He Sued 27 Banks Then Built a 500M Self Storage Empire

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Ep. 3 (Spotlight) — From $500M Default to a $150M Fund: Brad Minsley on Automation & Data Science Guest: Brad Minsley — Co-Founder & Principal, 10 Federal (5.3M sq ft, 122 properties; creator of DaVinci Lock) Host: Chris Berg — Head of Business Development, Abernathey Holdings Recorded: December 9, 2025 Video: https://www.youtube.com/watch?v=PxZcYwHYmsM Key topics: Phillips Development going from a living room to the 11th-largest multifamily developer in seven years, the GFC collapse — suing 27 banks and defaulting on $500M, short-selling their own properties, why 10 Federal chose self-storage (vertical integration, simplicity), automating their first facility in 2016 and firing the manager (48 leases in month one), DaVinci Lock and the Elon Musk simplicity algorithm, the two-axis definition of automation (customer satisfaction × operating efficiency), the 63,000-facility proprietary database and machine-learning rent model (~85% explained variance), cutting COVID-stimulus static (late 2020–22) and "Extra Space static" (2023) from training data, Fund 2's #1 Preqin ranking (34% net IRR — beat Apollo and Bain), the $150M Fund 5 and the RIA channel, the development-fund pivot (permitted-site distress in Austin/Charlotte/Savannah), construction pricing falling deal over deal, underwriting demographic bands vs. street rates, using the model to get bank financing, Powell's term ending in May, and Brad's open-door offer. Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. YouTube chapter markers removed from body text. ————————————————————————————— Chris Berg: So imagine you're developing $700 million in real estate, and all of a sudden the GFC hits — and it hits hard. What do you do? Well, you sue the banks, of course. That's the obvious solution, right? Then go on to build one of the biggest, basically self-automated, self-storage portfolios in the country. Very excited for our guest today here on the Self Storage Spotlight. I'm your host, Chris Berg, head of business development for Abernathey Holdings. Brad Minsley — he's one of the founders and principals at 10 Federal. Brad, it's great to have you on the show, and thank you so much for being here. Brad Minsley: Yeah — love that intro. Thanks, Chris. Chris Berg: Yeah — what do you do? You sue the banks, of course. So let's start there, because I think your story is fantastic to talk about grit. For myself — I'm a former athlete — I always learn the most from my L's, right? That's when you grow: "Oh, I probably should never do that again." So I'd love to hear your story, just to give people some context. Brad Minsley: Yeah, sure. Let me rewind the clock to the most formative years of my education. So — me and another guy started a multifamily shop out of his living room, called Phillips Development. I loved my business partner, Don Phillips — that guy was risk-on all the time. And when you do that, and banks will give you high leverage, and money is available — we went parabolic. We went from a living room to the 11th-largest multifamily developer in the nation in seven years. Truly levered to the hilt. Which meant that when the GFC got there, we were beyond crispy-fried. The banks moved on us very quickly, because it was going to be no secret that we were going to be a sick patient, let's just say. And the moment they moved on us, my business partner said, "I think we'll stand a fair chance of being the plaintiff rather than the defendant." I don't know why he thought that logic would work — I wouldn't say he was wrong, but — yeah, we sued 27 banks, defaulted on $500 million of loans, and spent three years working it out. I got a PhD in how the legal system really works — I had an extremely layperson understanding going in. What I mean by that is: you think somebody's right, somebody's wrong, and somebody's going to decide who's right and who's wrong. That is the furthest thing from the truth in our legal system. It is a war of attrition, fought with dollars and endurance. But we turned that into an opportunity. Along the way, somebody told us there's a Chinese character that means both crisis and opportunity — we got to live that fully. What I mean is: we eventually learned to arrange the short sale of our own properties to favorable partners, things like that. And somehow, on our last deal — we built it for $72 million, sold it for $4 million, and we made $4 million doing it. I'm not saying that as some act of bravado; it's just the facts of the kind of unconventional path we took, figuring it out along the way. Take that for what it's worth. Chris Berg: I appreciate that you say it very modestly — and you said on the pod you did with Arie: "Look, I'm not suggesting this as a strategy. This is the one we went with, and this is how it worked." But you've got some battle scars. And as you and I talked right before the pod — I've always learned a lot from things that didn't go well in my life. So how did you take that learning and apply it to self storage — and why did you end up choosing self storage? Brad Minsley: Yeah. Well — in that situation, we had no money. The banks had unlimited resources and tremendous legal counsel. We had an ambulance chaser who, like most assassins, had three names — I'll spare him that. He was better than an ambulance chaser, but literally, that's where we found him: chasing an ambulance. What that taught us is that necessity is truly the mother of invention. There is always a solution if you sit there and think about it — and a lot of the time, to find it, you have to start thinking about things unconventionally. Like — the guy I worked for: we went and sat down with an asset-protection attorney, and to spread the legal cost, he brought in one of his developer buddies who was going through the same challenges we were. And the attorney said, "Well, you guys should get married." And they said, "What — to each other?" And, you know, it was Florida; gay marriage had just been legalized. So we had an honest-to-God, hour-long conversation about whether these two single guys should marry one another as a form of asset protection. So you can really get outside the box in how you think about these things. That imprinted on us, for better or worse: be willing to really get down in the weeds, think about things, and consider any option. You never know where those things go. So how did that affect where we ended up? Well — my brother and I, I said we were in multifamily, so how did we jump to storage? It's 2015. We'd been out on our own five years, and we were damn near starving to death trying to put multifamily deals together. The reason we were struggling is we didn't have any money. We'd try to get a deal under contract and raise money, and our equity partners would say, "Gosh, you don't have any skin in the game." "Well, pay us a fee and we'll put it in," or something like that — we just ended up being glorified brokers. So we said: we have to get a bigger piece of the pie. How do we do that? Let's vertically integrate. Let's become the developer. Let's become the GC. Let's even become some of the sub-trades. We felt we could get to some meaningful fees, which we could either collect and invest in the next deal, or contribute to those deals. However — multifamily is complex to develop and construct. So we asked: what's simpler? And that's how we set our sights on self-storage. I had a little experience with it really early in my career, but I was concerned about getting a date — I didn't think talking about self storage at a cocktail party was going to win me a date when I was 22. Shows you how stupid 22-year-olds are. In any event, here we were, 10, 15 years later, and we said, let's go build self storage. And our bank said, "What do you two knuckleheads know about building self storage? Why don't you run one first?" We said, okay, fine. So we went back to our investors, bought a storage deal — owned like one-tenth of one percent of it, as usual. But it came with a camera system, and we could see our manager. This was 2015 — cameras you could watch remotely were kind of a new thing. I was so freaking excited to see what happened at our storage deal each day. Put cameras up, put monitors in our office — and I'm watching, and our manager is literally sitting with his feet on the table. I'm like, what the heck is going on here? And I started to think: rewind the clock 30 years and line this up against a bank teller. Which one's not going to become automated? The bank teller has become an ATM. The guy washing your car — that's now a wash bay that can wash a Prius or an Expedition in the same bay. And renting a box out — this should be automated. What do I need that dude in there for? So, back to unconventional thinking — we went really hard at trying to figure it out, but nothing existed at the time to make it happen. We were 3D-printing parts — 3D printers were just coming out. We were taking parts from residential garage systems and cobbling them together. It took us about a year, but we finally got to the point where you could rent a unit through our website, and that would communicate with the controlled-access system on site to get you through the vehicle gate and to your unit. So we turned this thing on, and we fired our manager. And the first month, that thing did 48 leases — and the most leases it had ever done in any of the 12 months before that was like 30, 32. We'd increased leasing velocity by like 50%. We're like — holy smokes, we're onto something. And the rest was history. 2015 we bought it, '16 we automated, '17 we raised our first fund. Today we're on Fund Five — it's a $150 million fund. And life's good now. Chris Berg: First off, your story gives me hope — thank you for being candid. I love the "one-tenth of one percent" — you've got to start somewhere, right? But you're learning, you're growing, you're saying, "Hey, this is a way we can operate these assets more effectively." And I love that your initial thesis sounds like: simple good, complex bad. Brad Minsley: Yeah. Well — simple is so much harder than I ever thought. You know, one of the little things that came out of this is we created that little DaVinci Lock product — and for the love of God, I tried to do the opposite of it. The DaVinci Lock is a mechanical combination lock — no electronics, super simple, and for that reason it works. But that's not where we started. We tried to do electronic locks — I mean, we tried so hard. There's so much complexity that goes into that: power, communication, internal components that are weather-sensitive and temperature-sensitive, and customers you have to teach how to use it. We tried incredibly hard. And we figured out that simplicity is best. I love Elon Musk — he talks about "make the requirements less dumb." I forget all the steps of that algorithm — five steps — but in there is: simplify, then optimize, then accelerate, then automate. That has become part of our culture now: ask, "Is this something we really should be doing?" Then try to simplify it, then optimize it from there. Chris Berg: So one of the things that's always fascinating to me is how people approach assets — and it sounds like you've got some proprietary tech you're utilizing. A 63,000-facility self-storage database. So as you approach an asset, walk us through the underwriting process. What are the first things you're looking at? How do you implement this tech to mitigate risk and give yourself a margin of safety? Brad Minsley: Yeah. So we have two value propositions — I'll give you my 30-second pitch for how we raise money. Number one is the automation. And at the end of the day — the industry has taken forever, and I think we've only really figured out in the last year or two how to define automation. It's not manned versus unmanned. We think of a two-axis graph: the y-axis is customer satisfaction, the x-axis is operating efficiency. Automation is pushing out on both of those axes. If you introduce a technology, it had better improve customer satisfaction or push out on operating efficiency — without one coming at the cost of the other. A lot of people cram in technology thinking they're improving their model because they're becoming "more automated" — but if they're doing it at the expense of customer satisfaction, they're not getting anywhere. The moment you align your thinking down that vector, that's when you actually start creating value through technology and automation. Because at the end of the day, customer satisfaction is just another word for "what rent will somebody pay you?" The more they like your product, the more they'll pay for it. So that's automation — we build tools, and if they don't exist in the marketplace, we build them ourselves. And we're building them right and left. This is the most exciting age for technology: we've got voice AI agents, AI cameras, drones. I love new ideas — it's a blue-light special, for those of you who remember Kmart. Everything's up for sale right now. And then, on the other side, is our data science. I'm an econ guy by trade — I love data. What data is so helpful for is distinguishing between static and signal. There's so much freaking static, more now than ever — social media, news, all these things trying to evoke a response from you. One day the world's crashing under high interest rates; the next day we're going to have low rates and it's a bonanza. It's hard to know where we are in any of that. Our emphasis on data lets us cut through the static back to signal. So what did we do? Through some proprietary methods, we've been able to aggregate a database of 63,000 self-storage facilities in the country. And that was very hard — data is getting better; you had Noah on from TractIQ, they're making tremendous gains in creating good data, Radius+ the same — but generally, data is still very fragmented in our industry. Building the resolution logic to stitch data together from all these different databases has been a monumental effort. Forget the first piece of actual data — it took us over a year just before we could even start stitching data together. And then we're using machine learning — and there's so much beyond that now, neural networks, large language models, large world models; we're still just on the machine-learning side of things — which allows us to do the following. It lets us take our performance over the last 11 years and train the model on how we operate. Because nobody operates all stores equally — Extra Space, CubeSmart, they're going to operate some stores better than us, and we're going to operate some stores better than them. So it's figuring out how we would perform on any given store out of those 63,000. The machine-learning model tells us what rental rate we would achieve if we were operating it, and then we compare that to what rate they're getting now — and we can leaderboard out the entire country to see which properties we can impact most. That becomes our acquisition target list. Chris Berg: Wow. And I don't expect you to disclose the proprietary tech, but if there's a way you can speak around it: what data are you inputting for the machine learning to extrapolate rates? Is it 12 months out, 18 months — how far are you extrapolating rates? Brad Minsley: Generally, we're looking at what it is today: what would the rental rate be today, had we been operating it to stabilized performance? Why does a property get a rental rate? At the end of the day, it comes down to its constituency — what likely renters are there? Assuming you have an even slice of the population — you haven't targeted one group to build a better customer profile — you take a general slice of the population and assume that's an equal representation of who your tenants are. Those rental rates will be a factor of that underlying demographic. High income earners — no surprise — generally mean higher rental rates. There are a ton of other factors: how many competitors, quality of competitors, and qualitative aspects of the properties themselves — age, unit mix, visibility, things like that. And like in statistics, you get these R-values that tell you what percent of the variance is accounted for — we're at about 85%, is what the model tells us. So there's still room for improvement, but we have a very statistically significant model built. Chris Berg: And are you scraping the internet to find out what an asset's pricing has been for the past 12, 24, 60 months? Brad Minsley: We scrape data. We buy data. I think we're buying data from about a dozen different databases — I should know exactly, because I sign the check to pay the bills. Some of them, like US Census — that's not very exciting, and it's actually free — but there are others that get very exciting, that start to get predictive. Because really, what you're looking at is a community — but that community is in transition, right? So how do you look at communities in transition? US Census data is terrible at that: it's in 10-year increments. If a town's growing, US Census still thinks it's green pasture land, and now it's a bunch of D.R. Horton subdivisions — the Census is wrong. And the industry relies on that. You can look at Bureau of Labor Statistics — that's better, it's quarterly, but it's jobs, and people don't always live where jobs are. We've come up with ways to be a little more precise in those estimates. And we're still learning — there's still so much opportunity to improve the model. Chris Berg: How big is your portfolio today? Brad Minsley: We operate 5.3 million square feet, 122 properties — about half third-party, half owned. We sold our Funds One and Two. And if it's of any consequence: Fund Two we started in 2019 and sold in 2022 — so certainly we sold top-of-market, but so did a lot of people at that time. If you look us up on Preqin — commercial real estate funds — that fund, the last one we've liquidated... I'm proud of our team and our accomplishments; I'm not bragging, just giving them a shout-out: it finished first in the country among commercial real estate funds. We beat out Apollo, Bain — all of them. Chris Berg: Congratulations. Brad Minsley: I wish it was bigger than a $32 million fund. But it was a testament to having the right model at the right time, and I think we're continuing to build on that. Chris Berg: For people who aren't familiar with Preqin, tell them what that is — and secondly, to put you at number one in the entire country, what were they solving for? What metrics were the focus? Brad Minsley: So Preqin is a database of real estate sponsors and investors — their business is basically matchmaking. As a sponsor, I can go in and say: which endowments, pension funds, and so on are seeking to invest in commercial real estate, specifically self-storage, and would write a check between $2 and $10 million? So we can find who we should be talking to. Conversely, investors can ask: who are the top sponsors in our areas of interest — self-storage, secondary markets, $2-to-$10 million checks? Part of that matchmaking is that they leaderboard sponsors — you can filter by size and so on; we were extremely small at the time — and our fund was top of the chart on IRR. That's the metric: it was a 34% net IRR to the investors. Chris Berg: Congratulations. Brad Minsley: Hopefully it wasn't lightning striking once. Chris Berg: So I'm assuming your LPs are like, "Okay — thank you. Now how can I redeploy this with you?" Thus the $150 million fund. Walk us through that process — I'm assuming these guys want to reinvest with you — and then what's your thesis for the $150 million fund, long term, in storage? Brad Minsley: So — we have a great investor base. That said, in those days I'd say we were more country-club-type money — high-net-worth folks. We did our first fund off of CrowdStreet, so Fund One and Fund Two were more crowdfunding, with a somewhat expanded base. Now we're trying to migrate more into the registered investment advisor market — RIAs represent a bunch of high-net-worth folks, aggregate those dollars, and invest them with groups like us. That's new territory for us, and anytime you do something new, it's a learning experience — it's harder. This year has taken more effort, but we're making good headway. As far as the thesis — we're often cited as being contrarian. I guess it's like this: everything is a matter of perspective. You could say the self-storage market was great in '21 and '22 — well, it depends on what side you're on. If you were trying to buy, it was a terrible time. If you were trying to sell, or improve the performance of your operating properties, it was a great time. We're mostly buyers, most of the time. We only want to sell when my hairdresser — and I'm using that facetiously — is telling me, "Oh man, you're in storage? I'm thinking about getting into storage." That's a good time to sell. But we spend most of our time as buyers, and the last two years have been great. In fact, right now is probably one of the best times I've ever seen. Why would I say it's great? The high interest rates, combined with the REITs' low-street-rate strategy, have severely curtailed new construction for the last year and a half, two years. In fact, it became so obvious in our data science system — and we weren't even thinking about going into development — that we saw such a big variance we had to go fact-check it, to make sure the model wasn't doing something it shouldn't. And we said, "My goodness." So we went out, quickly raised $35 million, and did a development fund. We bought fully entitled sites in absolutely great markets — Austin, Charlotte, Savannah — from developers who just couldn't get financing in that environment. So why is it a good time? You're buying. Your construction costs are great. And on a macro level, demand keeps increasing — if you're in Austin, Texas, demand is increasing — while new supply is standing still. That's Economics 101: prices are going to trend up. I love riding those macro trends. Number two: Powell rolls off in May. I'm fairly certain the administration is going to put in somebody more aggressive about reducing interest rates than Powell has been. I'd buy all the real estate you can right now — all the real estate you own today will be worth more this time next year if rates are lower. So I'm very bullish on the supply-demand trends, and very bullish on where interest rates are likely to go. We are risk-on. We're trying to buy as much as we can. And the beautiful thing is, right now a lot of people are paying for the sins committed — perhaps overpaying a little in '21 and '22 — those deals aren't panning out, and they're reaching the end of the tolerance they have with their investors and banks. We are buying properties today at prices per square foot we haven't seen since 2019. And 2019 was the fund that performed top of class. Chris Berg: There's a lot I want to ask about what you just shared. Number one: what was happening in the metrics that made you go fact-check? What were you seeing that jumped out? Brad Minsley: So — the worst thing that can happen to one of our acquisitions is new construction opening up around it, right? So we track very closely, to the best of our ability, not just what's under construction but what's moving through permitting. And what we started to see was a large fracture between the number of properties being permitted and the number being reported under construction. We wanted to make sure we hadn't missed something in our data feeds — that something wasn't causing reported construction to be artificially low. And when we fact-checked, we said, "Geez — our peers must be running into a brick wall trying to get financing right now." That turned out to be the case. We use that same data — we know where all the storage development sites are: planned, permitted, all of that. We said, "We like Austin — let's go call on a few deals in Austin." Sure enough, we found one in North Austin and another in South Austin that were fully permitted, fully ready to go — but they couldn't get financing. They were literally terming out on land loans, with investors pulling their hair out. So we bought them at a great price and were able to start construction like 90 days later. We just started construction on the last one — we've been buying and starting them over the last nine months or so. And every single one we buy and start, the construction pricing comes in below what the last one was — by like a million dollars on a $10 million deal. Construction pricing is so good right now. In Austin — don't get me wrong, construction is busy out there — but if you're not doing stick-frame homes, you're a little slow right now. These are big red-steel multi-story deals, and we are getting phenomenal construction pricing on them. Chris Berg: Congratulations. My question then: with this $150 million fund and these dev deals — are you solving for IRR? Are you buy-and-hold-forever? Five-to-seven-year and recycle? Brad Minsley: Yeah — we're your traditional fund model. Like a 1.5% asset management fee, and an 80/20-type deal with a pref, and all that. We're heavily incentivized as a GP to maximize IRR — that's how we get paid best, and the investors are generally happy with the IRR. I would love to hold stuff forever. We keep batting around ideas on how to evergreen the fund — do you recap it? Do you form a REIT to drop these into? I wish people would sit on them longer, but that's just not the investor base. Chris Berg: My question around that, then, is how are you underwriting these? We don't look in Austin, but there are sites we're looking to develop as well — and the rates across the country, with what Extra Space is doing, make it tough to pencil. So what are you guys doing? Brad Minsley: That has been one of the biggest dividends of the data science system we've developed: it tells us what rental rate we would achieve. So we don't have to sample the market anymore. You have your move-in rate — but then there's what that person will ultimately be willing to pay you over the term, right? You might be moving them in low, but you'll be moving them up. And we know everything about our tenants — we know what each tenant within a band will likely be able to pay us. We've brought this model to our banks — for the bigger banks, to their data science teams — and they've sat down and validated it with us, to the extent that we've actually debated whether we'd make more money licensing our system to the banks or retaining it for ourselves for the real estate. I don't know that we're making the right decision, but so far we're keeping it for ourselves — because it's our golden ticket to getting deals financed and underwritten to rental rates that, if you just pulled them off Extra Space's website down the street, would never let your deal underwrite. Chris Berg: You literally just read my mind. Can you double-click on that? For example, we've got a piece of dirt in Moreno Valley. We felt really strong about our opportunity — get it appraised, go get financing. And then recently Extra Space bought a site next to it and dramatically lowered the rates, and now we're like, man, we've got to go educate — what's the assessment going to come in at? Walk us through how you're using the proprietary tech, lining it up with banks, and getting the financing. Brad Minsley: Yeah. So our data science system takes data going back 15 years — because there's been so much static in the last few years. For example, we literally had to cut the years from late 2020 through 2022 out of our system, because there was so much stimulus pumped in. Take a demographic band — simplifying to one attribute — if you make $50,000 a year, you can pay $100 a month. If you raise that to $130, most of those folks won't pay it — I'm making the numbers up, but that's the example. Well, during COVID, everybody making $50,000 was happily paying $130 and hanging in there. We knew there would be a reversion to the mean — those people at $50,000 weren't really $50,000 earners anymore; they were something higher, because they'd received so much stimulus money. So you remove that static. And the problem is: '21–'22 was COVID-stimulus static, and then '23 was Extra Space static. So most of our pricing data — what a demographic will pay — comes from before that period, back when rental rates were pretty much: you move in at $100, a year from now you're paying about $100. That was very good data. Using that, we've trained the model to say: what would this demographic band be able to pay? So we can go to a market like the one you just mentioned, pull the demographics, and we know what rental rate that underlying population will pay. That's the model we've shown to the banks, and they say: "Yeah, we get it. We see Extra Space is moving people in at 30 bucks. We know that's probably not the real final number." They can't see into Extra Space — they don't know what Extra Space is moving people up to. But we know they're probably moving them up to about $100, because that's what the demographic band that exists there can reasonably afford. That's how the model works. Chris Berg: Wow. Kudos to you. That's great. Brad Minsley: Yeah — brutal journey, but here we are. Again: necessity is the mother of invention. You stand out there and starve long enough, you'll come up with a solution. Chris Berg: Well, clearly you guys aren't starving, with the pieces you're putting together and the different funds — congratulations. I want to be respectful of your time; we said 30 minutes and we're over. I'd love to have you back, because there's a lot we haven't even gotten to — if that works for you at some point. Brad Minsley: You bet. Anytime. Chris Berg: Thank you. Is there anything else you want to add or share that I haven't asked? And if people want to reach out and find out more — maybe send you a bunch of money and be part of your fund — how can they do that? Brad Minsley: Look, here's my offer: shoot me an email — brad@10federal.com. We're an open book — right, wrong, or indifferent. I've brought more people through our office to learn about automation... We're the biggest believers, as a firm, in good values and the American dream. If I can help somebody improve the operations of their facility so they spend less time on it — so they can go spend more time with their kids, or earn more money — then I've done something good that day, and that's important to us. So: open book, hit me up. We're happy to try to help anybody who wants to improve their business, to the extent anything we're doing can help them do that. Chris Berg: Can I license your banking formula? Brad Minsley: Tell you what — if you want help, we'll tell you what rental rate we think you'd get in that market. Now, again, it's tuned to how we would operate — but most of us are pretty similar. We'll tell you what rate we think you'd get on that property, and if that helps you get some financing, then rock on, man. Chris Berg: My brain is spinning. Maybe, if you don't mind holding on after we wrap, we can chat about that. But Brad — thank you. Just such a great conversation, so insightful, and I appreciate you sharing as much as you did. Brad Minsley: Well, dude — thanks. Thanks for creating a forum like this. I hope somebody gets some benefit from something we've said today. Chris Berg: I can vouch that at least one person did — because I know I did. So thank you. This is the Self Storage Report Spotlight. Thanks so much for joining us — we'll see you back here again soon. — END OF TRANSCRIPT —