Stacy Rossetti sits down with StorageNerds Student Ted to discuss his storage successes in this case study episode. In just a couple of years, Ted was able to quit his full-time job to pursue storage investing and is on his way to achieving more in the industry. In this episode, Ted shares how he closed his first facilities while still undergoing the program and how each deal unfolded. Tune in as they exchange more tips on how to find, fund, and run storage facilities.
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Case Study: How StorageNerds Student Ted Bought His First Facilities While In The Coaching Program
I teach people how to invest in self-storage and I own the Storage Nerds, which is the coaching program. If you are interested in learning how to invest in self-storage, make sure that you check out StorageNerds.com. Also, we are now offering a turnkey acquisition solution for all Storage Nerds lifetime members students. That is going to be implemented on May 1st. I’m excited about it.
You can hire my acquisitions team to find properties for you. I have a team of five now that are out calling owners, talking to owners across the country, and trying to find facilities for us and the fund. If you don’t know, we launched the Self Storage Fund of America which is a fund where I’m raising money to buy facilities. If you’re interested in that, you can check out Self-StorageFundOfAmerica.com. I needed to find properties for this fund. That’s what happened. I started hiring all these acquisition managers onto my team. Their job is to find facilities for me to buy.
Luckily, they’re doing a great job. I figured, why can’t I offer this to all my Storage Nerds students as well? As of May 1st, 2022 we will be offering this to Storage Nerds lifetime members. If you are the type of person that’s like, “I’m too busy to look for facilities. I don’t have any time to call owners. I want to buy a facility but I don’t want to do all the work.” Let us help you find a facility. That is going to be the goal for May 1st.
The Storage Nerd’s doors are open for two weeks, starting from May 1st to May 14th. I will open up my schedule for those two weeks. You will get on the waitlist. You’ll be notified and then I will be taking calls. If you want to talk to me, you need to make sure you’re on the waitlist. You can ask me questions about Storage Nerds, the coaching program, the turnkey solutions, and anything that you want to know about self-storage and investing in self-storage. I’ll be available for those two weeks.
I only opened the doors three times a year in January, May and September. I want everybody to know that. People are starting to come on. Thank you so much for coming to hang out with me. I see Paul is in Frisco. I see Donald is in Austin and Tokyo. Which one are you at? Austin or Tokyo? That’d be good to know. Jim is in New Hampshire. We got lots of people coming on, so nice to meet you. Rochelle, you are in Arlington. Donald is in Tokyo now. What time is it in Tokyo now? Are you back in Austin now?
I hope you know, Donald, that I am from Austin. I grew up in Pflugerville. That’s where I grew up. I know Austin. In fact, I was there for a couple of months. I’ve looked around and tried to find some storage facilities to buy. There were a lot of offers but everybody in Austin wants too much money for all their sports facilities. We put a lot of offers in but it was hard to get anything under contract because people want a crazy amount of money for facilities in Austin.
I also was looking for property to buy in Austin because I would love to have a property in Austin but it’s expensive. $350 a square foot for a house. That’s crazy. I decided not to do that. I decided to put it on hold and I’m crossing my fingers. There’s a major crash. All of Austin’s sales plummeted and everything goes half the price. We’ll see. I’m not sure what’s going to happen with that market but I can always hope. Anyway, it’s good. I love Austin. Welcome, anybody from Austin.
I am in Las Vegas. If anybody is in Las Vegas, I’m going to the ISS Conference. I’m speaking at The Self-storage Conference that’s in Vegas. That’s what I came in from Austin through New Mexico and Arizona, all the way to Vegas. I’ll be here for a week. After that, I’m going to go to Southern California and hang out there for a little bit. If you guys don’t know, I live in an RV and travel full-time. People are hopping on. Thank you. I got Ohio here. I remember you, Donald. Leslie is here. I see a lot of students are here as well too. Thank you so much for coming and hanging out.
Also, all the REI USA numbers, if you are here, you can let me know. Thank you for coming and hanging out. If you don’t know REI USA, I own this company as well too. It is a platform where you can learn how to invest in real estate. Not just the storage but all things real estate, from land, wholesaling, rehabbing, Airbnb’s, multifamily and everything. We have all these coaches that come on and teach their specific niches. If you are interested in learning how to invest in real estate, make sure you check out REI USA.
Another thing I wanted to say too is on May 7th, 2022, I’m doing a raising capital virtual summit through REI USA. If you need to raise money in order to buy real estate, then you should be coming to this virtual summit. It is completely free. All you have to do is go to REI-USA.com/raising-capital. You can sign up to go to that. I’ll be speaking and teaching about how I raised money. We’ll have ten other investors from across the country. All the coaches from REI USA are going to be speaking on how they’re raising money.
You’ll be able to get an idea of how these investors are getting all this money. That’s one of the things I asked. All the investors I know were like, “Where do you get all the money from? I own all these facilities or buy these houses or properties that you buy. Where are you getting all this money from?” That’s what we’re going to be talking about in the Virtual Summits. May 7th, all day long and you can sign up. It’s completely free. Go there and you can sign up. You can listen to it.
One more time, since everybody is slowly coming on. The Storage Nerds doors are opening on May 1st, 2022. They’re only open three times a year. Make sure you hop on the waitlist in order to talk to me about the coaching program. If you don’t think you can afford the coaching program, just get the course for simple self-storage. You can get that as well, then you could DIY and do it on your own. Some people don’t want to do coaching. I get it. They want to run on their own. That’s totally fine.
You could do that as well. I’ll walk you through A to Z on how to invest in self-storage. For anybody here that doesn’t know me, I’m Stacy Rossetti and I own eleven storage facilities in Georgia and Florida. We also launched the Self Storage Fund of America. We’re raising money to purchase more facilities. We do have several facilities. If we’re not getting under contract, then I’m going to be pissed. We got to get them under contract. There are at least three facilities that we’re trying to get a number of contracts.
It’s a $1.7 million deal and the owner wants to owner finance it. Even the bigger deals, you can get owner financed. I was thinking about putting that in. I was like, “We can put this one in the fund.” He was like, “No, I want to owner finance that.” When you join Storage Nerds, you get the magic letter. That’s my magic letter from Storage Nerds. We implemented this in 2021. I’m going to tell you. My students have been using this letter. We’re using it as well and all my acquisitions people.
It’s getting the owners to think about owner financing. We have two facilities. One is worth about $3 million. We’re getting it for $1 million. He is going to owner finance it for us. We then got another that we’re purchasing for $1.7 million. It’s worth about $3.2 million and he wants to owner finance that for us too. The magic letter works but you got to be in the coaching program in order to get that.
Now we have Ted here. He is a student of Storage Nerds. He is very successful. I’ve been asking all of my students from Storage Nerds to come to my show. Don’t forget this show. You can find that on iTunes or YouTube or wherever you want to find that on. I met Ted several years ago. I will let him tell you his story.
I don’t even know how many storage facilities he has anymore. He will give us an update on that. I know during the coaching program, he bought one and had a couple of others under contract. He’s building onto one as well. As you’ve noticed over the past couple of months, I’ve been doing a lot of case studies. On Monday nights, every once in a while, we’ll have one of my students come on and talk about what they are doing to find funds and run their facilities, and how Storage Nerds has helped them to do that. Ted, are you here?
Yes, I am. How are you doing?
Thank you for hanging out with us. How are you?
Busy but good. I can’t complain.
I know because the market is nuts.
It is. I’ve been working on this contract for quite some time now. It’s looking like it’s making some progress.
Why don’t you tell everybody your story behind getting into storage and what has happened over the last couple of years that you’ve been doing this. That would be great.
It’s been a few years.
Tell us what you’re doing. Do you have any visuals?
I don’t have any visuals with me. My real estate investing career is like many others. I had a couple of single-family rentals and sold them off a few years ago. I wanted to take that capital and deploy it into multifamily when everything was exploding in that sector. I had trouble finding a deal that makes sense as far as cashflowing-wise.
I got a quad under contract. It didn’t work out. I was verbally reaching out to owners. Nothing came to fruition. I knew a couple of people that were getting involved with storage and that’s when I wanted to learn more about it. That’s when I searched storage programs in Atlanta and you pop up all over the web for that. I joined the program.
I wanted to expedite the learning process with storage. I know with multifamily, I was doing all the conferences and all that. I wanted to learn everything as quickly as possible. Within that first three months, on my second or third driving for storage, I was able to get my first facility under contract. I call it a baby facility but it’s running beautifully now. It was a 50-unit storage facility in commerce. I thought the owner at the time wanted too much money for it because he wanted to give me 2 acres.
Now, if I look back in hindsight, I would have paid the price for that extra acres. Who would have known? We negotiated a deal where it was about 1.2 acres, so I still had room to add. I got traditional bank financing on it because he was able to provide his tax returns. It was 90% occupied. He was able to show his cashflowing. The bank pretty much approved it after they saw his numbers then they saw my credit and all that.
The value-add on that storage facility was doing significant rent raises. He did everything by paper and pen. His rates were significantly below. Probably like 50% below market compared to the other storage facilities in the area. He had no online presence whatsoever. No website. He did everything pretty much old school because he lived directly next door. We came in and we purchased that storage facility. I remember I was going back and forth if we should do gradual rent raises to get to market or just do the one-time hit and do it all at once.
I was nervous to do that but I know you and Pete recommended to go ahead and do the big hit at once. He was charging for 10×20 I think $70. We brought it to $117 per door for a 10×20. We did that. We lost probably about 12 or 13 customers out of the 50. There were some people that were a little pissed about that. After about six months of marketing online and getting a guy to do the SEO on my website, things started turning around for the facility and getting filled back up. Ever since then, it has been nearly 100% full. I keep on raising rates and we finished the expansion on that a couple of weeks ago.
Let’s break that down so we don’t go so fast. First of all, can you tell us all the different ways that you’ve looked for storage facilities? How are you finding storage facilities to buy?
The three primary ways are cold calling, creating your own list and looking on Google Maps. Typically, when I’m looking on Google Maps, I look at cities usually with a population of at least 5,000. When I hone in on those cities, I look up all the storage facilities, then I find the ones that don’t have a website. Even if the facility does have a website, sometimes you’ll notice the place antiquated like ten years old. It’s like a one-page website. I still put them on my list as well.
I created a list from Google search, then I would reach out to those owners. That was my cold calling list. During my searches, I would go through the list and cold call them. I would go ahead and drive to them as well. I feel like when you meet the owners in person, you get a little bit better engagement. I did the contract from cold calling. I got two contracts from cold calling but they both fell through. You’re able to get in touch with the owners and make some conversation and engagement over the phone. You got to see what works best for you.
How much time does this take to do all this? I know you are working full-time.
If you’re working, I think of this whole self-storage investing, finding deals is what takes up the most time. I was working at the time full-time. I would be driving on weekends and doing everything part-time. It could be a lot but I wanted to get out of my day job at the time, so that’s what I was doing.
How many people did you call? How many owners had you talked to? How long does it take you to find this facility?
The first one happened relatively quick. My first mailer was weird because I drove out. I saw his storage sign on one of the highways. I didn’t see his actual facility but I’ve put it on my list. On the very first mail that I sent out, he called. That’s when we met up and started discussing things. I did a few mailers after that and pretty much it was crickets. I didn’t get much. It’s a matter of timing with some of these owners. That first one was from a mailer. The two contracts that fell through were from cold calling. The second facility I acquired was from cold calling and that closed in December 2021. The one that I’m working on now is a combination of driving and calling.
You’re still doing calling and driving and stuff?
Correct. At the moment, I stopped a little bit as we were doing the expansion, then working through this contract now, and turning things around on the second facility because we closed on it in December. We’re still going through that turnover process at the moment but yes.
Driving, calling, and you had the third way. What was the third way?
The mailers.
Of this whole self-storage investing, finding deals is what takes up the most time.
Sending letters out as well. This is basically how you find your facilities. Now you have the first one that you bought, then you have the second one that you closed on, and then you did the expansion. That’s what you’ve been doing, then you have a third one under contract.
We closed on the second one. That guy called me back probably in September or October 2021. It took about 2 or 3 months to close and we closed in December, a week before Christmas. The worst time to close.
Which one was this? Remind me about this one.
That one was in Thompsons. It’s about 30 minutes West of Augusta, for those who are familiar with Georgia. That one is 74 units, 11,000 square feet, and pretty much the same situation there. The owner did everything in paper and pen. It was 90%-plus occupied. He was willing to provide tax returns and I ended up getting a loan with the same bank. I did a significant rent raise on this facility and lost probably maybe 35% of the tenants. At the moment, we’re in a turnover phase to start bringing people back in and he had no website either. I implemented that. I have a guy doing digital marketing as well.
You just add a page for every single one of your facilities to your website.
That’s what the guy did pretty much.
The first one, how did you fund it? The second one, how did you fund it?
For the first and second ones, I did my own money and I did the down payment. For the third one, I’m finally branching out and I got private money on this third one.
Did you use the same bank for both of those facilities or different banks?
The first two, yes. They’re the same bank.
What kind of term did you get on that?
They were big down payments. They were 25% down payments but they are 25-year payment amortization schedules. In the first one, the interest was 3.8%. For the second one, the interest was 4.5%, I believe.
You can tell it did go up. It’s a 25-year loan for 3.8% or 4.5% with 25% down.
Correct. In the first one, I was able to get a construction loan from the same bank. This banker loves me now. We got a construction loan to fund the expansion. That’s due in November and that’s when we plan to refinance. We’ll see what the rates are at that moment to see how much cash to pull out. Obviously, we want it to still cashflow very well even after we pull out money. We’ll see what everything looks like in November.
How does the construction loan work? What are the terms for that? How did it work?
With the construction loan, at the very beginning, I had to get the estimates for everything, the grading, the concrete, and the materials, and send them to the bank for their approval. There was some lag time with that. By the time they got back to me, numbers would change, so then I would have to resend the estimates again. It was a little bit of a back-and-forth thing. Once they approved me for the construction loan amount, I was able to move forward. I did have to pay out of pocket to do certain jobs but once they saw the jobs were complete and saw the invoices, they would reimburse me for the jobs.
Talk about the process for doing the expansion.
I worked with Peaks and learned a lot during that process. The first mistake I did was I didn’t realize how to get civil engineering plans. The county wanted civil engineering plans from a civil engineer locally in the area. I was getting estimates for that. It took probably about a month or two to get estimates from a handful of engineers and to get the drawings done. The firm took about three months to get those done.
What drawings did you have to get done?
I had to put a retention pond and a drainage system on my lot. The county required a stormwater drainage system that an engineer had to write up in order for me to add square footage to the existing buildings at that time.
How big was the retention pond?
I don’t know how big it was but I know it cut my building in half towards the back. The building in the back is about 2,500 square feet and they wanted to add 5,000 alone back there. I did take up a piece of that. I’ve talked to other owners, you and others that have invested in these rural areas. Some of the counties are lax because there’s so much going on in commerce. They are a bit more rigid as far as what’s being allowed over there. I’m surprised it took this long, but I’m happy it’s finally over and done with.
You have the civil engineer do the drawings. You got those approved by commerce.
Correct. After they gave the county the plans, they approved the permits. That’s when I went ahead and ordered from Peak Steel all the materials. During COVID, there was a six-month wait for the buildings to come. I didn’t order that before the engineering plans because I had to wait for the engineering plans to get done to see what size buildings I would get, and make sure I had approval before adding the buildings. Once you have your order with Peak Steel, you can’t modify it afterward. I think that was with all the vendors.
They had a six-month wait time.
During that six months, I got the grading done relatively quick. I believe in late January is when I worked with Peak Steel to go ahead and get the concrete poured. They delivered the materials in early February, roughly.
When you had to get the grading done and all the different things, how did it work when you were working with the bank? Did you have to pay out of pocket and they paid you back? How did that work?
When I paid out the grading after that was done, I showed them the invoice. I showed them pictures of the work completed. Even the banker visited it on-site to check it out, and then they would give me the draw for that amount into my construction loan account.
Was it a small local bank or a bigger bank?
It’s Synovus.
That’s a bigger bank. They had somebody go out and look at the property and stuff.
The banker was out of Athens. I did send them pictures but he said that his superiors also did want him to physically go on-site to confirm everything.
Now, you got the grading done. What comes after grading?
After the grading is when we had the concrete poured, I think it was late January or early February.
How much did that cost?
The concrete was around $25.
How big of a place or a spot?
For the two pads, the total square footage added was 4,025. That’s how much it cost for that.
I wonder if that price is going up now.
Do you want to expand one of your facilities?
Yes, we do. I’ve been watching you and I’m like, “Ugh.”
I had to go through a lot of red tapes with the county. I had to repermit it because I didn’t do it within six months. It was one thing after another but it was a learning experience. I’m glad it’s done and over with, but if your county is lax and you don’t have to get engineering plans like some of these other owners I’ve talked to, that’s great. When I was getting estimates for the civil engineer to get the designs for the pond, they varied a lot. It took them a while to get them drawn up.
I’ve been really happy with Storage. There is a pretty good support. You call them up, and they’re always available, and they help out right away.
I’ve talked to Summer and it’s like they don’t even care, just do whatever. It depends on the county. Because you’re closer to Atlanta, especially everything is moving up your way, people are getting stricter in that area.
I’ve talked to Nick quite a lot and he’s in Jackson County, which is the county directly next to Madison County. They’re getting pretty strict up there as far as building out things. I think they’re delayed. It’s that whole big battery plant that everyone has been pretty much rushing towards the area because it’s bringing a lot of jobs over the next 3 to 4 years.
How long did it take them to put up the 4,000 square feet of metal?
It took 1 to 2 weeks roughly.
That’s fast.
It was relatively quick. I had my boots on the ground guy finished up the numbering on the units.
How do you manage your boots on the ground now? I know in the beginning, you were doing all that. Now, what do you do?
I was very fortunate on our first spot. The boots on the ground, I hired a tenant at the time. He reached out. He was a former military guy. He knew that we were based out of Atlanta. He lived 1 mile down the road and offered his help as far as getting things done. He wanted to do something part-time.
I’ve been with him ever since. He’s great. He does a very good job cleaning up the units. I’ve received compliments from customers saying how clean the units are. He’s very responsive. He’s not the handiest guy in the world but for our boots on the ground, all you’d need is someone that communicates well, cleans out the units, and do checks once a week. He has done that. I can’t complain at all about him.
How much do you pay him? How many hours? How do you pay him?
I do an hourly rate of $25 per hour for him. I started him off at $20 then I bumped him up to $25. I figured that was fair.
Is he only managing that one facility or is he handling anything else?
No, he’s only managing the one. If he had reliable transportation, I would have sent him to the other one, but the other location was about an hour and a half away from him. At the second location, we’ve had some trouble finding reliable boots on the ground. I’m meeting someone to see how they work.
This is the one by Augusta, right?
That one in Thompsons. I got a dumpster on-site there. I got probably 7, 8 units that I have to empty out from people that moved out and left stuff behind. I’ll be doing that and meeting these new boots on the ground and see how that goes. We’ve gone through a couple already. The communication, the simple picture or video of what’s going on, what time you’re there, what time you leave so you can pay them accurately. It’s simple tests like that, but some people aren’t very technology savvy. Communication with me is very important.
We are going to talk about this in the coaching but we implemented Microsoft Teams and that’s what we use. You can do that right from your phone for communication. The whole team, even our boots on the ground people, all communicate through Microsoft Teams, which is working out good. Pete loves it.
Do you have multiple boots on the grounds for all your facilities?
No, we don’t. We do have boots on the grounds and we have our office people. We have several phone support people. We are hiring more people because we’re going to start a call center.
That sounds exciting.
Who knows what Pete is up to over there but we do use Microsoft Teams, which is very low cost. It doesn’t cost a lot of money. If you need something to manage like task managing people or communicating with them, that might be a good way to check it out.
That might be something to look into. The boots on the ground posting, I did post on Craigslist. I did it for the third time. The person I’m meeting responded to a Craigslist ad. I’ve been running it pretty much every few weeks to see what responses I get. I’m doing basic interviews with these people over the phone and potentially meeting them in person and see how it goes from there.
We struggled for a while on our boots on the ground people too. You just got to pay them what they’re worth.
I heard from others a couple of years ago that everyone was paying $15 an hour. Obviously, with inflation, I don’t think any more is going to cut it. It’s a minimum of $20 now. If you can find someone that’s good, I’m willing to pay $25 for my time and take care of what I needed to be done.
It’s so funny because I saw a McDonald’s was hiring for $16.50 an hour. They’re starting at $16.50 an hour at McDonald’s. Think about it that way.
That is a good comparison.
They could go work at McDonald’s and make more money than working for you. I don’t know what the thing was but I only saw a big sign that said, “Now hiring $16.50 an hour at McDonald’s.” I was like, “What?”
That’s crazy.
What about the third one? Where is this located?
The third one, I don’t want to disclose the location yet. I like to be discreet but it is in a growing market. We haven’t closed it yet. We were scheduled to close at the end of April but looking at early May now. That owner, I’ve been talking with since last October. That one is almost 20,000 square feet. It’s over 100 units. This is a Stacy-type facility. It’s only about 30% occupied. It’s a little bit going out of my comfort zone with this one. There’s no online presence and no website.
What I like about this facility is I put up a brand new security gate and a new fence, and the roof is in good shape. The buildings structurally are good. It’s in a great market. It’s very low occupancy. It has low visibility as far as where it’s located. It’s an older guy. It wasn’t even his primary business. It was always his secondary business.
He’s older and had other offers. He has even shown them to me. Other offers are cash. His offer is higher than my offer but we’ve been talking for months. We’ve developed a relationship. We’re going to be working out owner financing because I try to get all private money on his contract and it was way too much. I thought about wholesaling it but then he agreed to do the owner financing with me.
How many units is it?
It’s 135 units.
That’s good. Try to get it owner financed, then you’re going to partner with somebody for the down payment. How is that going to work?
I have a friend of mine that’s going to lend me some money. I’m paying him 9% interest only. The owner financing terms are for two years. I told them I would return his capital back within two years. I also did a little incentive in there, telling him if the property appraises for a certain amount, I will give him an extra $10,000. If it appraises for this amount, I’ll give him a little bit more, just to incentivize him for potential future investments as well.
How did you find this private lender?
From a very good friend of mine. He’s a real estate investor himself but he’s on the residential side. He wants to learn more about the commercial side of the business.
You’re going to close that one by the beginning of May?
I’m waiting on the title exam back from your closing attorney. I also ordered an environmental. It was just a phase one environmental. I was a little concerned as far as the location of the facility if any issues might arise.
Why?
It’s next to a trucking business. Typically, if I’m going to refinance it in two years, I know sometimes the banks will want to do an environmental or depending on what type of lending institution. SBA requires phase ones, typically. I want them to do one now for peace of mind so I don’t have any red flags for later on or at exit whenever I potentially sell. If someone else does an environmental and it shows up on their end, I already know about it ahead of time.
Now, you got three properties. How are you managing all these? What software are you using? Tell everybody how you manage it.
Changing our investment strategy into storage helped out our cash flow a lot.
I’ve been using storEDGE. I learned it from you and Pete. I’ve been using it. I know a lot of people out there, probably three-quarters of self-storage owners use ESS. Once I get used to the software, I don’t want to change. I’ve been using storEDGE for all the locations at the moment.
There’s a lot of software out there now. There’s a lot of competition. We’ve had a couple of them come into Storage Nerds and do some demos and stuff. We have Breeze, Yardi and a couple of others come in. I can’t remember what their names are. There are a lot of options out there.
I’ve been happy with storEDGE. I have to admit. It’s pretty good. You call them up and they’re always available. They help out right away. That’s important to me if I ever run into an issue or I need something resolved right away.
We’ve been implementing with storEDGE, implement them if you have or not, it’s the Mail House. They have just started them. I don’t know if it’s a beta test for that or not. I’m not sure but they’re implementing a mail house. We’re using that mail house for revenue management. When we raised the rents, not only do they get emailed to let them know, but they also get a letter sent out. They will mail the letter out for you and do stuff like this.
Another thing is they do the auction letters as well. You don’t have to handle any of sending a letter out, letting everybody know that you’re going to be doing the auction and stuff. If you find yourself doing a lot of letters for some reason to get ahold of the tenants or doing auctions or whatever, you should check the Mail House out.
I will ask about that Mail House feature if they physically mail out.
Just so everybody knows, I’ve done a lot of demos from almost every software out there. There’s not a lot of software out there that does revenue management and dynamic pricing. Make sure that you’re taking advantage of that from storage as well because ESS does not offer this. Sitelink doesn’t offer it. A lot of other software doesn’t offer it as well. You want to make sure that you implement dynamic pricing too.
Do you ever use ESS at any point?
I never used it. I only started with storEDGE. I start with storEDGE when there are three people working for the company. It was back in the day. They do the generic pricing. We’re going to talk about that in the coaching program. That’s why I bring it up. We’re trying to get these loans on these $2 million, $3 million facilities now. What they were saying was that if you’re 82% full or higher, then that means that you’re not pricing your units properly. You need to be implementing dynamic pricing, so essentially like 82% to 92%. Typically, you run the numbers to 92% or something like this. You’re increasing your rates.
You keep on increasing it a couple of dollars here and there.
It’s even more. Push it to see what people will pay. Your last 1, 2 or 3 units should be ridiculously expensive versus your last 5 or 10 units. Look into that as well because you would make some more money on the back end doing that.
I’ll look into that. That’s a nice feature to try out.
Especially storEDGE because they use this. What else do you do? How do you manage everything?
I got the boots on the ground in commerce. I’m about to hire. I’m going to start her on the phone. I have a friend, a stay-at-home mom, that’s going to answer my phones for me. I’m going to try that out. It’s not rocket science to work in storage. It’s pretty user-friendly. Do the move-ins and keep tabs on anyone.
I’ve been handling the phones. Typically, in the last latter part of the month and then the first week of the month, the phones are ringing a lot. Especially when I’m out in the field, it’s a little bit of a nuisance. With the third facility coming on, hopefully, it’s a good time to bring on a phone person to train them, get used to them, and get them in rhythm before I can hand over the third facility. Initially, I like to reach first to all the customers and the tenants. After I get things going, I then pass them off to someone else. I’m assuming you are still with Bonnie, right?
We’re bringing her into the company because what we did is we took our property management company out of Ms. Lillian’s, then we formed our own property management company. That property management company is now going to be managing the fund and all the properties that go into the fund. She is the property manager of that company. Essentially, she now is a partner in the company for us. We’ve incentivized her to also give her even profit share and stuff like that so that she knows she needs to be running this company properly. She gets even profit on the back end and stuff.
I think we are all looking for our next Bonnie. Bonnie has been with you for how long?
Seven years. It’s a long time.
That basically from your first facility.
From the very first one, yes. She can do it all.
That’s great for her to be with you for that long. She has learned pretty much everything about the business at this point.
We’re trying to get Pete out of the business. That’s the goal. The only way you can get Pete out of the business is if you train Bonnie to do everything that Pete does. That’s what we’re doing now, which is exciting. I was going to ask a question about management. How are your auction and stuff? How are you handling all that?
The first facility had been fortunate enough. I only had three units to auction in the first year. I did them in person just to experience it. There’s very little turnout. A couple of people bought the units for $10 each. They made out pretty well. They found some nice valuables. For the second storage facility, I went online and scheduled the auctions on StorageAuctions.com. I’ve uploaded some photos and I got the auction date set up for early May. I’m sure I’m going to have a lot of the third facility.
That’s not too bad. We had a couple of questions. Which storage software that you demoed did you like best? For me, we’ve been using storEDGE for so long. I’m a storEDGE person. I know how it goes. We’ve been using it since the very beginning. They also call on Pete a lot for beta testing. We’re a storEDGE family. That’s what we are.
I was demoing ESS but during your Mastermind, Pete knows it so well. The little tweaks that you can do here and there. I felt comfortable going along with it as well. I know a couple of students went with ESS but a majority of them went with storEDGE.
Mostly everybody goes with storEDGE now. ESS and storEDGE are very close in price now. They are raising the rates and all kinds of stuff too. They are funneling a lot more money into storEDGE. storEDGE is becoming a storEDGE enterprise. If anybody doesn’t know what storEDGE enterprise is, what’s happening is Sitelink, ESS and storEDGE are all owned by the same company. The money that ESS is making is being funneled into storEDGE.
The money that Sitelink makes is being funneled into storEDGE. It’s becoming this storage enterprise where they’re putting so much development into developing the software. I think it’s going to be like the big one now. Back in the day, Sitelink used to be the big one. I feel like, over the course of the next year or two, storEDGE is going to be the huge software out there. I’m glad to be at the forefront of that.
I know ESS has a call center. I’ve heard a lot of complaints over the past few months that the quality of their call center has pretty much gone down because they were so cheap. I can’t remember how much they were charging but they raised prices on them because they couldn’t provide good customer service. They raised the prices on everyone to catch up and maybe hire more staff. I’m curious if storEDGE is going to have its own call center in a year or two.
The call center, they are not pumping that up. It’s not a big thing anymore. Back in the day, it was but they are not focusing on that. They are focusing on other things. The call center is not part. If you go to Storable, they don’t market call center. They just have that because ESS have it or whatever. We have a good question here. How did you quit your day job?
How or when?
How and when. How did you know when it was time to quit?
I’m sure there are people on this call like most of us. I was working a government job. I was there for thirteen years. I didn’t like it anymore. I dreaded it and wanted to quit it. I always enjoyed real estate. I was a part-time realtor. I still am a part-time realtor but I don’t focus on it anymore as much. I just wanted to be in real estate full-time. With my wife’s support plus changing our investment strategy, going into storage. That’s helped out our cashflow a lot so I decided to quit in 2021. June 24th was my last day at work. I have been full-time. I consider myself still a rookie entrepreneur. I’m still in my first year.
It only takes you a couple of years to quit. Not even a couple of years, a year and a half.
We have our storage income, Airbnb income, and my wife got a promotion at the time. Now my wife wants me to buy more stuff for us so that she can quit her job.
She’s got the bug.
We’ll see how it goes but hopefully, we’ll see what the economy has for us in the next year or two.
That’s true. Also, somebody asked. Did you do any feasibility studies for your facilities?
I did not. The first one I felt comfortable with the market being strong. I didn’t want to spend that much money on a feasibility study, to be honest with you. In the second one, I felt comfortable. With the third, I’m trying to do a little bit more research. Maybe get a desktop study from calling around the third location. There are about ten facilities. There’s a lot of competition but I underwrote the deal to be the second-lowest in the area. I feel pretty comfortable about that.
The market itself is pretty strong as far as the growing population and a lot of jobs. It’s not too far out in a rural market. I feel like investing in growing markets now is important. I feel like whenever there is a change in the economy, the growing markets tend to do better than a small rural town that only has maybe 1 or 2 major employers in the area.
The thing that you have to focus on too is that the movement of people has changed dramatically in the last few years. Even the smaller towns are growing. You want to make sure that you look at the growth. The funniest thing is the most construction I’ve seen in Georgia outside of maybe new construction in Atlanta is in Americas, and that town is booming. It was like 15,000 people. They were doing road construction. They were doing building and stuff like this.
It was a town of 15,000 people. That’s why I bought the facility there. I’m driving across the country now. I’ve been from Austin. I’m in Vegas now. We’ve been everywhere in between. There is not a lot of new construction going on. I know people think that there’s a lot of construction. I’ve been to all the major cities and a lot of smaller towns. I don’t see a lot of new construction. I want to keep that out for you. The movement of people is different now.
It is on our second location in Thompsons. When you look up Thompsons itself and you look at the population, Google says it’s pretty much stagnant and it’s decreasing at 1%. Augusta got some major government contracts that are bringing in a couple of thousand employees over the next couple of years. It’s still 30 minutes away from Augusta. I’m curious if it’s going to trickle out towards the area of Thompsons. I was at the facility. It’s not a bad thing but I saw a Starbucks being built 1 mile down the street from the facility there.
Investing in growing markets right now is important.
They got a Chick-fil-A. You have some new construction homes being built in the area, then I was reading in the county that they have 400 lots going up. It seems like it’s a little skewed because when you look on Google or I think there’s another website, the World Population Rank. I forgot what it’s called but when you Google a city of population, it’s one of the top ones in a search. It shows Thompsons as being stagnant.
Looks like Google is in 2019.
I feel like they are a little bit behind on their statistics.
We do that too. You got to be looking at 2020 but 2021, honestly, which is the hardest data to come by. You should be looking at that because I feel like the data is totally skewed now.
It is and I like to see some buildings and things going on in the area. I prefer to see that if I’m going to buy any particular city. I felt good that I saw the Starbucks then they do have some new construction homes going on. The county adjacent that’s a little bit closer to Augusta has blown up a lot. When you look them up on Google, the graph is going up like that. I’m sitting here and I was like maybe I have to be patient with Thompsons, but the jury is still out as far as if it’s to be a long-term hold or something that we want to flip in a year.
Augusta is a good area. It’s growing very quickly. Thank you so much. Real fast, anything you want to say about Storage Nerds? How does Storage Nerds help you to get your first couple of deals and stuff before you go? You got your Storage Nerds t-shirt on.
I changed my whole investment philosophy. I was not looking at storage at all. I was like everyone else. I was on the multifamily bus. Joining the program with you and Pete, I’m talking to other students since then. I have great relationships with them. It has been great. I have no regrets about joining. It has been a life-changer for me pretty much. My wife can’t stand it. All I talk about is storage. You become obsessed with it.
It’s addicting.
It is. You start analyzing and underwriting deals. You got to tell someone. My wife lives with me so I got to tell her.
At least she listens. With Pete, he doesn’t listen. He’s like, “Whatever.”
She’s like, “Just do the deal already,” I get a lot of dealings anxiety. She’s like, “If you don’t do it, you’re going to regret it.” My wife says, “Go for it. Do it.” She gives me the go. I’m like, “We’re risking a lot.” She’s like, “We got to do something.”
Storage is a buy-and-hold. Even if it doesn’t work out in the first year or two, just hold onto it. I promise you’re going to be fine. It’s going to be worth more money in five years or ten years.
I should listen to that advice because I’m being impatient with Thompsons in three months. I had to move out on Thompsons. I was upset.
The first one was such a good one.
The first one is practically running itself now. There’s barely any work being done on that first one now. I would love to have a whole bunch of those like that, but we’re redoing all the operations now on Thompsons. I have faith in it. It will be fine by the end of the year.
That will be great. It will be good. Congratulations on all your success. I appreciate you hopping on and telling your story. Everybody else, I’m going to hop off right now and go right onto the Self Storage Fund of America pitch. If you are interested in anything to do with the fund and what we’re doing in the fund then you could hop onto that. You go to StacyRossetti.com/fund, then you can hop on and get onto that. I appreciate it, Ted. Thank you so much. I will see you in the next sessions. Bye, Ted. Bye, everybody. Take care.
I think someone said how to contact me.
Put that in.
I’ll put my storage email and this is pretty much how you can reach me.
He is in the Super Simple Self-Storage Facebook group. You can search for him in there as well. You can always ask him any questions as well.
Thank you.
Take care, everybody.
