Self-Storage Expert Jon Allen Loves What He Does… and You Will Too

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“Why am I spending two hours driving to and from work each day to enrich somebody else?”

That was the question Jon Allen asked himself on June 17, 2019. He was working for a commercial real estate company as their Chief Financial Officer (CFO). He also played a big role in the real estate development side of their business. And while he was thankful for the experience—he’d learned all about asset management, financing deals, negotiating leases and loans, and so on—he finally admitted to himself that he wasn’t 100% satisfied with what he was doing. 

“When I began my career in public accounting, I worked closely with CFOs of real estate developers who were very successful as employees. So, I wanted to have a nice big W2 paycheck coming in, and I knew that real estate was a great way to do that. I had always said to myself, ‘I’ll work for the guys who are successful in real estate in exchange for a nice salary.’ But on that day, I realized that, instead of working for them, I could be one of those guys.”

Jon says he caught “the real estate bug” because 1) He loves making money work for you as opposed to spending your life working for money; 2) He loves the creativity and the economics behind it—solving problems and dissecting an investment to see if it makes sense, and 3) It’s just “plain fun” to him. So, he thought through all the different asset classes he’d been involved in—office, retail, flex, storage—and decided that storage was the avenue he wanted to pursue.

“I spent the next several weeks trying to source deals on my own–looking up storage facilities in my area and calling the owners–but I quickly realized I needed a partner. I was good at underwriting deals, but I was not good at finding deals.” In July 2019, Jon posted a message on the online realestate community, Bigger Pockets, writing that he was looking to talk with a self-storage expert in the Charlotte, North Carolina area. Several people responded to his post. Most of them recommended he talk to Kris Bennett. Then Kris responded. They met several times realizing that on top of their interest in self-storage, their goals and values were aligned. They decided to form a business partnership.

A Learning Experience 

Their partnership did not get off to a roaring start, unfortunately (or fortunately). The first deal they set their sights on was really small—2,500 square feet of storage. It was so small they almost passed on it. They pushed ahead because the rents were relatively low, and they could seamlessly be increased to the market rate and it included an acre and a half of land available to rent as long-term outdoor parking. Three weeks before closing the deal, they received a phone call from the seller, an elderly gentleman in his eighties. He’d experienced a death in the family and wanted to delay the deal. “No problem,” they said. They kept in touch with him over the next few weeks, checking to see if everything was ok. During that time, the gentlemen began experiencing seller’s remorse. While they reminded him that he’d signed a contract, it didn’t seem to matter. Months passed. Long story short, the deal never closed, and they ended up losing time and money on the deal, which Jon calls their “rookie tax.”

With every unpleasant experience, you’ll almost always find a lesson or two. Lesson #1: The smaller deals are usually more trouble than they’re worth; Lesson #2: Instead of the standard North Carolina real estate contract, they started using a customized contract that offered rock-solid protections should the seller reconsider.

“The Perfect Partnership”

On January 7, 2021, Jon was driving with his family to vacation in Orlando, FL when he received a call from Kris. “Did he know who Dan Handford is?” Kris asked. “I had never met Dan, but I knew about Multifamily Investor Nation,” Jon said. “I had heard him on a couple of podcasts as well. He seemed like a great guy. So, when Kris told me Dan was interested in forming a partnership, I was extremely excited.” When Jon got back from his vacation, he drove down to Columbia, SC in January 2021 to meet with Dan and Brandon Abbott to discuss working together. “The cool thing about our partnership is that everyone is doing what they are good at and what they love to do,” Jon added. “Kris is really good at pounding pavement, finding deals, and nurturing broker relationships. I’m the CPA (Certified Public Accountant), the numbers guy who really enjoys underwriting and financial modeling and figuring out how to make a deal  work. Dan, Brandon, and Danny are really good at raising capital and investor relations. So, it’s the perfect partnership.”

Storage vs. Multifamily

With two attractive asset classes, it’s only natural for potential investors to wonder which one is the best investment option for them. Jon says the goal of the team is not to automatically have Jon and Kris encourage people to invest in self-storage and have Dan, Danny, and Brandon automatically encourage people to invest in multifamily. “First of all, we want to make sure interested investors are educated on the benefits of both multifamily and storage. If multifamily is more suitable to what their investment strategy is, we would want them to go with multifamily. Our goal is to point them in the direction that best fits their goals. We view it as one company that now has another asset class people can invest in.”

Tenants that Stay and the Unmanned Model

That said, Jon sees great potential in storage for a variety of reasons. “You’ve got a sticky tenant base,” he said. “When they’re renting a unit, most people stay for a long time. They don’t move out of a unit because they found something that’s $25 cheaper a month. It’s not worth the hassle. Plus, you can scale quickly because it’s not as labor-intensive to manage as other asset classes can be.” He also is pumped about taking advantage of the economies of scale that result from implementing the unmanned storage model—instead of one manager per location, you have one manager overseeing multiple locations. “COVID-19 blew the argument out of the water that people don’t want to rent from a facility where there is not somebody on site,” he said. “If you go to facilities now all over the country, even the ones who have a person on site are advertising contactless rentals. Depending on what part of the country you’re in, you could be spending $70,000 to $80,000 on payroll for on-site managers, so if you’re able to convert something from a manned model to an unmanned model, that’s another way that you can increase the value of a facility.”

More Reasons Storage is a Great Investment 

Another key benefit of self-storage is the quality of the facilities that are available to invest in. “The current ownership base is very fragmented,” he said. “You have a lot of mom-and-pop shops. People who bought a storage facility as their retirement plan. What we’ve found is that they are more willing to talk about selling. So, you’re able to find better assets off-market than you might find with multifamily because so much of multifamily is controlled by the bigger players.” 

Another opportunity that Jon is excited about with the storage marketplace is adding value to relatively new storage facilities. “You don’t have to deal with a facility that’s fallen apart because it’s 30 years old. You’re dealing with something that was maybe built five years ago. Someone has developed a real nice Class A storage facility, they got it leased up, plus they’ve got a couple of acres of land that you’re able to expand on to build another building or two or more. So, you can play investor and developer at the same time.” Jon also anticipates buying land and building on it from the ground up.

Depreciation and Cost Segregation

While there are a lot of great reasons to invest in both storage and multifamily, one factor that investors should consider is the importance of depreciation and cost segregation to your overall investment strategy. “With multifamily, even if you don’t do cost segregation, because it’s residential property, you can depreciate it over a shorter time period than you can with a commercial building,” Jon said. “Storage falls into the commercial real estate category. You must depreciate over a longer time, which means a lower depreciation deduction for tax purposes. Now cost segregation, when it comes to self-storage, can certainly help, but it depends on the type of storage it is. If you have a multi-story climate-controlled building, you’re going to have a better cost segregation situation than with a non-climate storage facility. Because with that, it’s just a big metal building. Generally, you can’t pick it apart and say, ‘This is your HVAC, this is your water, and so on.’ It’s usually looked at as one big asset, a metal building, which is longer depreciation. With a multi-story climate-controlled building, you can carve out a lot more things, so in that regard, you can take advantage of cost segregation. However, cost segregation is generally going to be anywhere from 30% to 60% better with multifamily.”

Sizing up the Deals

Another difference between storage and multifamily are the size of deals that are available to invest in. “There are much bigger multifamily deals,” Jon said. “If someone has got a lot of money they need to place, with multifamily you’re going to find $20, $30, $50, $100 million-plus deals out there. If you go to a high-rise central business district, you’re paying over $100 million for a multifamily property—a single tower. With storage, you’re not going to find that. Your big deals are going to be $10 to 15 million. Kris and I have been looking at a couple of different portfolios that would be a lot more than that, but it’s multiple facilities and you don’t come across those that often. So, if you’ve got a lot of capital, there’s going to be more room for your money in multifamily.”

One advantage both multifamily and storage possess is they are well-positioned to bring in additional revenue by providing their clients with insurance. has their own insurance captive their tenants can access to insure the contents on their home. Jon says the storage division will either be piggybacking on the insurance captive or setting up one of their own.

Putting it all in Perspective

Switching gears, Jon, who lives in Charlotte, North Carolina, with his wife Lauren and four daughters (Ellie, 10; Kate, 8; Charlotte, 5; and Jane, 2) says his number one ambition is to be a follower of Jesus Christ. His goal “to love God and love others” encompasses his personal faith, loving his family well, and being involved in his church and community.  

In addition to regularly giving at their church, Jon and Lauren are passionate about organizations that go overseas to unreached people groups. Some of these groups that they desire to reach do not even have a written language. The work to establish a written language helps the local people have access to education, opens new doors for trade and economic stability, and the ultimate goal is Bible translation.   “My general principles are 1) God owns everything; 2) Giving to others—whether church or others in need—is an investment in eternity that is far more valuable than anything we could own or invest in here,” Jon said. 

“We’re going to take care of you and your investment”

Moving forward, Jon sees the Storage Division of closing on ten to fifteen deals per year. He is thrilled that Kris and he are now part of the team. “You don’t come across opportunities for a partnership like this, but once or twice in your life,” he said. “I’m extremely thankful that we were able to connect with Dan, Brandon, and Danny.  I’m very much looking forward to the partnership. To investors, I would say, ‘We’ve got a great team who are going to take care of you and your investment.’”