In this episode, Stacy discusses how you could double the storage facility’s profit in just one year! She shares how to get started in storage investing, take action, and implement strategies to help you get your business to the next level. Tune in to learn how you could get fabulous deals and analyze properties!
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How To Double A Storage Facility’s Profit In One Year
I have been teaching people how to invest in self-storage for several years. I have been investing in self-storage for several years as well. We are in Georgia now closing on our 12th facility. This facility is not going into Ms. Lilian’s Self-Storage brand. That’s our personal brand. This facility that we’re closing is going into our fund. The fund is called the Self-Storage Fund of America. It’s a 506(c) fund.
You have to be an accredited investor in order to put money in, but if you’re interested, you should check out my pitch. You can come to hang out with us. That’s where I talk about the fund and how you can invest. That’s true passive investing. “I don’t want to do any work. I want to make money.” That’s what the fund is for.
Our brand for that is called Mission Self-Storage because I’m on a mission to make my investors’ money, buy as many good deals as I possibly can into the fund, and teach as many people as I can how to invest in self-storage. The word mission essentially resonates with me. That’s why we decided to call our new brand, Mission Self-Storage. You’ll be reading a lot about Mission Self-Storage in the coming years because we’re going to be buying one storage facility a quarter for the next few years in the fund.
A quick reminder, I teach every Monday night. It’s a completely different topic every single Monday night. Hop on, hang out with me, and I’ll talk about whatever. Over the course of the next couple of months, I’m going to be doing case studies on my own personal facilities. We’re going to be using my new Deal Analyzer that my students in my Storage Nerds Coaching Program are going to get access to in the next few weeks. I’m introducing it to them so I’m excited.
We have ten virtual assistants that live in the Philippines. Their job is to call storage facility owners, not only for me but also for my students as well, too. You can hire my virtual assistants to find deals for you. They’re getting so good at this. We’re putting in 10 to 15 offers in a week. It’s crazy. They have been using the Deal Analyzer. We’re fine-tuning it. I will release it to my students inside the Storage Nerds Coaching Program so they can start using it as well. I want to make sure everything works properly. It doesn’t get all screwed up and stuff like that.
Inside the course, you are going to get access to the Deal Analyzer that everybody’s been using up until now. We’re going to be upgrading the Deal Analyzer in the course. If you already have the course, thank you for purchasing it. We’re about to upgrade the Deal Analyzer so that you guys will have access to version two and you’ll be able to run numbers on that. It has DSR and some new things on it that you can utilize as well, too.
Search storage facilities in your area and talk to the owners. Don’t talk to the managers. Talk to the owners and see if they want to sell. That’s the easy part.
If you have not bought the course, make sure you check that out. It’s called Super Simple Self-Storage. It will take you through how to get started in self-storage. You also get a Deal Analyzer because one of the things that everybody needs is how to run numbers and stuff. I go into how to utilize it and then also give you access to that as well, too.
In this episode, we’re going to get into a couple of things. I want to do a case study on the second property that I ever bought and it’s in Newnan, Georgia. I’m going to run numbers on it. Not only am I going to run numbers on it using the new Deal Analyzer, but I’m also going to show you some other tools that you can be using when you get out there and start looking for facilities. Remember, every single episode is completely different. Hop on every episode. You cannot learn how to invest and sell storage in one episode. You have to learn how to invest and run deal analysis.
Finding the facilities, honestly, is the easy part. I teach, “Call, talk to them, and see if they want to sell. Talk to the owner.” Search storage facilities in your area and call and talk to the owners. Don’t talk to the managers, talk to the owners and see if they want to sell. That’s the easy part. You need to learn how to run commercial deal analysis. You need to be able to tell if it’s a good deal or not. That’s what I’m talking about deal analysis and using the Deal Analyzer. That’s the bulk of everything that you do in commercial deal analysis. It’s called underwriting. You have to learn how to underwrite a deal.
Let’s get started so we can go over everything. For everybody that’s been following for a while, you all know that Google Drive is what we use to share all of our documents. I put everything right into the Google Drive folder. We have all of Ms. Lillian’s Self-storage folder and then inside it, we have our Newnan folder. I’m going to go through how did I find, fund, and run it. That’s what we’re going to do.
Let’s do Google Maps. Remember, I’ve been doing this for a few years now. The way that I found my early facilities was a little bit different than what everybody does now. Pete was supposed to be here to help Lillian. I’m looking for Newnan, Georgia and what I’m doing is I’m looking up Ms. Lillian’s. We’re up in Jasper now. We’ve got all these facilities all over Jasper. The reason I have so many facilities in this area to give you guys background is I used to live in Peachtree City. We’ve lived here for several years. When I got started in self-storage investing, we were looking in our area.
Driving For Storage
The first facility that we bought was in 2017. We started to build what I call a mini portfolio and within 30 minutes to 1 hour, we could just drive. To get up here was probably about 20 minutes and each place after that is maybe 30 minutes or something like that. Now, we have this portfolio. This is the one that’s in Newnan. I found this facility by driving for storage. That’s how I found it.
For everybody that wants to find facilities, getting out, driving around, and going into these little tiny towns, this is where you’re going to find like the deals that are going to be good first-time deals to purchase unless you have $1 million plus. This would be considered the secondary market of Atlanta. Newnan is considered a secondary market. I would consider Franklin a tertiary market. The further you get out, the cheaper it is.
When we got into storage, everything was cheap because nobody wanted to buy anything. That was in 2017. Nobody wanted to buy storage. It’s one of those things that was coming back. In the last few years, people wanted to buy storage facilities. When I started coaching, I bought all these at a time, but that was a good time to buy in secondary markets. It doesn’t mean it is not a good time to buy now. It means that you’re going to have to pay more money or go further out.
In primary markets, it’s super expensive. I would consider these two and even Newnan, a primary market. It goes off by population, whether or not it’s a primary, secondary, or tertiary market, but Newnan is like a suburb. It’s like Peachtree City. It’s a suburb of South Atlanta. I would consider this a primary market all the way through even McDonough and then Griffin as well, too. The primary market comes out way down now.
You’re going to have to go even further out to metro areas if you can’t afford that much money nowadays. What I used to do is I drove the whole area and I talked to every storage facility in this area. That’s how I bought all these storage facilities. We have one down there as well, too. I was driving this whole area and talking to owners. That’s how I got all these deals. That’s driving for storage. I would map out my day and that’s how I found the facility.
What you could do now is what I call virtual driving for storage. You could get into Google Maps and this is what my VAs do. They all live in the Philippines. They can’t drive for storage. They get into little tiny towns like Thomaston town. They’ll get in and look to see if they can find any long skinny buildings and say, “Here’s a long skinny building. That’s a primary school.” They would say, “Let me see if I could find anything else here.”
You could virtually drive around, see if you found any facilities in the area, try to get ahold of the owners, talk to them, and see if they can sell. This is exactly what my VAs do every single day of the week. In Thomaston, Georgia, you can see that there are a couple of them. There is America’s attic and there are two. It looks like that was a conversion. There is a Super Secure. When you look above virtually, it looks like a long skinny building.
You need to learn how to run commercial deal analysis. You need to be able to tell if it’s a good deal or not.
You could look and see here’s Barnesville Mini Storage. You could click on it and then contact them. You would call them to see if they want to sell. This one is a good one to try to contact because there’s no website here. I would call them up, talk to the owner, and say, “Would you be interested in selling?” That is exactly how we find every single storage facility. I wanted to point that out.
When we go back to Newnan, Georgia, in Ms. Lillian’s Newnan, we found this facility. You could see it’s two long buildings and it looks there are some parking and stuff here which is what we have. The address of this facility is 1210 Georgia. What I would do is go into LandGlide and I would put this address in and see if it comes up. This is the name of the address. I use LandGlide to get the information about the owner. This storage facility comes up and you can see we got a lot of property here. You can get all up in there, cut some trees down, and add units if you wanted and here as well, too. There’s a huge bit of property here.
I would come in, look through, and see anything interesting about this. We would see the mailing address. It’s Peachtree City. The description is there. If you need any more information, you could always click on the county link. The information would come up from the county as well, too. You would be able to see any information about the property. It was built in 1996. You could see what we bought it for, what we sold it for, and what it’s valued at right now. $169,000 is what we’re paying taxes on and what the assessments are each year and stuff.
Typically, we take this information, and then we’ll put it right into the Google Drive folder so that we have all that information as well, too. Now, it’s labeled by what we own. We labeled it by the name of the facility and the address. I wanted to share with you what my process is. We found this facility here and we see that it’s got some acreage on it. I don’t know if we can cut these trees out and then add more units if we wanted to do that. We have not done that yet, but that’s like what you could do.
You can go to MsLillians.com. You could also see if they have a website. We have a website. See how big it is and what it looks like. Look for some pictures of the facility. It looks like a storage facility. The front of it is all painted so it doesn’t look as bad. In Newnan, you cannot build a metal building without having a concrete facade. That’s the rule.
The owner built this facility in 1996 and then they had to add this weird facade. It was probably nice when he did it in 1996, but it got all old-looking and stuff. We came in and repainted it. You can see it’s all paved. There’s a keypad right here so you can come in and look. There’s a wireless gate and parking all over there. There’s a total of fifteen spots or something. It’s all fenced in. With the parking, we’re typically full. This is to give you an idea. It looked like a storage facility, but we have to put that facade on because that’s what the county wants.
Another thing I wanted to show you is Radius+. If you are not using Radius+, please check it out. What it does is it gives you information about the property. Sometimes it’s a tertiary market because what Radius does is pulls the information from the website. The one that we saw in Thomaston does not have a website. It wouldn’t come up.
More Storage Facilities
This is ours and it gives you a radius of 3 miles. How many storage facilities are within 3 miles? There are two besides ours. We don’t have a lot of competition. In Newnan itself, there are a lot of storage facilities there. If we went 10 miles out, then you could see the difference. There’s nothing in Whitesburg, and then up in Carrollton, there’s more storage facilities. You could see that. You could see what’s being built these years. Anything older than 2022, what does it look like?
A lot of storage from the last few years has been built in the Newnan area. If you wanted to see which facilities are being planned, you can see that. You could see there’s one being built here and then one up there also being built in the Fairburn area. That gives you an idea of that, too. Which ones are under contract? This one is under construction or being built right now. There’s no expansion being done. You can see that.
You can come in and play around with Radius so you can see all the competition. You put the address, but you’ll want to click on trade area and then you can see what’s offered within a 3-mile radius. This data is only until 2020. If you wanted to get 2021 to 2026, then you could upgrade and pay more money for that. You can see here that the square foot per capita is 5.3, which is pretty good because typically you want to be under 8 square feet per capita. There are not 87,386 non-climate controlled. That’s these three right here.
This is ours, so when you click on it, it comes up. You could see our net rentable square foot is 5,753. It doesn’t have any prices or anything. It’s not even pulling our prices or anything. You could see the storage facility. Here are our two buildings. There are 59 units in these two buildings. It doesn’t account for RV parking at all. Radius still doesn’t account for that, but you can at least see the information.
A lot of times, you can even get the owner’s information. If you need to find out who the owner is, you could always find that out, but sometimes it doesn’t come up. Ours is not even coming up. You could see the rates and the competition details if them pulls it up. Sometimes it will pull it up, sometimes it won’t. The more tertiary it is, the less information you’re going to get.
To buy storage facilities, you have to start driving the whole area and talk to owners. That’s called driving for storage.
We could pull up competitors here. This is because it’s pulling the information off of the website. If it has a website, then it will show up. There may be competitors that are out around us that are not on the website. You would have to get in Google Maps and look around to see if you have any competitors that may not fall into what Radius+ pulls because Radius+ pulls that data right off of a website. If it’s online, they’ll find it, but if it’s not online, they can’t find it.
You can see the Newnan Self-storage and they’ve got 5x10s, 10x10s, 10x15s, and 10x20s. They’re pulling off the prices from the website. If you wanted to, you can click on that. It will take you to the competitor as well, too. It’s not coming up. There are a lot of times you can come in and see all that. You can see that over time, are they increasing their rates or not?
You can see a 10×20 that started out in 2017 at $80 and now, it’s at $140. They have almost doubled their rates, which is about what we have done too in the last few years. There’s a lot of information that you can get off of Radius+. Make sure you utilize that to what you need because you will have to do a competitive analysis on your properties that you’re buying. I wanted to make sure I share that with you. At least, you could have an idea of where you could find competitors at.
There are all kinds of other stuff here that you can play around with. To use Radius+, there’s a credit and the credit is $20 or something. It’s expensive and you only get one hour of time to use this. I can’t remember the exact price because I buy them in bulk. If you come across a property that’s not in Radius+, you can add that facility. It will take them like maybe 1 week or 2 to check it, they will add it into Radius+, and then they will give you a credit.
I want to make sure you all know that because a lot of tertiary properties are not in Radius+. If you find out that they’re not, let them know, so they can add that for you. I have eight credits. I wanted to share with you all that, so you could play around with it. You could be alerted for certain things. We should probably set that up and get an alert. That’s good to know.
I want to get into storEDGE and show you what it looks like. You’ve seen Newnan. How did we run the deal analysis on this? How did we see if it was a good deal or not? There’s a whole bunch of software out there to manage all your facilities, but this is what we use. We use storEDGE. I wanted to get in and show you all. I wanted to give you all an update. It shows you how many leads come into the system, how many tenants we have, and also how long they stay. We’ve had 11 that have stayed for 2 years plus, 5 for 1 to 2 years, and then 11 for 6 to 12 months. There are 5 for 3 to 6 months and 9 for 1 to 3 months. We’re 64% occupied.
Synopsis Of Your Facility
There are eighteen units that are vacant. Some of the RV spaces are included too, but we could look into that, and then past due is 27%. It gives you a synopsis of what your facility looks like. It gives you also some activity. It has unit activity and lead activity. There are some leads that are coming in and they have reserved some spots. The online reservation shows you that. It also shows you maintenance. We scheduled B7 for some maintenance and A8 for cleaning. They come in and you could see they have scheduled some maintenance and things through here.
These are some delinquencies and the people that haven’t paid. It also shows you your activity on the phone and who you’ve talked to, and it records the calls. We can listen to our phone people, how they are on the phone, and stuff like that. It shows you all that. I don’t ever get into storEDGE honestly, but you could make this into a widget. On the left, you could see the leads, the tenants, the units, and the billing. Whoever’s late, you could click on that and see all these people are late or overdue and how we get ahold of them and talk to them.
Everybody is always late because everybody’s considered late as of the first for us. We do overdue payments on the 3rd or 4th. We’re sticklers on this. As of the 14th, they have another charge. You would see they have a $25 charge for being late. You get a $5 charge after a couple of days. Once you’re late as of this day, you could charge $5, and then once you’re late as of another day, you get charged $25. It sets it up. Those are called rules and you can set any rule that you want in storEDGE.
It doesn’t show anybody going into an auction lately. We haven’t had any auction processes or anything like that. People are typically late and then once you notify them of the auction process, they all pay up. We rarely ever have any auctions. Out of 1,000 tenants, we have a couple a month. I wanted to share with you all what storEDGE looks like, so you have an idea and how we run our facilities. We run them through storEDGE. These grayed-out units are all unrentable. There are six units of them. This may include the RV parking as well, too, to give you an idea of what it looks like.
Deal Analyzer
We finally have the Deal Analyzer. Let’s run the numbers on this property and we’ll see what this one looks like. In the Deal Analyzer, this is what you need in yellow in order to run the numbers, the market cap rate. I don’t know what the market cap rate is for Newnan. It’s probably at least a 6% cap. Remember, we talked about primary, secondary, and tertiary markets. This is going to be considered a secondary market. I would say a 6% cap would be a good number for this to be run at. It could go as low as a 4% or 5% cap.
Typically, it’s like a 4% to 6% cap rate for a primary market, 6% to 8% for a secondary market, and 8% plus for a tertiary market. This is considered primary market. Even though there were a few facilities within a 3-mile radius, it’s right next to Newnan and it’s in between Newnan and Carrollton, and that would be considered a primary market for the Atlanta area.
A lot of times you can even get the owner’s information. So if you need to find out who the owner is, you could always find that out but it doesn’t always show up on the internet.
It’s 59 units plus 15 parking spaces. We’ll separate those out. The 69 units are all 10x10s. Let’s say, it’s $80. $80 times 59 is $4,720. It’s $4,720 if it was full, times 12 so that’s $56,640. We’ll practice thinking about it and running the numbers. As Radius+ said, it was a total of 5,900. That sounds about right because it’s 10×10.
This does not include the RV parking. We’re going to separate out. You do not include RV parking in your units because it’s going to decrease the value of the price per square foot because RV parking is $0.15 to $0.20 a square foot. The national average for storage is $0.88 a square foot now for a 10×10. You don’t want to put those two together because then decreases your average price. We saw that we were 64% and 67%.
We can do the vacancy on that, too. Let’s say 30%. Now, we have to come up with 30% of that number. Let’s do times 0.3, so that’s $17,000. Let’s subtract $57,000 minus $17,000. That’s $40,000. Let’s say we’re making $40,000. That’s looking good to me. We should be making $52,000 if we were full. You were taking it from 30% full to 8% full. Those are the two numbers right there. That’s the difference between the two columns. This is current as is and this is potential from taking it vacant to full.
Competitive Analysis
We need to figure out our competition. What can we bring it up to? Remember, we have to do a competitive analysis. You’re going to get into competition. This is how we do our competitive analysis. You can do it however you want, but essentially, we list out all of our competitors, and then we try to figure out, “We’re doing 10x10s only for this one. What are other people charging 10x10s?” This is where we list out all of our unit mix. You can list out 5x10s, 10x10s, or whatever it is all the way down. We keep track of whether or not it’s outside access, inside access, climate control, or whichever one you want. You could put whatever you want.
We’ll say on this one, it’s only 10x10s. If we take all these out, essentially, and then we would say the type of unit, climate control, outside access, or whatever it is. We would do 100 square feet and then 59 of these. We’ve got 59 10x10s and it’s 5,900 square feet. We’re charging $80 for each one. We should be making $4,720 a month at 100% percent full.
Now, we have to figure out what the potential is. What does the competition do? How do you figure out what the competition does? We’ll go into Radius and we look. The competition is charging $89.24 for 10x10s. Franklin is charging $105. We could take the average of these two, Newnan Self-Storage and Franklin, and say, “The $89 plus $105 divided by 2 is $97. We should be at $97. However, many competitors that you want, find them. You could use Radius, go on Google Maps, or do whatever you want to do.
We would go back to the sheet and then say, “Our competition is Newnan Self-Storage and Franklin Self-Storage. We saw that one of them was charging $89 and the other one was charging $105, so that comes out to $97. That’s our average.” Go back to your sheet and put your unit mix. We put $97 here. We should be at $0.97 cents a square foot for the competition. We’re taking it from $0.81 to $0.97. It gives you your valuation.
Financing Inputs
If there’s any clean-out CapEx that you need, how much is it going to cost to close this? You could put whatever number that you want and then this is based on $1 million. We haven’t changed that. The property taxes on this and then the insurance is all based on the financing inputs. We bought this one for $200,000. You can see what the financing inputs look like. At $200,000 our cash-on-cash return is at 20%. We got a private loan, so we can change this to an interest-only loan. We put 0% down, 10% interest, and it’s a five-year loan. Our mortgage is $1,666. We’re at a cash-on-cash return of 293% by taking this loan out.
We did not do the owner finances. I will be going owner financing once we get to one that we did owner financed. In owner financing, we’ll do like a 10%, 15%, and 20% down. This is when we make an owner-finance offer. We’ll do interest rates. If we do 10% down, we’ll do 5% interest, 15%, we’ll do 4.5% interest, and that 20%, we’ll do 4% interest. Those are all fixed interests. It’s a ten-year balloon amortized over twenty years. Even if we did get that or any of those offers, you can see the cash-on-cash return would be at 66% to 104%. That’s the deal analysis I wanted to share with you for now, at least.
What I wanted to show you, too, are the offers that we sent out because we bought at $200,000. You can see that our cash-on-cash return was at 10%. We got an owner financed to be super awesome. Once you increase the rates, then it’s $0.97, which we’re slowly getting to this price. Essentially, your cash-on-cash return be 20%.If you paid cash to us and we did big financing, it will be $293,000.
Our net income is about $2,000 a month. We will make $5,265 a month. Our operating expenses are about $1,600. Our NOI is $3,622 and minus our mortgage is $1,666. That gives us $2,000 a month and a 293% cash-on-cash return. The reason we have such high cash-on-cash return is because we don’t put any money into the deal. We try not to put any money into the deal. We borrow money. The more money that you put into the deal, the less your cash-on-cash return is going to be.
We bought it for $200,000. It’s valued at $338,000. This is if you paid cash. This is us getting it full. It’s worth $547,000. Once we get it to 97%, it’ll be worth $725,000. We take it from a 10% cap rate to a 21% cap rate. The numbers don’t change on the bank financing at all. It’s the same number. The debt-to-service ratio is a little bit low. We couldn’t get a bank loan on it. We borrowed private money. We’re taking it from a $200,000 purchase all the way to a $725,000 purchase. That’s our second deal in Newnan, Georgia.
You have to learn how to raise money as well, because if you only have so much money, it’s only going to buy you so many properties.
There’s room to add on and do more stuff but we haven’t gotten there yet. I wanted to share that with you all and give you an idea of getting out there, looking for deals, talking to owners, how we find them, how we fund them, get it privately funded, and how we run those. This is something that is feasible for everybody that’s reading.
Hopefully, I inspired you to get out there and look for some deals. Also, learn how to raise money because you can make the most money when you use somebody else’s money. You have to learn how to raise money as well, too. If you only have so much money, it’s only going to buy you so many properties. You got to be able to raise money, too.
All of our facilities for Ms. Lillian’s Self-storage is on Ms. Lillian’s Self-Storage website. You are more than welcome to take a look at it. We have not made Mission Storage yet, which is our new brand that we’re starting with the fund. That’s where we’re going to be buying more facilities through the fund. I’m going to jump on the fund and do my pitch because everybody’s waiting. If you’re interested, you’re more than welcome. You can go to StacyRossetti.com/Fund, and that’s where I talk about the fund. Remember, to hop on every episode. Next time, I’ll do another deal and we’ll run the numbers on that as well, too.
Darrel’s asking for the $797 flash sale. We’re doing a flash sale for the course right now. That’s typically $1,997, but every once in a while, we’ll run the sale for $797. That’s what Darrel’s talking about. It’s the same exact course. You’re going to get the new Deal Analyzer. We have a Deal Analyzer there, but it’s an older Deal Analyzer. We’re going to be updating the new deal analyzer here in the next few weeks as well, too, but you don’t need to Deal Analyzer right now. What you need to do is watch the videos, learn, and soak all the material in.
Once you get to the point where you need to Deal Analyzer, then you’ll have our version two being added to that. Over the course of the next few months as I’m here in Georgia in my studio, I’m going to make some more videos to add to the course as well, too, because I want to update some stuff and things like that. Everybody that owns the course will already get that and then everybody that wants to buy it, you’ll have that available to you in the next few months. I’m working on that. That’s a project.
The doors to Storage Nerds open on August 28th, 2022. Make sure you get on my waitlist because then you will get access to my calendar. I only have my calendar open for six days. In those six days, I talk to as many people as I possibly can and typically, 150 to 200 people. I then accept 20 to 25 people into the coaching program. We will go through a series of assessments and questions to see if you’re a good fit and then you can join the coaching program. I’ll be there to hold your hand as well, too.
I only opened my doors 3 times in 1 year for 6 days. If you want to talk to me during that time, you have to get on the waitlist. The coaching program is ongoing. It’s month-to-month coaching. You could buy Legacy Membership and you could be in there forever or do month-to-month and pay month-to-month. That’s good for now. I appreciate you guys hanging in there. I’ll be better prepared for next the episode.
Important Links
- Ms. Lilian’s Self-storage
- Self Storage Fund of America
- Storage Nerds Coaching Program
- Super Simple Self-Storage
- LandGlide
- Radius+
- storEDGE
- StacyRossetti.com/Fund
- Legacy Membership
