Are you ready to dive into the world of self-storage investments but unsure which storage market to be in? Stacy Rossetti helps you figure it out in this episode, navigating the competitive market of storage facilities. Fresh from a two-day boot camp, she explores strategies for creative deal structures and securing private money to overcome the high costs of storage investments. Learn how to leverage the current market downturn to your advantage, with lower costs for materials and construction. She also shares real-life success stories from students and emphasizes the importance of feasibility studies and deal analysis. Whether you’re considering primary, secondary, or tertiary markets, this episode is packed with insights on making informed investment decisions, mastering marketing and management, and understanding market dynamics. Tune in and start your journey toward multiple facility ownership and substantial monthly profits!
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Figuring Out Which Storage Market You Should Be In
Two-Day Bootcamp
We had our two-day bootcamp and I went over funding for two days straight. I tap my heart out. I taught everybody how to raise capital for deals. The truth of the matter is that storage facilities are expensive and they’re not going to get cheaper so everybody’s like, “I’m waiting for the market to drop or whatever it is.” However, the truth of the matter is that storage is only going to get more and more expensive.
If you can’t afford storage right now, if you’re looking at buying a storage facility but you can’t afford it, then you should be focusing on raising money and doing creative deal structures until you can afford your own facility, which is the route that we did. We didn’t have any money starting out so I raised private money and in the end, now I have sixteen facilities and I haven’t put any money into any of them in purchasing them.
We put money into operational income and stuff like that, but not into purchasing them. It is possible to use other people’s money to buy storage. The thing is storage is expensive. Commercial real estate is expensive and if you don’t have enough money to buy more than one facility unless you’re buying a huge facility that’s 30,000, 40,000, or 50,000 square feet your first time, it’s hard to retire off of one facility.
I was like, “I’m going to buy a storage facility and retire.” Unless you’re okay with getting $1,000 a month and retiring on that or something and if you’re going to live off Social Security and then on top of that you’re going to get an extra $1,000 a month from your storage, that’s doable. I don’t know how long Social Security is going to last. You guys tell me. I don’t rely on Social Security at all for retirement. We are not betting on Social Security at all.
I don’t know about you guys, but we’re in this game to buy as many facilities as we can, partner with as many of my students as I possibly can, and then live off of that income. That’s where we’re at. You guys tell me your goals. Do you want to buy just one? If you want to buy one, then you don’t have to go out there and raise money. You could just afford one but if you want to have more than one or if you want to make $5,000 a month, $10,000 a month net profit, or $20,000 or $30,000, that’s more than one facility.
If you’re going to buy more than one facility, then you need to learn how to raise money. That’s just how it is. You need to be smart. That’s what we did for two days straight and I only do that bootcamp once a year so it’s not going to happen again until May of 2025. All my bootcamps that I do are just once a year. I fund them in January, fund them in May, and then I do the management bootcamp in September. That’s how it is now.
You always can buy the course. I have this here and I’ll go over some of that funding stuff like raising private capital. There are some videos in there inside that course on how we raise money to do our deals and then the Deal Analyzer is available as well on the website. If you don’t know how to run commercial deal analysis, then you need to learn how to do that because you have to make offers.
Basically, the two most important things about investing in real estate are making offers and raising money. Those are the two things. If you’re not doing both of those, then you’re never going to make it. I talk to a lot of people. A lot of people want to get into storage and are interested in storage. They don’t want to do the work. I’m just letting you know that it takes a lot of work. You have to make offers, which takes a ridiculous amount of work to make an offer, even just one offer but you got to make a lot of offers.
The two most important things about investing in real estate are making offers and raising money. If you're not doing both of those, you're never going to make it. Share on XMarket Downturn
We make on average 5 to 10 offers a week. We make about 10 to 15 offers. We make a lot of offers. Lately, it’s lower because the market’s a little bit wonkier. To find a good deal, it’s a little bit difficult right now, but we still make offers. Even if somebody wants a ridiculous amount of money, we’ll still make an offer. I always tell my students, “Just make an offer. Who cares? It’s just an offer.” The market’s a little crazy right now and it’s not going to get any better.
In our ma in our mastermind, we had somebody come in. Her name is Catherine. She came in and she talked about feasibility studies and how to run your run deal analysis and do your own appraisal is what she talked about on your storage facility. She talks about looking at markets and deciding if the market is good which is a big part of the feasibility studies.
She was saying that in the upturn, a lot of people want to get into storage but then that’s what drives all the costs and the prices up. The reason that the prices are so high in the commercial world right now is because of the last couple of years. They are dropping a little bit but they’re not dropping that much. When I started in real estate a few years ago, I was buying at double-digit cap rates but there’s no way to be doing that anymore and it’s never ever going to go back to that.
If you’re sitting there and waiting for it to go back to the good old days, you’re just missing out on deals is what you’re doing and there are good deals out there that are good win-win situations. They’re good and fair deals. What Catherine talked about is we’re in a downturn right now. The market is only going to get better but in most people’s minds, the market right now is not good. They’re getting out of investing.
If you are a true real estate investor, this is the time to get into it because prices are dropping. The purchase prices are dropping and the cap rates are getting better but also, even if you want to do new construction, which we talked about quite a bit, now is the time to be doing new construction because even Catherine talked about it, she was building one of her facilities. She owns 3 or 4 of them right now but she’s building a couple right now. She was building a storage facility during COVID and it was very extremely difficult to build a storage facility during that time because the contractors were super busy and prices were high.
She said she hit her contingency before the project even started. Could you imagine building a storage facility that is like millions and millions of dollars and running out of money before you even start the project? That’s what happens when you do things in an upturn. Everybody seems to be wanting to get into real estate when the market is good. The truth of the matter is now is the time. Prices are going down. Material costs are going down and contractors are.
If you want to get a quote on building a storage facility right now, you can get a quote from five different companies. Last year, you couldn’t get any quotes. It took months and months to get quotes. Now’s the time and then go through all the entitlements and try to get to the point where you can build, it could take anywhere from six months to a year if not longer depending on the area.
It’s the perfect time to build right now because by the time your building is through the zoning, it’s all permitted, and ready to go, and you will be on the upswing when you come into the lease-up phase. For anybody who’s interested in doing new construction, I highly recommend now is the time to be looking for land we are going to be building. We are in the process of looking for land right now. That’s why I bring it up. That’s our next phase now is building something.
Building a couple here near us where we live and bringing it home because we have sixteen storage facilities all over the place. Over the last couple of years, we’ve been doing a lot of traveling and trying to do a lot of CapEx and stuff on our facilities. We’re getting tired. We’re vertically integrated. We want to chill out a little bit. We are not the type of people who go out and build hundreds of millions of dollars with storage. That’s not our personality. My husband is super hands-on. He likes to get in there, do the work, get his hands dirty, and stuff like that.
We’re not going to be those types of people. Our goal is to build a couple of facilities by us so that we could just manage those here and be here. They will have bigger facilities. They won’t be smaller. We started out with small facilities. We’re in the process of selling all of our smaller facilities. We have three of them listed right now and whenever they sell, they sell. I’m a typical storage facility owner. I’m okay with listing my property right now and seeing what offers I get.
However, the truth of the matter is not that many people put an offer in. That is the difference between you and me. You’re looking at the facilities. You’re thinking about it. You want to do it, but are you going to do it? That’s the question. Whereas for us, we’re putting in offers every single week. We’re calling. We’re looking at land to build. We’re doing all that. I’m taking the action and I’m going to be doing it. We are going to be building. That’s the goal.
We’re selling some facilities and once we sell those, we’ll roll that money over into land and then we’ll start the building process. I can guarantee you there are a lot of people reading this right now that are just reading and they’re not doing anything. If you want to do something, you have to figure out what you want to do and you are going to take action. Now, is the time. We’re going into the downturn. It’s going to be this bad for the next couple of years.
If you’re waiting for the market to get better, then you’re not going to get into the industry. I talked about this. Your buy box is shrinking and shrinking because there are a lot of players in the storage industry and there can’t be a lot of storage facilities. You can’t have a bazillion storage facilities. Your buy box and the timeframe of getting into this industry is now and it’s only shrinking. I would say during the next lease-up phase, during the next upturn, that’s when a lot of the stuff is going to be gone.
Deal Analyzer
Unless you want to go and buy something in a small tertiary market, a lot of the stuff’s going to be gone because the primary market is oversaturated. The secondary market is getting oversaturated so then you only have a tertiary market. I just talked to a guy that’s going to join StorageNerds and it is a great story. He bought my Deal Analyzer and he ended up buying two storage facilities.
He used my Deal Analyzer to run analysis on two storage facilities that the owner was just retiring and he didn’t want to have it anymore. He was telling me how he was using the Deal Analyzer to run the numbers. He made the offer. He got to seller-financed. He’s got three facilities. He wants to buy more. He is getting into turnkey acquisition so he can find more facilities.
He’s in North Carolina and right across the street from him, a guy built a 70,000-square-foot storage facility and the population of this town is 30,000 people. There’s a 70,000-square-foot storage facility that is his competition. I was looking it up and this competitor that he has owns twenty storage facilities in North Carolina. They’re all bigger facilities. His plan is to go into towns that are from 25,000 to 75,000 people and build these massive store facilities.
You just have to think about that. That would be considered a secondary market. If you’re 25,000 to 75,000 people, that is a secondary market. That’s not a primary market. You have these mom-and-pop owners that are the bigger players in the secondary market. They’re coming in and they’re buying everything up and building all these massive and huge storage facilities. What they’re doing is they’re making your buy box super small.
Your time to get into this industry is now and it’s only going to be for the next couple of years because you can’t have a lot of storage facilities. The way that storage works is it’s like square feet and then it’s also population. You can only have so many units per the population of the area, which is also called the net capita per square foot. When you get into the industry, you’re going to hear about this a lot. What’s the net capita per square foot?
What that is the total square feet of storage divided by your population within your radius is what’s called your net capita per square foot. Also, you want to be between 6 and 8 square feet per capita. A lot of people discuss this in the storage world, but all this means is that when you’re looking at a town and you’re like, “I want to go buy in Valdosta, Georgia.” Valdosta, Georgia within the primary market has so much storage.
This is the primary market, this is secondary, and this is your tertiary market. Tertiary is all the country around the town and then your secondary could be your suburbs or something like that. I’m telling you that investing in self-storage is nothing but numbers because the reason why is because it’s a business. This is a different mentality from commercial real estate to residential real estate.
Investing in self-storage is nothing but numbers. Share on XWhen you’re looking at houses, you’re like, “If I do something, how much can I sell it within the area? What’s the comps?” However, the way it works in storage is it works off of your total storage versus the population of the radius. How many units and how much square footage is within that area? You can only have so much. You can’t have a lot. That’s why it’s important to not be oversaturated. If you’re not in between the 6 to 8, you’re not in between this.
If you’re not somewhere around this, it could be either underdeveloped, overpopulated, or overdeveloped. You have to question, “Do I want to be in that market?” If you’re above eight, which means it’s becoming oversaturated. Now, people still buy into that. For instance, when I was talking to the guy who’s going to join Turnkey, he was saying that they are still built. There was already enough storage in his town of 30,000 people. There was enough without him and then this person came in and still built 70,000 square feet more.
Some people still build in these highly saturated areas. For them, it’s more of a risk or what it is, if the best marketer wins. This is something that I was talking to the new student that’s joining about because he owns these facilities and I love talking to owners of storage facilities because they get it. The first one, you’re still trying to figure it out, but after 2 or 3, you get how this works. The truth of the matter is the best marketer wins.
Gone are the days when you buy a storage facility and put a sign up because you are going to lose. It’s all about marketing because you have this business. You are buying a business and you have to learn how to run it. Marketing is the biggest expense that you’re going to be doing.
A lot of people don’t understand this concept and they don’t even think about it. When you guys are all looking at storage facilities and debating on whether or not you want to buy something. That’s why it’s so important for you to be doing a competitive analysis because you have to see. When you’re doing your competitive analysis, and this is something that we have on our Deal Analyzer, is that you want to add the total square footage of all your competitors.
How many square feet does each one of your competitors have and what’s that total? Also, within that mile range that you look at, what’s the population of that mile range? If you’re looking at something within 1 mile, 3 miles, or 5 miles of your facility? You’re looking at your competitors and you’ve got six competitors, what’s the total amount of square footage that those six competitors have versus what’s the population within that mile 5-mile radius or whatever it is?
We have this on the Deal Analyzer. We always look at total square footage just to make sure it’s not overpopulated and then the question that we always ask and what we ask our students is, “Do you want to do the 6 to 8? Do you want to do more than 6 to 8 or more than 8 or less than 6?” That’s something that you have to look at and think about.
Choosing Your Market
Let’s just say that you buy something where it’s at a 9, 10, 11, or 13 so then you’re asking yourself, “Am I going to be able to market to get tenants to move in? If I’m going to, if I’m at 10 or 12, what’s the amount of money that I’m going to have to spend in order to get people to move in?” All that is data and numbers and trying to figure that out. That’s something that we’ve had to learn along the way over the course of the last couple of years.
All the bigger players in primary markets and stuff all know this. This is why they’re out there with hundreds of facilities. They understand this concept but we little people, us moms, and pops, wanted to buy a storage facility with a signup. If we build it, they will come. That was how it was but it’s not like that anymore. Unless you’re in tertiary markets, I would say 5,000 or less population, you could probably do that still but anything over a population of 5,000, I’m telling you that the piranhas are out and they’re going to eat you alive.
You then ask yourself, “What type of a player do I want to be in this industry? Am I going to be a mom-and-pop in a small town and buy $500,000 facilities or less, put a sign-out, and know everybody in town? That’s how we build our facilities up and there’s nothing wrong with that. There’s a lot of people that do that or, “Am I going to be a bigger player? How big of a player do I want to be? Do I want to be a 5,000 to 25,000 population player? Do I want to be a 25,000 to 75,000 population player? Do I want to be 75,000 to 150,000? Do I want to be 150,000 or more?”
Of all the sixteen facilities that we have, we have facilities in every single one of those markets. I’m going to tell you that it doesn’t matter which market you’re in, there’s some difficulty in every single one of them. If you’re in a smaller player market, it’s like the boots on the ground and the management. How much time and effort that it take for you to manage that property? It’s still a lot of time and effort to manage that property if it’s a little tiny facility and a little tiny town.
We have primary market facilities and it’s all about marketing and how good of a market I am so that I can get the tenants in. I talked about this too. It’s also about your phones, answering your phones, converting, and this kind of thing. It’s along this whole line of all different types of facilities out there and what you can get into. It’s not just about, “How much can I afford?”
If came to the bootcamp, talked to people, and raised money, the amount of the facility that you buy would not even be in your brain. I don’t even think about what the price of my facility should be in terms of whether can I afford that or not anymore because I have money all over the place. I don’t have to worry about that. What I have to worry about is do I want to be in a tertiary market of 5,000 people and worry about boots on the ground or do I want to be all the way up to a primary market and worry about marketing and conversions.
When you’re sitting there and trying to figure out what type of facility do I want? Where do I want to be buying? The location doesn’t matter and the further away the better a lot of the time because then you make it as passive as you can. People say that’s not right. Some people say, “No. I want to have something that’s close,” or whatever your risk level is, you want to consider what type of problems you want to be dealing with when you own the facility versus what the price is or how much you want to be able to afford or what you want to be doing.
For instance, in the secondary markets, we’ve got 5,000, 25,000, 50,000, 75,000, and 150,000 people. That’s population and then problems. The issues are always the smaller ones the boots on the ground or the management. It’s going there and taking care of stuff. It’s just as much work to manage these types of facilities as it is to manage something that’s in a bigger facility, a bigger market, or whatever but there are different problems.
Here, it’s all about marketing. Here, it’s like boots on the ground. These two here I would say are both. You’re not doing as much marketing over here as you’re doing over here. In the middle, you have to handle all of it. We’re mostly in the middle. We’re always dealing with boots-on-the-ground issues, auctions, past-due payments, and trying to figure out what the prices are. Whereas in the primary market, it’s how much money can I spend in order to keep myself at 80% full or 85%, whatever it is?
That’s how you’re working. All these questions are for every single one of the facilities, but you’re dealing with more of one thing versus the other depending on where you want to go. Does that make sense to everybody? Just let me know in the comments if you have any questions but again, this is the hottest market right now. This market right here is oversaturated. You don’t want to be in this market. This here is just the little people. This is the moms and pops. This used to be moms and pops. It’s no longer moms and pops.
Here’s the hottest market. You’ve got bigger players coming in. You’ve got secondary players coming in. You also have the mom and pops who are trying to get into that market and build up our brands and stuff. This market is in utter chaos. This price range right here is going to be anywhere from $1 million to $5 million. This is what I’m talking about. If you’re thinking about buying something for $1 million to $5 million, they are typically in this market, but that doesn’t mean you’re not in this market.
Typically, there’s a $500,000 deal or maybe a less than $1 million is what this is but this one could be a $1 million to $2 million. You’re like, “Now, I got to figure out what I can afford. I also have to figure out what I want to be focusing on. Am I a marketing person? Am I going to sit there every week and look at my marketing, my prices, and my occupancy? Am I that type of a person?” You’re going to be in this range. Do I want to be competing with primary markets? Do I want to just focus on marketing?
A lot of times here too, you’ll have people that are in-house. This is not remote. For the bigger facilities in primary markets, that’s not remote. You got to have somebody that is there managing stuff. I think it’s a lot. I’m telling you all guys, everybody’s a buy box. I’m in the game. I’m not getting out. I’m your competition. You guys are all the ones who want to get in so now you got to figure out what your goals are on that. You have to figure out where you want to be and what you want to do.
It’s fun, but it’s a lot of work. That’s where we’re at now on that. I want to make sure that you guys know too. We have the line and we have all these different types of facilities. We have a $500,000 to a $5 million facility. It’s what it is. 5,000 population to a 200,000 population. I live in Tallahassee. Tallahassee is considered the primary market. This is tertiary. This is primary and all the rest with 25,000 to 150,000 or whatever is right here.
This is going to be $1 million to say maybe $4 million is where you’re at. This is the secondary market. It’s always good to know your market. It’s always good to know how much money you can afford and what your population is. You also want to know what your total square feet is per capita. Now in this area, when you’re looking at this area, you need to know if it’s between 6 and 8. A lot of people say that the net capita per square foot should be between 6 and 8. Now, you’re looking at how much total square footage of storage is there. What’s the population of that area? How much is it going to cost? What’s my marketing or management style?
That’s how you choose this. Are you going to be a big marketer who loves marketing? Are you going to be able to do both, boots on the ground, remote, and marketing? Are you going to be more like a boots-on-the-ground kind of mom-and-pop kind of thing? That’s what the market looks like right now. You’ll find nuances in every single one of them and stuff. You can find a town of 5,000 people and it’s got ten storage facilities. It’s got way too many storage facilities.
It’s like, “Do I want to be in that market? I’d have to compete with all those people,” but the same thing happens in the primary market. As I said, there are a lot of storage facilities being built in primary markets right now. I’m thinking, “Are there enough people to even accommodate this?” I don’t know. You have to be a good marketer and be good at promoting in order to get something like that filled up. Just like the student that’s joining. He’s in a town of 30,000 people and there’s already too much storage and now there’s another 70,000 square feet.
It’s a beautiful storage because I saw pictures of it. I’ve pulled the website up and it’s this massive beautiful storage facility. The one thing I always think about when I look at storage too is your unit prices. When you have a paved storage facility that’s made out of concrete with an office and the black iron gate and stuff, the beautiful curb appeal, that costs a lot of money to build that thing price per square foot. That means your price for your units also has to be higher.
The question that I ask myself is, “Are people going to be able to afford to put their stuff into that unit, or if you’re going to keep it at a lower rate?” Right now what’s happening, and we discussed this in our mastermind is that the marketing for primary markets is like a promotion, a low-rate promo. The rate is low and then it increases over time. Instead of doing a $1 move-in or whatever, we do 50% off the first three months.
We were discussing that primary market companies like REITs and stuff are not doing that. They’re saying, “You’re going to move in. It’s going to be this price and over the course of the next 6 to 9 months, it’s going to be increased just so you know.” It’s a whole thing. My question is what type of a person are you on this? I would love to know. If you’re looking at this and you’re saying, “I know I’m going to be in secondary, primary, or tertiary. I’m okay with doing some marketing, but I’m not going to be an awesome marketer.”
I love marketing. I’m a big marketing person. You guys all know that because you are all here because of all the marketing I do. For me, doing this and being in this area is up my alley and I am not this person. My husband is this person. My husband’s the person who likes to go to the facilities and do cleanups and stuff like that. He’s a hands-on person.
For us, we have to be in the middle. We have to be secondary if we’re partners because he’s this person and I’m this person. You guys tell me. What are you thinking when you look at this? Where do you fit? Do you have any idea of what type of market that you want to be in or even the price range? What’s the price range that you want to be in?
If you know your price range, then you know where your market should be. That’s how you’re looking at it right now. Again, I want to reiterate that time is of the essence. It’s going to be available in the next couple of years and after that, it’s slowly going to go away. Maybe there will only be some more in this available area. If you’re okay with being in this price range or this size, then you could be as slow as you want.
The one thing about storage facility owners is that they are the least motivated people of all the owners and all of the real estate investors out there. If you have a storage facility in this area and you’re like, “I’m going to keep talking to this person,” and you’re going to keep following up over and over again. Eventually, over the course of the next couple of years, they’re going to want to sell. They’ll be interested in selling but it takes a long time to get somebody to even decide if they want to sell.
It’s like me. I’ve been wanting to sell my storage facilities for a couple of years now and I finally got them listed out. We’re the least motivated because there’s no reason really to sell. We’re making money on our facilities so what’s the point of selling unless you’re in some sort of an issue? We have one owner right now that we’re talking to and she’s selling a facility at an amazing price the reason why is because she needs to get rid of it but that never happens.
This is how the market looks so we can have an idea of how it’s looking. This is something that’s very important for you to be thinking about. I want you to be thinking about how much money you’re going to be spending, what’s the population, what market you’re going to be in, and how are you going to be managing these properties. What type of manager are you? That’s the biggest question. It’s because like I have met many people that have bought bigger properties and then they realize that they have to do all this marketing and they can’t do it. It’s not their thing.
Types Of Facilities
You can always hire a marketing person to do all that if you can afford it but it’s expensive to do marketing and have somebody you know do all that for you. We’re vertically integrated. We do everything ourselves. Jeremy says secondary and tertiary at $2 million. Now you know that if you get something in this end, you’re going to have to be good at both managing your boots on the ground people and getting out there doing online marketing as well. I wanted to also add to this chart for every single one of those types of properties, you still have the same types of facilities and there are still a lot of different ways to invest in self-storage.
Depending on your personality, you can take this and you can apply these to any one of those markets. You’ve got mismanaged. Mismanaged property means that it’s not cashflowing. You have income-producing. It is cashflowing. You also have conversions, which is a super popular thing right now. You are going and buying a building. There are a lot of buildings out there that are just sitting and then buying that building for a very good rate and adding like pods, building it out, and putting like units in those.
We bought a conversion and it was a very good buy. I think that this is a very good way to get into the business especially because you can get buildings for super cheap. We do have to have some money for that though or you can also do new construction. This is what we talked about in our mastermind. I said that the market is down. Now, is the perfect time to be getting into and looking for property to buy because it does take on average a year or maybe even two years to get to the point where you can build because of zoning, permits, and things like this.
By that time, you’ll be in the lease-up. That is our mindset. This is what we’re going to be doing right here over the course of the next couple of years, especially in good markets that are growing. We’re in the Tallahassee market. This is something we’re looking at. Tallahassee is a very good secondary market that is becoming a primary market is basically what’s happening. That’s where we’re at.
We’re good at the marketing and the management now. We feel like we can compete in this market. My wholesaling course will come out. If you’re reading this right now and you’re like, “Stacy, you’re scaring me because I have no money or I have very little money. I want to get into this industry but I don’t know how,” you should be looking at wholesaling. Going to Facebook groups and you’re seeing all these people post out. Owners post out their own deals but then also wholesalers are posting out deals.
Wholesaling is where you’re the middle person between the buyer and the seller. That’s what it is. You’re the middle person. You can go out and find facilities, talk to owners, and get it under contract. We have several wholesalers within our coaching program that wholesale to our students. You have to have the buyers. You have to have the sellers and get it under contract and you have to have the buyers.
You’re that middle person. You’re like a realtor, but you’re not a realtor. You’re getting it under contract is what you’re doing. I have a course coming out if you’re interested in learning how to wholesale self-storage. Typically, this works for smaller facilities, but what I do with turnkey acquisitions is wholesaling company but instead of me taking a fee in the middle for buying and selling, I’m just taking a cut in the deal. You can do that as well too.
It’s like I’m wholesaling. It’s a big deal. If you’re very good at finding facilities, talking to owners, running deal analysis, and getting stuff under contract, then all you have to do is go out and find the buyers. If you find the buyers, you can make some money on that deal. That’s what wholesaling is. Also, entitlements. We talked about this. Entitlements are taking the process of building a storage facility from the very beginning not doing anything and not even having land, nothing to getting it to where you can sell that project.
Entitlements are finding the land, going through the zoning process, all of the civil and the surveys, and the neighborhood meetings or whatever you have to do. You are doing all that to the point where you get the permit and then once you get the permit, you could either sell your deal and somebody builds it or you can continue to keep building it and always try to sell it along the way as well. You can sell it all the way up to it’s getting built. “It’s a brand new facility.”
You see all the time brand-new facilities that just got put onto Crexi or whatever it is. Those are all owners that went through the entitlement process, which is buying the land, zoning it, getting the permitting process, clearing the land, developing it, and getting it ready to be built. Along the way, throughout that whole process all the way through even leasing it up and selling it once it’s full, you can sell to any one of those steps. If you’re the type of person who likes to develop, then entitlements are the best way to go. There are certain people out there who like developing. That’s what they like.
Finally, lending. This is what I want to do. I want to partner. I want to lend. I want to not do the work and make money. The best way to make money is to lend your money out because you’re not doing anything. I’ve got lenders that have made $1 million off me in the last few years. He hasn’t had anything. He has no idea even what I’m doing. That’s the best way to make money is to lend. That’s what I want. That’s what you should want as well too.
The best way to make money is to lend your money out because you're not doing anything. Share on XIf you’re the type of person that’s reading this and you’re like, “I want to get into the storage world but I don’t want to do the work,” then you should be lending. That’s what you should be doing. Find a partner. Partner up. Have somebody who wants to do the boots-on-the-ground person, be the boots-on-the-ground person, be the manager, and be the person that does all that. You just lend and make money. I’m partnering on a lot of projects right now and I get a check in every quarter. I’m like, “This is awesome. I did nothing at all for this money.” That’s what lending is.
All in all, you’ve got seven different ways to invest in self-storage. With mismanaged facilities, you’re going to be doing all the work. CapEx, we do a lot of this. We have income-producing properties. We have conversions. We’re going to be doing new construction. I’m starting that process now. Also, wholesaling. You can be the middle person and entitlements. You never know. I might be getting into this if I start doing the new construction stuff. I might be able to sell my deal and not finish it. Also, lending. Partnering or lending out your money either as a partner, in a fund, or as a debt loan. You could do that as well too.
Deals In Markets
Now, that you know all these seven things, tell me what you’re interested in doing. What type of person are you? Also, I want you to know that all of these seven things fit into any one of these markets. You can do any one of these things here and in the tertiary, secondary, primary markets, and any population, you can do that. Now, that you have an idea of how all that works, tell me. John’s in Tennessee in the Upper Peninsula. “I’ll probably start in tertiary markets. I would consider West Virginia.”
West Virginia’s a very good market for storage facilities because it’s one of those markets that nobody ever talks about but there are people that need storage in West Virginia. What is the big deal about not owning a storage facility in West Virginia? We find good cheap deals in West Virginia. If you don’t have a lot of money, West Virginia is the place to be. In Arkansas also, you can find some cheap deals. New Mexico as well. You can find some really good deals, but it’s getting a little bit more expensive in New Mexico. New Mexico’s one of those states that nobody ever thinks about. Also, West Virginia. If you get up until like Maine, Maine is a great state. There’s not enough storage in Maine for sure.
Jeremy said mismanaged in cashflowing. Jeremy’s going to do a mismanaged and cashflowing either in in tertiary markets or maybe secondary markets. Jason said secondary market and income-producing. Jason wants cashflowing. It’s what he wants. He wants the cashflow property. There’s no right or wrong way to do any of this. It’s that you’ve got to understand how to look at the markets when you do look at the market.
This is how my brain thinks. It’s like, “What type of market is it? What type of a deal am I going to be buying?” I never know what kind of a deal I’m going to be buying until I start putting out offers because you just don’t know what type of a deal you’re going to get or what type of terms and stuff. What I do is talk to owners. I put offers out. Whatever I find is going to the market and the location. From there, it’s going to be the type of deal. From there, you’re figuring out, “How am I going to manage this thing? What type of management am I going to need? Am I going to be okay with that?”
It’s finding the owners, putting the offers out, figuring out the market, figuring out the location, and figuring out what type of deal it’s going to be. From there it’s like, “What type of management am I going to do? How am I going to be able to manage this thing?” If it’s mismanaged, it’s going to be more hands-on. There’s a lot of CapEx. There’s a lot of things that got to be there all the time. If it’s not in an area that I want to go to over and over again, then why would I buy in that area? It’s because mismanaged facilities require a lot of hands-on work. I won’t be doing mismanaged facilities anymore. I’m tired of being mismanaged. It’s just too much work.
Now, I’m going to get into construction so it’s going to be even more work. I’m tired of mismanaged facilities. You guys have all been following me because I want to buy mismanaged facilities. I’m like, “After sixteen mismanaged facilities, I’m ready for some income-producing properties,” but then I have my husband. He is a hands-on person. I’m like, “Why don’t we just build? You can manage that whole process and I can do all the marketing and stuff.”
This is just my thought process. Who knows what’s going to happen? You got to get out there and start looking for deals. Any other thoughts on this? First cashflowing and then mismanaged in primary markets. For sure, there are cashflowing properties out there. It’s hard to find a mismanaged property that’s severely mismanaged anymore. Those are few and far between. Now, it’s cashflowing but it’s not making what it should be making.
It’s not breaking even is what it is but it is making sub cash. Those are out there. There are a lot of income-producing properties out there, but you always can increase the income. Overall, the idea behind the session was how I figure out which market I should be in right now because I know that the market is getting smaller, and the buy box is getting smaller. When I’m in that market, what type of a deal should I be looking at? Also, think ahead to how you’re going to be buying, affording, and managing it before you get yourself into a deal that you just don’t want to be in.
It’s because I’m seeing a lot of deals that were bought in the last couple of years where the owners are realizing that this is not what they want to be doing. You don’t want to be that person. That is the point of kind of thinking the whole thing through is what I’m saying. I talked to an owner who’s bought a $4 million facility and he is like, “I’m not good at marketing. I suck at marketing and I don’t know why I bought this facility.”
You don’t want to be in that position at all. He got it seller-financed and he thought it was a great deal because he got it seller-financed but the truth of the matter is just because something’s seller-financed doesn’t mean it’s a great deal. You have to think about all these things. I appreciate you guys coming and hanging out with me. I’m here every Wednesday. Whatever I want to teach, I’ll just teach about it so it’s never the same. Again, go to my website and my course is there, my Deal Analyzer’s there, and you can register for the next training. Take care. Bye.
