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How Kris Bennett went from cleaning out gym lockers to renting out self-storage units

The year was 1997. Kris Bennett, 18, was out smoking marijuana with friends. While driving home, he got pulled over by the police. Kris thought his life was over. He had just enlisted in the Air Force which he felt was his only option, and he assumed it would no longer happen. Kris envisioned himself “flipping burgers” for the rest of his life.

Kris admits, in his teen years, he lacked direction in life. He attributes this to losing his father to kidney cancer when Kris was just eight years old. In high school, he ranked 328th out of 333 students. He was even failing Physical Education. He received a passing grade only after asking the teacher what he could do to pass. The teacher told him to clean out some lockers, which he did. He was then given a passing grade. (He managed to get his high school diploma after similar bartering sessions with two other teachers.) 

“You asked for it.”

When he was sitting behind the wheel waiting for the police officer to approach his car, he heard a voice say, “You asked for it.” He turned around to his buddies in the backseat and asked them if they had said something to him. They said no. Then he heard it again. “You asked for it.” Even today, Kris doesn’t know exactly how to explain it, but he feels it was God communicating with him, telling him to get his life together.

As luck would have it, the police officer only gave Kris a ticket for minor possession (“It was California, after all”) and he was even allowed to drive home. He woke up the next day determined to change his life. He made a commitment to his mother that he would go to church. And from that day on, he changed both his life and his fortunes.

Instead of joining the Air Force, he spent the next six years working in the ministry, where he spent some time in Bolivia and Venezuela on mission trips. While he enjoyed his time, he wondered what else was out there waiting for him. 

Exploring his options, he read books about business and sales. When a friend, who went to the same church, asked him if he would be interested in joining the real estate brokerage firm he owned, Kris jumped at the opportunity.

A gut-wrenching experience

In 2007, he got his real estate license with the anticipation of succeeding as a broker, but things didn’t turn out as planned. After the 2008 crash hit, he wound up working in the foreclosure side of the business, evicting people from their homes. Every eviction was a gut-wrenching experience for him. It didn’t take him long to realize he no longer wanted to be involved with it. He quit his job and enrolled at the University of North Carolina at Chapel

Hill as an economics major, business minor. As fate would have it, the only summer work he could find was with a commercial real estate private equity fund. It was there that a light bulb went off. “He (Kris’s boss) was looking at an apartment purchase of sixteen multi-family properties between Charlotte and Raleigh, and I was underwriting them,” Kris said. “I had no clue what I was doing, but he was gracious enough to teach me. I had never seen so many zeros on a project price in my life. Everything I was doing up to that point was a $50,000 single-family home. This was not that. This was millions of dollars. And then I realized he was raising capital from private investors. I didn’t know that you could get capital from private investors to buy an apartment complex. I thought that was tremendous. That’s what piqued my interest in the commercial side of real estate.”  

A needle in a haystack

While attending Chapel Hill, Kris was a Fund Manager for the business school’s $3.6 million student-run real estate fund. He sourced potential investments from multifamily to hotels and retail. Fast forward to 2016, Kris began working for a company where his role was to hunt down multifamily investment opportunities. But because the criterion they had set for potential deals was so high (a year one cash on cash return of 9%) combined with their core-plus strategy (no heavy value adds, just very minor upgrades), it was like looking for “a needle in a haystack.” The company he worked for was also into self-storage, and whenever he talked to brokers, they’d tell him that his multifamily strategy wasn’t that interesting, but self-storage was. So, he took it upon himself to learn everything he could about self-storage and helped his company launch its first self-storage investment fund. Their goal was to raise $10 million in equity to acquire small self-storage facilities in North and South Carolina.

In January 2019, he started a YouTube channel called “The Storage Investor Show” where he talks with other self-storage experts about acquisitions, raising capital, and property management of self-storage. In September 2019, he partnered up with fellow North Carolina resident Jon Allen with the goal of raising capital to invest in self-storage deals. In November 2020, he turned the YouTube channel into a podcast and continues to post self-storage content for his audience.

A sticky tenant base

One reason storage is such an attractive investment opportunity is that there is a growing demand for storage space. According to the Self-Storage Almanac, about one in ten households takes advantage of self-storage. Plus, in addition to the low cost of both the facility and maintaining it, storage has a “sticky tenant base.” Kris explained, “If you’re paying me $100 to rent your unit and I raise your rent to $105—$5 a month, $60 a year—are you going to get mad, call up your buddies, and rent a truck and move to another storage unit? Most likely not. But that $5 rental rate increase is a 5% revenue increase for me.”

Other revenue opportunities include supplying content insurance to customers who require it, supplying boxes through a “hands-off” affiliate program, and, in some cases, taking advantage of a relationship with U-Haul (if it’s not too paperwork intensive).

The power of networking

In July 2018, Kris saw a Multifamily Investing Meet-Up in Charlotte, NC advertised online. It was hosted by Dan Handford. Kris attended, not because he was interested in Multifamily Investing, but to meet and network with other like-minded businesspeople in the area. Every month, when he could, he’d attend Dan’s Meet-Ups, strengthening existing relationships and forming new ones. Late December 2020, he received a phone call from Dan. Dan explained that the goal with PassiveInvesting.com from the start was to have assets other than multifamily investing under the PassiveInvesting.com umbrella, and that he’d like to arrange a meeting with Kris and Jon in January to talk about a potential business partnership. 

Two key partnership advantages

Kris says two advantages with the new PassiveInvesting.com Self Storage Team has over many of their competitors is the know-how and desire to lower costs by spreading the management expense to other facilities in the area. “A manager might cost, let’s say it’s $40,000 to $50,000 including benefits,” Kris said. “Instead of having two, three, or more managers at multiple facilities, we would have just one overseeing every facility. Same with the maintenance people.” Another advantage is the ability to raise capital at a favorable rate to close quickly on deals. Kris’s goal is to build relationships and enhance their reputation, so they always get the first look at the best deals available in the marketplace.

Warren Buffett’s advice

With PassiveInvesting.com now having two attractive investment asset classes, it’s only natural to ask, “What makes the most sense for me, investing in multifamily or self-storage?” Kris cites Warren Buffett’s advice on investing as a guide. Buffett is quoted as saying, “Never invest in a business you cannot understand.” If you love multifamily, then stick with it,” Kris said. “If that’s what you know and like, that’s totally fine. I wrote an article called The Pros and Cons of Self-Storage Investing (see article from February Passive Investor Newsletter titled “A Look At Self-Storage”). There are cons to self-storage investing. Having said that, I think there is a great opportunity in the storage space, and I really like the asset class. My curiosity helped me pivot to self-storage, and that’s where I’ve stuck ever since. It’s what I like. So, if you know something, stick with it, if you’re curious about something else, you can learn about it, and then dip your toe in the water and see how it goes.” (Note: We’ll explore some additional differences between multifamily and self-storage investing in next month’s issue when we feature PassiveInvesting.com’s other self-storage team member Jon Allen.)

People you know, like, and trust

Another factor Kris says people should consider when investing with PassiveInvesting.com comes down to the comfort level they have with the company. “Other folks are looking at good markets, other folks have good track records, other folks have good smart teams, other folks can raise the capital efficiently,” Kris said. “My question is, do you know, like, and trust us? Have you seen our content online? Do we provide access to you for you to get to know us personally, or at least on a face-to-face, one-on-one type level? So that’s the fundamental question, do you know, like, and trust us? And if you don’t, then I would say maybe now isn’t the time to invest with us, but I think once you get to know us, hopefully, you end up liking us, and you’ll come to trust us.”

In five years, Kris would like the Self-Storage Division of PassiveInvesting.com to have a portfolio of “$150 million worth of storage, if not more.” He envisions being in good markets in the southeast such as Charlotte, Atlanta (“maybe not downtown Atlanta, but in sub-markets of Atlanta”), Texas, Florida, and so on. Plus, he’d like to start a fund sooner than later.

Kris’s promise to you

For Kris, who lives in Charlotte, NC, with his wife, Amy, and three kids (Brantley, 9; Braxton, 6; Beckham, 9 months) being successful in self-storage is not something he takes lightly. “I believe that when I die and stand before Him, I will give an account—how did we treat our investors?” Kris said. “How did we manage their money? That’s all-important. So, it’s not trivial. I lose sleep. People think this is an easy business, it is not. I lose sleep over deals because I want to make sure everything goes fine… that everything is in line. Are we on track? We had a small deal—all cash—I was losing sleep. I would lie down, and my eyes would pop wide open. People are trusting us with their hard-earned money. We want to make sure we have everything squared away as best as possible. That informs my thinking when it comes to business. I appreciate the opportunity that we have in the storage space, and I appreciate the opportunity that Dan and the PassiveInvesting.com team have given us. I’m very appreciative of everything. We will always do the best we can for our investors.”