The Entrepreneur DNA - Why Smart Investors Are Betting BIG on Self Storage Right Now | Arthur Hood

Episode Date: March 16, 2026

The real estate market has changed and the easy money era is over. In this episode of Entrepreneur DNA, I sit down with investor Arthur Hood, an entrepreneur with investments across real estate, manufacturing, mining, energy, and operating businesses. Arthur shares why investors today must be far more disciplined with their numbers and why appreciation can no longer cover bad deals. We also break down why he’s betting heavily on self storage, with over $100 million in development currently under construction and plans to grow the portfolio into the billions. If you want to understand where the real estate market is heading and how smart investors are positioning themselves for the next cycle, you don’t want to miss this In This Episode We Cover: Why the real estate market has changed Why appreciation can’t fix bad deals anymore The economics of self storage investing Why investors are diversifying beyond real estate The future of interest rates and housing Why younger investors need income outside real estate How to build a billion-dollar portfolio The mindset of true long-term investors Connect with Arthur Hood Website https://arthurhood.com Self Storage Projects https://yourspaceamerica.com Email: [e-mail] Storage investment inquiries [e-mail] About Justin: Justin Colby is the host of The Entrepreneur DNA and The Science of Flipping podcasts and a best-selling author. He is a serial entrepreneur with over and a seasoned real estate investor with over 20 years of experience. Driven by a passion to help entrepreneurs thrive, Justin created the Entrepreneur DNA community to support business owners in building wealth, systems, and long-term freedom. Through his podcasts, books, education platforms, and hands-on mentorship, he continues to help entrepreneurs scale with clarity and confidence. Connect with Justin: Instagram: @thejustincolby YouTube: Justin Colby TikTok: @justincolbytsof  LinkedIn: Justin Colby Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

What is up the Oshmnor DNA family? Super excited about this podcast episode because my guest is a through and through investor. He is someone who has real estate. He has manufacturing. He has mining. I mean, he invests as an investor would because he's smart. He takes his time. He understands finances.

And if you're looking to invest in general, you want to listen to this guy. Arthur Hood is here. Thank you. How are you, dude? Pretty good. Good. Tired of a long day. Oh, man.

Literally, we were recording this at night, and he flew in on his private jet from you're in Pensacola, Florida. Well, I started in Dallas this morning at a meeting in northwest Arkansas, very close to Walmart headquarters, Stevensville, and then down to Pensacola for another meeting and then overnight in Miami. There you go, to rock the podcast. So excited to talk about this. I think we're in a very strange phase of the,

economy in the financial world, and we're just talking off camera about all this. I think there's some things that you see on the front line as a real true through and through investor, right? You do a lot of real estate, but you have manufacturing as part of your investment and mines, all these different things. So you're really analyzing the state of finances and money and cost the money. What are you seeing right now in the space? Well, specifically in the real estate space, I'm seeing a time where you have to have your numbers more accurate on the deals than you had to have in the past because you can't outrun mistakes with crazy appreciation in the current market. And you can't have too expensive of capital. You know, back in the heyday after 2020, you could have 18% credit cards and 14% hard money debt and still find 50% cost overrun and the appreciation of property would fix the problem.

Yeah. Now you've got to buy significantly below market, control your cost, and have a reasonable cost of capital. Yeah, we are joking, you know, in the last eight to ten years, if you fogged a mirror and you were in real estate, you could win. You could totally mess up the rehab and you're still going to be profitable in that space. That is drastically changed in the last 18 months, right? Absolutely. And time on markets change where, you know, you only had to worry about the time it costs you. you to rehab it because somebody was there to buy it. Now it may take you six months or longer, and you don't really know what the price is going to be. You have an average idea, but you don't know the exact price you're going to exit. Because we haven't had enough

runway at this cycle to understand that. There's not enough economics of what is the real exit price going to be on these assets? Not all. So you just kind of get close enough and hope, and sometimes you're not that close. I mean, everyone knows my story in the beating in 2024 I took. And the large part is because some of it is the runway was still at a point where I could say, okay, we were going to exit here and it stopped. It came to a screeching halt, right? And so when exiting, the numbers didn't add up. It didn't math out.

What assets are you looking at, keeping in real estate at least, what assets are you looking at as good investments? I'm still going to keep buying selectively and rehabbing single family homes, growing that portfolio. I'll always have some multifamily. I still do quite a bit of land entitlement. I'll buy larger tracks of land and title and sell it to some of the track home builders, but they're not buying as much now, obviously, because their market has slowed down.

But I think one of the sections that I'm most excited about have been pretty heavy in the last three years has been in the self-storage space, which is all climate control, what we would call Gen 5, new controlled, nice-looking facilities currently am building three in Las Vegas, one in Phoenix, one in Tucson, and one in Houston. and we've got about 11 on the pipeline right now. So you're just dipping your tone in it. You're just kind of creepy.

Like, that's a lot, right? These are typically multi-million dollar investments. Like, give us over $100 million in cost under construction and probably worth $200 million at completion. And we're probably trying to grow that portfolio over the next five to seven years into several billion dollars. So why self-storage? I like self-storage because you don't have tenants, toilets, and trauma.

or anything that goes along with it. You don't have crazy eviction laws depending on the states. You don't, you know, if somebody doesn't pay. Yeah. You can literally lock them out, auction the shut off, sweep the fucker out, and rerun it. Yeah, you're off to the race. Yeah. Again, also, in some of our abilities, you've got 1,000 units.

It takes a little while to fill them up or 1,100 units. It takes, you know, some time to fill them up. But once it's full, if you lose a few units, mathematically, it's nothing. Yeah. use a lot of units before it affects hundreds before you fall below 90%. Yeah, I mean, it's literally if you have a 1,200, you can lose 200 units and still be above 90%. Correct. Which is a lot of units.

And everyone knows, I mean, what I thought some of the answer was going to be, and maybe it is still, but people now are needing to rent more because they can't afford owning. They are needing to rent more. They can't afford owning. And also, as I said on both sides of this one, as one of the companies I own, we do homebuilding. And, you know, none of the spec homes we build have that much storage space anymore. Almost none of the home builders are putting a lot of storage space. So everybody's needing a place to store. Your new houses have very little storage.

Yeah. And everybody now seems to have hobbies from skiing to water sports to whatever. Yeah. Climbing, bikes, stuff. Stuff. And nobody wants to sell their stuff. So they end up just needing a storage place to keep things. Yeah.

Then we also have a lot of people that are running, you know, some type of Amazon business or something like that. They need a place to store material there. But everybody seems to have storage. Once people get in them, they don't seem to move. They stay five, six, seven years. I've heard something like once you get a storage, there's some really long tail before they actually.

Yeah, remember the exact, but it's years. It's years. And what a great tenant that is, right? You don't even have the human component, but they're going to be there for years paying every single month. Correct. And usually it's set up on a credit card or an ACA. So collection is pretty easy unless they change credit cards or changed banks. And then, you know, most people, oh, okay, here, I'll switch it out.

So you have a hundred million in construction, give or take. That's in construction cost. Cost. Value upon stabilization will be significantly more than that. Is there an exit or are you going to hold it? We're looking at a couple different exits. Some of the projects are not in the op zone, so we're going to be forced to hold them for 10 years. Some of the projects are not.

We may flip just to put some cash in the company. But at the end of the day, we'll probably exit into a REIT because it's a non-taxable event for our investors. They get shares in a public REIT. So if we get big enough and we get several billion in assets, we'll exit into a REIT. I guess, I mean, I'd love that problem. What is, so cash flow-wise, I had one storage facility, did really well, and then we exited. Relative the same to residential real estate, better than resident.

Like, let's remove the human component, but just cash flow. If you buy something existing and do a value ad, you can get to positive cash flow pretty quickly. If it's a development deal, you've got to get to the development cycle, and then the lease-up cycle, and then the pushing the rates up from the rates in which you bring people into the rates in which you stabilize that. So that can take you 36 months. maybe a little bit longer, maybe four years. But once that's done and you refinance your construction debt with cheap permanent debt, yeah, they cash flow quite well.

That's great. And so as a whole, you're going to still stay diversified within the real estate space because after 20 years, I really stuck in a single family. I'm now moving much heavier into apartments. And like them or not, Grant Cardone now finally I actually think he is right for me, meaning one roof, one building. I just went through several hundred single family assets that you know my story. Like not ideal, right?

Not ideal with everyone independently, right, versus just one, right? Yeah. So you're going to diversify. You're going to still do new home builds. You're going to still do storage. You'll fix and flip. You'll buy single family assets and continue adding that portfolio. You like the diversification.

I do. I like holding single family assets. assets is me and just me and me as my family trust. I like holding some multifamily in a couple of my entities and for me. And then the storage is more of a, you know, build something massive and get out. Now I have a couple small storages that are just mine, but as far as building the the Uerspace America company, which I'm the second largest shareholder, would be, is to really grow that into a massive portfolio that we exit into a REIT. Are you going into any, like, true commercial buildings, strip malls, office spaces, anything like that?

Probably not office. I own my own office buildings, and that's enough office for now. Yeah. I see what happens. You know, if a deal is a deal, I'll look at it, but I haven't really pursued office whatsoever. Yeah. I've had some industrial that I've sold off that I like, but to the moment. What makes an investor like you sell, right?

I mean, you know what you're doing. I mean, are you, you make an art. argument you should just keep keeping it, right? I'm making an argument I never should have sold anything ever. Okay. But sometimes you just sell because you want some chunk of cash to go do something else. Sure. I think hindsight being 2020, if you never sell anything, you're probably better off.

Yeah. But with capital markets and different types of financing you have, that's not always the way it works. Yeah. If you have the right partnership in something and, you know, you got 10 partners at a deal on the LP side, not on the GP side, and they all need to look. to the event, you may choose to go ahead and sell that asset versus refinance it, have a true exit of that group and go do something else. As an investor, when you bring on investors, you'll play fair to them as well, right?

It's not always just about Arthur. Like you just said, you had 10 LPs and they all want it. You're like, all right, we'll sell and hook you guys up and go to the next project. Yeah, and we're pretty upfront with the investors, like the ones in the op zones. you understand this money's locked up for 10 years. You're in this 10, 11 years. And then in the other deals, we're like, you know, these are some trophy assets.

We're going to keep them. They'll probably go into a REIT structure. And then some of these were like, you know, these are going to be some that are going to generate liquidity for you and the company. As soon as they're released up in three to five years, we'll sell them. Yeah. Yeah. How do you see the next 36 months?

I mean, no one has a crystal ball. So let's, you know, qualify it with that first. But where do you see it going, right? Is there going to be a better season to be selling here in the next three years? Do you think we're going to run for a while that you... Well, it depends. I mean, I don't have a crystal ball. Yeah.

And I'm not going to gauge what politicians are going to do. However, my assumption is, when you get a new Fed chairman, rates are going to drop. Okay. I would see a half a point to a point. At that thing, I think it'll light off the residential market. again to some degree. Yeah. Although I'm still skeptical that it's going to create the buying frenzy they think,

because even though historically we still have a reasonably low rate, if you look at mortgage rates historically over the last 50 years, but people got very used to their 2% and 3% mortgages, which were unrealistic, but that's what Joe Q public thinks a mortgage should be, should have a 2 or a 3 in front of it, maybe a 4. Right. And I don't think we're coming back to that. You know, listen, that's the first time I think either one of us has seen something like that.

I don't think we're going to sniff it. I think my gut, and I'm definitely not the expert, but like, I think we get maybe high fours, but I think we land in the low fives historically, and we stay in that range for a while. I don't see it. We stay in the high, fours, low fives. It'll light off some of the market. Yeah. But there's a lot of home buyers in their late 20s to mid-30s.

They got very used to and saw their first homes at 2.99 or 3 and a half, and they think that's a mortgage rate. Yeah. And it's not. It never was. Well, this is where I'm actually being real estate as long as I have been. I actually think homeownerships not totally ideal. And most people stretch to be able to afford the home. They're doing it for the ideology of owning your own asset. But if you and I both know, like sprinkler systems and lighting,

and roof and and it and just shit breaks. Oh, yeah. I have a little bit of an older house. It's 4,400 square feet that I live in primarily. And, you know, I've had to put in H-FAC units. I've had to do stuff to the pool. Yeah, you name it. You know, so I've never really amortized that cost,

but I guarantee you it's a chunk of money at the end of the year. Right. And so if they don't look at it as an investment in the way I would, like so, for example, if I have a million dollars of equity, I can take a home line of credit. Now I can use that capital to flip homes or do whatever, make investments. That now becomes a tool. I like that idea.

Just owning your home to say you're owning a home. Because most people buy a first time home, what is the average? What would you guess? $500,000. Now, realistically, $4.75 to $5.5.5.5. Depending on the market. And I also don't think until someone is kind of settled in on knowing where they want to live, city at least, or estate.

buying a home just for them is silly. Now buying a home to live in that you totally are okay with, okay, I got a job across the country. I'm going to walk out the door. I'm not going to sell it. I'll just rent it out. That's okay. You've turned a primary residence into an income asset, and as long as you bought something that would actually rent for at least the mortgage payment or damn close. And it doesn't hold you back from taking other opportunities somewhere else in the world. I don't have a problem with younger people buying a house. In fact, they should. It's a good way to grow some. equity, but if you're buying the house only to live in that house, and then because you have that house, you turn down other jobs and other opportunities and things before you're married,

before you have kids, before you, that's not a good plan. Yeah. Well, and it'll be interesting to see when you say kick off like the buying criteria. Like, I just still don't think there's enough assets on market. I know Trump made this big thing about, you know, the hedge funds buying homes and in certain markets that really did create a problem. Um, hedge ones for coming and buying up everything they could. But that was just in a few markets. And I do believe it's like the 2% of the total investor, investor owned properties. They're like 2%, which means the other investor owns are the mom and pops like us.

So. Yeah. And, you know, and what makes you an investor buyer? You know, I've got 200 some odd single family doors. But I'm still on the mom and pop side. I don't have 2,000 single family. That's right. What's the limit?

What is? One of the guys in the administration saw maybe it should be 20, maybe it should be 200. Well, I'm over both. Right. So what are they going to do, make you say, like all that, I think what I do believe Trump is, is brilliant at kind of the smoking mirrors and making everyone look over here and then does something over here. And my gut is that whole thing is that.

He's just saying, hey, let me go fight for the people. And then really he's going to go try to lower interest rates. And then he comes out to good way, good guy no matter what. Who knows what's going to happen with that? because the president doesn't have total control over the Fed. No. So we'll see what happens. Well, and if the Fed goes zero, mortgage rates don't necessarily have to change.

Nope. It's a good inclination they will. It doesn't mean they have to, right? You own other... When your T bill has more to do with finance rates than anything else on earth. Yep. Yep. What about stock market? Do you dabble?

Do you stroll with somebody here and there? But most of everything I own is hard assets. I own real estate. Yeah. I own a bunch of bars and nightclubs that produce cash flow. I own manufacturing businesses that produce an asset where I own pieces of. I'm in the mining business. I'm in some oil and gas.

I'm in some salt water disposal wells that are in the Permian Basin for the disposal of the salt water that the oil wells produce. So I'm kind of diversified from that standpoint. Do they all spit out cash flow? Pretty much they all spit out cash flow. I mean, the operating companies, you know, some months are a lot better than others, sure, but they all spit out cash flow. Do you, I mean, you're really diversified. Like, there's not a lot of connective tissue between manufacturing and buying a single family home. Right.

It's two different businesses. Yeah. You know, but it kind of worked well together because as I built the cash flow from owning businesses, I started dumping it into real estate. Yeah. Because one day I wanted to say, well, if all the businesses go to zero, now I want to mess with them anymore. more they get sold, I would have built enough real estate assets that it won't matter. Yeah. I think that is the way most people should be looking at it.

And again, I hate to take a page out of Grant Cardone, but I was pretty vehemently disagreeing with his premise from what he started. Give me a little bit of time in season. Now I'm starting to really realize, like, if you can just rent your home and take your income, your cash flow, and buy assets that pay for themselves, it really is just a better model. That's why I don't think in most people. And I get cross with some of the younger

and smaller real estate investors. I think you have to go out there and have a business, a job, a sales job, a widget, a wadget yourself. You have to have something that's generating income so that you can build your real estate portfolio without depending on it. So if you have four homes that are empty for six months

or you have a triplex that needs a bunch of work, you're not scrambling to figure out how to pay for it. You're not living your lifestyle. You're not paying for the groceries and everything else just from real estate income until that income becomes large enough that it can handle all of it. That's right. When you're first building the first 10 or 15 years,

you need other sources of income coming in. Now, I've never really had a job worth for anybody else, but I've had businesses that pay me. You've got to have some things that are making you steady money every day. Do all businesses you own, is there always tax advantages? Or sometimes it's like,

man, it's a cash cow and I'll have to, now is why I want to go into real estate. Cash cow, but I mean, everything's under a series of holding companies that flow up to a parent. So there's some tax benefit to it. But yeah, something makes enough money to just deal with the tax.

Yeah. Now, you may have a year that you can cost SAG enough, bonus depreciation. There are things that can come into play that can reduce it, but it didn't. Are you still happy with the money? Yeah. Do you want a million dollars out of that business and pay a bunch of tax or do you want zero out of the business and pay zero? So is your org chart slash how you set up all your entities and try is it overly complicated or have you keep it pretty similar simple, but it's a little complicated. Yeah. There's a whole bunch of individual entities that flow up to some holding companies that then have some management entities. Yeah. And then flow into a trust. It's not overly complicated. It's not simple, but it's not.

not open. But there's people that can set this stuff up. Like no one needs to understand that in depth, unless that's you're the lawyer who sets. You know, there's some great, this great firm I use out of Nashville, Tennessee that does it. They do it very, very well. They've done it for developers that I've got a couple really good tax advisors around the country. So we do it. What do you think this data? But I do think, because I've got some friends that have gone 50 steps further. And they pay far less in tax almost to nothing. Yeah. However, They don't really have control of their money. And you start getting into.

Yeah. Yeah. Listen, also kind of a problem I wouldn't mind having totally. But where do you think the state of like new homes, builders, what do you think they're going to do? Because one of the things that you see a lot in the news is, you know, the housing market having no inventory. Okay. Well, what are the builders going to be doing? Because if money doesn't stay cheap or get cheaper for them, what are their options?

Well, they're going to build the product that no one's going to afford. Yeah, they're going to build a product that no one's going to afford. We're going to have to come up with the weather. And I don't really like, personally, I'm not going to live in a tiny home. Right. But I think that that market is going to have to be brought out more. We're now at a point that the average job can't buy a house. I mean, when you're made, depending on the market, if you and your spouse both make $50 grand a year or $60 and you're $100 to $120, you can't afford that.

much house, especially if you have a little credit card debt, a little student loan debt and a car payment. Yeah. You're not buying a house. Not at the traditional mortgage at least. Well, and we're sitting here in Miami. I mean, talk about a city that everything is exorbitant. Now, I think there's some markets like in Miami. I think we're a little immune to the, to the, what's going on in this shift of the market. I can tell you the homes are flying off the shelves here in Miami. Which is true. Because in the past downturns, especially after the L.8, which I was very familiar with, you couldn't give away Miami. Yeah. And now is the time you're going, Miami were free. Yeah. And now, like, you can't buy them for $600,000. Right. I mean, it's insane. And partly is because you have so many people now moving to markets like this. And we're not the only market, but there's only a handful that really have been like, we're pretty steadfast. I mean, you're literally seeing New York come down here by the droves. You're seeing people from.

California because of the billionaire tax and one of the founders of Google, I forget which one, just went and bought almost $200 million of two homes. One was like $179 million. The others was like $30 million because he just had to get out of California, right? I mean, this is a unique market in the... You know, and it's funny because I own a manufacturer, I own part of the manufacturing facility in California and I'm in California quite a bit. and you know it's one of the greatest most robust economies on earth you chop it off it is its own country

but um it's got a bunch of problems now sure does i think we're leading quickly yeah i'm from there i won't go back that's just kind of my own side of it it has been beautiful my entire childhood growing up i could i thought it was the best place on earth and now i go back to san francisco and like, this is not where I want to be. No, it's a great weather and, you know, you can make a lot of money there, but, you know, a lot of the money there is going to leave and go somewhere else. What's your big agenda here? Let's say it's 2026 as we're recording this, say, finish out the 2020s.

From 2026 to 2030, what does Arthur Hood want to be doing? I want to grow up a storage company to $3 to $7 billion. Pretty big range there, but it depends on whether we do all ground up. If we do in all ground ups, we're going to hit that three to four billion range. If we start doing some value ads and acquiring stuff that's already there, we could get well beyond that. I want to grow that and buy, say, 20, 30, it would be nice to see that into a reet somewhere in that time frame. Yeah.

Probably a couple more years before it actually happened, we'd probably start that process. That's something I'd like to see. I'd like to see I'm involved in some other. real estate in different parts of the country we're putting in some data centers. I'd like to grow that business a little bit, although I'm just a quarter partner, but I help finance that. Really what I'd like to see is have enough real estate assets that are continuing to grow that I can just kind of focus on that and not as much on the operating companies.

Yeah. Because in the last 10 years, they've taken a lot of time. And still do. Sure. Yeah, the hard decision out of me, because I wanted to get out of the operating. I'm just not the operator because exactly what you're saying takes a whole lot of time a lot of work. In the last couple of years, I put some good people into operations. I'm doing less and less. But you still, no matter what, if you have operating businesses, you're involved in them.

A hundred percent. Regardless of how many, you know, there's no call me in six months. That's right. Yeah, yeah. All right. Where should everyone go find you, asking more questions, get involved in some of the, you have multiple storages. Right now, people can be involved in your world, this moment. It's just to me, which is arthurhood.com, and there's some buttons on there or Arthur at arthurhood.com. Arthur at Arthurhood.com.

And then if you're just inquiring about the storage, there's info at arthurhood.com. Make sure and check them out. Make sure to follow them. Go to the website, arthurhood.com, storage facilities, a lot of other different projects, and all that stuff is sunny. Yeah, it is. And then our website full of the storage is YourSpace America. Yourspaceamerica.com. I'll get your links to both.

Perfect. Appreciate you being on. Perfect. Yeah. That's Arthur Hood. I'm Justin Colby. This is the Entrepreneur DNA. We will see you on the next episode.