Dead Retail, Live Returns with Neil Henderson

Neil Henderson is a general partner and Director of Investor Relations at Nomad Capital, a Wilmington, NC-based private equity firm with a twist on self-storage: they buy vacant big-box retail buildings and convert them into climate-controlled storage facilities.

The numbers behind their model are hard to ignore. Ground-up self-storage construction runs $120-130 per square foot and takes nearly three years. Nomad's conversions come in at $60-65 per square foot, acquisition to occupancy in 12-14 months. Half the cost, a third of the time.

In this episode, we get into:

- Why old Kmarts and strip malls are the perfect conversion targets
- How vertical integration keeps construction costs at cost-plus-12% vs the industry standard 25%
- Their current deal: a 171,000 sq ft strip mall in Rocky Mount, NC for $6M with seller financing
- Why 2026 loan maturities could create a wave of distressed self-storage opportunities
- The Sam Zell principle that guides every acquisition: buy below replacement cost
- Neil's Las Vegas condo in 2005 and what it taught him about buying when everyone else is greedy

Learn more about Nomad Capital at nomadcapital.us

Book recommendation: "How to Break Up with Your Phone" By Catherine Price

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Additional Resources:

• Clark St Capital -> Passive real estate investments for busy business owners and executives
• Elevista -> AI SaaS for real estate investors
• Clark St Academy on YouTube -> Learn how to invest in real estate

Social Media:

• LinkedIn -> Ed Mathews (President at Clark St and Elevista)

Transcript

Neil Henderson 0:00

So we're building for about half the cost and in oftentimes, almost a third at the time. And that's a big deal right now, especially in this interest rate environment because it's the carrying costs that are gonna kill you right now.

Ed Mathews 0:16

If you're within three feet of me, we're probably talking about real estate, much to my family chagrin. But here's the thing, most people see 7% rates and freeze. I see opportunity. They're waiting for the perfect deal and well, I've analyzed thousands of them and perfect just doesn't exist. So I talk to operators across every asset class, flippers, multifamily, syndicators, note investors, and whatever else is working. No sales pitches allowed, just real lessons from people actually doing it. I'm Ed Mathews, and this is Real Estate Underground.

Ed Mathews 0:55

Greetings and salutations real estate underground. It is Ed Mathews with the Real Estate Underground. Thank you so much for listening to us and making us a part of your day. I'm truly grateful. And keep those comments coming because one of the things that we're trying to do with the show is evolve the, the types of professionals that we interview, as well as the asset classes we're paying attention to. Today is actually a really good example of that. So thank you for all your comments and it's interesting. I find that about half 54% as a matter of fact, of the folks that listen to our show actually don't subscribe to it. So if you could do me a favor and hit follow or subscribe depending on your platform I'd also be grateful 'cause it does help us grow and keep those comments coming 'cause it helps us with what we're gonna talk about. So today we're gonna talk about. Self storage and with my friend Neil Henderson of Nomad Capital. Neil, welcome to the show. It's good to see you again.

Neil Henderson 1:48

You too, ed. Thanks for having me.

Ed Mathews 1:49

Yeah I had the honor of being on your show probably about a year ago, right? It was a while ago. Yeah. Yeah. So I'm sorry it took us so long to get you back, but but thank you for your time today. It's good to see you.

Neil Henderson 2:00

Absolutely.

Ed Mathews 2:01

Yeah. For those folks who don't know about you and Nomad, why don't you tell us about who you are and what you do for a living?

Neil Henderson 2:07

Yeah. I'm Neil Henderson. I'm one of the general partners at Nomad Capital. I'm also the director of investor relations. We're a Wilmington, North Carolina based private equity firm. We focus on self storage with a little bit of a twist. We don't usually buy self storage. We don't build self storage. We prefer to buy vacant buildings and convert them into climate controlled storage across the southeast.

Ed Mathews 2:32

Yeah so tell me about that. And we were talking about a project you have off, before we hit record. I'm fascinated by your business model because, it's solving a community problem, which I love, and it's also, putting you in a position where you can real, you can. Build a thriving business in some really amazing towns throughout the Southeast. Why don't you tell us a little bit about your approach and how what's your buy box look like? Let's start there.

Neil Henderson 2:58

Yeah, so there's typically, there's four self storage strategies that most people employ. There's either they build from the ground up, they buy an existing facility that needs an operational turnaround. They buy an existing facility that has room to expand as so a lighter load value add, or they do a conversion. We've done all four of those. We like the conversion because it provides the best blend of heavy value add and ground up development. And here's why we like it. If you or I, ed, were to go out and build a ground up self storage facility today, it's gonna cost us anywhere from 120 to $130 a square foot to build it. And that's just for the cost of the construction. That does not include the cost of the land. On top of that. The average time to build a self storage facility from the ground up right now is two years into 10 months. That includes the time to do the, buy the land, get the entitlement prep the land to build and then, to start building. Yep. On average. Our last eight deals, we have built for an average of $60, $65 a square foot, and that includes everything. That's the cost of the building, the land, the construction, everything. Now some of our costs are starting to trend a little bit higher, I think, on some of our upcoming projects. It's just the na nature of the market right now. Yeah. But that's kinda one where we've been on top of that. On average, we're anywhere from 12 to maybe 14 months from acquisition to certificate, certificate of occupancy, and having our doors open. So we're building for about half the cost and in oftentimes, almost a third at the time. And that's a big deal right now, especially in this interest rate environment because it's the carrying costs that are gonna kill you right now. We, when we buy a building we're getting a long-term loan on there. We're not doing it, we're doing a construction loan, but it's a long-term loan. It's 25 year am sometimes even 30 year am. But, and they're typically loaning us what are called interest reserves, which kind of the. Money that we need to kinda survive while that project, once it's open, while it leases up, and you'll very quickly, the longer a project takes to get open, the faster you're gonna burn through those interest reserves or the larger amount of interest reserves you're gonna need. And that really starts to just squeeze the whole deal. So that's really why we love conversions. We also like it because a lot of times you can get yourself into a little market in an area where there's not a lot of vacant land to build a brand new self storage. We can, we can go in, we can buy a building where there was an old Kmart where there, there's already the communities already around there. It's in the retail corridor. But that building has been vacant for a long time. It's been, killed by Amazon and just online shopping. But people still know where that is. They drive by it every day. It's got easy access, good visibility, and we can go in there and convert it to self storage and then people end up taking a lot of those goods that they bought from Kmart and taking it back and storing it in the same place

Ed Mathews 6:15

cause their basement's full. Yeah it's interesting, here in the northeast the malls and strip malls that. Amazon hadn't killed, COVID did. And so it's, it's a, in a lot of cases it's a blight, right? These malls, people are just not, unless you're 17 years old and, like my daughter and likes to go to the mall. Neil, I haven't been in a mall in. Years. Years. And and I am pretty confident I'm not atypical that I'm a, and it's interesting, it's interesting for several. In several respects. One, the compression of the timeline to get these from acquisition to operational is really impressive. And I'm curious about the, so are you vertically aligned? Are, do you have a construction team as part of your company or do you do you outsource or a combination thereof? What's the approach?

Neil Henderson 7:15

It's a great question. We are vertically integrated. We have our, under our roof here in Wilmington. We've got Nomad Capital, which handles the acquisition capital markets and capital raising. We've got ELM Builders, which is our construction company and then we've got City Storage Management, which is our self storage manage company. So we're fully vertically integrated. Nice. And that's really our secret sauce, especially on the construction side. You could do this. With a third party construction company, but you're, we charge we charge our deals. Our elm charges, our deals 12%. Construction, on top of cost plus 12. Most constructions are gonna be cost plus 25. And on top of that, they're right here. They're literally on the other side of this wall for me right here. And so they, anytime we have a change order, it's literally we walk down the, we walk next door and we say, Hey, we need to change this. And on one of our most recent deals the unit mix has very much been in flux. And if we were working with a third party contractor, those change orders would.

Ed Mathews 8:19

Yeah.

Neil Henderson 8:20

They would, they'd up the cost and up the timeline. So we're able to do it very quickly. That's really. That's really where I say our secret sauce is that we come from a construction background. The founders Eric and Levi Hemingway were builders since the nineties. Eric built his first self storage facility from the ground up in 2006. He did his first conversion in 2016. He bought another conversion in 2017. He's done a ground up development. So we, we are. Our best team right now. We just had our company's annual meeting yesterday and we were looking at the metrics and our construction team is absolutely crushing it. We're, it is, they are we're expanding. We're bringing on guys that used to work for turning whining. It is it's a very talented team.

Ed Mathews 9:09

Yeah. Excellent. And is your construction team entirely focused on your projects or do you out, do you do work for others as well?

Neil Henderson 9:16

We are starting to, that is one of their mandates this next year, is they're going to start bidding out some other projects just because it's profitable. It keeps the lights on in this building. We're, we don't wanna be constantly having, we've got, we gotta have to keep them employed. And we don't want to be constantly have this pressure of, we've gotta find a deal for, to put these guys on and end up taking a bad deal just 'cause we wouldn't put them to work.

Ed Mathews 9:43

Yeah. The bench is just as expensive as the carry costs on a project. Okay. And then in terms of the. The management company. Tell me more about that. Are you obviously these days you're not acquiring dysfunctional operations. You're basically ground up, but obviously you're buying the box first and then and then retrofitting it. In the past have you done that or has it been a while since you've been, you've gone in and revamped an operation?

Neil Henderson 10:12

The only time we've ever really done that operational turnaround was that third facility that Eric acquired was a, it was an existing conversion. It was badly mismanaged. It did not have climate control. It was it was an old warehouse that had the old sodium lights.

Ed Mathews 10:35

Oh,

Neil Henderson 10:35

that, remember you and I probably remember the days of being in the gym where you come in and you turn 'em on and you do this clunk, bugger.

Ed Mathews 10:43

Yes.

Neil Henderson 10:43

Yep. And then they slowly get brighter and brighter. They eat power and they take forever to turn on. And so the owner. Just left them on 24 hours a day just burning power.

Ed Mathews 10:55

Wow.

Neil Henderson 10:56

And the place also wasn't climbing controlled, so they were getting killed on the electricity expenses and they, it was cold in the winter and hot in the summer.

Ed Mathews 11:06

Yeah.

Neil Henderson 11:06

And so he came in and he is like, all right I'll buy it. It was mismanaged. It was the original owner had passed away. It was being run by his son, being run into the ground. And he bought it. And the two big things he did was, one, he enclosed it and he added hvac. And then he went and talked to the local power company and said, Hey, I've got these old sodium lights can you maybe come in and replace them with LED? And they said, yeah, we can do that. Not only can we do that we basically have a program in place. We'll basically do it for free. And we're familiar with that building and we offered to do it. For them for years. And they always said no. And so they came in, I think it cost him maybe 10 grand to, to tear out all those sodium lights. Wow. And they put in motion activated LED lights. So now the facility is climbing controlled. So it was, not. Hot in the summer. It was, and not cold in the winter. So he was able to charge more. And then the lights, the LED lights, there's some lights that stay on all the time, but then the rest just turn on as people walk through the facility.

Ed Mathews 12:13

But they're LED lights. They, ED

Neil Henderson 12:14

lights,

Ed Mathews 12:15

nothing.

Neil Henderson 12:15

Even adding hvac, his electrics, electricity expenses went down,

Ed Mathews 12:21

I'll bet.

Neil Henderson 12:22

And then he was able to charge a higher premium for the climate controlled unit. Yeah so that's really, that's not, we are, we do look for operational turnaround facilities right now.

Ed Mathews 12:33

Yeah.

Neil Henderson 12:34

It's not, the opportunities just aren't there right now. The owners, we had this conversation yesterday. The owners are just. Have not caught up to the price of where it needs to be right now. There was a period coming outta COVID where facilities just got, the prices went way high. Yeah. And a lot of those original owners are still clinging to those prices when Yeah. They probably shouldn't be. So we're, it's just the opportunity's not there yet. I think it will be coming soon. But there's just too much opportunity for us in conversions.

Ed Mathews 13:06

Same thing's happening in multifamily world, right? It's I have this conversation on a fairly regular basis even today, where, a deal will pop, come across my desk and I'll get on the phone with the owner and, we'll get to the point where we're talking price and it's some variation of, look, I am happy to pay your 2021 price if you are willing to give me 2021 terms. Oh, Humm and Humina. And it's oh that's the deal. And so you mentioned that you see, th you see things rationalizing a little bit. And so I'm curious if you could take out your crystal ball just for a moment. What do you see in the market today that indicates that, there's a turn coming? In the lease? In self storage?

Neil Henderson 13:49

Yeah, so storage, just like commercial real estate, I think in general has been in a bear market for the last. Three years.

Ed Mathews 13:58

Yep.

Neil Henderson 13:59

Especially multifamily. Anybody who's listening who's been involved? I've been an, I'm in an LP in some multifamily deals. I haven't lost any money, thank God. I haven't had any capital calls yet, but they're all struggling. Pause distributions. Self storage is in a lot of the same boat, just not quite as bad. A lot of what happened with self storage we were probably. About to enter a market correction with self storage in 2019. It was just like the supply had hit a peak and a lot of people were saying, Hey, it's gonna do, things are gonna start slowing down. Yeah. Then COVID hit

Ed Mathews 14:34

right?

Neil Henderson 14:34

And suddenly everybody, every, everybody was moving. People were converting. Bedrooms into home offices, homeschool rooms and storage went crazy from about 2020 to 2020, end of 2022. And so it was all of a sudden reignited this fire with self storage. Then in late 22 and then early 23, the home prices had start shot up along with interest rates.

Ed Mathews 15:03

Yeah.

Neil Henderson 15:03

Suddenly people are getting price squeezed and suddenly people stopped moving. And that's really been the story of self storage over the last three years. Anywhere from 30 to 50% of storage demand comes from people moving and at the end of 2024, we were at a 30 year low in people moving in the United States. Because think about it, people are people most, almost 50% of people who own a house today have a mortgage that's probably below 4%.

Ed Mathews 15:32

Yeah.

Neil Henderson 15:33

And if they wanna move, even if they wanna downsize from a 2000 square foot house to a thousand square foot house, the new, their new loan is probably going to be, their mortgage payment is probably gonna be the same, if not higher.

Ed Mathews 15:45

Yep.

Neil Henderson 15:46

cause the home prices have shot up and they're, they're starting to, we can see it looks like starting to correct in some markets, but it's not there yet. And interest rates are starting to come down. We're starting to see it. We had our strongest spring lease up period in three years this last spring, which, so we're starting to see people move and people just, life moves on. Sure. People will have to move for jobs, baby boomers have to downsize or people are just having to do it. But, so there's two things that are starting to happen with storage. One is the construction pipeline is getting smaller and smaller. There's less, like it doesn't make si sense to build from ground up.

Ed Mathews 16:27

Yeah.

Neil Henderson 16:27

And so the supply of new storage coming online is dropping.

Ed Mathews 16:32

Yeah.

Neil Henderson 16:32

Which is good for us because we wanna be in a position in a couple of years to be some of the the only guys on the dance floor that have product to sell if we want to sell.

Ed Mathews 16:41

Right.

Neil Henderson 16:42

The other thing that's happening is there was a lot of people who got into storage in 20 21, 20 22, just like multifamily. And they got in. They may have gotten in with good rates back then and a lot of, I'm not, I don't think self storage is having as much of a problem with the floating rate debt. A lot of, they just didn't do that. But a lot of 'em, their commercial loans and their term is five years. And so their terms coming up. In 2026, there's gonna be a lot of storage facilities coming where their loan is due, and they're not gonna be able to refinance. Because the market, it's been really what we've seen in storage a lot of the times is the REITs, the big REITs, this, public storage, extra space, things like that. They essentially just started dropping their rates like crazy. They're buying, they're essentially trying to buy occupancy and so their NOI has been going down, their occupancy is staying pretty good, but their NOI is going down and then us, the small operators are having to play the same game.

Ed Mathews 17:48

Right?

Neil Henderson 17:48

And we've been having to lower our rates to keep our occupants occupancy up. And the NOI is just not there. And so now you're gonna have all these guys that bought four or five years ago that now they're gonna try and come to market with a facility that they were thinking was, it was 95% occupied when they bought it and now it's maybe 85% occupied. And their NOI has also dropped and now they're gonna not gonna be able to go to the bank. The bank's gonna say, okay, terms up. Whatcha gonna do,

Ed Mathews 18:17

right?

Neil Henderson 18:18

So that's where we think there's gonna be some opportunity in addition to just the way that construction is slowing down.

Ed Mathews 18:25

Yeah, it makes sense. If you are part of a group that has to bring cash to a, when you're when you're five-year comes due. Hopefully you've been saving for a rainy day. If not, there's either a capital call or a sale. Yeah. And it's, yeah, multifamily has gone through the very similar process. I suspect we're probably a year, 18 months ahead of you. It's pretty prescient that that it would, that it would follow, and it's interesting because self storage. From a track record perspective has always outperformed. I'm going back 50 years, right? Has, has typically outperformed multifamily by four or five points. And it's an asset class that I always thought about getting into. And, I wish I did in 2019 when I first. Started doing my homework and, maybe I'll get a shot in 27 instead. That's okay. I'm st, I'm still a young man maybe you can let me play a limited partner on one of your future deals. So in terms of the business obviously you've got a pretty big project. You're acquiring a you mentioned you're acquiring a a strip mall. In North Carolina right now. How many of those projects are you comfortable taking on at one given at any given time?

Neil Henderson 19:38

We, our pace has been about four a year. Okay. We, I think we feel pretty good about doing up to six.

Ed Mathews 19:45

Okay.

Neil Henderson 19:45

I'll say, and I'm speaking as the investor relations guy, that the, one of the hardest parts right now is just raising the capital that fast.

Ed Mathews 19:53

Yeah.

Neil Henderson 19:54

And our deals aren't, our raises are not usually huge. I know we're, right now this raises like 2.8 million. On average our raises are anywhere from 1.5 to 2 million. They're not big raises. These are not,

Ed Mathews 20:05

and these are on six, $8 million projects, right? Is

Neil Henderson 20:08

Correct.

Ed Mathews 20:09

Okay. Yeah.

Neil Henderson 20:10

Correct.

Ed Mathews 20:10

Yeah, I mean it, and so a lot of that I assume is being, in terms of capital stack is a lot of it is seller financing. Is that. Am I understanding or

Neil Henderson 20:19

on this particular deal? This is our first seller finance deal. And I'll give a little bit of color on this deal. We first found this deal, we love Kmart conversions. We've done two Kmart conversions one in Danville that recently exited. We've got another one in Reedsville, North Carolina. It's just a big, it's a great big open box there. At one point there were over 2000 Kmarts in the United States. Now they're all, every single one of 'em is gone. And this one in ha it's part of a big strip mall, 171,000 square foot strip mall in Rocky Mountain, North Carolina, where that Kmart has actually been close since 1983. And it's been a couple of other things', but it's been vacant a lot of that time. And we came in and we approached the owner about buying just the Kmart. We just wanted the Kmart to convert it to self-storage. And he is nah, I don't want self-storage. I want another big box in there. I want something else. And we said what if we bought the whole, what if we bought the whole strip mall? And he's okay, actually maybe a listen to that. And so we negotiated. It's a, it's in a nice area of Rocky Mount but it's a little bit of an older, it's an eighties vintage Yeah. Late seventies, eighties vintage strip mall that it just needs some TLC,

Ed Mathews 21:37

right?

Neil Henderson 21:37

And so what we're gonna, we're acquiring it for $6 million, 171,000 square feet of, that's a good deal. And 25 acres of land to I think roughly 2.5 million of that is seller finance. In second position we've got interest only for. Five years or no, three years. And then I think we've, we, the term on the seller finance part ends, we got a balloon in five years, but we've got a, a. Option to extend for another two years, I think.

Ed Mathews 22:07

Yeah. And when your construction, timeline is what you said, like 14 months not for this project, but in general. That's correct. Boy, that's with a three year interest only that that gives you some pretty good rocket fuel coming out of the, coming out of the box, right?

Neil Henderson 22:21

Correct. And our. First position loan with a bank has two years of interest only.

Ed Mathews 22:26

Nice.

Neil Henderson 22:26

So it's it's a little different for us. There's the strip mall's, 50% occupied, so it has income on it for us, which we really, we've done that a couple of times recently with some other similar projects, not exactly retail. They were triple net tenants that were on the property as well. So that sort of helps de-risk it a little bit for us. Yeah,

Ed Mathews 22:45

sure.

Neil Henderson 22:46

A lot people think the biggest risk. The construction for us, it's not, we're in and out in 12 months. The biggest risk for us is the lease up. 'cause we, we build this out in 12 months and now we've got an empty facility.

Ed Mathews 23:00

Right.

Neil Henderson 23:00

And now we have lease. Now we lease it up.

Ed Mathews 23:02

Right.

Neil Henderson 23:03

And you're in this kind of race to lease it up. While you've got these interest reserves and so you're trying to, get to profitability and break even point before those interest reserves run out, and then we end up having to feed it, right? Which we've had to do on some deals and we can do that. We've never done a capital call. But it's not where we wanna be, right? And this, having this produce, it's got roughly $60,000 a month. Gross revenue coming in from the rest of the the strip mall.

Ed Mathews 23:30

Yeah.

Neil Henderson 23:30

Which helps us offset some of the income while we build out the self-storage facility.

Ed Mathews 23:36

Yeah.

Neil Henderson 23:36

And and just puts us further ahead of the game and closer to profitability once we are.

Ed Mathews 23:42

That's a whole lot of oxygen. Yeah. So that's wonderful. Okay. Hey, we're we're getting into the latter part of the show, so I could talk about this stuff. Yeah. I'm fascinated by your business. Let's get into the final five. And then and then we will, we'll, dismount. So I'm curious, leaders like yourself people who have done as well as you and your partners have done. The, as I like to say, the mortgages are handled. The college, the college tuitions are set aside or are already taken care of. There's little or no car payments. You guys are doing fine, right? And nevertheless, you get in your car on Monday morning and you come care into the office ready to go. And I look at that as purpose, right? And so I'm curious, what gets you outta bed on Monday mornings? What gets you into the office?

Neil Henderson 24:29

Say my son. I have a 11-year-old son. I'm, I became a dad late in life. I was 44 when my son was born. 45. I don't know. I can't keep track anymore.

Ed Mathews 24:41

Time goes quick.

Neil Henderson 24:42

Yeah, it does. And it's just I had a, I had, I grew up, I hit the jackpot with my parents. It won the lottery. But my dad was a very successful Air Force officer and he was gone a lot. In when I was growing up. So for me, it's really about, being present and trying to be there as much for my son as I can until. He goes until we set him free and he goes off on his own. So that's really for me, that's, if you ask me what my purpose is, that's it.

Ed Mathews 25:17

I get it. You only get 18 summers with these kids. And I'm at the tail end of that. So I had, we had kids a little bit younger and it's interesting. I have a 22-year-old and an 18-year-old and, they're great kids. They love their parents, all of that. But when they come home, they don't wanna hang out with us. They want to go out with their friends and go do their thing. And we made the mistake of giving 'em cars so they can go do that. We can't even, we can't even, maroon them at the house. So it's

Neil Henderson 25:44

I'm taking notes, ed.

Ed Mathews 25:46

Yeah, don't give them cars. That's the key, right? Make 'em walk. Then they'll stay home more often. Now then their friends will come pick 'em up and it's the same thing. But yeah, you only get 18 summers and they're wonderful. But I think we just experienced our second to last summer with our youngest, whew. Alright with that, I'm curious about as you've grown career wise and also your business I'm curious about the, the mentors you've had along the way and, more specifically. I'm really interested in the best advice you've ever been given and who gave it to you?

Neil Henderson 26:49

Best advice I was ever given. I. This is not a mentor, this is not the words of my mentor, but one of my mentors is my business partner, Eric Hemingway. And it was an unintentional mentorship. We mentored each other in a lot of respects. Eric was a Eric, a very successful commercial real estate builder even before I met him, but unsophisticated when it came to scale. Things like that. And Eric the brilliance of Eric is his ability to spot value. And that comes from, and it's not complicated, it comes from Sam Zell very famous you know the name. Very famous commercial real estate investor who died a couple years ago. And he said, if you can buy for below replacement cost. You're so far ahead of the game, right? It, it gives you so much margin of safety, right? That you can make a lot of mistakes if you're able to buy from below replacement cost, you know that you're so far ahead of the game that, that it gets. You have to kinda work at it to really screw it up.

Ed Mathews 28:05

Yeah. You gotta really be focused on screwing it up.

Neil Henderson 28:08

Yeah.

Ed Mathews 28:08

Yeah. His book is one of my favorites. Am I being Too Subtle? Is the book I'm referring to for those folks that don't know Sam Ze, but all right. And I couldn't agree more. That's true with. Every asset class in this space. So speaking of trying to screw things up I'm curious about a decision that you made, along the way that you look back on and you go, man, I wish I would love to have that one back. I fundamentally think we, we learn more from our mistakes than we do from our successes. So what's a decision that you'd love to have back and how'd you handle it? What'd you do about it?

Neil Henderson 28:46

Yeah, so the first piece of real estate I ever bought was my first house. I bought a three bedroom, two bath condo in Las Vegas, Nevada. It was 1-year-old condo. I bought it in February of 2005. It was a year old. It had doubled in value in a year, so should have been my first red flag. I bought it for 2 0 5. I think the guy who I bought it from was getting a divorce, bought it for a hundred. It I think the value at one point went up to, in late 2008, maybe early 2009, I think it was valued at 2 75. I ended up short selling it in 2014 for 60,000 when it was worth $60,000. Yeah I sold it for a hundred. I got the buyer, bought it for a hundred. I ended up getting out with a, nothing more than a short sale on my record and a $5,000 promissory note. That was zero interest that I had to pay 83 to dollars and 99 cents on four, five years. And I paid not a dime over that for that period of time. Paid it off over five years. So the big lesson there was, be fearful when others are greedy. 'cause at the time everybody was telling me you gotta get into the housing market 'cause it's going up so fast. If you don't get in, you're gonna be left behind. I should have I should have rented. There's nothing the housing costs that, and that's very much in the position that a lot of people are in right now.

Ed Mathews 30:16

Yeah.

Neil Henderson 30:16

The housing cost, it makes more sense to rent right now than it does to buy. It does just does.

Ed Mathews 30:21

Without a doubt.

Neil Henderson 30:22

And I, and so many people are frustrated that they can't buy a house. And and I tell them, look, either just don't sweat. Don't, it's okay. It's okay to not buy. It's not a,

Ed Mathews 30:32

it's okay.

Neil Henderson 30:33

Not a race.

Ed Mathews 30:34

Yeah.

Neil Henderson 30:34

Or you gotta get creative. And I, I'm a big fan of house hacking. I currently house hack where I live right now. You gotta get creative. And it means that you're not gonna be buying. You're forever home right out of the gate. And you may have to have roommates, you may have to have somebody living on property with you. You may need to Airbnb a guest house on that property and then a DU. Yep. So that's really did I answer your question?

Ed Mathews 30:59

You did indeed. So I'm also interested how leaders like yourself take in information. Who is that what book is on your either actual or virtual nightstand? Who are you paying attention to?

Neil Henderson 31:12

How to break up with your phone, and I can't, and I can't remember the author right now. I'm addicted to my, like most human beings, I'm addicted to this little square screen. And and it's unhealthy for me in a myriad of ways. It's a it's a dopamine delivery system. And I remember, I use this analogy, I used to drive back and forth between Las Vegas and la a lot back in the early two thousands before smartphones came out. And I would listen to music. Yeah. And my mind would wander and I'd daydream and I'd come up with business ideas and I'd come up with creative ideas for the things I was working on. I haven't been bored, ed. 15 years because the moment I'm bored, I pick up this screen and I find some dopamine hit. Yep. So I'm only I'm halfway through the book. It's I feel like I'm in a bit of a a program and one of the first things I did recently was I did a digital Sabbath. On starting at Friday night at 6:00 PM I put all of my screens away and it lasted all the way until 6:00 PM the next day. And I was amazed. And one of the things that she tells you to do is to, when you're out and about, to notice people on their phone and picture it as if they're holding a cigarette. And I took a walk. I live across the street from the beach. I took a walk on the beach and I was stunned at the number of people I saw there with their kids on the beach, who the kids sitting there playing at their feet and they're standing on the beach in this beautiful place and they've got their head buried in their phone.

Ed Mathews 33:00

Yeah. What a lost opportunity that is. It's interesting, I, when you told me the book you're reading, I've, I flashed back to the late nineties actually. I was working for this guy, his name's Ken Powell, wherever he is, God bless him. And I was thinking about buying a blackberry and he looked me straight in the eyes. He said, don't do it. It'll ruin your life. And he was right. It hasn't ruined my life, but it's certainly, yeah I'm that person as well. Thank you for the book. I, it just went on the list and I'm gonna, I'm gonna that will, I just about, I almost screwed up and said I'm gonna put it on Audible and listen to it, but no, I actually have to get the physical book, don't I?

Neil Henderson 33:37

I listened to it on Audible. You can do that.

Ed Mathews 33:39

All right.

Neil Henderson 33:40

And I'd love if you do it. Lemme know how it goes. 'cause it, we can maybe form a support group. 'cause it's not, I tell you, it is not easy. I felt like a heroin addict. I was like, yeah, I can be this man. I can do it. It's no problem. Problem. So it's really hard. It's

Ed Mathews 33:56

only 45 minutes more. It's only 44 minutes more. It's only

Neil Henderson 33:59

yeah. Which is just another glaring reason why I needed to do it.

Ed Mathews 34:03

Yeah, absolutely. Last question of the lightning round. I want you to define success for me. How do you define it in your life?

Neil Henderson 34:11

That's a great question. I, when my, if I'm able to spend time doing the things I love with the people, I love with not having to worry about. The money to me, that is what will be success for me. Yeah. I still have to worry about the money.

Ed Mathews 34:40

Sure.

Neil Henderson 34:40

And I, my wife and I, a long time ago made a commitment to our ourselves that we wanted to value experiences over things. I can't tell you. What I got for Christmas in 1981. But I can tell you about that first family trip that we took to Europe. And I can remember sitting in a cafe in Switzerland drinking Swiss chocolate and e eating a cro, a croissant across from my mom and my dad and my sister. And I can, and now part of that is 'cause I have an, I have some photographs of that

Ed Mathews 35:12

sure.

Neil Henderson 35:13

Of that trip. But it takes me back and I can remember that. And like I said, I can't remember a single thing that somebody got me from that period, but I can remember those experiences. I can remember going to Lucerne Switzerland and seeing a sculpture in the mountain called Wounded Lion, which is, if anybody look up Wounded Lion, it's the most breathtaking natural sculpture I've ever seen in my life. So it's just value experiences. Over thinks is where what I would leave you with.

Ed Mathews 35:40

Yeah, absolutely. And couldn't agree more. So when you're not talking about real estate or self storage, what do you like to do for fun?

Neil Henderson 35:48

I love to travel with my family. We're going up to New York for Thanksgiving. My sister lives in Manhattan. We're, it's the first time I've ever been in Manhattan or on the holidays, been on my bucket list for a while.

Ed Mathews 35:59

What a great experience that will be.

Neil Henderson 36:01

I'm a, we're gonna go see some Broadway theater. We're planning a big trip to Japan, hopefully next year sometime. It was, we gave my son a bunch of options for trips we could take and he chose Japan. Played. And then I I'm a photographer. I've been a photographer for. 40 years. I love to go out and get that with my camera and take photos. And then I live at the beach, so I love to be near the water, on the water as much as I can.

Ed Mathews 36:27

Wonderful. Wonderful. Neil, thank you so much for your time today. It's really good to catch up. And congratulations on your company and all the success you and your partners are enjoying. If people wanna learn more about you or Nomad Capital what's the best way to do that?

Neil Henderson 36:42

Yeah. Or you can visit Nomad Capital is our website. You feel free to email me at NEIL. Spell the the correct way, not the sociopath. At Nomad Capital us.

Ed Mathews 36:55

Okay. All right. No sociopaths. Got it. Neil Henderson, thank you so much. It's good to see you.

Neil Henderson 36:59

You too, ed. Thanks for having me.