A new fund has launched in Santa Monica, CA, looking to bring self-storage investing to a wider audience by way of its “crowdfunding” platform.
RealCap is seeking $5 million to $10 million in commitments for its Self Storage Oppurtunity Fund; the company’s first offering which opened to investors on August 22nd.
The fund is open to accredited investors and is targeting returns between 10 percent and 15 percent. Individuals can invest with a minimum of $10,000.
“One thing I noticed in the crowdfunding space, it is hard to find anyone focusing on this industry,” said Matt Schuberg co-founder and CEO of Real Cap.
Crowdfunding differs from typical fundraising in that small amounts are raised by a large number of investors, as opposed to large amounts from a small number of investors.
“Crowdfunding seemed like the best way to scale our business,” Schuberg said.
Schuberg funded RealCap with business partner Tim Soto; the duo have been investing in real estate for more than 20 years and have previously acquired two self-storage facilities together.
Soto, COO of RealCap, said they have zeroed in on self-storage for their crowdsourcing venture because of the industry’s historically high returns.
“We’ve observed that the self-storage industry is a lot less management intensive and the return on investment is higher compared to all other asset classes,” Soto said.
Soto also said there is a lack of opportunities for individual investors to get involved with the industry.
“It seems like everyone is more interested in multifamily, primarily single family residence fix and flip, which is probably due to the shows on TV,” Soto said. “Being a real estate agent who works with investors, I receive a lot of inquiries from investors, who want to get into that investment strategy and trying flipping homes themselves, excluding all these other opportunities out there, especially self-storage.”
RealCap plans to focus on secondary and tertiary markets across the United States where this is less competition from hedge funds and REITs. Soto said they are also avoiding areas where new supply is being built.
“We’re also looking for value-add opportunities that will enable us to acquire the property at a higher cap rate. It doesn’t mean that we’re not pursuing stabilized properties, because even stabilized properties may have under-market rents to capitalize on,” Soto said.