Are you looking to pursue financial freedom through passive real estate investing? Join us as we explore one investor’s journey from analyzing tech stocks on Wall Street to building a data-driven self-storage investing empire.

In this blog post, we’ll dive into the key insights shared by Corey Sylvester, co-founder of DXD Capital and Radius+, during his recent interview on the Truly Passive Income podcast. Corey breaks down his motivations for leaving Wall Street, how he stumbled into the self-storage industry, and the data-driven approach that gave him an edge as a new self-storage developer.

Whether you’re an aspiring syndicator looking to raise private capital or a passive investor vetting potential sponsors, Corey’s story offers valuable lessons for anyone pursuing passive income through real estate.

From Chip Stocks to Storage Units: Corey’s Pivot into Entrepreneurship

Corey started his career as an analyst at J.P. Morgan and a hedge fund, evaluating tech stocks by honing in on niche details like which semiconductor chips were being used in the latest iPhones.

He and a hedge fund colleague eventually wanted to break out on their own, so they devised a plan to start a company offering data and analysis to hedge fund clients about whether to short or go long on particular stocks and sectors.

Their first target industry? Self-storage, which Corey knew nothing about at the time.

“I fell into self storage…We fell into being an entrepreneur in that regard a little bit because we were just starting our own business around trying to do what we knew how to do. There was no grander plan.”

Initially, Corey and his partners only aimed to advise hedge funds on shorting self-storage REITs during a period of oversupply. However, once they dove into the data, they realized traditional storage metrics were flawed and spotted an opportunity to build something much bigger.

Why Self-Storage Rental Rates Matter More Than Square Footage Per Capita

In the self-storage investing sector, developers have historically looked at the square footage of existing inventory per capita to gauge market saturation. But Corey realized this metric can be deceiving.

“Instead of worrying about how much storage there is relative to population, focus on the highest frequency and best telling data point, which is what are rental rates doing.”

While a market might have a low square footage per resident, that doesn’t necessarily mean strong demand. The latest market-wide rental rates provide a real-time look at the balance between supply and demand.

Surging rental rates indicate under-supply, even in seemingly saturated markets. As Corey learned firsthand:

“Our first facility we opened that we bought land was in Vegas, 11 square feet per capita. but think about the dynamic of how that can actually be a really good thing, because if you have high rates and high square feet per capita, and if you build another facility, it means that you’re adding actually a very small percentage of new storage to that already large existing market.”

This data-driven insight laid the foundation for Corey’s next ventures.

Leveraging Data and Relationships to Build a Self-Storage Platform

After advising hedge funds to short self-storage REITs, Corey realized he could solve a pain point for self-storage developers.

At the time, it took hours to manually analyze the competitive landscape around a potential storage site. So Corey and his partners launched Radius+ – a platform offering granular data on self-storage inventory, rental rates, and demographics.

Armed with this competitive intel, the Radius+ team started consulting directly with prominent storage developers. Those relationships led to further product development, forming the foundation of a unique self-storage data platform.

According to Corey:

“It resonated really well. And we hit the road…when we told [investors] this story and showed them the data, you know, they got it.”

By leveraging relationships and a proprietary data source, Corey successfully raised capital to launch DXD Capital – a self-storage investment and development firm.

Key Takeaways for Passive Investors

While Corey had the advantage of industry contacts and unique data, he notes that passive investors don’t need the same resources to succeed in self-storage investing:

“I don’t want to give people the impression that you have to have a proprietary data source to have an advantage.”

Instead, Corey suggests focusing on high-quality sponsor teams where the whole exceeds the sum of the parts. Identify sponsors with a proven track record of execution across market cycles.

For investors intrigued by self-storage, Corey shares encouraging data points:

  • Despite recent rate decreases, current rental rates generally exceed previous cyclical peaks.
  • Oversupply leading up to COVID has been absorbed.
  • Construction lending has dried up, preventing excess new development.

The bottom line? Corey sees a long runway for self-storage investors to capitalize on demographic tailwinds driving demand.

Want to Take the Next Step?

If you enjoyed this case study on converting Wall Street insights into real estate success, be sure to listen to the full Truly Passive Income interview with Corey Sylvester. You can also watch the full episode below.

You’ll hear additional tips for vetting self-storage markets based on rental rate data and guidance for connecting with experienced sponsors like DXD.

Ready to move forward on your own passive investing journey? Download the Truly Passive Income Passive Investor Toolkit for time-tested tactics to build lasting wealth through real estate syndications.

Have questions after listening to Corey’s story? Feel free to reach out – we’re always happy to help fellow passive investors.

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