Before we jump in:
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A few years ago, I had the chance to interview Jay Schuminsky at the ReConvene conference which is hosted by my close friend Moses Kagan.
Both of these gentlemen are complete badasses in real estate.
But today's email focuses on Jay.
Jay’s life changed about 17 years ago when his father, a real estate entrepreneur with a mixed bag of assets passed away.
Jay was working in the back office and tasked with taking over the family business. He was about 30 years old at the time.
Jay's father was running an old school small operation with around ten employees and no acquisitions team.
When Jay took over he started off by buying shopping centers at an 8-cap, but ultimately wanted to do something very different.
They had a few storage properties in their portfolio and after analyzing the opportunity, he decided to go all in. He started developing massive self-storage facilities of over 200K square feet each.
For context, the average properties we buy at Bolt Storage are around 40K square feet each.
Jay was building new developments from the ground up that were many multiples of that size.
Starting a bunch of new developments like this, especially multiple at the same time was crazy in hindsight but Jay and his team powered through.
Jay saw it as a bet on locations and an asset class that he liked and a bet on creating the infrastructure and systems for them to succeed.
As anyone who does real estate knows, development like this takes a really long time, but his properties eventually started popping up and tenants started rolling in.
The problem is they were all coming online at the same time.
Jay had to work on the tools to manage them, the call scripts his employees used, the billing and logistics, the marketing and sales, and the entire backend operations to run a massive portfolio at scale.
How Jay thought about real estate differently:
A lot of people I talk to see real estate as a passive investment to put their money to work, but Jay saw it as a very active business and focused on operations above everything else.
It became all about hiring and delegation, systems and processes, and the PEOPLE.
At one point Jay had over 8 million square feet of storage and had turned down generational wealth from brokers, funds, and acquirers who were asking about buying his portfolio every single year.
But a few years ago he finally decided to sell the entire portfolio, all 52 facilities, for $1.5 billion.
Rolling the wealth snowball down the hill:
Jay's next step wasn’t to retire, or to go on vacation, but to minimize his tax burden by acquiring new properties through 1031 exchanges.
Jay had a boatload of money to put to work in a short period of time.
He obviously still saw the long-term value in real estate investing and wanted to keep the snowball rolling as he continuously re-invested.
It's all about compounding as tax efficiently as possible to him.
As anyone in RE knows, there are strict rules around 1031 exchanges, so Jay was sitting in front of a spreadsheet trying to find where to put his new money, and ended up making massive investments into multi-family housing and a few other asset classes.
At the time, multi-family had the same cap rates as self-storage, and offered the convenience of brand new buildings with no need for inspections.
His portfolio sale closed on December 1st, and he had his first multi-family deal lined up the very next day.
Continuing to play the game:
It takes a ton of drive and discipline to not just sit back and relax with tens or hundreds of millions in the bank after a portfolio sale.
Jay could have gone to Italy or Hawaii and completely stopped running a business altogether.
While some people feel the need to see cash in their bank, Jay has deliberately tried to minimize his own bank balance in order to focus on building long-term wealth by acquiring more and more properties which creative positive cash flows and incredible tax efficiencies.
Our conversation then turned away from business and towards another component of life that is always on my mind:
Managing a family and raising children well.
When we now have generational wealth, it can be hard to not instantly solve problems for our kids, but we know that would only harm them down the road.
Boundaries are important with children, and you’re doing yourself a disservice if you get too involved in their affairs instead of letting them work through things in a healthy way.
I want to teach my kids to struggle with grace, and I want to hold them accountable and teach them to work hard.
If they do something wrong, I’m not going to bail them out.
Jay had notes on this as well which you can hear in the full conversation.
On creating content:
Jay also laughed at some point in the discussion when blaming me for the storage market being more popular now then it was before and asked me why I dedicate so much time to content and writing.
My business partner asks me the same thing often.
First of all, I love teaching and sharing my journey and the skills and principles I've learned along the way.
I often think that if one of my newsletters or podcasts or tweets can help another operator on their journey, or help them solve a specific problem, or help them think through a tough situation, it is time well spent for me to put that content out.
I also think building an audience is a superpower and can help people win deals, recruit, fundraise, and more.
Just like business, it was a multi-year journey of creating content for me before I built some momentum and started to break through.
Anyway, I was thinking about this interview that I did with Jay over the weekend and I wanted to share it because it was a good one.
The full interview talks even more about revenue management, interest rates, marketing for self-storage, how to navigate bull and bear markets in real estate and more.
You can watch the full 45 minute interview here.
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A few posts from this past week:
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Onward and upward,
Nick Huber
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