Latest / Own More Doors / #29 Is Investing in Self-Storage Real Estate a SUPERIOR Rental Property Alternative? (Brian Maginnis)

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#29 Is Investing in Self-Storage Real Estate a SUPERIOR Rental Property Alternative? (Brian Maginnis) · Own More Doors

0:00
SPEAKER_01: What's up everyone?
0:00
SPEAKER_01: Juan Weezar here with the Own More Doords podcast.
0:03
SPEAKER_01: This specific episode was first shared on our YouTube channel, Sage Real Estate.
0:08
SPEAKER_01: Check it out.
0:08
SPEAKER_01: And we're excited to bring it to you here.
0:11
SPEAKER_01: We hope you enjoy the interview.
0:13
SPEAKER_01: Today we're going to show you an alternative to multifamily investing.
0:16
SPEAKER_01: This alternative still requires you to purchase real estate.
0:19
SPEAKER_01: You're still going to make cash flow.
0:20
SPEAKER_01: There's still appreciation.
0:22
SPEAKER_01: You still have tenants.
0:23
SPEAKER_01: There's still gross income, some expenses.
0:26
SPEAKER_01: However, you don't have to deal with evictions, no eviction attorneys, no eviction moratoriums, no rent control laws to pay attention to.
0:33
SPEAKER_01: Overall, super less political oversight on this type of investment.
0:38
SPEAKER_01: I'm referring to self-storage investing.
0:40
SPEAKER_01: Hi, I'm Juan Weezar, president of Sage Real Estate, and our channel is dedicated to showing people how to build wealth.
0:46
SPEAKER_01: Now, in the past, we've been heavily focused in on multifamily, which we love, and that is our primarily focus.
0:53
SPEAKER_01: But there are alternatives and we're going to show you other ways to build wealth through real estate.
0:59
SPEAKER_01: And what better way to bring you the tips, the hacks, the to-dos on self-storage investing?
1:05
SPEAKER_01: Today we're interviewing Brian McGuinness.
1:07
SPEAKER_01: This is the second time we've had him on.
1:09
SPEAKER_01: Brian McGuinness is a client, he's a friend of mine.
1:11
SPEAKER_01: He literally plays Monopoly in real life.
1:14
SPEAKER_01: He owns a lot of real estate, but one of his specialties and his passion, and I think you're going to gather from today, is how he built wealth, tremendous wealth, generational wealth through self-storage investing.
1:25
SPEAKER_01: Currently, he owns over 15 self-storages, over 5,000 units.
1:30
SPEAKER_01: This is over 600,000 square feet of self-storage space.
1:35
SPEAKER_01: Think about that, more than half a million square feet in self-storage space.
1:38
SPEAKER_01: So we're going to learn from him.
1:40
SPEAKER_01: This is not someone who's read about it.
1:42
SPEAKER_01: This is someone who's currently doing it.
1:44
SPEAKER_01: He's passionate about it, and there's a lot for you to take away.
1:47
SPEAKER_01: Everyone, we're here with Brian McGuinness.
1:49
SPEAKER_01: This is the first time that we've had a repeat guest.
1:53
SPEAKER_01: And it was by popular demand.
1:55
SPEAKER_01: We we had folks reach out to us and they wanted to learn about self-storage investing.
2:00
SPEAKER_01: And so thank you for agreeing to do our second interview.
2:03
SPEAKER_01: And so let's get started with the questions.
2:05
SPEAKER_01: What makes self-storage such a good investment?
2:07
SPEAKER_00: If you compare it to, say, multifamily, we don't get the call of the toilet not flushing or somebody parking in a driveway or there's bugs.
2:17
SPEAKER_00: It's a simpler, more straightforward business, and the return on the investment is so much greater.
2:26
SPEAKER_01: It looks like you're not just owning the real estate, it actually comes with the business as well.
2:30
SPEAKER_00: Exactly.
2:31
SPEAKER_00: I first got involved 22 years ago.
2:34
SPEAKER_00: My first involvement was, I thought it was just buying real estate and operating a business on it and allow the business to pay for the real estate.
2:45
SPEAKER_00: I realized shortly thereafter, maybe year four or five, that self-storage is a viable business.
2:53
SPEAKER_00: It's not necessarily a real estate transaction, it is a real business.
2:58
SPEAKER_00: And I've always been instructed that whatever business you're in, buy your real estate.
3:03
SPEAKER_00: If you can pay for the real estate with whatever business, if it's a restaurant, if it's a bar, if it's an equipment rental company, whatever it is, buy your real estate and let the business pay for it.
3:17
SPEAKER_00: But I realize that the cash flow and the cap rates for self-storage are very substantial and it's a viable business.
3:25
SPEAKER_01: Brian, your your first self-storage, what what year was that?
3:29
SPEAKER_00: We actually started our business in 1999.
3:32
SPEAKER_00: Did you buy an existing self-storage?
3:34
SPEAKER_00: No, the first one was raw land.
3:36
SPEAKER_00: So we built our first one, and we haven't built one from scratch since in 22 years.
3:44
SPEAKER_00: We buy and then we expand.
3:46
SPEAKER_00: We learned a lot since then, and as a matter of fact, just this year, before before the end of this year, we're going to hire a construction manager who will be responsible for building new facilities for us.
4:01
SPEAKER_01: So, Brian, you started in 1999.
4:04
SPEAKER_01: How many self-storages do you own now?
4:07
SPEAKER_00: Right now we own 15, and that's a little bit over 600,000 square feet, a little bit more than 5,000 individual units.
4:18
SPEAKER_01: Brian, you mentioned having 15 self-storages.
4:21
SPEAKER_01: Where do you own the self-storages?
4:23
SPEAKER_00: Okay, we're specifically in one state, North Carolina, and that was because my original partner lived in North Carolina.
4:30
SPEAKER_00: Talk to us about finding a deal.
4:32
SPEAKER_00: What's a good self-storage deal?
4:35
SPEAKER_00: A good self-storage deal is just like any other deal.
4:39
SPEAKER_00: If you're dealing with a person who's honorable and you have some sort of chemistry, then that's where I start.
4:48
SPEAKER_00: You know, unless the people fit, then I'm not interested.
4:53
SPEAKER_00: I just as soon work with good, honorable people.
4:56
SPEAKER_00: And there's so many deals out there.
4:58
SPEAKER_00: So I find these good honorable people, I call it the 20-second rule.
5:03
SPEAKER_00: I take 20 seconds and I decide do I want to deal with this person?
5:07
SPEAKER_00: And if I do, then we start talking and negotiating.
5:11
SPEAKER_01: Yeah, so what you're talking about is relationship building.
5:14
SPEAKER_01: And I and I would say in any industry that you're out there, you want to make sure that you have that connection and that relationship is built for various reasons.
5:21
SPEAKER_01: What metrics are you using to analyze and break down a self-storage?
5:26
SPEAKER_00: Very, very similar to multifamily.
5:28
SPEAKER_00: We start with the gross rent multiplier.
5:31
SPEAKER_01: Okay.
5:31
SPEAKER_01: Because some people would say that that's I mean, even I get teased sometimes.
5:35
SPEAKER_01: Some folks are like, oh, that's too simplistic.
5:37
SPEAKER_00: Well, it is simplistic, however, there's a lot more things you look at once you look at that.
5:44
SPEAKER_00: And the gross rent multiplier in the self-storage industry, for me, has been a real good down and dirty uh way of saying, are we in the ballpark on what what the seller wants?
5:59
SPEAKER_00: You know, if if we're way out of the ballpark, unless we can add some more value, then you know, we just kind of bow out early on because we don't want to waste anybody's time.
6:12
SPEAKER_00: Once we look at the gross rent multiplier, we look at things like protection coverage.
6:17
SPEAKER_00: Does this facility have protection coverage?
6:20
SPEAKER_00: What's the occupancy?
6:22
SPEAKER_00: Uh what's the the uh rental rate per square foot?
6:28
SPEAKER_00: Because we measure these every single day in our business.
6:32
SPEAKER_00: And when I say every single day, I mean every single day.
6:37
SPEAKER_00: And so then we look at a facility, down and dirty, what's the gross rent multiplier?
6:43
SPEAKER_00: Okay, then we go from there, what's the add-on?
6:46
SPEAKER_00: We factor all that in because we know what we can do, we call it Americanizing it.
6:52
SPEAKER_00: That's the name of our business, a self-storage business.
6:56
SPEAKER_00: We Americanize the purchase, late fees.
6:59
SPEAKER_00: You know, we put late fees into effect, we put auctions into effect.
7:03
SPEAKER_00: These are all add-ons that really don't come into play until you look at them and compare what the previous owner is doing, so that we say it may take us six months to Americanize it.
7:17
SPEAKER_00: And once we're there, maybe we're we go from six dollars a foot to nine dollars a foot, and then another three months later we're up to our standard just shy of twelve dollars a foot.
7:29
SPEAKER_01: To kind of break that down for some of our viewers, in the apartment world, we say we're we're buying maybe a apartment building that's maybe not, I'll call it mismanaged, and maybe the the income is not where it should be, and then we then we buy it, we try to stabilize it.
7:47
SPEAKER_01: So when you use the the word Americanize, it's you're you're you're stabilizing the business, right?
7:53
SPEAKER_01: Is that is that the way that we should look at this?
7:55
SPEAKER_00: Stabilizing it, yes.
7:57
SPEAKER_00: You know, bringing the occupancy up to uh you know, stabilize is anywhere from 90 to 93 percent.
8:03
SPEAKER_00: You you never want to be higher than that because you always want to have the ability to move people in at the absolute highest rate.
8:12
SPEAKER_00: It's a simple game in self-storage.
8:14
SPEAKER_00: The operations people rent the units up.
8:18
SPEAKER_00: Occupancy is very, very important in their mine.
8:20
SPEAKER_00: And then management, divisionary people raise the rates.
8:25
SPEAKER_00: And so it's a constant battle, and there are definitely cycles, annual cycles, on when you do that to maximize revenue.
8:36
SPEAKER_01: I know on your first purchase, on the first self-storage, 1999, it was difficult to get financing, but now you have the experience.
8:44
SPEAKER_01: What does financing look like for you now when you when you locate a new property?
8:49
SPEAKER_01: What type of down payment are you getting?
8:51
SPEAKER_01: What is the interest rate on a self-storage?
8:53
SPEAKER_00: I think today we're mid-fours.
8:58
SPEAKER_00: Um we're putting probably 40% down.
9:03
SPEAKER_00: Part of that, however, is because of the track record that we have that we say this is what we've done, and that they may not be so so difficult in the down payment because they know that we're going to bring that property out.
9:17
SPEAKER_00: We've done a total of five deals in the last year and a half, and two of them, the seller was very excited about seller financing.
9:27
SPEAKER_01: Because of their track record, that they're able to buy a building, put 40% down, which in the world of commercial, I would say 40% down is very typical.
9:35
SPEAKER_01: So there's nothing shocking with that.
9:36
SPEAKER_01: I would say interest rate of 4.5, I couldn't believe it was that low because some people are buying homes and the interest rate is higher than 4.5.
9:43
SPEAKER_01: Part two of that, what Brian's talking about, is because of their track record, some owners are playing the role of the bank to Brian, where Brian, instead of getting a loan, a separate loan from a bank, he's agreeing a price and terms with a seller, and the seller plays the role of the bank, and you're writing interest rates to the seller.
10:02
SPEAKER_01: The seller is no longer the owner and doesn't have to deal with the maintenance upkeep and the management of the business.
10:07
SPEAKER_01: And that's what we call a seller carried note.
10:09
SPEAKER_01: And in the apartment world, it's used, but you've been able to utilize that really, and it's a win-win for all the parties involved.
10:17
SPEAKER_01: Oh, absolutely.
10:18
SPEAKER_00: It it makes for a simpler sale.
10:20
SPEAKER_00: The the seller ultimately puts more money in their pocket.
10:25
SPEAKER_01: Earlier on, you talked about owning self-storages or mini storage or storage facility because there are a lot of names that people give them, that it gives a great rate of return.
10:34
SPEAKER_01: Talk to us of what is a good rate of return for you.
10:37
SPEAKER_00: That varies.
10:38
SPEAKER_00: We like to hover around 15%.
10:41
SPEAKER_00: Also keep in mind that my strategy, my personal strategy, is every every dime that we've that I have made in self-storage, I put back into self-storage.
10:51
SPEAKER_00: So I don't rely on that return.
10:54
SPEAKER_00: We may buy a facility at a lesser return, but then know that once it's stabilized, the returns are going to increase.
11:02
SPEAKER_00: You know, we we try to get as close to cash flow as possible on the acquisition.
11:07
SPEAKER_00: Then the returns really come down the road once we maximize the square footage on that property and you know increase the level of service so that we can increase the rates.
11:18
SPEAKER_01: What Brian's describing is very interesting to me.
11:20
SPEAKER_01: It's very similar to how we add value to any other piece of property.
11:24
SPEAKER_01: So a good friend of ours, Mark Milan, and you know, he's my mentor, he he taught me that one, when you look at a piece of real estate, what we want to do is try to increase its income.
11:35
SPEAKER_01: And when you increase the income, we therefore increase the value.
11:39
SPEAKER_01: And so what Brian's talking about when he's talking about he looks for a um a self-storage where he could Americanize it, but he also wants to add to it.
11:48
SPEAKER_01: So, kind of in a way that I talk about value add, he's adding value to it because he's looking for ways to add more units.
11:54
SPEAKER_01: Well, why does he want more units?
11:56
SPEAKER_01: Well, the more units you have, the more income you bring in.
11:59
SPEAKER_01: He's forcing the value up.
12:01
SPEAKER_01: So that's doing two things.
12:02
SPEAKER_01: He's increasing the value of the asset.
12:04
SPEAKER_01: He's probably able to then get a better loan on the property, that's why he's having to refinance it after a couple years.
12:10
SPEAKER_01: But more than that, he's probably increasing the cash flow.
12:13
SPEAKER_00: And we have to be aware of all those things because when it's time to refinance, the bank only has one issue.
12:21
SPEAKER_00: How are you going to repay me?
12:22
SPEAKER_00: And without that cash flow, they're not going to give you the deal.
12:25
SPEAKER_00: So you have to be aware of that cash flow.
12:27
SPEAKER_00: And you know, you've got to have a 1.2 ratio or something similar to that so that they get their money.
12:35
SPEAKER_00: There's no deals in banking.
12:38
SPEAKER_00: You know, it's cut and dry.
12:39
SPEAKER_00: The underwriters uh look for certain things, and you have to fulfill all of those covenants to get the loan.
12:48
SPEAKER_00: And once you get the loan a couple times, they feel really comfortable with you, and the loans become almost seamless.
12:57
SPEAKER_01: You know, so a lot of our folks are apartment owners, they own commercial buildings, office buildings, and they've been able, maybe they own several houses out of state.
13:05
SPEAKER_01: In North Carolina, if I was to say, what's the average sales price for a self-storage?
13:11
SPEAKER_01: What is that?
13:12
SPEAKER_00: The last five acquisitions went between three and six million dollars.
13:17
SPEAKER_01: So the price range of three to six million, and I don't I know you kind of just threw that out.
13:21
SPEAKER_01: I mean, for a lot of people, that might be a really high barrier to entry.
13:25
SPEAKER_01: I mean, that's that seems like a large number.
13:28
SPEAKER_01: Is there is there a state where you would say, hey, self-storages in this one state seem to have a lower price price range?
13:35
SPEAKER_01: Would you happen to know that?
13:36
SPEAKER_00: You know, I don't.
13:38
SPEAKER_00: Um, I do know in California it's it's incredibly more expensive.
13:43
SPEAKER_00: But um, you know, I'm assuming in North Dakota or in Wyoming, it might be less expensive.
13:48
SPEAKER_01: Okay.
13:49
SPEAKER_01: For anyone looking to get started, we're looking at 40% down, possibly more if you don't have the experience.
13:56
SPEAKER_01: And and then finding the right commercial lenders that do self-storage loans would be probably uh a really good recommendation starting there.
14:04
SPEAKER_01: Because as some of our clients, some of our investors are moving their investments out of California and they're looking for alternative investments.
14:12
SPEAKER_01: And so if they're watching this video, and I'm just I'm trying to give them some ideas on what they can do next.
14:16
SPEAKER_00: Right.
14:17
SPEAKER_00: And you know what?
14:18
SPEAKER_00: Here's what you do.
14:19
SPEAKER_00: If if you have a vision of entering self-storage, call me.
14:24
SPEAKER_00: If we can possibly meet, we can do a Zoom call.
14:28
SPEAKER_00: If I'm in your area, you're in my area, we can have coffee.
14:32
SPEAKER_00: We just talk about it.
14:33
SPEAKER_00: Don't make the same mistakes.
14:34
SPEAKER_00: Partner up with me.
14:36
SPEAKER_00: If if you're a contractor and you have the ability to build something and you've got a piece of property, you know, we're a natural.
14:45
SPEAKER_00: You build it, we operate it, and we have a clause, a simple clause of three years, five years down the road that somebody buys somebody out.
14:56
SPEAKER_00: And it doesn't make any difference to me who buys, but in that amount of time, both of us can make a tremendous amount of money, and we can share each other's knowledge.
15:07
SPEAKER_01: You know, I'm fortunate enough now that I'm you know part of various groups, networking groups, mastermind groups where I'm around a lot of um, a lot of entrepreneurs, and a lot of them, you know, they want to continue growing and entering into new markets.
15:20
SPEAKER_01: And the number one thing I took away from them is they don't enter a new market without the experience.
15:25
SPEAKER_01: And so they would do so with the experience of partnering up with somebody because they want to benefit.
15:31
SPEAKER_01: So instead of thinking, oh, well, I want to own 100% of it, they might say, I'll own a portion of it, but at least I get to learn from someone like you as they enter.
15:41
SPEAKER_01: And so, with that question, because I know you you put it out there and you're saying, hey, if you're an owner or if you're someone who wants to get started, or if you're a contractor, or if you already have something, will you look outside of North Carolina?
15:53
SPEAKER_00: I'll look anywhere.
15:54
SPEAKER_00: Um, it doesn't take a whole lot to look at a market, make some phone calls, visit some competition, and get a feel for is this the right thing to do in this sub-market?
16:06
SPEAKER_01: If we're looking at investing in self-storages, is there demand for more self-storages nationally?
16:13
SPEAKER_01: Like, is this a scarce product?
16:16
SPEAKER_01: Or has it been overbuilt in some areas?
16:19
SPEAKER_00: It's been definitely overbuilt in a lot of metropolitan areas.
16:25
SPEAKER_00: Absolutely, and I believe some of the big REITs and some of the big uh syndicates are second-guessing self-stores right now.
16:35
SPEAKER_00: You know, they're they're used to uh, you know, the big return.
16:38
SPEAKER_00: They want to go out and buy more, more, here's more money, and then all of a sudden things slow down a little bit and they're not getting their return.
16:46
SPEAKER_00: They think the sky is falling, and um I think there's an opportunity, and so I want to be there when those groups get out.
16:54
SPEAKER_00: And we're seeing a lot more self-storage facilities for sale, a lot of the bigger uh operations to 50,000, 60,000, 70,000 square feet.
17:03
SPEAKER_00: Although we have uh three facilities that size, our niche is 20,000, 30,000, 35,000 with room to expand.
17:14
SPEAKER_00: Okay, and then we expand it up to the 70, 80, 90,000 square feet.
17:19
SPEAKER_01: And that's where you're you're adding your value.
17:21
SPEAKER_01: Brian, you talked about bringing rental units up to like market rate in California and actually other parts of the country now that are implementing statewide rent control on the residential portion.
17:34
SPEAKER_01: Is there any talk of that at the self-storage in the self-storage world for rent camping storage units?
17:43
SPEAKER_01: Not as of yet.
17:44
SPEAKER_01: So that would be another benefit for some people that are that are getting out of multifamily, and some of them are just fed up.
17:49
SPEAKER_01: It's really hard to keep track.
17:51
SPEAKER_01: There's moratoriums for everything, and they're constantly being extended, especially here in California, where maybe that's not an issue you would have to deal with if you completely change the asset type of your investment.
18:01
SPEAKER_00: I'm I'm more of an operator, a hands-on type guy, and I look at the numbers every single day.
18:07
SPEAKER_00: And so for investors like me, self-storage is absolutely a no-brainer.
18:14
SPEAKER_00: Because, you know, our our biggest issue last week, for example, would be uh we had a person sleeping in their in their unit, and you know, we're we're able to call the police, and the police escort them out because they're literally trespassing.
18:32
SPEAKER_00: We're not a residential type business, therefore they're trespassing.
18:36
SPEAKER_00: The police can do something about it.
18:38
SPEAKER_00: Now, you have a squatter in a unit, a residential unit, and that becomes a civil matter, and that's two and a half months and litigation and going to court, and we don't have those problems.
18:53
SPEAKER_00: You know, somebody owes us$120, we give them a late fee, we give them an overlock notice, and we give them a lien sale notice.
19:02
SPEAKER_00: This is all absolutely automatic in our software.
19:07
SPEAKER_00: You know, unless we stop that notice, it goes to pre-lean, and then we we make sure that none of the property in that unit is leaned.
19:19
SPEAKER_00: Somebody else has a lien on it, and then it goes to auction.
19:22
SPEAKER_00: And that whole process is electronic, it's online.
19:27
SPEAKER_00: People don't ever come onto our facility for the auction.
19:31
SPEAKER_00: They look virtually, and they come on board our property to pick up their unit after they've paid for it and they've paid a deposit.
19:40
SPEAKER_00: So it's it's so much simpler.
19:43
SPEAKER_01: I know you said you've learned a lot through the years since you got started, but what are like three things that people just need to avoid when they're looking at self-storage investing?
19:52
SPEAKER_00: Probably the biggest thing is deferred maintenance.
19:55
SPEAKER_00: You know, look at the facility, see how it's been maintained.
19:58
SPEAKER_00: Moisture and and storage just don't get along.
20:03
SPEAKER_00: So look at the deferred maintenance if there is any.
20:07
SPEAKER_00: Look at the online presence on what the people are saying about them.
20:12
SPEAKER_00: In our society today, we buy anything and we we read the reviews.
20:17
SPEAKER_00: Go into the competition and tell them who you are, and hey, do you have any information on this facility that we're looking to buy?
20:27
SPEAKER_00: Uh you know, we do um mystery shopping as well.
20:30
SPEAKER_00: If we find the owner or the the manager of another facility and we nurture that relationship, we can get a lot of information there.
20:39
SPEAKER_00: So, you know, check out that facility, check out the reputation, get the police reports.
20:45
SPEAKER_00: How many times have the policemen down and visited that facility?
20:50
SPEAKER_00: Because that's the number one selling point in self-storage.
20:54
SPEAKER_00: It's the stuff has got to be secure.
20:57
SPEAKER_00: Women are the biggest customers.
21:00
SPEAKER_00: A woman wants to go into a self-storage facility that's well lit, they feel safe, there's an alarm, it looks nice and clean.
21:10
SPEAKER_00: They want that good feeling, and they're willing to pay for it, and so that's a little bit more of the value add.
21:16
SPEAKER_00: Is there one where you're like, for some reason, we get more per square foot when it's this?
21:21
SPEAKER_00: Typically, climate control is when you go down an elevator or into an elevator down a hallway, and climate control, you're gonna get more uh return on your investment.
21:32
SPEAKER_00: You know, it costs more to build, but you're gonna get a better return.
21:36
SPEAKER_00: And the trend, at least in our markets, are people want climate controlled units.
21:43
SPEAKER_00: So a lot of times businesses want drive up units, they're they're storing their products, uh, their maybe their papers, their construction materials, and they're in and out.
21:55
SPEAKER_00: They want the drive up, they don't need the climate control.
21:58
SPEAKER_00: But typically the home.
22:00
SPEAKER_00: Homeowner wants the climate control and they'll pay more and then you go down the hallway.
22:06
SPEAKER_01: Brian, if if I'm looking at a profit and loss for just the business component of the self-storage, what does that look like?
22:13
SPEAKER_01: What's our bottom line?
22:14
SPEAKER_01: Like what are we looking at that that excites you?
22:17
SPEAKER_00: We try to stay around 20-23% for the business itself.
22:22
SPEAKER_00: Okay.
22:23
SPEAKER_00: The the the margin, if you will.
22:26
SPEAKER_00: And every month what we do is we try to keep our expenses between uh you know 28 to 34 percent, and then we have our financing costs.
22:38
SPEAKER_00: Once that's all taken out, you know, we should be up in that 20%, okay.
22:43
SPEAKER_00: A little bit more than 24%.
22:44
SPEAKER_01: Okay, so someone could do the quick math to let them know what the financing cost is going to entail to back into what that would be.
22:51
SPEAKER_01: So that makes perfect sense.
22:52
SPEAKER_01: Brian, what are the different ways that you could add value to a self-storage investment?
22:58
SPEAKER_00: You know, this comes from, you know, 22 years of experience.
23:02
SPEAKER_00: Number one, you go in, you clean up the property, make the property look good, trim the bushes, get rid of some bushes, uh, make it pleasing to the eye.
23:12
SPEAKER_00: People are gonna pay more.
23:13
SPEAKER_00: They drive up, they look at it, have a happy feeling, they're gonna pay more.
23:17
SPEAKER_00: Bring the rates up to market.
23:19
SPEAKER_00: I say up to market plus 5%.
23:22
SPEAKER_00: I don't want to be the average self-storage operator.
23:26
SPEAKER_00: I want to be the Nordstroms, I want to be the Harris Teeters in the South.
23:31
SPEAKER_00: People are gonna pay a little bit more because they're getting a little bit more.
23:35
SPEAKER_00: And the the people who shop self-storage by price only typically are not the people that you want in there anyway, and you're not gonna get the best return on those people.
23:49
SPEAKER_00: So figure out the market that you have.
23:53
SPEAKER_00: Another way is by you know adding more units, maybe cutting down some of the big units.
24:00
SPEAKER_00: The big, big units, the price per square foot is lower than the smaller units.
24:06
SPEAKER_00: And um you rent typically smaller units more.
24:11
SPEAKER_00: People want smaller units.
24:13
SPEAKER_00: So figure out that unit mix and uh match it to the market.
24:17
SPEAKER_00: You know, we do protection coverage.
24:20
SPEAKER_00: We require our customers to protect their property while it's on our premise.
24:26
SPEAKER_00: And this is actually cheaper if they pay us for that protection coverage than if they put it on their homeowners policy.
24:35
SPEAKER_00: Because if they have a loss at storage, then it's under the storage policy rather than the homeowner policy.
24:44
SPEAKER_00: And so they're insuring, you know,$3,000 worth of stuff versus$80,000 or$100,000 stuff, and when their rates go up on their homeowners 3 or 4%, it's a lot of money.
24:55
SPEAKER_00: So we provide protection coverage, and of course, we make some money on that.
24:59
SPEAKER_01: Now listen, every every state and area and region is going to vary.
25:03
SPEAKER_01: But in North Carolina, what's the the average price that you're getting per unit?
25:08
SPEAKER_00: As of today, the average is eleven dollars and ninety cents a foot.
25:15
SPEAKER_00: And so if you have a 10 by 10, it's 100 square feet.
25:19
SPEAKER_00: If you have a 10 by 20, you can do the math.
25:22
SPEAKER_00: And so, but that that may sound like a question that has a lot of importance, but it's really not because it's that mix of units that you have.
25:34
SPEAKER_00: It's those smaller units, it's those little lockers that I love, the little four by four lockers, you know.
25:42
SPEAKER_00: And um the students love them, the parents love them, and you know, I get$20 a square foot on those lockers.
25:49
SPEAKER_00: So I'd I'd have 100,000 square feet of lockers, but the other visionaries in my group say, no, no, you can only rent a thousand of them, you know.
25:59
SPEAKER_01: So here's my takeaway with that.
26:01
SPEAKER_01: Um my mentor taught me that to take um a single tenant building, so call it a commercial building, and chop it up into smaller spaces.
26:10
SPEAKER_01: So, like let's talk about a commercial building standalone.
26:13
SPEAKER_01: And it it relates to what Brian's talking about.
26:16
SPEAKER_01: And Brian said it.
26:17
SPEAKER_01: He said the smaller the square footage, the more you could increase, uh, the more you could charge per square foot.
26:22
SPEAKER_01: So, same thing with self-storage is the smaller you make the unit, the more you're gonna get per square foot, the more you're getting per square foot, the more income at the end of the year, the higher your overall real estate's worth.
26:34
SPEAKER_01: I mean, there's just a lot of correlation.
26:36
SPEAKER_01: So, for anyone who is investing in real estate, a lot of the principles adding value, um, increasing, stabilizing, all these things are still similar and apply in the self-storage industry.
26:49
SPEAKER_00: Absolutely identical.
26:51
SPEAKER_00: You know, it's the same concept, and you know, let's talk a little bit more about that.
26:56
SPEAKER_00: I get really excited when I look at a five-acre parcel and they have, say, 20,000 square feet on it, and they have three acres that they're not using.
27:07
SPEAKER_00: You know, we gravel it like the first week.
27:09
SPEAKER_00: As a matter of fact, we just the the last facility, well, two two that two ago that we bought.
27:16
SPEAKER_00: We had gravel ordered and we worked a deal with the seller, we want to put this gravel out today.
27:22
SPEAKER_00: And if for some reason the sale doesn't go through, keep the gravel, or if you want, we'll scrape it up.
27:28
SPEAKER_00: But I had acres that I could park vehicles on almost overnight, right?
27:36
SPEAKER_00: And then as I rent up the the typical storage and I increase the prices, and and we're very aggressive with that, then I start building.
27:48
SPEAKER_00: And so it may take me six or eight months to put a traditional building on there, but I have income because people are parking on it currently.
27:59
SPEAKER_00: Okay, and then part of that gravel, by the way, goes into the uh foundation, and you know, it's just a win-win.
28:05
SPEAKER_00: And that's why I said earlier, you know, don't learn these things the hard way.
28:12
SPEAKER_00: You know, if you have a piece of property, if you have the contractor background, let's talk about it.
28:18
SPEAKER_00: And if we partner up, great.
28:20
SPEAKER_00: If we don't partner up, then at least you're gonna pick my brain and you know, we'll have a good Italian dinner in the process and and hoot and holler and laugh and and have fun and we'll we'll be friends.
28:31
SPEAKER_01: So there you have it.
28:33
SPEAKER_01: Some of my takeaways is there's a lot of parallels, so many parallels in real estate investing and the way that I analyze a property and the way that I see uh opportunities and the way that I'm gonna add value.
28:46
SPEAKER_01: Everything that I've taught you, if you've been watching our channel, we always look at how to find a good deal, how to analyze it, and what are we gonna do to drive the profits up?
28:55
SPEAKER_01: Why?
28:56
SPEAKER_01: Because when we drive profits up, we drive the value of the asset up, and that's where we're building equity.
29:02
SPEAKER_01: Everything that we've been studying and practicing in real life, it's the exact same thing that Brian has taught us.
29:09
SPEAKER_01: And so the lot of parallels.
29:10
SPEAKER_01: And so for someone to look at this and say, hey, I have the experience in multifamily, it's not gonna take that much more to get into self-storage.
29:19
SPEAKER_01: Now, some of my takeaways, should you do it alone?
29:22
SPEAKER_01: Absolutely not.
29:23
SPEAKER_01: You really need an operations partner, you need boots on the ground in whatever area you might look you might be looking into.
29:30
SPEAKER_01: You got to do your due diligence.
29:31
SPEAKER_01: And the one thing that's really separates these two types of investments, I look at self-storage with two businesses under one.
29:40
SPEAKER_01: One is the real estate component, and the other one is a full-on business.
29:44
SPEAKER_01: You have staff, you have managers, you have people taking calls, people collecting rents.
29:49
SPEAKER_01: Sure, there's a lot of software, but you got contractors.
29:52
SPEAKER_01: So, in a way, a lot of what Brian said analyzes a property the same way that I would on a multifamily, but there's further things he's looking into.
30:00
SPEAKER_01: So where my uh formula is 621, I would imagine if I dig deeper into self-storage, it might be 12 to 1 because there's other things he's looking at occupancy, price per square foot on a unit.
30:14
SPEAKER_01: So things that we could all pick up and learn and apply.
30:18
SPEAKER_01: So, if anything, I think that we're in a really good position knowing what we know now and just partnering up with someone like Brian who's gonna teach us and help get us there.
30:27
SPEAKER_01: I'm excited about it.
30:28
SPEAKER_01: Personally, I want to look at getting into self-storage investing as well.
30:32
SPEAKER_01: You know, once you build some of this equity and buying units and rental property, why not look at an alternative that appears to be a little, a little bit easier to manage when it comes to a tenant perspective basis?
30:44
SPEAKER_01: With that being said, make sure to like, comment, and subscribe.
30:48
SPEAKER_01: And please note that we have nationwide affiliates.
30:50
SPEAKER_01: So where you may not be in Southern California looking to invest, we have contacts affiliates nationwide.
30:56
SPEAKER_01: Reach out to me and would love to put you in contact with the right professional to get you to your goals and dreams of owning this.