Episode 3: Big Vision, Bigger Deals and Billion-Dollar Storage with Arthur Hood

In this episode of the Self Storage Development Podcast, Brady McDonald sits down with investor and developer Arthur Hood to unpack how he’s helping build a massive self storage platform from the ground up.

Arthur shares his journey from construction, trucking, and real estate finance into large-scale self storage development, and breaks down what it really takes to scale in today’s market. They dive into joint venture partnerships, entitlements, debt relationships, value-add vs. development, capital raising, and what separates operators who actually get deals done.

This conversation also goes beyond the spreadsheets. Arthur opens up about risk, leverage, private capital, why most people are not cut out for development, and the reality that bigger money does not automatically bring bigger fulfillment.

If you want a no-BS look at how major storage deals are structured and what it takes to build something truly meaningful, this episode delivers.

What you’ll learn:

• How Arthur structures high-level development partnerships
  
  
• Why self storage development can outperform value-add
  
  
• What lenders are really looking for in today’s market
  
  
• Why entitlements create massive upside and massive risk
  
  
• The role relationships play in raising debt and equity
  
  
• Why chasing money alone will never be enough

Whether you’re a new or seasoned self storage investor, you won’t want to miss this! 

👤 Connect with Arthur Hood

Instagram: @arthurhooddotcom

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

LinkedIn: linkedin.com/in/arthur-hood-455a8310/

Website: https://www.arthurhood.com/ 

Transcript

SPEAKER_02 0:00

Welcome to the Self-Storage Development Podcast, the show where we take you behind the scenes of building class A self-storage from the dirt up. I'm Brady McDonald, the founder of Barefoot Landco, and in every episode we dive deep into the deals, the entitlements, the wins, and the real life stories behind the people building storage across the country. From personal lessons to development insights, this is your no-fluff playbook for sourcing, developing, and investing in self-storage. Let's get into it. All right, ladies and gentlemen. Welcome to the Self-Storage Development Podcast. I've got my great friend here, Arthur Hood. Welcome, Arthur.

SPEAKER_00 0:35

Good to be here. Good to see y'all.

SPEAKER_02 0:36

Yeah, thanks a lot for coming in. All right. Now, I look up to you as you know one of the guys that do more storage development than anybody I know personally. And so, you know, obviously I know who you are, but our listeners don't. Why don't you just give us some Kohl's notes about who Arthur is with regards to self-storage development?

SPEAKER_00 0:52

Um started in real estate development 20 years ago, but in real estate development finance, I own operating businesses. So pretty diverse portfolio. About uh four years ago, got very heavy in uh ownership and development of self-storage. And in the last couple of years, we we've really kind of blown that up. We formed a partnership with a good friend of mine, Russ Colvin, who had a had built a big two and a half billion dollar self-uh storage portfolio that he exited that, but he was more of a manager and a small partner in that company. He formed a company. I'm the second, third largest shareholder in the company, and we've decided to grow that to a massive self-storage company. We started in the development space, so we're developing self-storage, ground up entitlement and developing. We're starting to do some value ads now, uh, but we really want to build that to a pretty massive portfolio. We'd like to get it to you know three to seven billion in the next you know five to seven years and potentially exit into a read.

SPEAKER_02 1:49

Yeah. Awesome, awesome. So let's just back up a little bit. So you've got, you know, you guys are obviously created a partnership, and we want to get into that because that that is one of the ways that we've created a lot of our wealth is through joint venture partnerships. So I want to unpack on you know how you structure your partnerships. But before we do that, let's go back a little bit. Like, where did Arthur grow up? What's a little bit of your backstory?

SPEAKER_00 2:10

Um, I grew up in Birmingham, Alabama. We had family friends who were in the excavating business, and then I had some friends with farms, and I kind of grew up ever since I was probably six years old running heavy equipment, bulldozers, tractors on the farm, mining equipment. I just grew up around that, which I think really helps you with a different skill set. I mean, from mechanicking to building to construction. So just kind of always there. As I got older, I got heavy into oddly enough, after high school, got involved in some uh small construction company that started during high school. We did underground uh utility construction, okay, like road and river crossings, directional drilling. I had a small trucking company that did some heavy haul and dump trucks, and then that just kind of morphed into, got out of that and got more into real estate, started buying a few little properties here and there, and then started helping on the finance side. I got connected with some people that were very good at structuring real estate finance, and I did a bunch of deals probably 06, 07. Um, when we came in, we structured real estate finance and made some pretty big cash fees, spent more than I should have back then, but because you always expect the next million dollars. But started really then becoming on the equity side of every deal. Like if I helped structure or finance the deal, I didn't just want a cash fee, I wanted a piece of the deal, and it's kind of been a train moving from the station ever since. I've stayed predominantly in real estate, but I do have operating companies. I've got some uh bar, restaurant, nightclubs that produce quite a bit of cash. I've got some manufacturing companies I own a piece of that produce cash, got a couple of service businesses in the glass business, and then I'm also in the mining business um industrial and rare metals, uh rare earths, and we we've got several different mining operations across Africa. Those all produce cash, which I think is very important in the real estate business, not to be just dependent upon real estate. Yeah. So take that cash and deploy it into real estate. Yeah. And then a couple of years ago, we formed Your Space America, which Russ formed um after his uh time at uh North American Self-Storage and some other um operators. He wanted to really grow it, but and he has the expertise of site selection, entitlement. He's very good at entitlement, excellent at entitlement, good at construction management, wasn't as good as capital raising, at least on the equity side. So I came in with my ability to raise equity, plus some of my own cash and some close associates' cash. And then we, you know, acquired his first few sites and we just really started growing that company. And our goal is to grow that company something massive.

SPEAKER_02 4:39

Yeah, wow. So the experience that you got like in creating these partnerships, like what are the things that you look for when you're creating a partnership? Like because it's like these deals are pretty big, right?

SPEAKER_00 4:49

I I look for somebody that's got good operating ability, yeah, and will will do the down in the trenches work. I'm a little bit more high level. I can do down in the trenches. I've done entitlement, I've done it all. You know, I just uh a year and a half ago, I entitled an entire subdivision in Alabama that was over 600 lots and 300 acres and sold it to DR Horton, which I'd, you know, and made a good profit on that. I'd I'm in the home building business in the same region, which is the South Alabama panhandle of Florida. So I can do all of that, but I look at it putting deals together where my biggest skill set is the finance side, okay, the equity and the finance, and the structuring of deals. Like we have some JVs that are coming in. Yeah, I'm very good at structuring how a joint venture would look. So as long as I do that and I have somebody else, they can do the other part.

SPEAKER_03 5:38

Yeah.

SPEAKER_00 5:38

You know, and and the partnership with Russ was perfect because he was very good at site selection, design, managing construction, being an actual developer, and I was very good at the finance side. Yeah. And another friend of mine that's involved, Robert Papier, is very good at the finance side. So with the two of us handling the debt and the equity, and a little bit of the construction when necessary, but the debt and the equity and Russ handling the site selection and construction, the three of us were able to put together a pretty big company. A power team. A power team. And now, you know, we have uh two sites that are finished. We've got five under construction currently, and we've got 10 or 11 in the pipeline along with some joint ventures. Yeah. And, you know, these projects are not small, you know, their total costs are between 20 and the largest one's 52 million. Yeah. So they're significantly sized construction projects, and they're going to have values between 40 and 100 million dollars upon completion and stabilization. Yeah. So just in what we've got now is well over a half a billion once it's stabilized. Yeah. And once what's on in the pipeline under construction will exceed a billion dollars in value once everything's stabilized.

SPEAKER_02 6:48

Yeah, and that doesn't include all the joint ventures we're about to start. Correct.

SPEAKER_00 6:51

That doesn't include our joint ventures.

SPEAKER_02 6:53

Yeah, and so I just wanted to get unpack that a little bit for the listeners, is could because a lot of people, if they're looking to get into storage or just maybe they're interested in storage, because most people are, right? Like, you know, everybody loves loves the idea of it.

SPEAKER_00 7:05

Um but they're no tenants, toilets, and trauma. Exactly.

SPEAKER_02 7:09

Yeah. And it's like, how do you structure the deal? Or like how do you know, and and what I think the biggest mistake a lot of people do is they go and get a deal under contract and they could they can raise the equity, but the missing piece is the operations. And so you obviously have got the finance part, sort of the equity part, you've got a debt partner that can really help with that, and then you have an operations partner. Correct. You know, and I think that's like a the big lesson for the the listeners is like that's how you properly set up a company, right? And just then divide and conquer based on your actual skill sets because like there's no way you could be good at all that stuff.

SPEAKER_00 7:46

And no way to have the timing. You know, yesterday I left Dallas. I I had a meeting and a breakfast in a regular meeting yesterday morning. Then I left Dallas 10 o'clock in the morning, flew to uh Springdale, Arkansas for another meeting and looking at an apartment community complex that we're involved with that's in an op zone right there in the northwest Arkansas region. Then I was down in Pensacola for a bank meeting thereafter, then into Miami yesterday evening for a dinner and actually did another podcast. I don't have time to sit there and be doing the minutiae.

SPEAKER_02 8:17

Yeah, and there's details in there. Like, I mean, when we're looking at our entitlements, I mean, today we just had another meeting today that this would be one that you would never have time to be on, yeah, right. But I've got to be in the weeds because, and that's why we're partnering up because you can solve the problems that I don't want to do, and I can stay in the weeds and operate, right? And make sure the team is doing it. And it was like a, you know, you get into in the entitlements and actually design phase, and they're like, hey, we don't need the green space because of some other rule change. And so now we're back into relaying out this floor plan, which takes attention, right?

SPEAKER_00 8:48

Takes attention, it takes time, and that's also wasted dollars because you're sitting there eating up time and either engineer, architect, or both to reformat something.

SPEAKER_02 8:58

But you see, get in there, get it. Yeah, and you can't be in that weeds and trying to raise equity and trying to raise the debt and figure out the debt solution. So, yeah, that's cool. So, where do you think, you know, you're focusing on development? Have you guys been doing value add as well?

SPEAKER_00 9:11

Or uh, we're starting to look at value add. Uh, Russ had done it in a former partnership back when he worked at the other storage group. I've done value add in a lot of asset classes, uh, but we hadn't really done it together in storage. We're looking at it, but our development pipeline's been so full. And the lift you get between a piece of unentitled property through the value add of getting it entitled, constructing it at or below a market cost, your your lift, you're so far ahead of the game doing it that way. It's been hard to get the same returns out of value add. But we're seeing some deals out there that are worth pursuing.

SPEAKER_02 9:47

Yeah, and they're just hard. It's like the um, you know, private equity came in there like 10, what, 10 years ago, probably.

SPEAKER_00 9:53

Yeah, it's hard to make a bid on it because if by the time you get it, get under contract, raise the equity, some private equity groups. They could just close on it. They just want to close on it. Even if you're sitting on the cash, the return sometimes is better on a on a ground up development. But I think there is some great deals out there, it's just you got to find them.

SPEAKER_03 10:10

Yeah.

SPEAKER_00 10:11

And a lot of like I said, a lot of our team is so focused on the development stuff, taking the time to go through them.

SPEAKER_03 10:16

Yeah.

SPEAKER_00 10:16

But uh this year we want to make a focus to get at least two value ads. Okay. The nice thing is you compress the time, you collapse the time from acquisition to cash flow on a value ad.

SPEAKER_02 10:27

Yeah, and you're probably looking for bigger deals, I would assume. Like you even your development deals are in small.

SPEAKER_00 10:32

We're anywhere between 118 to as much as 330,000 square feet of heated and cooled Gen 5 self-storage, and a lot of them have boat and RV on in addition to that. Yeah.

unknown 10:43

Yeah.

SPEAKER_00 10:43

So we're not any small deals. You know, a lot of them are, you know, the one we just finished in Owens in Las Vegas, that one isn't an op zone, is 150, 156, 158,000 square feet.

SPEAKER_02 10:54

Yeah, yeah, big deals.

SPEAKER_00 10:55

Yeah.

SPEAKER_02 10:56

Okay, let's just talk about debt. It's like how are you guys solving the debt for for your developments?

SPEAKER_00 11:02

We're doing debt several different ways. We we've used a private lender a little bit out of Atlanta, Yieldie. They're just a private syndicated first trustee lender, so they go out and raise the money. We've used a couple community banks and we've used a regional credit union. Yeah. You know, I I use whatever debt source we can find. I think as a uh a newer company, it's easier to use uh credit union and community banks and or some smaller regionals that'll get pretty aggressive in the construction lending. Your big huge banks, they're not gonna do it unless you're borrowing 300 million and you've got a portfolio that's already producing cash flow.

SPEAKER_02 11:40

Right. And so did you was that your role in this partnership to be flying around, you know, creating those relationships? For the most part, yeah.

SPEAKER_00 11:48

I mean, I'm already operating businesses and all over the country, and I have an airplane which makes life a little bit easier. I can hit multiple places in a day.

SPEAKER_02 11:56

Yeah, yeah, that makes sense. So, what are you guys doing for the operations and management? Who's looking after that?

SPEAKER_00 12:01

Um, there's a couple smaller deals that I own that I'm that we manage ourselves, but most of our deals we're doing a management with either public storage or uh cube smart. Yeah. And they take their little two to four percent piece, but we get their national reservation network. If you're moving from Chicago to Houston, you're coming to us because they're gonna drive you to us. We get their advertising, their everything. I I think it it's well worth it. You get a little bit of a premium on the exit. Yeah, and sometimes they're your buyer. Yeah, they would probably would, especially the big stuff at a lower cap rate than anybody else. Yeah, so they can be your buyer at a lower cap rate, they drive traffic, and if you do go to the open market, private equity will pay more. So for us, building as much as we have and not really wanting to sit there and lease storage units all day, we'd rather let them run it.

SPEAKER_02 12:51

Yeah, yeah. No, that makes sense. Does that rate like two to four percent you said? Like I I've seen it that as high as six, right?

SPEAKER_00 12:59

If you negotiated, you'd get it in that range. Okay. And then it depends on your splits on the insurance. You know, a lot of people forget that some of them will split the insurance premium with you. Yeah. Which is that's just pure money to the bottom line.

SPEAKER_02 13:11

Yeah, that's yeah, big time. Cool. So let's talk about obviously you didn't learn this overnight. Let's go back and okay. So before you were doing storage, which is like the last four or five years, yeah. What was your main focus then?

SPEAKER_00 13:23

Uh, before that, it was operating businesses and my single family, multifamily rentals.

SPEAKER_02 13:29

Okay.

SPEAKER_00 13:29

I would always and have for 15 years, I'll buy 10 fix and flips, sell eight, and keep two. Okay. So you so that that was like the training ground.

SPEAKER_02 13:40

Yes, right. Really deal structures, deal flow, capacity.

SPEAKER_00 13:43

Yeah, and I would do, you know, I'd buy a section of four or five acres, entitle it, split it into lots. Um, then I started getting a little bigger than that. You know, I did uh some some big ones. I've done some, you know, 350 acre, 600 lot, 200 acre, 400 lot subdivisions where I took raw land and titled it. Usually did a paper lot deal where I flipped them before doing construction, but I've also done curved gutter streets and made pads. So you've done all the horizontal and then you'd sell the pads after that. I prefer the paper lot deal.

SPEAKER_02 14:13

Yeah. Okay, so let's just unpack that for a quick minute because there's not a ton of people that even understand what entitlements mean. In Canada, that's how we start cutting our teeth is by doing, you know, buying a bigger lot, severing it into two or three lots. It's it's more or less the same as doing a big, you know, big subdivision. It's just, you know, obviously the bigger stuff costs more money and there's more risk because of the dollars and the time.

SPEAKER_00 14:35

Right.

SPEAKER_02 14:36

Do you recommend people to go down that road?

SPEAKER_00 14:38

Like how much wealth is created or potential is created in that entitlement phase or the well, a lot of wealth that's created there, but I I would never advise someone to do that that doesn't already kind of understand it. I've learned a lot of the skill set and I catch some flag for this. First of all, my personality is FitFo. Figure it the fuck out. Yeah, I can do anything. And I literally mean that. I think I can do anything. Yeah, it's because you can't, but most people probably could, but won't. Yeah. And entitlement has just so many things that go with it that you got to be kind of cut out to do it. Yeah. You know, picking up picking up a 40-acre parcel in Ballin County, Alabama, and a 160 next to it, and then closing on that. So now you're out a couple of million bucks.

SPEAKER_03 15:23

Yeah.

SPEAKER_00 15:24

Then buying under option enough to get your drainage and everything else, putting it all together and selling off to a big home builder. Yeah, I made a lot of money doing that, but that's not cut out for everybody.

SPEAKER_02 15:35

I was at a meeting yesterday, and it was a bunch of real estate agents that have big teams. And uh actually his name's uh Cheplak is his last name. Anyway, he just like he called me out. He's like, You're clearly psychotic, right? Because he's also got other developers who are also psychotic.

SPEAKER_03 15:50

Yeah, yeah.

SPEAKER_02 15:50

It's like to your point, you gotta be cut for it, right? And not everybody can handle it. It's yeah, you gotta be a little bit fucking nuts to be honest. Yeah, that's what he was saying.

SPEAKER_00 15:57

He's like, Clearly, you're a little nuts. I'm like, I guess so. Yeah, yeah, you pretty well have to be. Yeah. You know, because there's there's risk in there that you can't quantify on a piece of paper. You can't find it. It's hard to find it until it's there. Yeah, I mean, the risk can be you got one neighbor five miles over that heard your development's coming and organizes 200 protesters to show up at the council meeting. They're just things you just don't know.

SPEAKER_02 16:23

And that could all happen at the last second after you've talked to city council members and PNZ and everybody loves it. And then all of a sudden, 200 letters. We actually just went through this where they couldn't approve it. Actually, no, it needed supermajority vote because of the amount of opposition. It's like like I didn't even know that that was in Lancaster, in uh Cedar Hill, Texas.

SPEAKER_00 16:44

Oh, we I've had one where it was by right, which means the council has to grant it, but they had so much opposition that they pulled me aside and we're we're still listening to opposition. The meeting had started at 6 p.m. It was midnight. We're still listening to opposition. Where was that? Uh subdivision in Alabama. In Alabama, uh, because there's light pollution and it's gonna change the farmland, all this crap. And finally, the can't one of the council members uh on break pulled us aside and said, We're gonna turn you down because we have to, it's our voter base, but you're gonna turn around tomorrow and threaten to sue us all individually because we can all be sued individually since it's by right. And then at the next council meeting, we're just gonna grant it when no, you know, when just give you a heads up. Just give you a heads up. You're losing now, you're gonna threaten to sue us, and then you're gonna we're gonna give it to you next yeah, next meeting.

SPEAKER_02 17:32

Yeah, it's so it's so crazy how political it is. Do you think storage is more like that than the residential stuff?

SPEAKER_00 17:40

Or was there one at some asset classes that create more big subdivisions are always gonna be a challenge because you know if you've if that big field next to you has been a blank field for the last 50 years, you don't want it to change, but it's gonna change. Yeah, it's gonna change. Um, so that has a lot of opposition. What what gets you some opposition in storage is the stuff we're building, you've seen very nice, very good looking. Looks more like an office building than an apartment building, something like that. Or an apartment building than a self-storage. But in people's mind, they think, you know, still roll up doors and trash and whatever. So that's the opposition, and then the cities will give you some opposition because you're not really employing anybody.

SPEAKER_02 18:19

Yeah. One person, two, their tax base isn't massive. Yeah, yeah.

SPEAKER_00 18:23

So that you get some pushback. The cities may want other use.

SPEAKER_02 18:26

Yeah.

SPEAKER_00 18:27

But as long as the home builders, you know, me being in the home building business, you know, I'm not adding closets to my new homes. I'm not giving extra storage space. I'm not getting paid for it. So all these new neighborhoods you see going up have very limited storage. And then if you want to talk about really limited storage, these apartments, these studios have very limited storage, and everybody's got a hobby, whether they're a runner, a biker, a skier, water sports, whatever they're doing, well, everybody's gonna have a place to store their junk or their stuff. And they tend to put it in storage units. So as housing has less and less storage, more people need external storage.

SPEAKER_02 19:02

Yeah, for sure. Let's change gears a little bit. Um, we've all made mistakes. Ken Clothier, one of our mentors, or at least my mentor, he he says, Brady, when you feel like just failure, failure, failure, is like you're either learning or earning. And let me just tell you, I feel like I learned a lot the last couple of years. Um, but yeah, I tend to learn the hard way. But like what give me a lesson or two that you've learned maybe over the last five or 10 years that's really helped change the course of your your you know, your business or your life.

SPEAKER_00 19:31

I think in the up markets, where the where the wind is at your back and where assets are appreciating faster, I don't give a damn what the cost of capital is. You know, if I've got 7% money, 6% money, or 18% high-yield debt from a private fund, doesn't matter. But I think when you see the wind slowing, you got to be very careful about your percent of leverage and the cost of capital.

SPEAKER_03 19:56

Yeah.

SPEAKER_00 19:56

Then you have to be a little more careful and have a takeout ready. You and I both know a lot of the single family guys that got stuck with a bunch of properties that'll never cash flow that they can't even put them into a DSCR loan uh without writing a check.

SPEAKER_03 20:08

Yeah.

SPEAKER_00 20:09

I think the and then you know, years ago, the mistake I think I made was when I first got into doing this in 05 and 06. You know, I was still young, very young. Before the crash. Before the crash, was thinking that you know money would just fall on trees because you know. I mean, I had months then that you know, my early 20s, I put one deal together and then 1.40 million is 400 grand.

SPEAKER_03 20:29

Yeah.

SPEAKER_00 20:30

You know, an unrealistic for you know how much money is coming here. Right. You know, you made a million five in six months and you made nothing for two more years. Yeah. The market crashed.

SPEAKER_02 20:39

How did you get uh caught up in the market during that time?

SPEAKER_00 20:42

I was had small equity and a couple of development deals, so I didn't get hurt that bad, but just cash flow drew dried up. And the stuff that I had bought, luckily I had had because I had made some cash, I bought with cash, so I didn't lose any of it. Now I had some stuff under contract and option, I just walked away from that.

SPEAKER_03 20:58

Okay.

SPEAKER_00 20:59

But it was really about four years before any real financing or development came back.

SPEAKER_02 21:04

Yeah.

SPEAKER_00 21:04

Because everything died middle of 2007.

SPEAKER_02 21:07

Yeah.

SPEAKER_00 21:08

People didn't realize it was dead. Yeah. But deals were starting to crater in 2007. Everybody talks about 08, but a lot of the condo deals, a lot of the developments were all financially cratering the year prior. It just didn't hit anybody's radar until 08 when the banks and the institutions started failing.

SPEAKER_02 21:26

Do you see? I mean, we've seen a lot of pain in the last couple of years. I mean, the debt market.

SPEAKER_00 21:31

We just saw one in Chicago fail two days ago.

SPEAKER_02 21:34

Yeah. You think that's that where we haven't seen the worst yet?

SPEAKER_00 21:38

I don't think so. And and it really depends because there's a lot of commercial debt out there that's up to refi that nobody's going to refi right now. There's a lot. There's a lot of office building debt that's out of covenants. And there's a lot of operating companies that were bought with private equity in the last few years that are levered with institutional debt that has covenants and they're all out of covenants. Now, maybe nobody does. Anything. Nobody enforces the covenants and just sweeps it under the rug and continually renews it and just keeps going. But if anybody ever resets any of this stuff, there's going to be some failed banks.

SPEAKER_02 22:11

Yeah, interesting. And yeah, and it's obviously been a challenge getting debt. Like we've seen the number of developers developing storage in particularly is like dwindled to very few in the past three years.

SPEAKER_00 22:22

Debt's relationship based. You've got to use the right sources to get into the right rooms because all the debt now, you know, there's a percentage of it that's traditional big bank, but it's a very small percentage. The rest is community banks and local banks and private debt funds. And those you all have to have a relationship with individually to borrow from.

SPEAKER_02 22:42

Yeah, that's a big nugget. So how does somebody go around? Like if you were to, you you know, you you probably worked at this probably a few years ago or said, hey, we're building this big thing, this got on this big mission. How do you go about or how do you recommend somebody goes around and trying to create relationships strategically with these people? Like you're network, you're a master networker. Every time you're flying around everywhere shaking hands and kissing babies.

SPEAKER_00 23:03

You you have to network, you always have to be in the right rooms to meet new people. That's the best way. Secondarily, I use a couple of major debt brokers around the world that that do billions of dollars in commercial finance because when they send your deal in, even if they haven't sent to that lender, that lender will know who they are and know that they did XYZ building in New York or something, you know, something, and you'll end up with a much better reception.

SPEAKER_02 23:30

Yeah.

SPEAKER_00 23:30

So I use a couple of big debt broker funds that that that's all they do. They're mortgage broker, but on a massive level for commercial. Can you say who it is? Uh I've used Meridian Financial, I've used another one out of New York and a few other ones. Meridian's the probably the largest. Okay, the capital group.

SPEAKER_02 23:46

Yeah. And so what about like a lot of people are looking, they go down to the the family office groups and like how have you have you gone down that rabbit hole before?

SPEAKER_00 23:55

A little bit. We've got some debt out of a family office construction debt. It's actually reasonable money. It's not that expensive on uh three projects right now.

SPEAKER_03 24:04

Yeah.

SPEAKER_00 24:04

And they're, you know, sub-10% or sub-9% money. They're very good for private capital. With the family offices, you have to build a relationship and find the family offices that actually will write a check. A lot of family offices want to go into a fund or into a managed equity group or a pooled investment to mitigate their risk, to mitigate their risk and not have to do as much work.

SPEAKER_02 24:28

Is it because they don't know real estate per se?

SPEAKER_00 24:30

Like they don't know real estate and they want to mitigate their risk.

SPEAKER_02 24:33

Yeah.

SPEAKER_00 24:34

And to mitigate that risk, they'd rather just do it with somebody else. Right. You know, to getting them to actually underwrite you. I mean, we had to have them underwrite us as a team and us individually, get comfortable with the team, get comfortable with each one of the three of us individually. And you know, we have over you know 35 million out in mortgages with them, you know, in three loans. And those are you know, substantially sizable loans. Yeah.

unknown 24:58

Yeah.

SPEAKER_00 24:58

Over 10 million each.

SPEAKER_02 25:00

Yeah.

SPEAKER_00 25:00

And a lot of family houses don't want to do the work to do that.

SPEAKER_02 25:03

Right. So back to the networking. Um, you obviously have your own plane. Let's just talk about that for a quick minute because it's interesting as heck. I've got my vision board's right there, it's got a plane on it. I'm not even sure if I want one. I've been we're gonna go on it this afternoon. And you've been on it uh coming going out to California a couple of times, yeah, and it's been great. Yeah, it's been great networking, getting to know you, obviously, but it's like a time saver. But like, yeah, just why how long have you owned the planes and what's been the benefits you?

SPEAKER_00 25:30

I play private about half the time for really the last 15 years. I've owned uh Beach Jet 400 all to myself, I've gone to Citation Ultra, half. I've owned half or all of four or five different airplanes. Yeah. Um I like airplanes. I I'll see a good deal on an airplane, I'll buy it, do some fix it up and fly it for a little while and sell it for hopefully what I got in it or whatever. But I just like airplanes. But from a business perspective, if I'm gonna go somewhere for four or five days or or ten days and I'm staying there, I'll just fly up on the airlines usually. Just logistically, it's easier than moving a crew because if I fly the plane up, I the plane's there, I've got to put in the hangar there, I gotta fly the pilots back on the airlines, bring them back, all that stuff. But where I find the the plane invaluable to my own life is I can go somewhere in the morning, come back and home in time for dinner, or I can go three or four places over one or two days. So, you know, I was in three places yesterday. Yeah, you could never do it today, you know. So in two days, I've been in four places, and and I'll still be home tonight reasonable.

SPEAKER_03 26:37

Yeah.

SPEAKER_00 26:38

And I'm not wasting any time. If one meeting runs over, other than my day I sell that I've already planned to be tightly scheduled, it doesn't matter.

SPEAKER_02 26:47

Right. Yeah, yeah. It makes sense. And and and I know you're kind of explaining the cost, you're like, Brady, it's I mean the last time you're like, you can totally do this. You just gotta park, I think it was like 500 grand aside per year or something like that.

SPEAKER_00 26:58

Yeah, I mean, you you're gonna spend, you know, I run a uh what would be considered a live jet side touching ultra, but still got a good range. Yeah, you're gonna spend somewhere between, depending on the year, 500 to 750,000 a year to maintain and operate. I use contract pilots, but if you just you know park say 700 grand a year, you're flying into a couple hundred hours a year, and just that is what it is.

SPEAKER_02 27:18

Yeah, well, it's cost of doing business, yeah, right? Because you can probably, well, I imagine you've been doing it for a long time. You wouldn't be doing it if it wasn't added.

SPEAKER_00 27:27

And I know, and I know, you know, I you know, I've got shops that I've worked with, so I get maintenance done at a reasonable price. Yeah, you know, I'm not taking a citation to Textron and spending triple what it's worth to get work done. So it's you know, it's it's learning how to manage an airplane is a bit of a a skill set, but um once you do, it just saves so much time. Yeah. You know, you run over your meeting runs over. Okay, no big deal. Yeah, you decide to have dinner, no big deal. The only thing is if you do sometimes, which I do, I'll have a three-stop day, and then things running over is a problem, but not because of the flying. It's running over because I've got things booked. I gotta be out of here by 11:30 in the morning, back on the plane by 1150 to be somewhere else by one, and then to the next meeting at 1.30. But that's you know, my own choice sometimes. But I like to do that because I can knock out a week's worth of stuff in a day or day and a half and get home.

SPEAKER_02 28:21

You know, I've been on the plane a few times, and it is insane how just less stress it is. You just and then you're also doing business while we're on the plane.

SPEAKER_00 28:29

Oh, yeah, and there's no TSA, and you're not dealing with being strip searched before you go anywhere. Yeah, you know, I at home I pull through the gate, pull up next to the wing of the airplane, throw my bags on it. Uh, one of the ramp guys parks my truck when I land, my truck's pulled up to the edge of the airplane. I get my truck and I leave. Yeah, it's just it's easy.

SPEAKER_02 28:46

Well, there's a saying um, you know, about boats, because I've got a big I have a 53-foot boat, um, which is just a small yacht, but it's a big Canadian yacht, small yacht in the US, but it was like uh, you know, what's better than having your own boat?

SPEAKER_01 28:58

Yeah, a friend with the boat.

SPEAKER_02 29:00

It's the same thing. Same with the airplane.

SPEAKER_00 29:02

I've got the airplane, I've got friends with boats. You and I've got a couple friends in Dallas that have boats and in Florida and one in Puerto Rico. And like, yeah, I y'all can have the boats.

SPEAKER_01 29:10

All right. You you just keep the planes, buddy. Yeah. Oh, that's awesome. Let's just kind of talk about the future.

SPEAKER_02 29:15

Where's your what's you know, what is the ideal life for Arthur look like in the next five years?

SPEAKER_00 29:20

Where are you trying to go? I really want to build the storage something into something massive. I think we'd like to exit it into a REIT or some type of uh public entity. Just I want to do that. Yeah. Um tell you why, but I yeah, why? I don't know. Take something public, be fun.

SPEAKER_02 29:38

Okay.

SPEAKER_00 29:38

Um, I've done it on some small scale.

SPEAKER_02 29:40

Uh with so it's not for the money, it's because you want to because it's about the process, it's about the building the thing.

SPEAKER_00 29:46

Like we you talked before that you're a builder. Yeah, I like to build stuff. You know, I you never have enough money, but I have enough money to live. So it and now it's just a game.

SPEAKER_02 29:57

Yeah, I know we uh I'm gonna go back to something that we were talking about in the truck before we came in here about purpose. And because we we were talking about like you actually made the comment about, you know, there's a lot of these people that go after all the money, and then in their 30s or early 40s, they make a boatload, and what happens?

SPEAKER_00 30:17

What have you seen? I've seen a lot of founders more on the tech side in their early 30s get a big exit, or maybe in a another type of company in the in their 40s, or even some manufacturers in their 50s, all of a sudden get a big exit, or they sell a big chunk of their company, and all of a sudden they went from a good net worth to now liquid 50, 100, 200 million in cash, and then they'll stay on for a year or so, but it's no longer their baby or two years, and then when that's out and they're out the door, they can have some serious issues because there's you're talking about a guy that spent 120 hours a week, 24 hours, 365 days a year thinking about what he's building, now he doesn't have anything to do in a big pile of cash with nothing to really do.

SPEAKER_02 31:00

Yeah, and I think that's just the reason why I want to bring that up is because I think I mean I found myself chasing it for sure, and and like you know, just hey, you know, if we have this number of deals, like when I first started, our goal was 12 properties, right? And then, like in the first year you get to your 12, and it's like okay, now it's it's 20, then it's 30, and it's 40, and it just keeps growing. And then what never changes is the feeling. It like it never makes you feel better. No. Um, have you ever felt like that?

SPEAKER_00 31:25

We're like, oh, I made it, or I mean, everybody has stages where you feel, oh, I made it because now I have this or that, or yeah, whatever, but it doesn't really change how you feel. No, you're still you. Yeah, I've noticed a lot of other people have their own opinions about how you made it, or oh, you must be perfect because you have all this. But you know, no matter how wealthy you are, and until you get into the multi-billions, that's a different category. But no matter how wealthy you are, you always have money issues, they're just bigger money issues. Right. If you're a developer building$30 million deals, you're not worried about a$50,000 new car or a$10,000 repair, or something happened at the house for$20,000. None of that bothers you. Yeah. But all of a sudden now, you've got million-dollar problems, set the thousand dollar problems. Yeah, and all of a sudden now your bank instead of loaning you 80%, is going to loan you 70%. And now you need with reserves and this, you need another three million dollars out of thin air. So your problems just change.

SPEAKER_02 32:20

Yeah.

SPEAKER_00 32:21

The commas move.

SPEAKER_02 32:22

Yeah. And I think that's just like that example right there that you just said is a perfect example of just be cautious on just chasing things for for money or for, you know, to be bigger and be more because it doesn't make you feel better. It just feels the same. It's just like I remember when we first started doing our first deals, a thousand bucks was scary.

SPEAKER_00 32:39

Right.

SPEAKER_02 32:39

Right. Now it then it was a hundred grand. It was like, uh, you know, like now it's now now that's gone more. So the feeling doesn't change, but so we have to find other ways to find purpose.

SPEAKER_00 32:47

Yeah, it's like you used to you you you worried about a thousand or ten thousand earnest money check, then the earnest money checks get to a hundred thousand.

SPEAKER_02 32:54

Yeah.

SPEAKER_00 32:54

Then they get bigger than that.

SPEAKER_02 32:56

So yeah, and I think um, yeah, I just I just want everybody to connect the dots while they're listening to that because that I think we can all recognize, like, oh yeah, I've been chasing that. And it's so if you're chasing it and you haven't, you know, you just recognize how you feel. Is it is maybe just try to mix in something that actually will give you purpose. I mean, we're doing the zero to one hundred wishes, we're giving them, we're raising a million bucks to give to make a wish, and uh like that's gonna impact a hundred children's lives. So for me, the it's the same skills that we're doing in business, but that, you know, I'm not gonna make any money from that. I'll probably create some great relationships. There will probably be something that comes to my mind. But due to those relationships, you'll make some money. We'll make some money. Yeah, it always comes back. But that is, you know, that drives me or that I know makes me feel better in my heart, right? Where a hundred thousand the bank count doesn't, you know, and so that's cool. That I just you know, I appreciated that part of the conversation too.

SPEAKER_00 33:50

Yeah, it's kind of like with charity. I I I argue a little bit, you know, I know some people that that give a lot to charity, but they give little amounts to a tremendous amount of charities, which is great, no problem with that, but doesn't move the needle for anybody. Maybe if you took that same hundred grand you were gonna give and gave it to two charities at 50 grand a piece, now you move the needle in some.

SPEAKER_02 34:12

Yeah, yeah, 100%.

SPEAKER_00 34:14

Because then you've actually done something that they can quantifiably say, okay, you're giving me this for this, they go do something.

SPEAKER_02 34:20

Yeah, yeah, 100%. And a lot of what like when I when I've raised money for um, you know, obviously when you're raising money to for storage, you're saying, hey, for the 100 grand, you're gonna get this. And so what I've done successfully, we've I've raised like$94,000 for running 100 miles. And in that, I'd be like, hey, if you donate a thousand bucks, I'm gonna run a mile for you, right? And it's like, so then they can, you know, and or they get something.

SPEAKER_00 34:44

They get something.

SPEAKER_02 34:45

They're like, okay, and then you can, you know, it's the same thing.

SPEAKER_00 34:47

And if you do another 240 mile, do you say it's it's actually 2,000 a mile? Because it's 100 a thousand bucks a mile, baby.

SPEAKER_02 34:53

Let's go. Yeah, I know 300 coming up, but anyway, let's do it a 300 mile run. Yeah, in uh six weeks.

SPEAKER_00 34:59

How long will it take to run that? Uh it's gonna take about five and a half days, I hope. And how often do you get a short nap? How does that work?

SPEAKER_02 35:07

So you sleep whenever you you like you start to sleep, walk, right? And so the first night usually won't sleep at all, and then I'll start having dirt naps, like hour and a half naps per day. And then yeah, hopefully, you know, the last race I did 240 miles was uh I had a five-hour nap once, but uh so nine hours of sleep.

SPEAKER_00 35:26

Nine hours of sleep, 240 miles, and how long from start to finish?

SPEAKER_02 35:29

That that one was 101 hours. Straight. Yeah, but so so developers.

SPEAKER_01 35:35

Developers are crazy. Yeah, yeah.

SPEAKER_00 35:38

We're crazy. I'm not talking about it.

SPEAKER_01 35:40

I just haven't exposed yours yet. Yeah, yeah.

SPEAKER_00 35:42

We haven't got there yet. Yeah, yeah. Good God. So you're gonna do it 300 miles. Yeah, you're gonna do it in six days.

SPEAKER_02 35:49

Yeah, it's gonna be about six days. So again, it's all like the reason why is like God asked me to use my legs for something better than you know, ego or further further distances, and that's all part of raising that million bucks for charity, too. So that's awesome. But yeah, so okay, let's uh let's just pop back over to storage. So you're always raising money. Always. And how do you structure your offerings when you're when you're raising money and you're getting investors?

SPEAKER_00 36:14

It it's different in some of the deals, but our our standard offering is more of a hedge fund institutional offering. We're paying between a six and a 10% pref, depending on the deal. So you're earning a pref from the day the money goes up, and then we're 80-20 until a certain threshold, then 70-30. And then if there's some home runs, we can get all the way in some of them to a 50-50, but most of them uh will only ladder back to 6535. Yep. Uh, we have one that uh we got the land really cheap, and we're all gonna make a 40% IRR even at a 50-50. But our our standard deal is 80-20 with some waterfalls that if you make more, we make more.

SPEAKER_02 36:56

Yeah, that's good. And so if somebody wants to get uh a hold of you, Arthur, and to invest in one of the deals that you currently are you raising money right now? We are. Are you ever not really raising money? Uh probably not.

SPEAKER_00 37:08

I mean, we were fully raised at the end of the year, and then we we got our construction bids back to start three more projects this year. So, yes, we last year we raised about 75 million in equity. Wow. And we'll probably do the same this year.

SPEAKER_02 37:21

Yeah. Okay, so what do you got in the pipeline?

SPEAKER_00 37:23

Uh we've got a deal coming up in Henderson, uh Arizona. Nevada. Nevada. Right. And we just started construction in Tucson. Okay. We just completed two in Las Vegas. I saw those open. We have a new one in Las Vegas, Mount Hood, that started, but that one's pretty much fully committed. There's a little left on it. There may be a million bucks, but that was a big raise uh left on that one. And then we got Bakersfield, which is an opportunity zone. So anybody that's got any deferred capital gains issues that needs to defer capital gains, study on the opportunity zone or talk to me, but you can kick the can down the road. Then any gain in an op zone deal that we hold for 10 years is exited tax-free. Yeah. So we've we've got that. And then we got four more in the pipeline. So we're we're always raising, but we're going to raise uh specifically for the Henderson deal and what little bit left on Bakersfield uh right now. They can always reach me at info at Arthurhood.com, art-h u r-h-o-o-d.com. We'll drop that in the comments. Yeah, yeah. Okay. All right. Who's your ideal investor? Ideal investor is somebody at our technical minimum is 100. We can do less. Uh, they gotta be accredited, although we are now gonna set up with Stella a pooled group.

SPEAKER_02 38:32

So investor club.

SPEAKER_00 38:34

Investor club, so we can now do non-accredited. Yeah, that'll be ready in a couple of weeks.

SPEAKER_02 38:38

But yeah, that's pretty cool. So make follow, make sure you follow Arthur on that one because he's you're essentially gonna create your own investors club, right? So then accredited, non-accredited doesn't matter. You can invest, and you might have minimum in that as well. But it do you do you know any rules?

SPEAKER_00 38:52

We we don't know what minimums we're gonna, it's a self-chosen minimum, probably 10 grand or something.

SPEAKER_02 38:56

Yeah, so it's makes it much more accessible to it.

SPEAKER_00 38:58

Yeah, because our our current minimum is a hundred. Uh one unit's a hundred. Yeah. Uh we could do a quarter unit for 25, but you still have to be accredited. Right. You know, we've done that for people that want to do 250,000, but they're spreading it amongst kids' trusts and things like that. So it's a bunch of 25s, but our normal deal is a minimum of 100.

SPEAKER_02 39:16

Yeah.

SPEAKER_00 39:17

Um, just because most of our deals are, you know, six to ten million of equity.

SPEAKER_02 39:21

Right. Hey, I got a question. This is like, I know you'll know the answer probably anyway. Don't want to put you on the spot. But can somebody 1031 their like, you know, an apartment built deal into a fund or say into one of our joint ventures or something like that?

SPEAKER_00 39:35

Like the structure 1031s. Uh, there are times that we're you know fully locked up on a deal and and what we could do in 1031 we can't do, but generally we always have something in the pipeline that we can do a 1031 with.

SPEAKER_02 39:46

Cool. Yeah, okay. We need to talk about that because that could help, that could work a lot with our stuff too. Okay. Cool. All right, Arthur. Well, it's been a pleasure chatting with you. I think uh we unpacked a bunch of stuff. And again, everybody, if make sure you follow, did they should we follow you on Instagram or Facebook or something?

SPEAKER_00 40:02

Yeah, yeah, we'll drop a link to that. It's I think Arthurhood. Yeah, something.

SPEAKER_02 40:06

We'll get you on that. But anyway, message Arthur. Honestly, there isn't somebody that uh has raised more money than Arthur that I personally know. So, and you're a good steward of money. So awesome, buddy. Appreciate it. All right, perfect. Yeah, thanks a lot. Thanks for listening to the self-storage development podcast. If you got value from today's episode, hit subscribe and share it with someone in the self-storage space for exclusive, fully entitled self-storage development land opportunities. And to stay updated on future episodes, head to barefootlandcoat.com and join the newsletter. I'm Brady McDonald. Appreciate you being here. Until the next time, keep building.