selection. What are the most critical data points they consider when evaluating new self-storage sites, and why do you think these are so important?
- Bill Kanatas and Benjamin Salzberg mention both ground-up development and value-add conversions. Which approach do you think has more potential for today’s market, and why?
- Finding the “diamond in the rough” is a recurring theme. What processes do Bill Kanatas and Benjamin Salzberg follow that help them discover standout deals in a crowded marketplace?
- The team discusses red flags that passive investors should watch for. What do you consider the most important factors or warning signs to look for before investing in a self-storage project?
- Both speakers reflect on their mistakes, especially around construction and contractor selection. Why is specialized experience in self-storage development so crucial when choosing a contractor?
- Operational excellence is a major focus for Benjamin Salzberg, who references saving over $50 million through streamlined processes. What operational weaknesses might cost self-storage owners the most money, and how can they be avoided?
- The guests predict that self-storage will remain a strong asset class, potentially integrating with residential and mixed-use properties in the future. What trends or innovations do you foresee revolutionizing the self-storage industry in the coming years?
Fun facts that were revealed in the episode:
- Bill Kanatas and Benjamin Salzberg have transformed a former Burlington Coat Factory, which sat vacant for three years, into a thriving self-storage facility—showing their knack for turning blighted properties into valuable assets.
- The duo’s development approach is extremely data-driven, taking into account factors like population density, income levels, competition, traffic counts, and zoning restrictions to pinpoint ideal self-storage locations.
- Operational excellence is a major focus for Benjamin Salzberg; their systems and processes have saved over $50 million, proving that efficiency and customer service can go hand in hand with profitability in the self-storage sector.
Timestamps:
00:01 Profitable Real Estate Strategies Unveiled
05:31 Strategic Site Selection Explained
07:52 Key Factors for Facility Location
11:02 Mitigating Development Risk for Investors
14:21 Cost-Effective Architectural Redesign
20:22 Optimizing Operations and Tenant Retention
21:32 Why Invest in Self Storage
24:27 Future Innovations in Self-Storage
25:35 Connect with Bill and Ben:
https://www.Self-StorageDevelopers.com
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