Buying self storage can be hard. How much do you need? What should it look like? Is it expensive? In this episode, Stacy Rossetti shares how much self storage you can actually get with $100K, how the market works, and how to hack it all and find out which self storage units are the best value for your money! Tune in now and know where to spend your $100K in real estate!

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How Much Self Storage Can You Buy With $100k?

In this episode, what we are going to do is we are going to talk about, “If I had $100,000, what would I do with it in the storage world?” We owned storage facilities in 2013. We have two of them that are in our fund, which is the Self-Storage Fund of America, and we have eleven of them that we own personally. We are through Georgia and Florida. I had been investing in 2017. It doesn’t take long to get where I’m at. You have to take action. The one reason why I am successful at what I do is because I take action.

I tell this to my students all the time, and I will tell it to you. As long as you are moving forward, trying, exerting energy, and making this a priority, it will come to fruition. The truth is that it takes a lot of work and effort. I look like I’m successful, but the truth is, I have been doing this nonstop since 2016. I looked for my first storage facility in 2016. I was pregnant with Lillian, and I wanted to have a passive income so I could stay home with her. I got out there and started looking at storage as an option to be able to do that.

Since then, the first year we bought our storage facility was 2017. The second year I bought one. In the third year, I bought three. In the fourth year, I bought none. In the fifth year, we bought five, and in the sixth year, we bought two. It is not easy. Amber says, “How do you make it look easy?” The truth is, it is me doing this over the course of every day, all day long, over the course of the last several years. What you focus on expands. If you truly want to buy a storage facility, you have to be making an effort to want to do that. The best way to make an effort is to put offers in because it is a numbers game. Aubrey says, “How do you find all your facilities?” We put a lot of offers in. We put in 10 to 15 offers in a week. We still don’t find hardly any storage facilities to buy.

Every once in a while, you will find something on your first try. I have a student. He was in the coaching program for several months. I was like, “You got to get out there.” He was like, “I never did.” I was like, “You got to get out there and start talking to owners.” The first person that he talked to, he got it under contract. That happened, but that doesn’t happen often. It happened to him. Put offers. My question to you is, if you truly want to buy storage, how many offers did you put in this week? It could be through Crexi, going to the owner directly, MLS, or broker. It could be all different ways of doing it. “How many offers did you put in this week?” We put a lot of offers in. We still don’t get any storage facilities a lot of times. That is my two cents, and I’m sticking to it.

Real Estate Is Expensive

What I wanted to talk about was if I had $100,000, what would I be doing with it? This is for all the newbies. I talk to many people. $50,000 or $100,000 is typically what everybody has in order to get started in self-storage. There are a few of us that have more than $100,000, and there are a lot of us that have less than $50,000. If you have less than $50,000, I highly recommend that you learn how to wholesale self-storage or you find a partner that has money. The truth is that commercial real estate is expensive. You got to think big.

 

I got started in real estate investing in 2010. I was talking to a guy. He was sitting across the table from me and telling me about real estate, “You should get investing into real estate investing.” He was like, “I couldn’t think big. I couldn’t think like that because I had never been put around that.” He was talking about the $50,000 and $100,000 checks that he was writing. To me, in awe, I was like, “How are you doing that? That is impossible.”

He was like, “I’m writing $50,000 and $100,000 checks all the time.” I was like, “That was weird. What would that be like to write $50,000 and $100,000 checks?” When I was talking to him, I vowed and said, “I am going to write $50,000 and $100,000 checks. I want to write a check that says $100,000 and pay somebody.” The truth is, at one point, I was doing many rehabs. We were doing 20 to 30 rehabs in a year. I was paying $50,000 in general contractor insurance a year. Could you imagine writing these checks out every month for a general contractor for insurance?

I started writing big checks. I write massive, huge $20,000, $30,000, $40,000 to $50,000 checks to contractors. You want to get the check for $50,000 or $100,000, but I was writing a lot of checks out to contractors and stuff for this much. I got to the point where I could write $50,000 and $100,000. After a couple of years of doing that, I started receiving those checks too. When you sell the houses, you will get $50,000 or $100,000 checks. I would get wires because, in checks, they hold them for weeks.

I started getting to that point where I could do that, but several years ago, I could barely fathom doing that. For a lot of people, it takes forever to save up $50,000 or $100,000. This is the one thing I truly believe, and I hope you guys take this to heart, especially for what is coming up in the next couple of years. You have to learn how to have multiple streams of income. How many different ways are you making money? That is the question that you should be asking yourself.

 

Considering what’s coming up in the next couple of years, we have to learn how to have multiple streams of income.

 

When I started in 2010, that is another thing that the guy across from me was telling me. He was like, “I write a lot of big checks.” When he said that, that stuck in my head. Another thing that he said was multiple streams of income. He was like, “I have several different ways of making money. How many different ways of income do you have?” At that point, I had just a W-2 job. One stream of income, that was it. I started thinking about that.

At that moment, when he told me that, I vowed to also start one new stream of income a year. That was several years ago. I probably have 25 to 30 different ways to make money now. I want to inspire you to start thinking about how many different ways you are making income, especially over the next couple of years. Those that have a lot of different ways of making income, even a 2nd, 3rd, or 4th, are going to be the ones that are going to be a little bit safer than the ones that have that one job. We have thirteen storage facilities. Those are thirteen different incomes and all the different other ways that we make money. I like to be focusing on multiple streams of income for the next couple of years and start creating the $50,000 or $100,000 to get to that point.

I wanted to talk about $100,000 because it is an easy number. You could substitute for $50,000 if that is what you have. $50,000 or $100,000 is a good number to work with. If I had $50,000 or $100,000 now and I wanted to get in and invest in self-storage, what would I do? I’m going to go through that and see what you guys think. If you have any ideas or questions, post them. We already have questions like, “Can you 1031 a storage facility?” Yes. “A residential property?” Yes. We will get into all the different questions.

A hundred thousand dollars, I have taught this several times and but I’m going to go through it again because a different way of looking at it is all the different ways that you can invest in self-storage. I’m going to give you also my ways that you can invest in self-storage because I got a lot of stuff going on. What I want to do is I want to talk about all the different ways that you can spend $100,000 in storage. There are six different ways for you to invest in self-storage. In four of them, you need money in order to do something. The $100,000 you will have will be perfect for these, and the other four we will get into will be passive.

Mismanaged Facilities

The first thing is it was exactly what I do, which is mismanaged facilities. If you only have $100,000, mismanaged facilities are difficult to buy through a bank because a misuse facility means it is not producing the income it should be producing. A bank is not going to lend to it. These banks only lend to income-producing properties.

There are banks that do what’s called projection-based loans, but there are few and far between. SBA will do a projection-based loan, and we are in the process now of talking to SBA about doing a projection-based loan. They are going to want to have a lot of spread. They are not going to give you money if you are only going to make $50,000 or $100,000 on the backend. They want you to double, if not triple, the value of that property. In projection-based loans, you should be 50% LTV or lower. LTV means loan-to-value.

We are in the process of buying a $2.5 million facility that is worth $5.4 million. That is 50% or less than 50% loan-to-value. When you think about mismanaged facilities, you want to have a huge spread. A bank is not going to fund this deal unless there is this huge massive spread, and you can prove to them that you can take this mismanaged facility and make it to this beautiful facility. I will do a whole session on this once we are done with this alone. There is so much stuff that they want for this. It is not easy to get a projection-based loan.

Just so everybody knows, it is not easy. It is a lot of work. They are requiring a ridiculous amount of stuff. It may be because all the banks are conservative now. They were like, “What about this?” They want a management business plan. They want a business plan, resumes, and know everything about you. They want a whole bunch of stuff. They want you to be able to prove that you have the experience and, at the same time, you have a plan for this thing.

 

In mismanaged facilities, you could go and get a projection-based loan. It is an SBA loan because, typically, only SBA is going to do a loan for a mismanaged facility like this. Some local banks will do this. Especially now, it is few. Local banks are being conservative. SBA requires 10% or 15% down, depending on a lot of different things like your experience plus the loan at the deal itself. Is it a good deal or not?

This happened to my students quite often. A lot of times, they will tell you, “Ten percent down,” and the day before closing, they will be like, “We have to do 15% down.” I have seen this quite often. I tell my students all the time with SBA, like, “Run your numbers at 15% down.” They may say 10% down, but the truth is it is 15% down. SBA has a ridiculous amount of fees. They get you a lot of fees. At 15%, $100,000, you are only going to be able to buy a $500,000 facility, maybe $550,000, or something like this. That is 15%. Let’s say $550,000 to $650,000, something like that, depending on the deal.

If you have $100,000, you reverse engineer, “How much money can I put down? I should be looking for these types of deals.” In a mismanaged facility where you have to cut, you can buy $500,000 to $600,000 and put down $50,000 to $75,000 or $100,000 because you may need some CapEx. You want to make sure that you stay on the money for CapEx if you need it. Especially for a mismanaged facility, you probably need some CapEx because they are a mess.

We closed on a facility, and it was a $375,000 purchase, but it is $200,000 in CapEx. That is a severely mismanaged facility. We probably could have got an SBA loan for that, but I didn’t want to go through the whole shebang of doing all that. The $100,000 can get you a mismanaged facility if you want to do a projection-based loan, and it is between $500,000 and $600,000.

In your mind, you were like, “Now I know what a facility I can buy. Where can I go find this?” A $500,000 or a $600,000 facility is not going to be in Nashville, Orlando, or something like this. A $500,000 or $600,000 facility is going to be in a tertiary market. Tertiary equals country, in a smaller market or maybe a secondary market. For me, a secondary market is a population of 25,000 to 100,000. That is not oversaturated or a 25,000 or less, like a little tiny town.

Sometimes you can’t find a $500,000 facility, even in a town that has 5,000 people or less. It depends on your area. In Florida, there are a lot of little tiny towns, but they are suburbs of all these bigger areas. That is not going to work as a secondary market or tertiary market. A tertiary market is standalone. I live in Panhandle, Florida, now, and it is tertiary, honestly. This is the perfect place to find a $500,000 or $600,000 facility.

Where are those tertiary markets? I had a student in the Panhandle close to a facility. It was 110 units, and it was $389,000 or something like this. It was a mismanaged facility. They had not raised rates in several years. A $500,000 or $600,000 facility is not going to get you much anymore. Gone are those days. Keep that in mind, and I will be focusing on the tertiary market.

Some areas, like Missouri, it has a low price per square foot. You might be able to find a $500,000 or $600,000 facility, not in the tertiary but a little secondary market town or something like that. Keep that in mind. In mismanaged facilities, $100,000 will get you a projection-based deal. Most of the time, with mismanaged facilities, you need to raise money. That is why I said I bought a $375,000 facility, and I’m going to put $200,000 into it. I had to raise the money for that. Most of the time, with mismanaged facilities, you have to raise that money or have cash for it.

Income-Producing Properties

The second way is income-producing properties. Banks love income-producing properties because it has low risk. You can go to a local bank in the area, and you can get a loan of $100,000 down that is going to get you a good decent size facility. The only thing with local banks, six one way and half a dozen the other, is that local banks are requiring more money down. They are requiring 20% to 30% down. A lot of them are 30% down now because of the market. We are running our numbers on bank financing for 25% down and 7% interest.

You always have to think about bank financing. When you close on the deal, what is that interest rate going to be? We are getting a loan on a property now, and we are running our numbers at 8.5%. That is crazy, but that is where we are running our numbers at. If you can find a deal that works at 8.5%, it is a great deal because, eventually, you will be able to refi that out and get a lower rate. It is that now, you are going to close on it and hold onto it for 1, 2, or 3 years and you will be able to refi that out at a lower rate, and you will have a much more spread.

There is nothing wrong with buying at higher interest rates at all. Every deal that I have ever done is high-interest rates. It doesn’t bother me at all, but you have to have a bigger spread. Keep that in mind with the income-producing property. A $100,000 can get you a good income-producing property in a secondary or tertiary market, but you have to make sure that you are running the numbers based on what the terms of the banks are.

Is anybody else seeing anything else? 25% down and 7% interest is a good number now, but let’s see what happens in several days. I’m guessing they are going to go up. They are going to go up through March 2023. That is my guess, but I don’t know. What does everybody else think? I would love to know.

A $100,000 can get you an income-producing property, and you can go to a local bank and get a loan, or you can go to SBA and get a loan. SBA has already been through that. They love income-producing properties and storage. SBA is a great option. They love projection-based loans and income-producing properties. They like $500,000 or more. They want a little bit bigger deals.

New Construction

If you have $300,000, go to your local bank. That is the perfect loan for a local bank anyways. You have income-producing and mismanaged, and with $100,000, you can do new construction. It will help you to buy something that you can do for new construction. A $100,000 will help you to get all the preliminary work done and probably buy a piece of property in a tertiary market, where you could build storage. SBA loves new construction.

If you are that type of person that’s like, “I got this perfect piece of land. I have been driving by this lot on the corner over here, and I think that would be the perfect spot for storage,” you may want to consider getting a feasibility study. A feasibility study will cost $3,000 to $5,000. It sounds like a couple of thousand dollars. They will do a study and tell you if it is a good place to build or not. They look at competition, rates and all this stuff. They tell you about traffic and things like this. They tell you if it is a good deal.

If you have $100,000 and you were thinking in the back of your mind, “I could build,” I’m going to tell you building is an amazing way to make and leverage money. You will make the most amount of money by building, but the only thing is that you have to have a strong stomach because it takes a long time. It is a lot of work. The hardest part about building is the preliminary work, getting the approval from the city and the county and getting all the construction stuff done. That is the hardest part of it.

 

Building is an amazing way to make and leverage money.

 

If you can get through that and get to the point where you have a permit, working with the contractor is hard, but it is not as hard as the preliminary work. Also, preliminary work for new construction is slow. I have built it before, and it is slow. That is why I say you have to have a strong stomach. A $100,000 will get you enough to buy land or maybe put a down payment for some steel, which you don’t need to do. You don’t need to do that until you close on the property. It gets you enough to buy a piece of land and get all your preliminary work done. Go to a bank, get a loan and put some money down for the loan. SBA will require 10%.

I pitched a fund that I’m co-sponsoring. It is in Texas. It is a new construction deal. Rhonda, the person that I partnered with, did it great. She went out and did all the preliminary work. She has been working on this thing for months to get it all done. She worked on putting the fund together. She is raising the money. What I love about new construction is the returns are amazing. It is a 25% return. She is spending $100,000. She is putting this into the deal to put the whole deal together.

Her cost is $100,000. She is the one that did all the preliminary work. She found the facility, put it under contract, went to the county and did all the work that the county wanted. She went to the city and did all the work that the city wanted. She also found the loan. She got an SBA loan, and she is going to manage the funds. Her cost for putting this fund together, which she is going to syndicate this deal out, is $100,000.

For $100,000, if you are a savvy investor, you understand the concept of putting funds together and syndicating, or you want to learn about this. She is spending $100,000 on putting this whole bill together. She put the earnest money down, did the PPM and went through that whole process and stuff. Her cost to do this is $100,000. She is managing the project and everybody. She is the asset manager. In the end, she is not going to get paid out until the facility is built and it is leased up. In the back end, she is going to make a lot of money. It is going to take several years for her to make that money, and she will make a lot of money. For her, spending $100,000 now in order to make hundreds of thousands of dollars in several years is worth it.

This is great too. I love this concept. I’m okay with not making any money until the end of the last year or the 4th and the 5th year of the fund. If that is the type of thing that appeals to you, she is doing a $6 million fund. It only costs her $100,000 to manage the whole process and get everything to the point where she has the permits. She does what is called entitlements. That is an entitlement. Preliminary work is called entitlement. You are getting it from nothing to something. She is still managing the fund, but she is going to hand it off to a GC, and the GC is going to build this facility. She is the asset manager.

If you have $100,000 and understand that concept a little bit, this is a good way for you to make money. We can add that to the list of ways you can invest in self-storage. On the other end, you can always put your money into a fund and be a passive investor. You could put your money to find a fund, do nothing and make money. Honestly, that should be everybody’s ultimate goal. It is being a passive investor. In my personal opinion, the best way to make money is to lend it out. A lot of people feel they have to own them and do the work. This is how we are too. My husband feels this way too. Ultimately, the goal for us is to become a passive investors. That is how we focus on funds and do that.

 

To recap, we have the mismanaged facilities where you can get an SBA loan and put money down. We have income-producing properties where you can get an SBA loan. You can get a local bank to fund it for $100,000 or do new construction. You can go out and find a piece of property. In new construction, a square piece of land that is half of an acre will fit 50 doors, and a rectangular piece of land that is an acre will fit 100 doors. Typically, this is where it is to give you an idea. I always calculate, on average, one acre fits 100 doors.

I’m not sure what they are thinking when they are building their storage facilities. A lot of times, I’m like, “You have an acre of land. It is five different buildings in all different places and stuff.” I saw one facility one time. It was a two-acre square, and he had 200 10 by 10 doors there. It was the perfect property ever. The driveway in between all of them was fifteen feet. The buildings were lined up. There was a gate, and it came in. It was a perfectly made property. I will never forget that facility. I was like, “It is the perfect facility.”

Raising Money

I never see, hardly ever, properties like that. They are always angled. Back in the day, this is what you did. You would try to do a 6 by 10 next to a 4 by 9 and fit it in. A lot of times, the price per square foot, the smaller the facility, the more you make. This is the concept of what a lot of people back in the day were thinking, especially when they didn’t have a lot of stuff, and 5 by 10 was a good size. Now everybody wants 10 by 10s and 10 by 20s. You might stack those things and make them perfectly in order. A $100,000 in new construction will get you X amount of space, and you could build onto that or $100,000 that can fund your next syndication. You can get out there and raise money for your own deal.

Over the course of the next couple of years, everybody should be learning how to raise money because the truth is there is a lot of money out there. People are now trying to figure out where to put their money. Everybody was all over the place because the whole world was going crazy. Put your goal on your list for 2023 to learn how to raise money or raise capital, putting one offer in a week, talking to 5 to 10 owners and putting in one offer a week and learning how to raise money. You can take your $100,000 and multiply it by hundreds of thousands of dollars over the course of the next couple of years. That is something that I highly recommend that you focus on.

 

Everybody should be learning how to raise money because the truth is there’s a lot of money out there. People right now are trying to figure out where to put their money. Everybody’s just all over the place.

 

Those are the four ways that you should be investing. The fourth way is the lending part. I got into that and putting money into a fund, but lending your money out. If you have $100,000 and you were like, “I can’t find any good deals. My money is sitting and not doing anything,” you should be lending that out, getting it worked, and making money.

Lending your money entails partnering with somebody and finding somebody else that has another $100,000. That $200,000 can buy you a $1 million property, or it could be putting your money into a fund. You could lend the money as a loan to somebody who wants to buy a facility or do a bridge loan. A lot of times, people don’t have enough money for down payments and things like this. You could do a bridge loan.

I have one deal that I’m partnered with. I got the owner-to-owner finance. It was a $600,000 or $700,000 facility. I got the owner-finance for $400,000 of it, and I needed $200,000 more because he needed to pay off his loan. I brought somebody in with $200,000 and partnered with them on the deal. You could do the same thing with $100,000 or $50,000. That is the bridge to getting the deal done. You are in the deal and can be a part of the deal, silent or not silent, however you want to do it.

Partnering is a great way to get into the business, learn and see. It is a trial and error. If you have $100,000 sitting around, I highly recommend that you call ten owners a week and put in one offer a week so you can find a deal, or you start working on building or partner and lend the money out to somebody else or put it into a fund for passive income. Don’t let it sit there.

One thing that I’m good at is I’m actively moving my money around and working my money. My money is there to help my business grow and help me build wealth. That is what it is for. Those are the four ways to utilize $100,000 in this market. “What if we want cashflow versus money in several years?” When you say money, what do you mean by money? Cashflow is money.

You can get cashflow from owning a facility or lending money. I talk to investors on a daily basis. There are investors out there that do nothing but lend their money out. All they care about is cashflow. They are asking me, “How much am I going to make on a monthly, quarterly basis or annual basis? What is that distribution going to look like because I live off of this distribution? I need to know how much money you are going to be making,” versus, “I own this facility. I’m running my numbers. I need to know what my cashflow for this property is going to be.”

What You Need To Know About Owning The Facility

Cashflow is cashflow. It doesn’t matter if you are lending the money out or owning a facility. I’m going to tell you owning the facility is going to be way more work than lending your money out. When you calculate cashflow and owning a facility, make sure you calculate your time and effort in working on this facility versus running numbers, wiring money over and getting distributions. This is going to be way less time-consuming than this is.

I heard vacancies are rising as the recession kicks in. What occupancy rate should I model for? We run our numbers at 92%. We talk to many owners. I’m full. They want us to run their numbers at 98% or 99%. Ninety percent is a good number to run your numbers at, especially in primary markets. In a primary market, run your numbers at 80%. In a secondary market, maybe 85% to 90%. In a tertiary market, 90% to 92% or something like that. 88% to 92% is going to be a good number. You never want to run your numbers at 99%. Ninety percent is a good solid number for tertiary markets and secondary markets.

Physical occupancy is different from economic occupancy. Physical occupancy was like, “I’m full.” Is everybody paying? We are trying to buy this facility where the guy is full. He should be making $150,000 a year, but the truth is he is making $110,000 or something like this. That means his economic occupancy, those that are paying, are low. That is the difference between physical and economic occupancy. Make sure you understand those two and that you are looking at that. I’m still running my numbers at 90% physical occupancy because the ultimate goal is to get this full. We run it at that vacancy. It could be at 65% or 75% full. Your goal is to get it to 90% full.

A lot of people are saying, “I’m getting more vacancies.” That probably means their prices are too high. You want to consider that when you are running your numbers and looking at the competition. You do not want to run your numbers or your price per square foot at the highest number. I have talked to several banks where they said, “We ran our numbers at 90% full at $0.90 a square foot.” They are 85% full at $0.80 a square foot, and they are barely able to make the mortgage.

You want to keep that in mind. You don’t want to be like, “The competition is around the corner. The big one over there is charging double. I get to charge double.” You want to look at the entire competition and what they are charging. Over the course of several months, what have they raised their rates to and are their rates dropping? You can see this in Radius Plus.

We bought a facility in August 2022, where the entire area, the price per square foot within ten facilities within a ten-mile radius is $1 for a square foot. We ran our numbers at $0.95 a square foot. We wanted to be ultra-conservative and say, “We are not going to get to $1 square foot. We are going to be a little bit less than that. We want to be super conservative, especially now.” It is a cycle. They may not be full now, but eventually, they will get full. Everybody that wasn’t full this past year or so may not be full over the course of 2023. It is a cycle. You want to make sure you get that average or a good solid number where you say, “I feel comfortable with this number. I know that I’m not pushing this number. I’m not going to push myself.” That is the goal.

 

If you are financing at 7%, economic occupancy goes to 80%, and you modeled it at 90%, what happens to your cap rate? Your cap rate goes down. It is horrible. The truth is that the cycle is only going to last long. You got to keep in mind that over the course of 2023, you may have to decrease your prices. What we do internally is every three months, we look at our prices. Are we in tune with what the market is calling for?

On that facility that we bought, it was $0.95 a square foot. When we bought the place, he was charging $20 for a 10 by 10. That is how bad it was. We are at $100 now. We pissed a lot of people off. A lot of people left. On our physical and economic occupancy, we lost 30%. In the last month, we got ten new tenants at $100. That tells me that our prices are correct. It is that these people didn’t want to pay that much. They had been paying $20 for the last several years. They were like, “Screw you. I’m out of here.”

When you start getting in and managing the place, you will start getting a feel for what the prices should be. When you are running your numbers, you want to be conservative. You are not pushing your numbers. You are being conservative. The national average is $0.88 a square foot for a 10 by 10. Some areas I told you about, like Missouri and Arkansas, are below the national average. Some places are below the national average.

For the most part, from what I’m seeing, most areas are at the national average. I went into one of the Facebook groups, not mine, to a different one. I went into the Storage Managers or something. I posted out and asked, “Who here knows what the national average for a 10 by 10 storage unit is? I would like to know if anybody here knows what the national average is.” Everybody, not one person, said $0.88 a square foot. I don’t know if they are managers, investors or what, but they all posted what they are seeing in their area for 10 by 10s, which makes sense. It is not like they don’t know what they are doing, but they only see what they know and only know what they see.

Self Storage Fund of America

All those prices were all national average or well above the national average. There is a good 100 people that commented on that thing. Prices across the country are high, but there are some poor areas where they are low. I still think they should be going up $0.50 to $0.60 a square foot. After this, I’m going to pitch my fund. It is the Self-Storage Fund of America. If you want to be a passive investor and have $50,000 or $100,000, and you don’t know what to do with it, you should put it in my fund. It is StacyRossetti.com/fund. I always pitch that right after this.

We have some questions here. “If we invest in the funds, we have to wait five years for cash.” No, you don’t. Some funds are annual distributions, and some of them are quarterly distributions. As soon as that fund starts making money, which for us, we calculate month nine after you put your money in, you will make quarterly distributions. You will get on a quarterly basis X amount of dollars depending on how much you put in. That is how funds work.

“How much NOI can you get from a $500,000 property?” We shoot for 10% cash-on-cash return. We typically go by cash-on-cash. We don’t go by NOI. An NOI, for anybody that doesn’t know, is Net Operating Income. Let’s say a $1 million property is making $100,000 a year, but you have to minus your expenses. We run our expenses at 40%. I got $60,000 left. Out of those $60,000, that is your NOI. Out of that comes your mortgage if you have a mortgage. It depends on the terms of the loan of what your mortgage is. After that, your net income. That is what you are making on a monthly basis. That also determines what your cash-on-cash return is. That is a key factor.

In my Deal Analyzer, the one that I offered to everybody that bought the course, that is explained. Hopefully, if you bought the course, you upgraded to the Deal Analyzer because on the Deal Analyzer, there is a cash evaluation sheet that shows you those numbers. The course is available. If you haven’t bought it, make sure that you buy that, and you can upgrade to my Deal Analyzer. It is $497. Anyway, that is how you calculate that.

“Do you ever have competitor pop up 200 doors near you? How does that crush your numbers?” You are talking about the primary market. Maybe the secondary market is what you are talking about. You are not going to have a tertiary market facility pop up 200 doors next to you. That is going to be a more secondary marker or a primary market. I have never had that happen because I only buy in secondary and tertiary markets. The primary market is going to be expensive. My question to you is, how much money do you have to spend? I’m buying $2 million to $3 million facilities, and they are in secondary markets. The primary market is $3 million or more, but I would say probably $5 million or more.

“With all the conservative forecasting of the future, how big of a step back do you feel storage is going to take?” I do not feel like storage is going to take a step back. Storage is amazing because, in an upturn, you are going to be moving, changing, doing things, buying more stuff, getting rid of old and putting new in your house. It is this whole cycle. In a downturn, it is the same thing. You were like, “I got all this stuff, and I got to downsize to a small house. I got to put all this stuff in storage.”

“Why do you think apartment buildings are adding storage?” When you see a new apartment building, they all have storage on them. Why do you think RV parks have storage and mobile home parks are built with storage? There are tiny home places, and there is storage right around the corner. At one point, I was like, “The tiny house community with storage is a perfect idea.” Storage is not going to go anywhere.

 

Storage is not going to go anywhere. As Americans, we have this disease called consumerism. Even in the bad times, we still buy stuff.

 

As Americans, we have this disease. It is called consumerism. Even in the bad times, we still buy stuff. We buy different things, and we buy more because we buy smaller things. You were like, “I can afford $5, $10, $15, to $20.” That stuff starts consuming. You can’t go out and buy huge big items, but you can buy little tiny things. A lot of people, when the times get tough, they spend money. That is the mentality that we have. I am going to hop onto my pitch. I appreciate you guys hopping on, and I will see you next episode. I appreciate everybody following me. I’m here to help. Next time you get into the Facebook group, post any questions you have. We are there for you. Take care.

 

Important Links

• Self-Storage Fund of America
• SBA
• Radius Plus
• StacyRossetti.com/fund
• Facebook – Stacy Rossetti