Self-storage facilities have proven to be a stable investment option, providing investors with reliable cash flow and long-term appreciation. In this episode, Stacy Rossetti interviews Armaan Premjee, who shares his journey from novice to successful self-storage investor. Armaan recounts how he dived into the self-storage market in early 2021, navigating the challenges of securing financing and managing properties himself. He details his initial acquisition, a $1 million investment, which he later sold for $2.25 million after significant value improvements and strategic refinancing. Tune in to discover practical tips on financing, property management, and scaling in the self-storage sector from Armaan’s real-world experience.
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Student Showcase Armaan Makes $1 Million Selling His 1st Facility
We have Armaan with us. Armaan is one of the very first students from back in the day. I asked him to come on and talk about his storage journey. He started out like you guys started out in storage, trying to figure it all out. He’ll be a very good inspiration for everybody. I’m going to let him take over. He’s going to go through his deals and talk about his story, his process, and everything.
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Armaan, are you going to do 1 facility or 2 facilities? What are you going to do?
I can do all three.
Quickly do find them, fund them, and run them. How did you find it? How did you fund it? How did you run your analysis and stuff like that?
Deal Discussion
My name is Armaan. Premjee. It’s nice to meet all of you. Thank you for having me. I got into self-storage in 2021. I fully committed myself at the beginning of the year. It was January of 2021. It was Stacy’s mastermind. I was getting a lot of help from her when I first got started. I got under contract to buy my 1st facility in April of 2021. I was making a lot of offers at the time. I probably had to make a good 30 or 40 offers. I was able to get 4 deals under contract, and then I ended up closing on the best 2 out of those 4 deals.
The 1st closing happened in June of 2021. It’s a facility that is called Lufkin Climate Controlled Storage. I paid $1 million for it. I paid $1 million for it. It’s 78 units, new construction, climate controlled, 17,000 square feet gross, and under 15,000 net. The guy that sold it to me was a local developer in the town of Lufkin, Texas. He built it to sell it. However, it was 2021. Things were great. There was a lot of cash flowing around. When we got under contract to buy it, it was 30% occupied in April 2021. At the time of closing in June 2021, it was 60% occupied. We were getting 15 to 20 move-ins a month. It was ridiculous.
I was self-managing at the time. I didn’t have any management company or anything like that. When I closed on it, I had to come up with $200,000 of my own capital. The $800,000 was through a private lender. Stacy helped me out with the financing cost. It wasn’t stabilized. It was my first deal. For lenders, a lot of them require the property to have stable cashflow or financials. This would be more for bridge-type debt.
9% honestly was not the worst interest rate in the world. I wanted to get this thing acquired. As soon as I acquired it, we quickly leased up. I was giving very aggressive rental rate hikes to the tenants. It was $160 a month for a 10×20 climate-controlled. Immediately, I bumped that up to $200. A few months later, it was $225 and then $230. These tenants, within a year, their rate had already gone up from $160 to $230. We didn’t have enough units. The property was doing really well. I don’t know what the rates are now. The rates are very low.
Isn’t that interesting? That’s how it is honestly even for our climate-controlled facility. Rates are super low.
I sold this property two years after I bought it. In September of 2023, I sold it for $2.25 million. This is the building that cost me about $400,000 to build it.
What was that process like?
I worked with a local general contractor in the area. He built it for me. I didn’t even live in Texas. I was living in Florida. I flew out there one time to meet him in person. The second time I flew out there, the building was already done and ready.
For you, it was worth it to hire a GC to manage the whole thing. A lot of people are like, “It’s too expensive. I’ll manage it myself,” but it’s so stressful to do that.
Especially if you’re inexperienced, it’s best to go with a good GC. My total cost on this was $1.4 million, I sold it for $2.25 million. What I did was I bought it in June of 2021. In December 2021, because I was giving such rapid rental trade hikes, we were getting stabilized very fast. I found a lender to do a refinance. What they did was they didn’t give me my $200,000 back, but the interest rate went from 9% to 4.25%. They paid off the private lender their money. They also agreed to pay for 100% of the construction cost or the expansion. The $400,000 went straight from the lender to the GC. The money never hit my bank account. As the GC sends the draw request, the lender funds it.
How did you find a lender like that?
It was a local bank in Dallas that I had a relationship with.
A local bank that you went to. They refi-ed it and funded adding the new building.
100%. This was the story behind the first facility. It is a little bit shocking to see the rates as low as they are. We were getting $300 a month for this unit. Now, it’s $167.
That’s how it’s for us too as well. You don’t have another climate controlled, right?
Yes.
Are your units that low for this one?
No.
We have a facility in Orlando and our rates are really low. When we were in the numbers, we were running the numbers at $1.50 a square foot for climate control. We’re at around maybe even less than $1 for climate control in that area. I’m wondering what everybody else sees for climate control across the country. If I see a 10×20 as $107, that’s less than $1 a square foot. That’s $0.50 a square foot.
I was getting, on the Lufkin deal, over $2 a square foot. For the small units that were climate-controlled, the 5×5 and the 5×10, it was $2 a foot. It was still over $1 a foot for the 10×20, which is a pretty large unit. Even for that, I was getting over $1 a foot.
That was right during the COVID times.
There was so much cash. There was so much money.
They bought this for $2.25 million. I wonder how they’re doing. They’re probably struggling.
They’re probably in a situation where the customers who are paying $230 a month have left and they’re not getting enough move-ins at that rate. That’s why they have to scratch the rate. They’re probably in a situation where the occupancy is falling backward. When I sold the property, the cashflow was still pretty strong and healthy. They’ll still do fine in the long run. They have to make it through this.
A buy-and-hold is what it is. You live in Florida. Do you still live in Florida?
I live in London. I’m not even in the US anymore.
During this time, you lived in Florida and then you managed this. How do you do that?
I had a local boots-on-the-ground for the first year. I would manage them. We had a call center with Easy Storage Solutions. They would handle all the incoming calls. After a point, my boots on the ground quit and I’m like, “I really don’t enjoy this whole process of doing the auctions myself, setting all these notices, and managing the boots on the ground.
I’m not an expert on self-storage litigation, management, and auctions. I don’t want to do anything incorrectly,” so I hired a third-party management company. Ever since that, I’ve never gone back. The management company I use takes 10% of revenue, which is a bit high as a percentage, but my facilities are really small, so it makes sense that they’d be a little bit higher. They do 100% of the work. It works out pretty well.
You really don’t do anything. If you are going to hire a third-party management company to manage your facilities, what work do you do?
Nothing.
I have another student who uses a third party. He has two big facilities. He was complaining that he had to turn the utilities on and it was too much work to do that.
The third-party management company does everything, whether it be the utilities or the auctions. If you want new signage, if you want security cameras there, anything, they’ll take care of it. You can hire a management company. I don’t recommend doing this, but you could forget that you have it and a year later, it would still be running itself and doing well. You pay for the peace of mind.
Outsourcing to a management company can alleviate the burdens of day-to-day operations and offer peace of mind. Share on XWhen you hire a third-party management company, you’re giving up 10% of the income is what you’re doing. Noel is asking how many acres was this property.
It was over an acre in size. I don’t know the exact acres. It was between 1 to 2 acres.
What’s the total amount of square footage? How many units did you have?
For the Lufkin deal?
For this one that you have up.
This is the second property I bought. This is 24,000 grill square feet and 21,000 net. There is a very interesting story behind these deals. The whole thing was a shopping center. It was one big shopping center. The owner before me, and this was a Dollar General, bought the whole thing and converted this from a Dollar General to a climate-controlled storage. When I bought it, I had a climate-controlled storage of 50 units and then I had all these shops. There were some little areas on the back. It was an unused office area.
I bought this property for $681,000, which on a price per square foot is really good for 21,000 square feet of property. I converted that unused area into additional climate-controlled storage. I spent another $80,000 or so expanding this. It was 36 units that I added, so it went from 50 units to 86. All those units were 5x5s, pretty much small units. We were 100% full with the waiting list when I bought it. These retail tenants were very low as well, so I was able to give these guys pretty big hikes in terms of what they were paying before. We did have a few tenants move and a few new tenants come in, but I feel like the retail was also quite an interesting experience.
Can I ask about the retail experience?
Yes.
We have a facility almost exactly like this one where we have commercial space as well. I don’t like commercial space, honestly, and managing the commercial space. Tell me. How did you find tenants? I know how to do storage. Our storage facility is 150 units and almost full. It’s doing great. The commercial side, I’m always struggling with.
What I’ve noticed with the commercial side is it does take a little bit of time to find a tenant. It could take maybe 2 months or 3 months. It’s not instant. The good thing is you hire a retail broker, which is what I did. I had this guy with a carpet cleaning business right here. He was paying me $600 a month for a $1,500 square-foot store. We put it up for rent for $1,050 and had 2 people bidding on it. We had 1 offer at $1,500 a month and 1 offer at $1,400 a month.
Is he listing them on Crexi? What is he doing?
I don’t know how she listed it. She may have put it up on some of these sites like Crexi or LoopNet. She had two vape stores both willing to pay.
Do you manage the commercial part or do you have a management company managing that?
I manage them because the money is deposited directly into my bank account every month. It’s not going through storEDGE. There’s not much that a management company needs to do. The retail tenants don’t really bother me. We don’t communicate on an ongoing basis. It’s 3 or 4 months if something needs to be fixed or repaired, but usually, they take very good care of the property.
I remember the last time I talked to you, you were adding more units onto that with Janice.
Yes. With this property, I gave very big rate increases as well because we were 100% full with the waiting list with the 50 units. It was giving tenants 40%, 50%, or 60% rent increases on day 1. Occupancy dropped from 100% to 78%. Over time, we leased it back up to 100%. We’ve leased up over 50 units. We have about 56 or 57 units leased out of the 86. I’ve owned this property since August 2021.
This is in Iowa Park, Texas, which I don’t even know where that’s at. People are always asking, “Can you buy a storage facility in a town like this?” What is it like to own a storage facility in a little town like this? How big is this town? How did you do your due diligence to see if this would be a good area? How did you figure out whether or not that was a good town to buy in? What was your due diligence process for that? Talk about that. How is it owning a facility in such a small town?
Living in small towns is really tough. This town has only 6,000 people. The population is very small in Iowa Park, so it carries some risk. What I loved about the property, and this is one of the very first things that I look at, is I don’t like to buy in an area where there’s nothing going on. Here, I saw there’s a Pizza Hut as my neighbor. I got a bank right across. I got a Lowe’s and a gas station. There’s stuff happening. The beauty of this property is I have road access from West Bank and Park Avenue. It’s visible from the highway. You have this whole residential community.
Even though the population is small, there’s enough going on to where I feel like I’m in a decent location. I’m not too far from Wichita Falls. This place has a huge population. It’s over 100,000 people. It’s ten miles away. I would never buy in one of these areas. It’s so remote. There is nothing happening here, even Vernon and White City. These are areas to stay away from. If you’re close enough to a big city, you can figure it out.
The difference between Lufkin and Iowa Park is Lufkin had 30,000 people. This had only 6,000. There are way fewer move-ins. You don’t get as many move-ins and you don’t get as many move-outs. Things generally move a little bit slower. This is where we’re at. We have 57 units occupied. 21 are still vacant. These are all the 5x5s that we built. I was using ESS but the management company wanted me to switch over to storEDGE, so that’s what we did. We have 50 initial units and then we have expansion units at the back, the 36 units that we added.
Why did you pick 5×5?
It was only 1,000 square feet that we could build. If you do a 10×20, that’s 5 units and you’re done. With the 5×5, We could do 24 units. We did a few of these 5x7s, these odd unit sizes, but most of them were 5×5 because that’s all we could fit. We figured if there’s a waiting list, maybe with time, we’ll fill those up. A good thing with 5x5s is you can run multiple of them. You can ask a tenant, “We don’t have any 10x10s, but how about you run four 5x5s? We’ll give them right next to each other and it will cost you the same amount or less.” There are some advantages to that as well.
Somebody’s asking about the leasing agreements for your commercial tenants. How did you come up with that? Did you have an attorney do that? What happened?
It’s honestly the retail broker. Like real estate brokers when you buy or sell a house, the retail brokers do the same thing. In Texas, you have a standard lease agreement template for commercials. We follow that.
She handled that part of it too. The Lifetime one here, this one’s also climate-controlled. Would you consider this a tertiary market? Somebody was asking.
Yeah. This would be a tertiary market.
Talk about managing these things. Do you have boots on the ground people? How do you get stuff done? How are you running these things?
This is also third-party management. It’s the same management company that’s doing it. The management company has a bunch of virtual assistants that are overseas. They handle all the incoming calls. They respond to all the emails. They have a really good system in place where anytime a lead comes in, they follow up with these leads every single day. They’re calling them, leaving voicemails, and texting the leads.
If two weeks go by past the desired moving date and the customer doesn’t move in where it has already been nine days for this guy, they’ll eventually delete their reservation. They’re very persistent. This is why you need a management company because it is a headache. If you’re getting a bunch of tenants to manually call or voicemail every single one of these guys, it would be a lot of work, I feel like. Especially once you try and scale, it would get you a lot.
A good management company can automate many tasks which is crucial when scaling up. Share on XWhat do they do for marketing? Do they do marketing at all at the management company?
They also offer an SEO package that you can opt to buy. I did do that for a little bit but even with SEO, I wasn’t getting much of it either. It’s a very small town and already ranks pretty high. I’m using a different marketing agency. I’m using SpareFoot for the move-ins. I want to be able to get some of these Wichita Falls customers. Wichita Falls is very competitive, so I’m hiring a slightly bigger-scale marketing agency. I’m giving them $500 a month to help me get some of these move-ins from here.
With this property, I’ll walk you guys through the numbers. I bought it for $681,000. I put about $100,000 into it, so I was in it for close to $800,000 all in. I did a cash-out refinance within a year and a half of owning it. The $220,000 that I put down, I was able to get that back plus $100,000 on top of that, so I got back $320,000. At that point, I owned this property for free. The cashflow was paying off the debt. I wasn’t left with much income, but the beauty in real estate is that over time, even though the loan payment is the same, rents go up. You raise rents in the retail tenants. You raise rents in the storage tenants.
Slowly, I was starting to see a positive spread again of $500 a month and then $1,000 a month. We’re about $1,700 or $1,800 a month in net cashflow. In over 25 years, this loan will get paid off and then I can choose to sell the property or I can do another cash-out refinance. I really like the strategy of buying something, increasing the value, raising the rent, doing a cash-out refinance, getting all your money back, forgetting that you ever owned it, and letting it run its course. That’s how the wealth is built in real estate and self-storage.
With this one, you went to a bank and got it financed.
The initial financing was 4.75%, 80% loan-to-value. The cash-out refinance rates were going up at the time. I refinanced in December 2022. It was 5.75%. It has a long-term debt of a 25-year or 30-year loan. Every five years, they renew the rate. In a couple of years’ time, they’ll reevaluate the interest rate. Interest rates are still high. My rate will go up. This is a property that the plan is to forget that I owned it and let it run its course.
You’re going to hold on to this one.
Exactly. It appraised at $1.2 million when I did the cash-out refinance. 75% loan-to-value is usually what the banks go up to on cash-out refinances. It was a local lender in Dallas that was willing to do it. It’s not too far.
How do you find lenders? Do you call around like, “Do you do storage?” or is it referral-based? Is it the people that you talk to? How do you find lenders?
Honestly, that is the biggest challenge. I had a friend of mine in Dallas who was working in banking. He worked at both of these banks at different points in time. It was my relationship with him. I feel like if you cold call a bank and say, “I’m looking for finance,” for some reason, that strategy hasn’t worked out for me. Maybe I’m not calling the right banks. I feel like with these local banks, it’s really helpful to know someone there. For the cash-out refinance, I used a bank I’ve never worked with in the past. I went with a mortgage broker. They were able to find this local bank. If you have no lender relationships, hire a mortgage broker. They’ll take 1% but it takes all the hassle off.
They work hard. Do you have a lot of competition there?
No. I’m the only climate-controlled facility in a ten-mile radius. There is no competition here. There are a lot of climate-controlled facilities here in Wichita Falls. Even though it’s a small town, there are a lot of self-storage facilities here for some reason. We have quite a few. For 6,000 people, you have 6 facilities. That is quite a lot.
You’re the only climate-controlled one.
That’s right.
What are the rates? Are they $1 per square foot for climate control?
It is very healthy.
How often do you do increases too?
For a 5×10, we’re at $89 a month. For 50 square feet, it is $89 a month. It’s $1.80 a square foot if my math is right.
That’s awesome.
It’s pretty healthy.
That’s really good. Texas is one of the healthier areas.
$14,000 to $20,000 a month. It’s over $1 a foot even for the larger units. You were asking about the rate increases. We have in storEDGE a setting for occupied units. You can see exactly where all the tenants lie and who’s paying how much rent. One tenant, for some reason, we’ve excluded them from the revenue plan, but the revenue plan states that the rates keep going up. After they move in, they get an 8% hike. After an additional 8 months, it’s another 8%. It’s another 8% nine months after that. The rate increases less frequently. Let’s say there’s one tenant that’s being way more than the rest of the tenants. We’ll pause them. It won’t be so aggressive. That’s how we do it.
I’m glad that you use that yield management because there are not a lot of people that do that, honestly.
I feel like it’s one of the best things about storEDGE for the other facility that I have. You can do a percentage amount as well. This is the third facility, Cypress Mini Storage, for 5×10 where it’s $60 a month. $60 a month is what I want to charge when we’re 90%-plus full. This rate is slightly higher than what the market is. If the market is $50 a month or $55, for stabilization, I want to be at $60. If we’re less than stabilization, it’ll be $5 less in this occupancy range, $10 less at this range, and then $15 less at this range. That’s how I’ve done it.
Some people will do the standard rate of 60% to 70% and then they’ll increase it from there and decrease it if it gets less. It’s better to do it as you want to be at stabilization so that when you calculate your gross potential income and things like that, it becomes a little bit easier. You can also do it in terms of percentages. It’s really good from that end.
I don’t know what we do because Pete handles all that, but I know we do something.
For some reason, we have a 5×10 tenant who’s paying $59 a month and then 1 who’s paying $35. This guy, we’re going to pause him on the rate plan, and then this other guy is going to get the most aggressive rate hikes. These guys, we’re slowly going to try and get them up to the $45 to $49 range. Most of these guys are on their revenue plan. In storEDGE, it shows you when the next rate increase is going to be and what amount it’s going to be in. All of this is pretty automated.
That’s super helpful.
I’ll give you guys some context into the last and final deals. This is Cypress Mini Storage. I bought this in February 2023. I paid $1.1 million for this. This was listed on the market. Within a day of it being listed, I already had my offer in. I had a relationship with the brokers. I wasted no time. It appraised at $1.5 million, $400,000 over what I bought it for. This is at the time of acquisition.
Here’s the catch with this deal. It’s 200 units, 22,000 square feet, and all drive-up units. However, it was horribly mismanaged. Out of 200 units, 100 units were occupied and filled with junk. We didn’t know whose stuff this was. We did not have names. We didn’t have phone numbers. We knew nothing. It was a mess. It was producing no income whatsoever.
Interest rates were very high in 2023. The situation that I had is that with the Lufkin lender, that property appraised at $2.4 million. The loan amount was $1.1 million. What the bank told me is, “Instead of getting a new loan for this, we’ll cross-collateralize the two loans. We’ll do 100% LTV financing for the steel.” Even though the purchase price was $1.1 million, the bank lent me $1.15 million. They gave me $50,000 on top to cover closing costs, due diligence, and all of that. The cashflow from the first property was so strong that it could pay for this property even if this property generated no income whatsoever.
You got this for cash.
For free. The bank said, “Once you’ve filled this up and this property is doing well, we can do another 100% loan on another property if the combined cash flow supports that.”
Did you sell that first property?
Yeah. Small banks were getting in trouble. We had all these small banks in the US defaulting. This bank had completely stopped doing loans. They were so aggressive in giving out money, and then they went completely the other way where they’re like, “Our credit officers told us we’ve given out too much. Now, we need to get back the money in.”
They became so stringent with lending. They were saying, “If you want the loan, you have to put 20% down for the property and give us 20% cash that we’re going to hold in the bank.” They were very anti-lending. I sold that property. All that money, which was a $1 million spread, they took and used to pay on this asset. This loan amount went from $1.15 million to $130,000.
What is it like buying a severely mismanaged facility? What are the first six months like for you? What was it like?
The first year was a nightmare because no management company wanted to deal with this. I didn’t want to deal with it either. In the last 1 year and 4 months of owning this, I’ve had to go through 3 different management companies. That has been a lot, to be honest. The second management company was very creative. They went on Facebook. They tried to look up all these whatever names the owner could recall and give them. They started to look all these people up and try to contact them in very creative ways. They put notices out on the actual doors. They send stuff in the mail. After a year or so went by, we started auctioning these units off.
How many people did you get in contact with out of all of them? Was it a lot?
We were able to get in contact with a good number of them. Some days, we weren’t. We’re in a situation where the facility was 90% occupied physically but the economic occupancy was 27%. It was very tough for us.
Why did it get so bad? Was the owner sick or something? What happened?
It was a divorce situation. The wife was managing the facility and then they got a divorce. The husband got to keep the facility and he ran it to the ground.
That’s a perfect opportunity. You bought a $20,000 square foot for $1 million. This thing is worth way over $3 million.
I wouldn’t say $3 million because it appraised at $1.5 million.
I mean once you get it full and stuff. What’s the income supposed to be once you’re at 90%?
Probably about $2 million maybe. $2 million would be good. There’s also land here for expansion. This is a huge power play opportunity. Someone could add a climate-controlled facility here. They could add more drive-up with the land as well. It presents a pretty good opportunity.
This one, you’re going to hold onto or this one, you’re getting it occupied and then you’re going to sell?
We still have so many un-rentable units. We have units that we still have in a state that’s not cleaned out and not auctioned. Once we’ve leased up and gotten this whole facility’s units occupied, at that point, I am either going to build more self-storage or I’m going to sell it.
This is not a good time to buy or sell. Get it rented as much as possible. What’s your marketing like for this one?
It’s all SpareFoot.
SpareFoot is working?
It is working. I don’t think long-term, it’s a good strategy, but short-term, it’s fine. It’s doing the job.
Get it leased up. We’re doing promos. We buy facilities like this one. It is a lot of work. People don’t understand how much work it is. You have to have super cheap prices to get people in, and then you raise the rents on them.
What we’ve done on SpareFoot is we’re running a promotion where we give tenants 50% off the first full month. I notice other people do this as well. This helps us be very competitive, a 50% discount for the 1st full month. We’re also, on top of that, one of the cheapest. One guy is charging $91 per 5×10. We’re at $45 a month and a discount on top. This guy is $55 a month. We’re $10 below him with a discount. Our lease-up momentum has been very strong thanks to making sure that we’re below everybody else. As we get up to 70% to 80%, then we’ll relax a little bit. The system automatically will push their rent to a more reasonable number.
The management company is handling it and then you’re not in this. How does that work?
I had to work with them. I like to be a little bit more hands-on, so I had a very vocal role in deciding what the rates should be. The management company, let’s face it, they’re not logging into SpareFoot every week and checking what the competitors are doing. They’re managing so many sites. They’re trying to deal with whoever’s moving in and contacting them. They’re handling the day-to-day. It’s really on you to push.
It's often better to be hands-on with rate setting to ensure competitive pricing. Share on XThat’s true. You can’t let the management come and do all the marketing because then, they’re going to either spend your money and not care about your conversions or they’re not going to do anything. Between mismanaged facilities and income facilities, and we only have a couple of minutes left, tell people what the big differences are and what your preference is. Also, what are you going to be looking for in the future, if anything?
I like mismanaged facilities because you’re able to add value to those and you’re able to push the income. If something is stabilized and it’s generating healthy cashflow, you are not going to get it at a good price per square foot. There’s going to be competition. I tend to go for mismanaged facilities only. The best kind of mismanagement, to be honest, is if a facility is 100% full with a waiting list, there’s no Google My Business page or there’s a Google My Business page but there’s no website, there’s no call center, and there’s no management software. There’s none of that.
As soon as you build out that management software, you can start taking payments with a credit card. You can start selling tenant insurance. You can do automated rental rate increases. There’s so much value that can be added once you have management software. If you know there’s a waiting list, you know there’s going to be demand at that site. Those are the best kinds. The Cypress deal wasn’t as good as the Lifetime deal because it wasn’t full. It was full but with non-paying tenants. It was more of a hassle to deal with that than the waiting list situation.
Future Outlook
Armaan went over his three deals. You started in ‘21. It’s 24. You’ve been in this game for three years. What are your thoughts? Are you going to keep looking for more facilities?
Yes, I’m going to keep looking. I’m taking a break from the facilities. I did get on the contract to buy 2 facilities this 2024, but with the interest rates as high as they are, the term sheets that were coming in were so horrible. They were at 10% interest rate. I’m like, “Even if I’m 100% full at the top of the market rates, I’ll never be able to pay you. I won’t even break even.” I had to pass on both of those deals. If you can get creative and you can structure owner-financing at a 4% or 5% interest rate, there are deals to be had, but you have to be creative with that.
We have a lot of students buying some deals and they’re getting some really good rates with seller-finance stuff. Also, the interest rates are coming down. They slowly are coming down. It’s going to take a while. I don’t think anything’s going to happen until after the election. Everything is about that. We have 90 days until the election. This is the time to be looking for deals, looking at deals, analyzing them, and getting into this mindset because 2025 is going to be a very good year.
There is a little bit of a transition phase here because when I got into the business in 2021, it was so hard to find a good deal. There were so many offers coming in. You needed to act quickly. If you see a deal, you need to be making an offer within the hour ideally, if not within 24 hours, and locking into that immediately. Now, you have the luxury of time. If something that’s listed, you can take 3 or 4 days to underwrite and review. You don’t have to jump on things as quickly anymore because there are fewer buyers and less cash. It’s presenting a unique opportunity. I do feel like seller expectations have not quite come down. They’re still pretty high. They’re not willing to sell you something at $25 or $30 a square foot. That’s not going to happen.
It’s going to take time. I don’t think it’s ever going to come down. Commercial real estate is going to stay expensive. You’re going to have to ask yourself how much money are you willing to spend and how long are you going to be willing to hold onto it. It’s like the one that you bought for $600,000 or whatever. You know you have to hold onto that because that’s how you’re going to make money on that deal.
You have to hold on. You need to do deals with banks. First of all, there are very few banks that even lend money out, and even if they are, they want more than 20% down. They want 30% or 40% down because that covers the debt service coverage ratio and it’s not going to meet the 125 at any reasonable cap rates.
I appreciate you coming in and hanging out with us. It’s crazy that you’re living in London. Did you decide to move to London for a little while?
Yeah. I thought I would give it a go. Thank you, everyone.
Thank you. Everybody, Armaan’s stuff is on the website. If you want to find out more stuff about him, he’s there as well. Thank you, Armaan. Take care.
Bye.
He’s one of the very first students I started teaching and coaching in 2020. He came in in 2021. It took a good six months or so for people to close and buy deals and stuff. With the very first deal that he bought, he was scared. He was really scared to buy his first facility. I had to be that person that was like, “You can do this.” When he’s talking, he seems like a pro. It seems like he knows that he knows what he’s doing. It’s scary to buy your first deal.
I’m here to help you. I’ve got courses. I’m here on Wednesdays. I’ve got the coaching program. My book is going to be launched in the first week of August 2024. Make sure you get on the waitlist for that. Everything that I’m saying is all on the website, StacyRossetti.com. I’m going to have a boot camp in September 2024. I appreciate you guys coming, hanging out, and tuning in to me on a weekly basis. Hopefully, we can work together. Everything that you need is on the course if you want to do something. Take care. Have a good day.
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