In this video, we’ll take a closer look at the four stages of owning a storage facility. From the initial planning and pre-development phase, where you’ll need to find a suitable location and secure financing, to the final stage of expansion and growth, we’ll guide you through the process.
The development and construction stage involves overseeing contractors and ensuring that your facility meets all safety and quality standards. In the operations and management phase, you’ll need to hire and train staff, set rental rates and policies, and manage tenant accounts and payments.
Finally, the expansion and growth stage may involve acquiring additional facilities or expanding your existing one. Whether you’re just starting out or have been in the business for a while, understanding these four stages is key to making informed decisions and achieving success.
So, if you’re thinking about investing in a storage facility, or you’re already an owner looking to grow your business, be sure to watch this video to learn more about the stages of owning a storage facility.
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Breaking Down The 4 Stages Of Storage Facility Ownership
Stage One: Get It Under Contract
What we’re going to do is we’re going to get into the stages of storage investing. It’s Self-Storage 101. This is what you should be doing to get started. As we go through the four stages, let me know if you resonate with any one of the stages and if you like one of these stages. This the four stages of owning a storage facility. The goal is to get a storage facility under contract. Your goal now is, “I want to get a storage facility under contract.” I’m in stage one now. What are the steps in order to get a storage facility under contract? That’s the question of the day. I’ve gone over this in previous sessions. There are two major ways to find a facility. Number one is you can cold call or what I do is driving for storage.
Notice that I do not put on here, “Go to a broker or a realtor and have them find me a facility.” I do either cold calling or we drive for storage. What we typically do now is virtually driving for storage. Both of these you can do. When you cold call somebody or you virtually drive for storage, these people are not ready to sell. They’re not thinking, “I wish somebody would cold call me and ask me if I would sell the facility.” They’re not doing that.
The ones that are online, the ones that are listed by brokers or Crexi, and all this stuff, those are all people that are ready to sell. If you didn’t see my pitch, I pitched out three of my facilities I’m trying to sell. I am ready to sell those facilities mentally with all my documents, my P&Ls, and all the balance sheets. Everything I have is all ready to go.
These people right here are not ready to go. They don’t have their numbers and stuff. A lot of times, you’ll ask them for numbers and it will take them forever to get the numbers. We’re talking to one owner now in South Georgia. We talked to him months ago, and he told us, “My CPA’s working on the numbers. We’re going to get you all the numbers.” Every time that we talk to him, he’s saying, “My CPA’s still working on the numbers.”
He was not running his facilities to the point where he had all his numbers, which is a typical thing when you talk to owners. They’re not going to have their stuff together. Know that this takes a lot of time and effort. What you’re going to do is you’re going to build your list by driving for storage or buying a list if you want to. I don’t buy the list. I do it myself. You’re going to build your list. I always teach to go directly to the owner because every time I have a realtor or a wholesaler in the middle of any deal that I ever do, it’s such a pain in the butt. The transaction is not fun.
We’re closing on a property directly to the owner. The owner, I can call him. He’ll hop on Zoom. He’ll give me any information directly. He’s working with us. He’s patient. I just closed on two facilities. One of them was through a realtor and the other one was through a wholesaler. Those transactions, I thought I was going to have a heart attack and die because they were so hard.
It’s always the eleventh hour when you’re working with a wholesaler and a realtor. Every time you close on a facility, it’s always the eleventh hour. I don’t get that. For me personally, I go directly to the owner and talk to him. I build a relationship. It’s so much easier if you have this relationship directly with the owner. My suggestion is directly to the owner.
All of the facilities that I have found are going to be either from cold calling or driving for storage, except for the last two that I closed on. Those were brought to me by a student or somebody else. I closed on them because they’re good deals. Deals are brought to me now because I’m out there. People bring me deals, “What about this deal?”
I closed on those, too, but right here is the best way to find deals. You want to build your list and call owners if you can. This is the way that you want to do it. The thing too about it is that you’re going to get the best bang for your buck if you can do these two things. This is the ultimate goal. Let’s say you’re saying like, “I am not going to put the time and the effort in. I’m not going to call the owners. My list is too much. I don’t want to do that. I’m going to go on Crexi.”
If you’re going to go on Crexi, LoopNet, a realtor, broker, or whatever you’re going to do, know that prices are super-duper high and ridiculous. We looked at one now that a student brought. She was like, “I think this is a good deal.” They wanted $725,000 and we ran the numbers. The numbers came out at $400,000. You put an offer in for $400,000, and then you piss everybody off. If you can work with the owners and build a relationship, that’s the best way to go. My suggestion is 1) Build your list. 2) Call the owners.
After you call the owners, you’re going to get all the information from the owners to run a deal analysis. If you have my Deal Analyzer or my course, I get into this where you know exactly what you need and then input the numbers. It tells you if it’s yes or no, “This is a good deal.” You have to run the deal analysis. What that means is that you need to have some spreadsheet where you can plug numbers in, run the deal analysis, and then look at the deal to see if it’s a good deal or not.
You need to understand commercial deal analysis. The next step in getting a facility under contract is getting all the stuff to run the deal analysis and making sure that you understand whether or not it’s a good deal. That’s going to be your next step, building your list, calling the owners, getting the information, running the deal analysis, and seeing if it’s a good deal.
If it’s a good deal, you got to put an offer in. This is where our Deal Analyzer comes in. We don’t put one offer in. We put four offers in. We have 4 to 5 offers in. You don’t want to just put a cash offer or an offer in. You need to get the people’s wheels turning. Especially the owners that are not looking to sell, they want options. If it was a person that was like, “I just want to sell. I’m going to go to a realtor and sell it. I’ll try to get the most amount of money that I can,” their mind is set on one path and one path only.
You just put in that one offer. A lot of times, too, when you offer a creative deal structure and stuff to realtors, they’re like, “What? This isn’t going to happen.” However, if you go in a back way like I do when you go to the owners and you get to know them, create a connection, get all the information you need, and put in 4 or 5 different offers, and creative deal structures, then they will start turning.
I’m going to tell you all, over the next couple of years, the owners are open to creative deal structures because they know that their price is not going to work with 9% and 10%. Interest rates are 8%, 9%, or 10%. I believe they’re going to go over 10%. Who wants to pay 10%? The only way 10% works is if you’re buying $0.50 on the dollar. If you are not getting your deal for $0.50 on the dollar, you cannot go to a bank and get a loan now.
You have to do creative deal structuring. You have to understand this concept. It’s running deal analysis, understanding commercial deal analysis, and then you’ve got to understand creative deal structures. I have my bootcamp coming up on July 3rd and 4th, 2023. It’s two full days of funding deals. How do you fund deals? It’s going to be raising private money. It’s going to be creative deal structures, syndicating deals, and starting funds. Also, going to banks and getting loans. It’s any type of way that you think that you can fund a deal, we’re going to go over that in the two-day bootcamp.
The StorageNerds doors are open now, if you’re interested, go to StorageNerds.com and fill out the application. You can then get access to my calendar and we can go over the coaching program. You need to learn creative deal structures and commercial deal analysis. These are your steps in order to get a storage facility under contract. We’ve put the offer in. Now, you got to negotiate the offer. We’re negotiating six deals as of the moment. Five of those are owner-finance deals, and then one of them is not. It’s a cash offer.
One of them is in Texas. There are 2 in New York, 2 in Georgia, and 1 in Florida. I can’t remember where they’re at. They’re all over. We’re going back and forth. What we do, too, is we put the offer in, and then if they come back and say, “I’d be interested in discussing this,” I hop on Zoom. Immediately, I have a Zoom meeting with them, and we discuss, “How’s this going to work? Are you open to a creative deal structuring or not?”
Whatever they’re open to, whatever they want, we then put it into a contract and send the contract over. We do not go back and forth with an offer like, “Here’s another offer letter.” We send over the contract and put all the terms in and everything. The owner reads through those terms, and they’ll come back and say, “I don’t want to change this. I want to change this.”
That is our negotiation tactic. That’s our strategy. We try to get it under contract. That process takes several weeks. You don’t ever send over a contract. One time out of the sixteen deals that we had, we sent over the contract and then they signed it and send it back. I was like, “That’s awesome,” but every other time you send the contract over, they’re like, “Change this, take this out, update this, change this,” or whatever.
That goes back and forth for several weeks a lot of times. It takes forever. This is a very long process. The hardest part of this whole stage is this part right here all the way to the part where you’re building your list, calling your owners, and getting all the information from the owners. Building your list takes a long time. You then got to call the owners. We have ten virtual assistants that do nothing but call owners. The rule is you cannot call an owner until you have 300 names on the list.
Once you have 300 names, then you’re working that list. You’re beating it to a horse and doing a lot of follow-up and stuff. You could start building your list again once you go through that list. To build this list, it’s a month of work. You got to put the time and effort in, but to call the owners takes a while. It’s not fun to call the owners.
Do not call an owner until you have 300 names on your list of potential storage owners. Once complete, you can start beating it to a horse and do a lot of follow-ups. Share on XIt’s fun when an owner’s like, “We’d be interested.” You perk up and you’re like, “Let’s do this. What do you want to do?” However, up until then, this part right here is grinding. From there, you have to get all the information from them so that you can run the deal analysis. That takes time, too, because a lot of times, they don’t have all that ready. They’re following up, “What about this?”
We’re getting pretty good at that stuff, but it’s taking us a good ten days or so to get all that stuff and put it into the Deal Analyzer, run the numbers, and everything. You then got to put in the offer and send them over. They get back in the week. It’s not ever fast or anything. They’re getting back to you and then you’re negotiating. Typically, this is about 90 days right here. This is a good couple of months.
As I said, the guy that bought the course bought it several months ago. It took him about 90 to 120 days to get his first deal under contract. He’s supposed to close in 60 to 90 days. Within 6 or 7 months, he’ll have that thing under contract. He’ll own a storage facility. That is honestly what I see. That is about what it takes just to give you guys an idea of how long this process is. This is not fast.
Stage Two: Closing And Taking Payments
You then negotiate the offer, and after that, you negotiate, send the contract, and get it under contract. If people are like, “I don’t have a contract,” there’s a contract in the course. Everything you need is in the course. That is stage one. The first stage is to get it under contract. Now, you got it under contract. You’re like, “It’s easy. Let’s do this.” The goal of stage two is to be able to take payments on the facility on the first day that you close the facility. There are two goals. It’s to take payments and close the bid. Close it and take payments. Those are your two goals. For stage two, you got it under contract. Now, you’re like, “How do I pay for this thing??”
You got to figure out how you’re going to pay for it. There are all different ways to fund a deal, but you could do owner financing. This is a lot of creative deal structures. If they want, you can get a traditional loan. If they’re like, “No. I do not want to own or finance this,” you could do a traditional loan plus a creative deal structure. You could say, “The bank is only going to give me $1 million. If you want $1.5 million, why don’t you do a second on the backend if I buy this from a bank?”
There are all kinds of creative structures that you can do. You could JV partner. If you partner, you got to figure out how you’re going to set that up. Partner is the whole thing. You could do traditional loans. You could create a deal structuring. You could pay cash. If it’s a larger deal, then you could syndicate. You could borrow private money or private debt. You could crowdfund or start a fund.
That’s what I have with my Self-Storage Fund of America. It is a crowdfunding fund. It’s a way that I could pool money together. I started the fund so I could pool money together. Trying to fund it is what you’re trying to do. That’s to close the deal. That’s step one. That’s that part, but you have to also be able to take payments.
This is what we call the onboarding phase. You have to onboard your facility. Onboarding your facility means that you have to figure out what your software is going to be. You got to get your merchant account set up. You’ve got to be able to take payments. You’ve got your software set up. You’ve got your tenant insurance. It’s everything that you need. When you close on that facility, you’re able to manage that facility. You don’t want to be like me.
At my very first facility, I closed on it, but then I was like, “Now, what do I do?” I was like, “I got to take payments. I’m going to go get some software.” That’s basically how it was. I was running around like a crazy person trying to figure it all out. What we do is we do what we do the onboarding beforehand. This process typically takes about 90 to 120 days. A lot of the time, a lot of the software companies take several weeks to even onboard this. You got to go through their whole process and stuff. You want to be working on this before.
In my Deal Analyzer, there is an onboarding checklist. There are about 50 different things that you have to do as our onboarding checklist. You could always update it or whatever, but it’s our onboarding checklist of all the different things that you have to do. For instance, with insurance, we just closed on an SBA loan. These are not fun at all, but we had to have general liability insurance, a business policy insurance on the facilities, plus a business policy and worker’s comp. You have to quote all that out and get it all done. That took almost a month to get all the insurances that this bank wanted.
There is so much stuff that you have to do in the onboarding phase. You want to close on the facility, but you also want to be able to take payments within the first week that you buy the facility. A lot of times, that does not work out unless you give yourself plenty of time on the backend to implement all the processes.
There is so much to do during the onboarding phase of owning a storage facility. You need to close on the property and also take payments within the first week you buy the place. Share on XIf you wait till the very end, then you’re going to screw yourself over. One of my students just closed on a facility in Louisiana. The facility was using software to manage itself. He kept that same software and they flipped the switch over. He got all of that information imported over to his new website and everything. The thing is no matter what, whatever software that you use, you have to get the payment information from the owner or the tenant payment info. Also, you have to get your contract signed.
Stage Three: Transfer Ownership
You cannot do this until you close. This is stage three. Stage three is now you own a storage facility. You closed on this storage facility and now you own it. What do you have to do? The fun starts now. You have to contact the tenants, let them know that you are the new owner, get them to go online, get into the software, set up their account, sign the new contract, and get the payment information.
Whether or not you’re switching over from one or you’re starting from a new one, this stage is hard because it’s like chasing tenants internally. We have a lot of tenants, like 1,500 tenants. We just closed on a facility. It’s 500 doors. Internally, we have one person that does this because every 3 to 5 months, we close on a facility. This stage is called the transfer ownership stage.
This is where that one person, you or somebody else, your VA or whatever is calling the tenants, introducing ourselves, “This is Ms. Lilian’s Self-Storage. We’re the new owners of the facility. We’re the new management company. We need to get you into the system so that you can get access to your account and get access to your stuff. Can you please log into our account? Go to MsLillians.com and then fill out the information. While you’re in there, you’ll need to sign the new contract and put in your new payment information.”
That’s a whole process to do that. That’s called transfer ownership, and the main thing is getting them into the system. While you’re transferring ownership, when you own that facility, you’re hiring boots on the ground so that you can have somebody to go out there, overlook, clean up the trash, and stuff. That could be you or somebody else. Who’s going to be the boots-on-the-ground person to be the person that goes out there once a week or however big the facility is? You need to go out there and do all the work that needs to be done out there.
In the first 90 days, there’s a lot of work that goes on. After 90 days, there is not so much work. Have boots on the ground, but you need the phone person and a phone system set up. In stage two, you can set up phones, but what we do is we port that phone number over. We close, we keep the phone number, and port it over, but then we need somebody to answer the phones. We’re not going to do that. We have somebody answering the phones 24/7 so that we do not miss a call, but you have to get that set up after you close.
In the onboarding process, you can be searching for these. We’re searching for these in the onboarding process, but the true, real setup and implementation is after you close because that’s when people start getting the calls. You don’t want to hire somebody after because then you’re going to start getting calls and you have to train them and stuff. You want to give yourself a couple of weeks to train these people, get it up and running, and get the thing going.
Stage three is transfer ownership. Now, you transfer the ownership. Also, each one of these stages is 90 days typically. You’re doing this. Sometimes it takes longer. Sometimes it’s shorter, but on average, it’s about 90 days. These are the three stages. Stage one is getting it under contract. Stage two is closing on it and being able to take payments. Stage three is the transfer ownership stage. You own the property and you’re trying to get it up and running.
Stage Four: Automation and Systematizing
Stage four or the final stage is automation and systematizing. Now, you’re 90 days into owning this thing. A couple of months in, you’re like, “I need to get in there and understand this software. I need to take advantage of it. I need to use this software with all that it offers.” The software nowadays offers a lot of stuff that you can do depending on the software. Some are better than others. Some are cheaper. Some are more expensive, but you want to get in there and you want to utilize how much of this can you automate.
For instance, can you automate dynamic pricing? As price increases, can you automate auctions? Can you automate tenant insurance? Can you all automate mailing letters, price increases, or whatever you do? Can you automate emails? You’re getting in there and trying to automate everything as much as you possibly can. There’s a ridiculous amount of stuff that you can automate in the software, but you want to get that all set up.
In the first couple of months that you own a storage facility, you’re trying to get the tenants into the system and get their contracts signed. It’s hard for you to get into the nitty-gritty of setting everything up. You have to set up the basics in the software. You’re going to have to put your unit mix in and your unit sizes. You will get your facility maps set up and this kind of stuff.
That is in stage three because that’s when you have access to the software, get in there, and start playing around with this. You set the basics up while you’re trying to get the tenants in and get all their contracts signed and their payment information and stuff. That’s what you do. After a couple of months, you’re like, “I’ve got 80% or 90% of my tenants in. I’m getting the hang of it. I’m answering the calls. I have the script. I have VAs training. I have the boots on the ground going. Let me get in and create some maintenance systems.”
“If I want to set my pricing up, is it going to increase at certain times and periods or whatever? How am I going to automate my auction process? Can I do that online, or do I have to do that manually? Can I automate any emails or text message reminders? In my software, do they offer this or not offer this?” Some software offers this. Some software don’t. Whatever software that you use, you want to utilize it as much as you possibly can. The truth is when I buy facilities or when my students buy facilities and they have software that they’re using, 80% of the time, most owners are only using the software to put their tenants in. If they want to do a price increase, they’re manually increasing those prices.
However, you don’t want to do that. You want to automate that. You could set that up so that it’s managing itself. You want to make sure that you find the software that you could do because there are very basic software to amazing good ones that can automate everything. You have to figure out, “How much do I want to automate? Do I want to get in there and do this stuff myself, or do I want to have it where I could set it up and it does itself?”
Some people are different, but that’s it. This is going to take you about 90 days. During this stage is when you’re like, “I feel like I can get out there and look for another storage so I can focus. I’ve been looking. I’ve been seeing wholesale posts or whatever, but I want to get out there and find a facility. I’m at that point now.” You can then find another facility. That whole process starts again, and then you’re going back. You’re starting to get out there, build your list, talk to owners, call them, etc.
Those are the four stages of finding a storage facility, getting it under contract, owning it, and buying it. That’s what you want to go through. In all these stages here, you can do 1 of 2 things. If you need help with this and you want some walkthrough, you can get the course and then we’ll walk you through all of this. Every point I talked to is all into the course and then some. Go to StacyRossetti.com and click on the course, Super Simple Self-Storage. It will walk you through that.
The course teaches you how to do deal analysis, but the Deal Analyzer is a separate product. If you want to be that person that puts out more than one offer, then you want to get the Deal Analyzer because it will calculate five offers for you at the same time. That’s the Deal Analyzer. That’s available to you as well at StacyRossetti.com.
If you’re reading this and you’re like, “I want to get a mentor coaching on this,” then you should check out StorageNerds. The doors are open now to StorageNerds. With StorageNerds, three times a year I take ten students. If you’re interested in having me hold your hand and walk you through the process, I would highly recommend getting onto StorageNerds.com and filling out the application so that you can get access to my calendar and discuss what your goals are in storage.
If you truly want to buy a storage facility and close within the next six months, as it says, where you’re going to close this within 90 to 120 days and you want to close a storage facility and buy one, I can help you to do that. If you’re reading this, and you’re like, “This is a lot of work. This is not what I was thinking,” what you should do is you should become a passive investor.
I talked about how you fund deals. There are a whole bunch of different ways that you can fund deals like owner findings and creative deals. You can go into a bank and get a loan. This is the one that we have now that is called the Self-Storage Fund of America. Before, I syndicated at least four deals. I’ve done those through either private syndication or through the Self-Storage Fund of America.
If you’re interested, the website is StacyRossetti.com and you can get the course here or the Deal Analyzer. You can also go to StacyRossetti.com/fund. I pitch the fund every single week, and then you could hop on and you could become a passive investor if you’re like, “No, I’m not going to do this anymore. I’m going to put my money in. I’m going to let somebody make the money for me.” That is passive investing.
There was one question. It was, “What insurances are needed if you’re not an SBA loan?” It’s the same insurance, but you don’t need workers comp because you’re not going to have a W-2 employee. Typically, you’re not. If you’re going to have a W-2 employee, then most likely, you’ll need worker’s comp. However, if you’re not going to have a W-2 employee, you are going to need hazard insurance, which is if there’s a fire, tornado, or a tree falls on the unit. That’s hazard insurance.
Also, you’re going to need a business policy. You’re going to need the same things that I needed. All my deals, I always closed. Also, on the insurance, whoever’s going to be the person that lend you that money, if it’s going to be a bank, an owner, or whatever it is, they need to be named on that policy. In case you die or something or the thing burns down, their loan will be paid off first, and whatever’s left over, you get. That’s how it works. Those are the two insurances that you need.
I appreciate you guys reading. You could go back to StacyRossetti.com. Everything that I have and everything that I do is on that website. There’s one more question. “Is the boots on the ground a 1099 employee?” Yes. Typically, they’re 1099 employees. It’s a contract worker. I appreciate you guys hanging out with me. Next episode, the training is going to start on Wednesdays. It’s called the Weekly Wednesday Webinar. It’s going to be 1:00 PM Eastern. If you want to keep learning, make sure you block that out. I’ll be here to teach you how to invest in self-storage. I appreciate your time. Take care.
