Ever wondered how to break into self-storage investing without a ton of upfront cash? Stacy Rossetti breaks down how to buy a storage facility with little to no investment money in self-storage, giving insights on different investment approaches. With her trademark enthusiasm and wealth of experience, she lays out various strategies for aspiring investors. Drawing from her journey of owning 16 storage facilities without putting a dime of her own money into purchasing any of them, Stacy reveals the power of creative deal structures, raising capital, and strategic partnerships. Tune in and discover how much investment you’ll truly need based on your budget and preferred approach to self-storage ownership.
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How Much Money Do I Need To Invest In Self-Storage
We’re getting a lot of people to join Storage Nerds that own storage facilities, which is cool. They already own a storage facility, and they want to build out their portfolio. In the last couple of weeks, we have had a good number of people join. Let me know if you follow me, if you own a storage facility already and want to build your portfolio out, or if you’re completely new and like, “I want to get into this industry or learn about this industry. I’m buying my first one.”
The doors to the coaching program are closed. I only open it a couple of times a year. If you want to learn how to get into investing in self-storage, you can always come here. I’m here every Wednesday. I teach whatever I want to teach, something about storage investing. I try to find them, fund them, and run them. That is what I do. It’s like a week of finding them, a week of funding them, and a week of management. I do another week of like deal analysis. That’s how this goes.
If you’re coming here on Wednesdays, I don’t do the same session over and over again. I randomly talk about something in one of those topics. That’s what this Wednesday is for. The course is available for anybody who wants to purchase the course and the Deal Analyzer. The course is called Super Simple Self Storage. Deal Analyzer helps you to learn how to analyze deals. If you’re reading this and you’re like, “I don’t know if it’s a good deal or not.” You need the Deal Analyzer course.
The Wednesday training, and you have the Facebook group, make sure you join the Facebook group. It’s called Super Simple Self Storage. This is where you can post your questions as you’re learning and trying to figure this out. Post your questions. We answer every question that comes up. A lot of people email me, and they try to ask me questions. I say, “Post that out in the group.” Everybody can chime in. We can all chime in because there are a lot of people in the Facebook group who own storage facilities. They’ll put their two cents in. You don’t have to have my opinion.
That’s the whole point of Storage Nerds. I want to be surrounded by people who are like me so that we can bounce ideas off of each other. This is at StacyRossetti.com. After you read this, you’re like, “I do want to do this.” You can go there, get the course, and get the Deal Analyzer. That will take you through the next couple of months of learning how to get into this industry.
For those of you who are reading for the first time and you’ve never read before, I own sixteen facilities, and I partner 10 or 15 more. I have around 50 students or more who own storage facilities. I’ve done 100 masterminds in the last several years. Can you imagine me sitting at every mastermind that we’ve done and hearing all the students? I already know how they go through their process and all of the guest speakers that we have with the masterminds. I can’t miss any mastermind because I’m the facilitator. We funded eleven of them ourselves, and we syndicated the five others.
I have a good idea of every type of deal out there, even the ones that we partner on. One of our students is putting a fund together. He’s going to be raising money, and I will be a part of that deal. We have people who have bought little tiny deals all the way up to even doing their own funks. I have an idea of how every type of deal in every scenario goes in the storage world. That’s why you’re here. I can brain-dump what things I see out there.
My specialty is finding deals and funding them on the running part. It’s not that I can’t do it, but it’s not my favorite part. My husband runs the management part. I put my 2 cents in. I’m like the director. I yell at everybody like, “Why isn’t this done? Why isn’t that done?” I do the finding. I’m good at finding facilities that owners want to buy. This is something that comes naturally to me.
I’m good at funding deals, doing a lot of creative deal structures, and putting money together. It was my two specialties. That’s what I focus on a lot. For the management part, most people don’t get to that part. They’re all trying to find and fund deals. I’m going to tell you those two steps are the two hardest steps of everything in the process. The management part is not that difficult because you can automate that and do it over and over.
I got an email from somebody. This is a question that I hear over and over again. I wanted to discuss this question and go over how I would answer this question and show you because it’s a loaded question that everybody asks me all the time. I want to go through that process and talk to you about how you’re going to answer that question. I told the person who emailed me. I said, “I will answer that question in the Wednesday training. Hop on and listen if you can because I’m going to go over that question.”
Investment Range Breakdown
I’m going to read the question and come back because I put it right over here. He emails me and asks me, “What is the minimum amount of investment that he would need to get into the storage investing world?” This is a question that comes to me quite often. It’s like, “How much money do I need in order to be able to invest in self-storage?”
The second part is, “Do I need to be an accredited investor?” He’s like, “I don’t have $1 million to invest. What if somebody only has $50,000, $100,000, or $200,000?” He says, “Is that enough money? Should I even try this?” How much money do I need to get into this industry? Should I move forward on this? That’s the question.
I’m going to answer that question with all of the ways that you can get into this industry. The truth is, how much money do I need in order to get into the self-storage investing world and own a storage facility? The truth of the matter is that you don’t need any money at all to get into this industry. I own sixteen storage facilities, and I have not put a dime of my own money into purchasing any of them. I’m 100% financially funded. I own sixteen facilities and around $20 million to $30 million worth of storage. I haven’t put a dime of my own money into purchasing any of them.
How is that even possible? Is that even possible? How can you do that? That’s where I want to get in. When you come through my application process, I will tell you that to get into Storage Nerds, you have to be able to pay for Storage Nerds. It is not expensive, depending on which package you pick. It’s not cheap. It’s expensive to get in. You have to be able to afford that. That’s what he was asking. He’s like, “How much money do I need?”
What I do is I ask the question, how much money do you have to invest in buying a storage facility? Is it less than $50,000? Is it $50,000 to $100,000? Is it $100,000 to $200,000? Is it $200,000-plus? That’s one of the questions I have on my storage application. The reason that I ask that question is not because if you don’t have any money, you can’t do this.
The reason I ask that question is because that question determines which path you’re going to take in the storage investing world. If you answer the question, $50,000 or less, there is a way for you to do this. If you answer you have $200,000 or more, there’s a different way for you to do this. What you have to do is determine how much money you can come up with to get into this industry. We talked about this during my funding bootcamp. We spent two whole days discussing this question. This question and how much money you can come up with is going to determine how you’re going to be able to do something.
Let’s go through each one of those scenarios. If I’m asking you the question, how much money do you have to invest in self-storage, and you are telling me $50,000 or less, your scenario looks like this. You have a couple of different scenarios. Number one, this is something that we talked about all day Saturday in the boot camp on how to do this. If you want to buy a storage facility, you have to learn how to raise capital. If you don’t have a lot of money, you can use other people’s money. I never have any money. All my money is always going to operational funds or investing in another storage facility.
We are looking for a piece of land that we’re going to be buying to build on. Every penny that we make on all the facilities that we have goes back into managing the properties that we’re running or is going to buy another property. We rarely ever have any money. What we have to do is find people who will give us money. That’s why I’m always posting out, “Who has $200,000 or $300,000?” On my list, I’m asking for money all the time. If you have $50,000 or less, you have to ask for money, and you have to be okay with that.
When I got started in self-storage investing, I bought a $250,000 storage facility, and I didn’t put a dime of my own money into any of it. I had some money, and it gave me $250,000 to purchase that facility. I borrowed that money. I didn’t put any money in for that. There are people out there who will give you money. You can have a debt loan, or you can partner. You can be the boots-on-the-ground person. You can be the person that manages it.
I have a student. He’s 23 years old. Now, he has money because he’s buying a six facility. When he first started, he didn’t have any money. He was like, “I’ll be the boots on the ground person. If anybody has any money in Storage Nerds and they want to buy a storage facility, I will manage it for them.” That’s how he went out. He had less than $50,000. He had no money. He’s buying his sixth one now.
If you want to read his story on how he got into storage and bought five storage facilities without any money at all, go to my YouTube page and search for Luther. Luther’s story will inspire you to understand you do not need any money to get into this business. I tell you that all the time, but nobody listens to me. I’m the coach, but Luther has done that. A lot of students in the coaching program have done that. Another thing that he did was get the owner to seller finance the deal. One of the facilities was 0% down. On his fourth facility, he got the bank to collateralize one of his other facilities.
If you don’t have any money and you want to buy a storage facility, you have options. You have to be more creative to do it. This is how every single one of my facilities has been bought. I’ve raised money partnered, gotten debt loans with interest-only payments, and done management. We’re a manager in one of our properties, and we get a cut for that. I’ve gotten a lot of property seller finance with no money down. This is a 100% percent debt loan. My private lender gave me $250,000 to buy a facility. It was a 100% for the purchase price. All I did to find that was I asked people for money. If you want all this, it is if you want to buy a storage facility.
If you don't have any money and you want to buy a storage facility, you have options, but you have to be a little bit more creative to do it. Share on XThe second thing with $50,000 or less is that you can wholesale self-storage. If people don’t know, this is the seller, the storage facility, and you. You go to the seller and ask him if he wants to sell his property. He says, “Yes, I’ll sell it for $100,000.” You take the contract, find the buyer, and sell the storage facility to the buyer for $150,000. Together, you make $50,000 on this bill. This is wholesaling.
That’s what turnkey acquisitions are. It’s wholesaling. You can make a fee on the difference in the purchase price, or you can also get an equity split. You could say, “Give me 5% or 10% of the deal, and you can have this. I found this deal for you. If you buy this deal, my cut in your deal is 5%.” That’s what turnkey acquisitions do. You could do 10% whatever you want to do. You could get a fee or a cut in the deal. I choose a cut in the deal. That’s what wholesaling is.
If you don’t have any money or you have little money, and you’re looking at all these deals and you’re like, “I can’t afford. I can’t get into it. I’m out. I give up.” You are shooting yourself in the foot. You’re losing out on opportunities because you do not understand that you do not need any money to get into storage. You need to be creative, raise money, and find private lenders or people who are open to partnering with you.
You don’t need any money to get into storage. What you need is to be creative. Share on XYou could be the boots-on-the-ground person, manage the deal, and get your foot in the door that way. You can get the owner-to-seller finance with 0% down. If you already have a facility, you can get the bank to collateralize that facility, and you can use that money to buy another facility. Those are all great ways. You can wholesale. Go out there and find the facility and find the buyer. You put them together and get a cut the deal somehow. That’s the first answer to how much money I need to get into this business.
50K To 100K
Let’s say that you have $50,000 to $100,000. You guys let me know if this is you or not. You have a little bit of money. You’re like, “Now what?” First, you have to assess what facility you want to buy. $50,000 to $100,000 seems a lot of money to people, but it is not that much money. Storage is expensive. It’s getting more expensive every day. That’s why you should be focusing on raising money or figuring out some creative way to get into this business business.
Those are the ones that win. The ones who understand creative deal structures and raising money are the ones who win in real estate. You talk about all these people in the storage world who have $100 million or $50 million in assets. I’m telling you that the way that they do that is they raise money. It’s the same thing if you had $50,000 to $100,000. You have to learn how to raise money. You have to be able to ask people for money.
If you only have $50,000 or $100,000, what you need to do is understand that if you get a bank loan, you’re going to need 30% down and run your numbers at 8% interest. $50,000 to $100,000 is not going to buy you a big facility. It is going to get you a $500,000 facility or less. We have a student. She’s buying a $550,000 facility, and the bank wants $200,000 down. That’s where it’s at now.
I’m going to tell you all that’s where it’s going to be for the next couple of years. I read an article where the Feds are not going to decrease interest rates. It is what it is. Now that you know that you’re going to have to do 30% down and 8% interest, you have to ask yourself, “What do I want to buy? What facility do I want to buy?”
I have a student. He’s like, “I’ve got $50,000.” He started looking at these tiny facilities. It was 30 units. I’m like, “Now, it is difficult to make money on a facility that is less than $1 million.” The interest rates and the down payments are high. It’s difficult to make money on a smaller facility. Every once in a while, you’ll come across a deal that makes sense. If you have to get a bank loan and you have to get a conventional loan, the numbers are tight.
If you get an SBA loan, you’re at 15% down and 10% interest or higher. A lot of times, SBA loans are variable rates. SBA is a small business administration. SBA gives business loans. They love storage. They love to invest in self-storage because self-storage has a low foreclosure rate. This is something that they like. They’re willing to give a loan. It’s a government-backed loan, but they offer variable rates. We know that the Feds are like, “I don’t know when I’m going to be decreasing the rates.” You don’t know what that interest rate is going to be. It’s hard to determine what you’re going to have to pay. It’s a little bit more risky.
If you can find a deal where you’re 50 cents on the dollar, you may have that spread available to be able to get a loan like this. When you go and get a bank loan, whether it’s SBA or conventional loan, you have to have a big spread. Deals are not like that anymore. When I started, that was the good old days. I missed the good old days. That $250,000 property that I told you about that I got 100% financing on is worth over $1 million now. If you were in the business in 2015, 2016, 2017, and 2018, that is when the spreads were there, but the spreads were not there anymore. It’s a good deal, but it’s not an amazing deal.
I see people out there looking for amazing deals. Amazing, good, and great deals happen on bigger deals. When you’re hearing, “I doubled and tripled the value.” That’s $2 million or more. That’s where you get amazing deals. That’s what we’re seeing. For $50,000 to $100,000, get you $2 million because you have to put 30% down. It’s barely going to get you $500,000.
You’re like, “I only got $50,000 to $100,000. Should I even get in? It’s super tight.” This is what happened with one of my students. He’s like, “I only got $50,000.” I was like,” You need to find partners. You need to find other people who will be interested in working with you. There is nothing wrong with partnering on a deal.
You need to find partners - other people who will be interested in working with you. There is nothing wrong with partnering on a deal. Share on XWhen I syndicate my deals out, and I’m the GP, and I have the LPs, those are partners. They’re investors. They’re partnering on a deal. I’m only getting 30% of the deal. I’m giving up 70%. For all these bigger deals that are $1 million or more, I’m okay with doing that. There’s nothing wrong with giving up some of the deals. I can move on to the next big deal.
You have to be open. If you want to buy the smaller deal, you have to look for an amazing deal in a tertiary market. You’re only in a tertiary market. That’s a tertiary market. You can afford $500,000 or less unless you are good or okay with asking people for money. If you are okay with asking people for money, the sky is the limit. You could do any deal. You could partner or syndicate. We talk about syndication in the bootcamp. What you could do with $50,000 to $100,000 is you could find a deal where the owner is okay with taking 10% down and seller-finance with 0% to 10% down.
We have a student who bought a facility in Texas. She bought a $330,000 facility for 10% down for the owner-seller finances. She only had to come up with $30,000. That means that you have to be good at getting the owner to be the bank. If you can get the owner to be the bank, the sky is the limit. You say, “Sell me this facility, and I’ll put 10% down.”
When you find a $2 million facility and the owner wants to sell their finance, 10% is rare but not impossible. I have a student who bought a $1.2 million facility with $200,000 down. That’s all you had to come up with. That facility is worth $2.5 million. They’d be able to double the value of the property. The owner was like, “Yeah, give me a couple of hundred grand, and I’ll be happy.”
If you understand the concept of seller financing, $50,000 to $100,000 is a lot of money, but you don’t want to use that $50,000 to go to a bank and buy a $300,000 facility because the returns are not so high because of the interest rates. If you need to buy a $1 million or less facility, you have to be good at raising money and doing creative deal structures or being okay with partnering and syndicating.
100K To 200K
Let’s get into $100,000 to $200,000. Everything that I’m telling you applies to anything. There are a lot of people who have $100,000 to $200,000. A lot of people I talk to say, “I got $100,000. They saved up $100,000.” It isn’t easy to save $100,000. I get that. You’re thinking in your mind like, “I need to make sure this $100,000 gets me the best bang for my buck. Storage it and multifamily. Do I need to buy some land? Should I start a chicken farm?” You’re trying to figure out what to do.
I’m going to tell you storage is lucrative, but it’s a buy-and-hold strategy. It’s more lucrative when you don’t use a bank. Interest rates are high. Being able to do things like syndicating, partnering, and creative deal structures is where you’re, over the course of the next couple of years, going to shine and make a lot of money because banks are being conservative on everything. They’re sticking to that 1.3 debts of service ratio. They want that. That means you have a big spread.
What happens is your money doesn’t take you that far. That’s the issue. A couple of years ago, banks were okay with 1.15 to 1.2 DSRs, and LTV, that loan to value, was a little bit smaller. Now, they want 70%, 65%, and 60% LTV. That means they want that bigger spread to make sure that you can afford that mortgage on a regular basis.
You got some money. You’re like, “Yeah, I got some money. I got $100,000.” $100,000 to $200,000 could most likely get you into the $1 million plus area. Everything I tell you all is my opinion. If you guys listen to everybody else, they may say the opposite. I have no idea. I don’t listen to anybody else. This is what I’m seeing. A million dollars or less is tier one. $1 million to $2 million is tier two. You’ve got $2 million plus.
Most of the people who followed me are not going to be buying $3 million plus storage facilities. I’m the person that’s going to get your foot in the door. People are in these three price ranges. I’ve never bought big, huge storage facilities. If you all want a big, huge storage facility, I may not be the person to help you with this. You can never apply all the concepts that I teach. When you get into 50,000 square feet or more, that’s when you’re syndicating and doing a lot of funds, which I can do. I do those for smaller facilities.
You can afford something in the 1 million or less. We all know that. We’ve discussed that. This is where the interest that makes rates makes everything tight. When I say tight, I mean your cashflow. Your upside on the back end may be amazing. You could buy something for $750,000 and sell it for $1.5 million in the next three to five years. The upsides on storage are always rather good, depending on whether or not it’s a mismanaged facility. I talk about this. That says mismanaged or cashflowing.
I got $50,000, $100,000, and $200,000 to get out there and look for a facility. You’re thinking, “If it’s 30% down, I could barely even afford $700,000. That’s what I’m looking for.” You start looking for a mismanaged or cashflowing. You come across one of these properties for $750,000, and depending on how it’s run and managed, which is how you make money in this industry, you are going to come out of pocket on a monthly basis to get it where it needs to be because the cashflow is tight. You’re going to, and most likely on these types of deals, $1 million or less. Even if it’s cashflowing, it’s probably not cash flowing where it should be. You’re still going to be coming out of pocket a lot of times because the interest rate is high. Keep that in mind.
That’s what I’m personally seeing is $1 million or less. It doesn’t matter if it’s mismanaged or not. Most likely, you’re coming out of pocket to break even. You have to ask yourself, “Am I okay with coming out of pocket every single month?” On my application, when you apply for Storage Nerds, I ask, “Are you okay with coming out of pocket every single month to make a return?”
The student that I told you that bought a 1.2 million facility got it seller finance. He had put $200,000 down. The seller’s finance is $1 million. That’s what the owner’s doing. His mortgage is around $6,000 a month. His expenses are $4,000 or $5,000 a month. He is $11,000 or $12,000 a month. That property was only making $8,000 or $9,000 a month.
He knows that if he gets it filled and he gets it to the prices it’s supposed to be because that owner was the lowest in town and it was maybe 50% full, he knows that he’ll be able to sell that property for $2.5 million within the next two to three years. He has to come out of pocket every single month for the next two years at $3,000 to $5,000 a month, depending on how long he owns the property and how long it takes him to stabilize that property.
He asks himself, “Am I okay with coming out of pocket every single month for the next two years up to $5,000 a month? That’s going to cost me $100,000 to make $1 million on the back end when I sell the property.” That is how you look at properties that are $1 million or less. You don’t look at them as like, “I can’t afford it.” You look at it like, “What is my opportunity? How much money am I going to make on the backend? Am I okay with coming out of pocket?” I told him, “If you didn’t buy it, I was going to buy the property because this is the type of property we buy every day. We’re coming out of pocket all the time.”
This is a question a lot of people struggle with. I was like, “You have to buy this property. You’re going to make $1 million in the next couple of years if you could spend $100,000 or $150,000. Isn’t that a great deal?” A lot of people don’t understand that. That is what $1 million or less is typically you’re going to be seeing now in this market. You have to be okay with that. You could buy a $1 million or less property. You have to know that the cashflow is going to be tight, or you’re going to have to come out of pocket. You ask yourself, “Is that okay?”
You have $1 million to $2 million. This is where you’re like, “I want to get into the $1 million to $2 million.” This is where you’re gonna have to seller finance, partner, or syndicate. That’s where the raising money comes into play. If you have $100,000 to $200,000, that is not going to get you into $1 million to $2 million now. You have to say, “I’m going to push seller financing. I can do 10% to 20% down, depending on the deal. I’m going to try to find somebody else who can help me bring down the payment for a deal. We’re going to partner on that deal.” That is the $1 million to $2 million is working now. That’s how we’re seeing it.
When you buy our Deal Analyzer, we are running out of cash. We’re running like, “Let’s pay cash. Let’s run numbers at bank financing and private lending. Let’s also run numbers at seller financing. Let’s come up with a whole bunch of different offers.” We make that offer. We’re making like four offers based on a creative structure because we know that if the owners are open to working with us, and I’m going to tell you all, a lot of storage facility owners are open to doing this. If somebody would make me an offer on my properties, I would be open to doing this.
The truth is nobody does this. Storage facility owners are open to this. I know because I talk to owners every week. I talk to them about buying their facility or getting into the Storage Nerds Coaching Program. I am an owner. I understand the mindset of what they’re thinking. The thing is, most people are not doing and understanding this.
There’s no way with $100,000 or $200,000 that I can buy a $2 million property. I have a student in the coaching program who is buying a $2.3 million property, and he only has $200,000. How is he doing this? He is syndicating the deal out. Everybody was like, “There’s no way I could do that.” This is the first storage facility that he has ever bought.
When I say syndicating, syndicating means that he needs $600,000 down, and he needs another $150,000 to $200,000 in CapEx. He needs $750,000 to 800,000. He has this number available. He knows he has $200,000. He has to find a couple of other people to bring the money in. He creates a fund, which is a way of putting a partnership together. He comes up with three other people that come up with the money together. He’s the general partner, and they’re the LPs in the deal. It is another way of putting together and structuring a deal. It’s creative deal structuring at its finest.
He’s going to have a 40% stake in the deal, partnering on a $2.3 million facility that he’ll be able to sell for $5 million in the next three to five years. They will all be able to share in the profits. He only had $200,000. If you understand the creative deal structures, it is a lot of money to buy stuff. If you do not understand what I’m telling you and utilize it, you are only going to be able to buy this less than that. You are stuck in tier one. That’s what’s happening. This is where most people stay.
I want you to start thinking outside the box and understanding these structures so that you can get into this industry. You can buy not 1, but 2, 3, 4 of these. That is where wealth is created. The question I get asked is, how much money do I need to get into this industry? That’s a question that only you can answer. What tier do I want to be in? Where do I want to be?
300K+
If you have $300,000 plus, the sky is the limit. I talked to somebody who’s like, “I come up with $500,00o. Is that enough?” I’m like, “ You could buy many storage facilities for $500,000.” As long as you stick with me, I’ll hold your hand. We’re going to find you some deals. We’re going to get out there and look and put some offers in.
In this industry, your job is twofold for the next year to two years. Your job is to make offers, raise money, make offers, and ask people for money. That’s it if you want to get into this industry. Making offers is buying the course and the Deal Analyzer and learning how to analyze deals. Being able to buy storage facilities is like learning how to raise money and do creative deal structures. The Deal Analyzer will help you with the creative deal structures. That is what the offer letters are for. I appreciate you guys all reading this. I hope I answered the question of how much money I need to get into this industry. I look forward to seeing you guys at the next session. Take care.
Important Links:
- Super Simple Self-Storage – Facebook
- YouTube – Stacy Rossetti – Self Storage Investing
- Deal Analyzer
- Super Simple Self Storage Course
