Are you ready to learn the secrets of turning storage investments into a million-dollar fortune? You better not miss this episode because Stacy Rossetti will share her secret sauce to make $1M in storage space in three years. Discover location tips, budgeting strategies, and unit optimization for maximum profits. From newbie to pro, this video is your guide to storage success. Watch now to start your journey to financial independence!
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Start Your Journey To Financial Independence: How To Make $1M Through Storage Investing In Three Years
I appreciate you all coming in. I teach every Wednesday for free. Anytime that you need a pick-me-up, or you need to be inspired, you could hop on. We have the triad. We have on Wednesday this free training. We have my course, which is called Super Simple Self-Storage. We have the Deal Analyzer. The 4.0 is the newest version that came out. This is the version where you can run five different offers at the same time and look at all different five offers. There’s the cash offer and a bank financing offer. There are ways to do private lending offers, seller financing offers, and different kinds of creative deal structures.
If you don’t know me, I push credibility structures, especially now because the market is nuts. I am seeing it every day. Every week, we’re putting offers out. I have fifteen virtual assistants that do nothing but put offers out on deals all across the country. I know every market and every state pretty much because we put offers in almost every state now.
The market is crazy. The reason why I say the market is crazy is there are two things. Let’s say you have $50,000, $100,000, $200,000, or $300,000. Your money is not buying a lot of properties because if you’re thinking that you have to go to a bank and get a loan, then you’re typically going to have to put 25% to 30% down on a property. Your interest rates are going to be anywhere from 7.5% to 10.5% depending on what type of loan. What I talked about is all of the financing.
This is a big topic. It’s an important topic to understand. Unfortunately, your money doesn’t buy much if you have to go to a bank because you have to put so much money down, and you have so much interest. This is why we push seller financing and creative deal structures. When I’m talking to owners, I’m like, “Let’s come up with a structure that makes you and me happy because going to the bank is only going to make the bank happy. Let’s come up with a way to do it.”
I’m going to tell you, owners. If you are the type of person who can talk to owners, be realistic, and say, “The truth is it sucks out there. I know you want to sell your storage facility. I get it. Let’s work out a deal.” For instance, one deal we have in Pennsylvania has two facilities. It totals 125 doors for the two facilities. They’re right next to each other in this tiny town. The owner wants to sell. One of my virtual assistants found this deal. He’s calling my virtual assistant and saying, “When are you going to get the offer?” His price is $850,000 in cash or bank financing. If we want to owner finance, it’s $975,000.
This is a very normal scenario. All owners understand that if you’re going to have to go to a bank and get financing, the price for the property is going to have to be lower than if we could seller finance that property. I want to make sure whether or not you buy my deal analyzer or not that you’re not just putting in one offer. If you go to Crexi, look at a facility, find a facility, and talk to the realtor, the realtor is expecting one offer, and that’s it. They present the offer, and the owner says no but if you give them an offer letter where there are five different offers, then all of a sudden, the realtor’s mind and the owner’s mind open up, “This person is thinking outside the box on how they can get these deals done.”
In this market due to the lending situation, you have to think outside the box. The more creative you are, the better you are. This is exactly why we created the Deal Analyzer. We would put in one offer and maybe offer some owner financing. We didn’t push a lot of it up until the last couple of years. For the last couple of years, we started giving all these offers out. I had two facilities that we got owner financed. They’re $2.5 million facilities that we got owner financed. The seller was like, “I’ll seller finance. I want this amount of money. I know the banks are not going to lend on this. Let me seller finance it.”
Due to the market and lending situation, you have to think outside the box. The more creative you are, the better you are. Share on XThey’re big facilities. If you’re not running your numbers in five different ways and coming up with five different offers, you are missing out on opportunities. I see people out there saying that the only way that they buy money is through the bank because that’s how you can leverage yourself but the truth is now is not the time to be leveraging yourself with banks because interest rates are so high.
Another thing with seller financing is that I’ve been getting between 4% and 6% on all my deals. You can’t get 6% anywhere in the market. 7.5% is a good number, and that’s for a conventional loan at 30% down. That’s why I pushed seller financing and my Deal Analyzer. I have a whole bunch of training videos that go with it to show you how to run the numbers, put the numbers in, and stuff like this. You will be able to start running your numbers and putting offers with this Deal Analyzer immediately.
This course right here is where I’m holding your hand and giving you a step-by-step process on acquisitions, marketing, raising money, management, and that stuff. This is why I call this the triad. Make sure that you’re also joining my Facebook group. It’s called Super Simple Self-Storage. Make sure you join that as well. As you go through these three things, and you’re starting to get out there, look at deals, and put offers in, you can ask the questions because my team and I look at this and answer any questions that you have. I’ll help and guide you through the Facebook group.
Somebody asked what’s the difference between the 3.0. In the Deal Analyzer 3.0, you get inside this course but you cannot run five offers. This is the one where you can run five offers at the same time. You could put your financing terms in and stuff like that. This is one offer at a time. This is the one that we used up until 2021. We launched this in 2022. It took us a good year to even put this thing together. My husband created this. All my virtual assistants or VAs use it. Everybody else out there looking for deals is using it. We have $65 million in offers out, and it’s all with this Deal Analyzer.
I’m here to guide you and train you. You can ask all your questions here. You have the course to go through. Educate yourself on the whole process from start to finish. You have the Deal Analyzer to put in offers. I don’t know what else I could do to help you. I have no idea. You can get all that at StacyRossetti.com. A quick reminder too is that the doors to StorageNerds open on September 3rd, 2023. If you want to get onto the waitlist, you can go to StorageNerds.com. That’s the coaching program where I hold your hand. I’m like, “This is a good deal. Go out there. Do this.” You can talk to me on one-on-one coaching calls and stuff.
We have so many newbies here. Everybody wants to get into storage. I get it. I love storage. It’s the best thing that ever happened to me. The hardest part to get into storage and any type of real estate investing niche is, “What are my first steps? What should I be doing now?” I thought I would do the first steps so that I could guide you, help you get out there to start looking for deals and give you some tips and tricks on what we’re doing internally.
I’m wiring money over. It’s scary when you have to wire $1.3 million. It’s scary to wire that money. I’m purchasing a property for $1.4 million. We’re wiring the money over to the attorney. We’re closing on the deal. We’re closing on number sixteen. This thing has been taking me forever to close but finally, we’re closing on this deal. It’s going to be a fantastic deal. We’re closing.
In 2022, we closed on quite a few deals. I’m buying bigger deals. I’m moving on up but even if I talk about a $1 million, $2 million, or $3 million deal, the concepts are still the same. It changes when you’re getting into 50,000 square feet. Maybe it’s bigger players and stuff like this but the concepts are the same. You can apply everything that I’m saying to a $200,000 deal or a $2 million deal. My Deal Analyzer can do that as well for you. Don’t get afraid because I’m doing bigger deals.
The first 11 or 12 deals, we bought for less than $1 million. The last six that we bought have been over $1 million. We still haven’t even gotten past $3 million. We’re not buying super big deals or anything. What that means is that we’re buying deals in secondary and tertiary markets. You want to keep in mind what type of market. You’ve got the primary, secondary, and tertiary markets.
Type Of Market
Notice how small the primary market is. For some reason, everybody thinks that they have to own storage in the primary market. Those markets are major cities, and the market is not that big. There’s way too much competition. The prices are too much. There’s too much turnover because prices are too high for tenants. You have to think about what a tenant can afford. People can’t afford $300 a month for storage. The turnover in primary markets is high, especially now.
You can see a huge problem throughout the entire country. We used to run our numbers at 92% and higher. We’re now running our numbers at 85%. The goal is to get to 85%. If you’re at 85% to 90%, you’re doing great on occupancy because there is so much storage out there. In the secondary and tertiary markets, notice how big those areas are. There’s a bigger area of secondary markets.
There are a lot of cities that have populations of 25,000 to 100,000. That’s for secondary markets. Tertiary markets have less than 25,000. That’s what you have to think of. Think of less than 25,000. There are lots of lands across the country where there’s a population of 25,000 or less. There are more cities and towns that have less than 25,000 people than there are in the primary market. Your market span is way bigger in a tertiary market. Your prices are going to be lower because the cap rates are a little bit higher.
Instead of focusing on, “I live in Nashville. I want to invest in a suburb of Nashville where I have to spend millions of dollars to invest,” there’s nothing wrong with going into tiny towns in the middle of Tennessee and trying to see if you can find storage. The first twelve facilities that we owned are all in tertiary markets. All the ones that we bought in 2022 are in secondary markets.
There are what I call sub-secondary and sub-tertiary markets. Sub-tertiary would be even smaller with 5,000 or less. Sub is 5,000 or less. Sub-secondary would be 25,000 to 75,000 or something like this. One facility that we own is in a secondary market, and the rest are either sub-secondary, tertiary, or sub-tertiary. We have worked our way up. There is nothing wrong with getting started in a tertiary market.
I want to make sure everybody knows this, and then I wanted to give you an idea of what the populations are. Secondary markets are not cities that are close to primary markets. A secondary market is a standalone market or city that has anywhere from 25,000 to 100,000. Texas has a lot of tertiary markets. There is nothing wrong with buying storage in any of those. It’s expensive in Texas. Even Texas is expensive in a tertiary market. There’s nothing wrong with that. Keep in mind where it is.
Price Is Everything
Are you interested in a tertiary market or a secondary market? Are you still like, “I want a primary market.” In terms of prices, the most expensive facility we bought was $2.5 million, which is in a secondary market. We bought two $2.5 million properties in secondary markets. Think about that. The one that we close on would be in a sub-secondary market. It’s a $1.4 million facility. The tertiary is typically $1 million or less.
With the market being where it is, if you only have $50,000, where are you going to be looking for deals? If I only have $50,000 to buy a facility, I’m only going to be in one market. I should not be looking at any of the other markets. This is something I’ve talked to my students. My student has $100,000. We found a facility in Georgia for $750,000, and she only has $100,000. She’s talking to the lender that I introduced her to that lend in that area. At $750,000, they are going to need $200,000 down. That’s 25% down.
If you want to buy something for $750,000, and you don’t have $200,000, you’re not buying this thing. You can bring a partner in but the thing is when you bring partners, you’ve got to give up money. Maybe this thing is worth $1 million in the next couple of years. Maybe you could appreciate it. Appreciate and stabilize it but that means that you’re sharing $200,000 with somebody. You’re going to give up $100,000 to partner and stuff. The question is this. Do you want to do that? It’s hard with smaller deals to partner because the truth is the cashflow is hard. You have to give up half of whatever it is. You’re giving up half of what you make on the back end.
Partnering on smaller deals is hard unless you’re okay with giving up a lot of your money. There’s nothing wrong with that as well. You have to get your foot in the door. I have a student. He doesn’t have any money at all. He’s like, “I’ll be your boots-on-the-ground person. I’ll manage this thing. I’ll do it for 20%.” He will do whatever. His foot is in the door. You have to give up a lot when you’re partnering.
We have a $750,000 to $800,000 deal. I can’t remember how much it was. She has to come up with $200,000 down. She’s going to have an interest rate of 7.5% to 8%. It’s super high. They’re going to be breaking even. There’s no way to even split that money until they increase the rates and stabilize them, which is going to take anywhere from 18 to 24 months and then still make some money on the back end when they sell it. In 3 or 4 years, they could sell it, make a couple of hundred thousand dollars, and share it.
Partnering is difficult on small deals. You don’t want to put that out if you don’t want to but if you’re okay with giving up money, then you can partner to do bigger deals. Know that if you have $50,000, and you don’t want to partner, then you should only be looking in sub-tertiary areas and maybe a tertiary market but most likely, you’re going to find something in the sub-tertiary market.
I talked to my student and told her that she has $100,000. That’s it. She needs an income-producing property. She could only afford $500,000. We need to be looking at tertiary markets in the Southeast. That’s where her market is. You’re going to find nothing for that on the West Coast. It’s super expensive on the West Coast. Even in the Northeast, this is too expensive because this person lives in Maryland. We were looking in Maryland for deals. She can’t afford anything in Maryland and Delaware, nothing at all. There’s nothing North. We’re starting to look now at Southeast for her and all these states. We’re looking in smaller towns because that’s what she can afford.
Wilson says, “Are there lenders who are willing to lend on the asset and its cashflow?” All commercial lending is asset-based lending. It’s all based on your cashflow. That brings me to the second thing. We talked about this here. The market lending conditions are your biggest concern. The second thing that you have to concern yourself is occupancy. Your facility is only worth how much it’s making, how occupied it is, and how much the tenants are paying.
Your facility is only worth how much it makes, how occupied it is, and how much the tenants pay. Share on XThere is physical occupancy versus economical occupancy. Physical means that you are full. We have one that one of our students is buying. The owner is like, “We’re full,” but only 69% of the tenants are paying. Based on the market and the economy, occupancy is a huge problem. We’re down. I see in our numbers that we’re down with people that are coming in as tenants and then what they’re paying.
We are doing a ridiculous amount of auctions. I’m going to give it to you straight. We’re doing a lot of auctions, and occupancy is down but the truth is real estate is all a cycle. You’re going to have awesome years and horrible years. We did great in 2022. We were awesome. In 2023, it’s not so good. It’s good but it’s not so good. Maybe in 2024, who knows? Is it going to go up or down? We have no idea because we don’t know what’s happening.
Occupancy is the biggest concern. We are we’re doing so much marketing and trying to come up with different ways to market and get new tenants. We have 4 or 5 people that answer our phones for us. We have 2,000 doors. If we have an actual tenant calling to get pricing from us, “How much is your unit? I need a storage unit. How much is it?” the rule is that you need to do whatever it takes to get that tenant into the door. We’re doing price matching, 50% discounts, and first-month free to get the person in the door because typically when they come into the door, they will stay for at least a while depending on the location. In primary markets, it could be not long but in secondary and tertiary markets, they tend to stay for a couple of months, six months, or longer.
You should do whatever it takes to get that tenant into the door. Share on XThat’s called the customer lifetime value. You got to know how long on average in your market somebody is staying. Typically, how long do they stay as a tenant? You know how much money you can spend on marketing because you know how much money they’re going to be bringing in as income. Occupancy is a huge issue. If you as an owner of the facility are not focusing on it, then you are going to lose the game, and I’ll buy your facility within the next two years.
There are many owners. We are talking to a ridiculous amount of owners that have bought facilities in the last few years, and they want out because they don’t realize how much work it takes to run a facility, especially nowadays when there’s so much competition. You have to work. Gone are the days when you can put up a sign, and people will come. If you’re not doing Google Ads, you don’t have a Google Business listing, or you’re not doing creative marketing stuff, you’re out. Your prices are cheap.
Creative Marketing
You’ve got marketing and prices. As an owner, these are the two most important things that you should be focusing on. What are you doing to bring new tenants in? That’s why I said when we get a lead, we have discount codes that our phone people could put in. The question is this. What are you finding out there? Let us know the prices. Are you finding something cheaper? We will match that price. We will give you 10% less than that price.
You want to leave or move out. What if we give you the next month free and even the next 50% off? The rule is you have your codes. You know what you should be doing. Let’s try to keep them in the door or do what it takes to get them as a tenant. That’s how it is. In the last few years, there were so many people needing storage. You don’t have to do that. We were full. We were doing what we call dynamic pricing. Dynamic pricing means when you’re 80% full, your unit is this much. 10×10 is this much. When you’re 85%, it’s this much, which is higher. If it’s 90% full, it’s this much higher priced. If it’s 95%, it’s a higher price. If we only have one unit left, you’re paying a ridiculous amount of money for that thing.
Gone are the days of dynamic pricing. Now, it’s like, “What do we need to do to keep you in as a tenant?” Occupancy is so bad. I hope I’m not scaring you off because the truth is that investing in self-storage, it’s very hard to have cashflow. If you’re looking for cashflow, a lot of times, the deals you’re going to find are not going to be cashflowing now or within the next year. Maybe it takes a year to stabilize them or something like this. You might be paying a little bit more than what it’s worth and knowing that you’re coming out of pocket but in the end, the best thing about storage is the appreciation on the back end.
Storage is worth a lot of money, not in the interim but on the back end. That’s where you build your wealth. On a scale from 1 to 10, what risk level are you? This is one of the questions I ask my students when they come in for an application to get into StorageNerds. If you are not an eight-plus, then you are going to have a very hard time finding a deal.
Once you get into this and educate yourself, you know that it is not difficult to make money, especially in storage. Are you willing to come out of pocket? Are you willing to push your comfort level? Are you willing to pay more than what the facility is worth if you can make money on the back end? For instance, I have a student. He did turnkey acquisitions. If you don’t know, you can hire my team to find you deals. He is an entrepreneur. He owns Marco’s Pizza. He has five Marco’s Pizzas.
If you own Marco’s Pizza, you’re a risk taker because there are a million pizza places out there. He has been doing this for a long time. He’s like, “I got to get out of the Marco’s Pizza place. This is too much. I can’t do it anymore.” It’s active income. It’s not passive income. It’s hard to sell something like that. I was like, “Selling a storage facility is way easier than selling a pizza place.”
Selling a storage facility is easier than selling a pizza place. Share on XHe hired us to find him a facility to buy. He was like, “I’m going to buy something. I’m going to slowly build my way out of this.” We ended up finding him this portfolio of three facilities. They’re all in the same tertiary market town with less than 25,000 people for sure. It happened to be an owner that owned all three. He lived three hours away. He was not in the mood to be driving out there. He has another business that was booming. He was in the firewood business. He’s like, “I don’t want to do these storage facilities anymore. I’m going to sell them.”
It has a total of 230 doors or something like this. I can’t remember how many square feet it is. They’re three buildings. There were 230 doors. He was making $89,000. 2022 was a great year. In 2022, he made $89,000. If you were not making what you should have been making in 2022, then you were not managing your facilities properly. He told me that. He’s like, “I am managing these properly. I should be making way more money, and I’m not.”
When I think about 230 doors, I’m thinking of $200,000 to $250,000. It’s typically around there. Let’s say that he’s making $200,000. He should have been making $200,000 but he only made $89,000. He wasn’t managing the property well. This is considered a mismanaged facility. You could not go to a bank and get this financed at all. No bank is going to finance this.
His purchase price is $1.2 million. I almost bought these but I passed it on to one of my students because I want my students to be successful. I said, “Buy these. This is a great deal.” He called me because he knows me. He was like, “Buy these for me.” I was like, “Let me see if I can get one of my students to buy.” This is a very hard sell for most people. Most people will be afraid of this deal but this deal right here is a typical deal that I am seeing over and over in the industry. I know the storage market because we are calling everybody.
He’s making $89,000. $89,000 to me means $800,000 to $900,000 or something like that. If you’re in a low market with a low price per square foot, that’s a different number but this is a very good area. $1 a square foot is where you should be or maybe $0.85 to $0.90 a square foot. He wanted $1.2 million for this deal. I said, “Nobody is going to buy this deal for $1.2 million. No bank is going to be able to finance this deal. You have to seller finance this. Are you open to seller financing this?” He was like, “I’ll seller finance it.” I was like, “What are the terms?” He said it’s $200,000 down, 6.5% interest, and a seven-year balloon amortized over twenty years. Those are the terms. In this industry, it’s very fair terms.
It’s not even 20% down. It was 15% down in a 6.5 or 7-year balloon. It’s seven years to stabilize and then refi out, which is plenty of time to do this. What happened is he has to come out of pocket $5,000 every month. $7,000 a month was the mortgage. He’s making in total $7,000. He is going to be able to cover the mortgage with what he’s making now but nothing else. He is going to have to come out of pocket for all the expenses and everything else.
We calculated around $5,000 a month. It’s going to take at least a year to eighteen months to stabilize this deal to get it to the point where he’s making money on the deal. The occupancy is up. He’s going to be working his butt off to do that. When I say, “Working your butt off,” there’s a little bit of work at the facilities but it’s being on top of marketing and prices. There’s a little bit of groundwork to keep it clean and keep it nice-looking and stuff. How are you getting tenants in the door? You could sit at your house and hire somebody to do it.
It’s $7,600. They were making about that much. We know that he’s coming out of pocket for his expenses. We calculated about $5,000 a month. It’s going to take eighteen months minimum to stabilize this property. That means he’s coming out of pocket $75,000 until he starts breaking even. We’ve got seven years to stabilize but you could stabilize this thing easily in 3 to 5 years. You could sell this thing in five years. Let’s say it takes anywhere from 5 to 7 years to sell this property.
What is he going to be able to sell this for? Two hundred and thirty doors should be worth $2.3 million at $1 a square foot. When we run the numbers, we’re coming up with a $2 million to $2.3 million valuation on this property. There’s also room to add on the properties. There’s a house that he could rent out. There’s other income and stuff. He could do a lot of opportunities for this deal. The valuation of this property is anywhere from $2 million to $2.3 million. If you do not know how to evaluate a property, then you should buy my Deal Analyzer because that’s what we used to buy this property and run the numbers. I want to show you how to do that.
Let’s say that in two years, he stabilized the property. He’s now making $200,000 a year minus his expenses and mortgage. He’s going to be able to sell this property for $1 million more than what he paid for it. The question I always tell my students is, “Would you be okay with coming out of pocket $75,000 and some work to get the thing going to make $1 million in five years?”
TJ was like, “I’m going to do that.” I talked to several other students about this deal, and they did not want to do this deal because they were afraid about this coming out of pocket every single month to get the thing stabilized but the thing is they passed up on an amazing deal because of that issue. We put in offer after offer. Most of the deals that we find are like this.
If you’re not getting the owner to owner finance or if you’re not asking them how we can make a win-win situation and do some creative deal structuring, you’re missing out on an opportunity here. If you don’t have a risk level of an eight-plus, then you’re going to be missing out on a lot of opportunities out there, and you’re going to miss out on a $1 million deal because you couldn’t come up with $75,000 to manage this property. Every deal I’ve done is exactly like this.
My husband asked the manager of our property, “If I can come up with $5,000 every single month, I’ve already come up with all this other money on these other properties I bought.” Our cashflow is negative. A lot of the time, we try to buy an income-producing property to help with that. All of our old properties make money and pay for all the new properties.
If I have sixteen properties that look exactly like this, my appreciation or my wealth on the back end is what we’re working for. The cashflow always works out. My husband is always like, “I need more money,” but that is how it’s working. If you don’t have a high risk level, you should not be looking in storage. You should be finding another place where you can put your money that’s less risky. This is how it’s looking. That is my session.
“What’s your opinion on smart locks?” We do smart locks on one of our facilities. We do all kinds of stuff, honestly. We try it all out. There are pluses and minuses in every single one. Pick whichever one you like. It will be fine. We do all of our auctions online. We have 2,000 doors from Clarksville to Orlando. We’re all over the place. Every couple of months, we do auctions on the same day. We have 100 auctions in sixteen different facilities happening in September 2023. There’s no way we would ever be able to be at all of those. We do them online.
“When you say out of pocket, what do you mean from the facility?” When I say, “Out-of-pocket,” that’s coming out of your personal income. You are going to have to come up with $5,000, and it’s not coming from the facility. All he’s making is $7,600 a month. That is enough to pay the mortgage, and that’s it but there are other expenses. He’s going to have to come out of pocket every single month on his personal income to pay for that facility.
“Do you ever state the terms?” The terms are all on the Deal Analyzer. The Deal Analyzer creates the offer letter, and the offer letter states the terms. We do a whole bunch of different scenarios and say, “You can come up with your scenario if you want. These are a couple of ideas. We’re open to anything. Give us your feedback.”
“Is it riskier than the stock market?” Everything is risky if you want to make money. What is your risk level? That’s the question you should be asking. Everything is risky, especially now. High interest rates are risky. I’m typically 8% to 10%. For me, it’s normal. This is not scary to me at all because I’ve been paying 10% interest for the last few years. If you’ve only ever paid 3%, I can see how risky it is but the truth is you can make money in 10% interest as long as you buy at the right price and understand the deal.
Go to storagenerds.com. for guidance into investing in storage facilities. Share on XYou got the free training, the course, the Deal Analyzer, the Facebook group, YouTube, and everything. I’m all over the place. You can join StorageNerds. Go to StorageNerds.com. That’s the coaching where I hold your hand and guide you. I do offer the Deal Analyzer separately at StacyRossetti.com. Get the Deal Analyzer. Call owners and practice putting offers or go to Crexi, run the numbers on the Deal Analyzer, and put offers in, that is what you should be doing. The offer letter will give five different ways for you to put offers in. I appreciate you hopping on. I’ll see you. Take care.
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