Did you know that you could find and manage self-storage facilities while living abroad? All you need is some boots on the ground, Google Maps, and some education about self-storage. These are all things our guest utilized in order to make deals on these facilities. Start out small and steady when it comes to your first deals. Join Stacy Rossetti as she talks to Matt, one of her StorageNerds students about the facilities he bought. Matt talks about the three facilities he bought. He bought some with owner-finance and some with an SBA loan. Discover how he did it and why he chose small facilities over the big ones. Learn how he values his properties and how he gets his deals done. He started out small and he’s still pushing through. Learn more about these self-storage facility deals today!
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How To Find & Manage Self-Storage Facilities While Living Abroad W/ StorageNerds Student Matt
How are you?
I’m good, Stacy. How are you doing?
Where are you at?
I just got back from Tennessee.
Are you moved over from Jamaica now?
We have officially moved. We are back in America for the first time to live in several years.
Is it still nice to be back in America?
Yeah, definitely. It was well missed. I saw some folks checking in from Mexico. We did a three-year assignment in Mexico. We were up on the border in Chihuahua in Juárez. I missed that time very much and some of my favorite food I have ever had. We are back in the US now, and I look forward to sharing how your program has helped my family.
We want to get into your deals. Tell everybody where you lived and why you decided to get into self-storage investing?
I joined Stacy’s program last February 2022. I have been in for over a year. I didn’t get my first deal in 90 days but I got it in less than six months. As Stacy and I mentioned, my wife is a Diplomat. We have been living overseas for several years. It was a little bit harder for me to drive for self-storage because I couldn’t drive in the US. I had to rely on Google Maps and some family who was driving around. Anytime I came back to the US on a visit, I spent time collecting numbers, getting information, calling and texting people, mailers, and emails.
I went that whole route. Long story short, we bought our first facility in July of 2021. From February to July, it took us to get one under contract and close on it. It’s a small-town tertiary market outside Chattanooga, Tennessee, where my wife is from. We have family here. As we came back to visit, I found this facility. I called the guy and said, “Do you want to sell it?” He said, “Yeah, I sure do.” We made a cash buyer on that one. It’s a very small facility, 26 units, 4,100 square feet or something like that.
Self-storage tenants or renters aren’t really stressed out about who’s getting their money.
He hadn’t raised rents in a long time. His expenses were low, and I was able to keep them low because I had a reliable boots-on-the-ground person who was close. Taxes were very comfortable. I did not have it online. I was accepting multiple payment options. It was an easy purchase and close. I waited about 6 or 7 months until I raised rents. I just raised the rent. I lost nobody throughout that process, which was good. In my letter to them, if I knew how long they had been renting from this unit or this facility, I told them, “This is the first time your rent had been raised since 2018 or 2019.”
I reminded them that the new owner was coming to get their money. Things have changed in the last few years. That was a cash buy. It’s a low-maintenance facility and easy to do. Once again, I’m fortunate to have family nearby. That one was quick and easy. I went through a period or gap between that one person to the next one. Partly, once again, as I said, because doing so from overseas is a bit more difficult. My family is down in Tampa, Florida, so I branched out and wanted to add middle Florida, country Florida, Cal-Florida, and Oranges, Florida.
I liked that market and wanted to go hard after that market. We sent out mailers in that area, and started texting, overhead driving, and finding numbers. Google Street View to make sure that I could get the phone number or see what the facility looked like. If you have been with Stacy at all or heard her stuff, if they have a website, I would still contact him because sometimes it was a Google My Business website.
If they had storage or web solutions running, most people were not interested in selling but I found a facility in middle Florida and went under contract with it. It’s a larger facility. The owner and I went back and forth for a good while in conversation. It was not for sale. He responded to a mailer that I sent. We started an email conversation back and forth but he was in the process of getting married.
He said, “Let me pause my conversation with you. I will talk to you after my honeymoon.” I said, “Okay, fine.” I forgot about it, to be honest with you. We kept trying to find some other stuff. A little while later, he reached out to me and said, “I’m back in town. Are you still interested in the facility?” I put it in Stacy’s evaluator and started collecting information on it. I got excited when I went into Radius Plus and saw the numbers for the area.
I got even more excited when I started doing some overhead views of the property and saw that there was a subdivision across the street. There was a 55 and older community 1.1 miles away. For those two reasons, we decided we were going to go after that facility. My wife has a W-2 job. I spend my time in real estate investment. We have two little boys. I homeschooled the oldest one. If I’m not homeschooling him, I’m trying to find a self-storage facility to buy. I got under contract with that one. For as easy as the 1st one was to buy, the 2nd one was the complete opposite.
We chose to do an SBA loan, and I don’t regret it yet. I do know that the time investment was as bad. If you read any Facebook groups or any groups or hear podcasts about folks who were buying with SBA, it is a painful long-drawn-out process. It took forever to get across the closing line, and we closed on that one. I have yet to see it. I’m flying to Florida to check the place out. I hired my boots-on-the-ground person and have been basically pretending to be the Manager, which Pete’s very good at. I had to give them my phone number and pretend I was the Manager of the facility, not the owner.
I had a few people reaching out to me, trying to get a unit or figure some things out. I wouldn’t call this facility mismanaged but I would call it under-managed, which was ironic because they have a full-time live-in manager, which we are going to get rid of that. It’s not necessary. It’s a 3-acre lot, so it’s fully fenced. The one downside is the front gate has been basically destroyed. We are going to have to come out of money. I’ve come out of pocket some money to get the front gate fixed so that it can be an automated entry. We are working towards that, and that stuff is backed up.
I have someone going over there opening and closing the gate. It’s messy now, but once again, if you’ve stuck with this for a little while, you will hear the first 90 days of purchasing a new facility is complicated. For 90-days, it has been complicated, nothing catastrophic. The other side that I’ve heard a lot, and it brings me some peace and helps me sleep at night, is that generally speaking, self-storage tenants or renters are not stressed out about who’s getting their money or what’s going on with that.
I have found that to be pretty true, which I’m obviously thankful about switching over from one system to another system, one owner to a new owner, an onsite manager who has somewhat of a relationship with these folks to a website. If you want a unit with us, go to the website. Here’s how you do it, sign the lease, spend the money, and you are locked in. That was the second facility.
Let me ask you some questions before I get too far ahead. For the first facility, can you tell everybody how you found that? This is the small one.
It’s a small facility, 26 units. It is in my in-law’s town. They live 4 miles probably. It’s one of those ones where when I came to visit them during one of our trips home. I was driving around trying to find it, and found it. It was not on Google. There was no address. It was not on Google My Business. If you click on it, it has the coordinates. It did not even have an address on it. I found that one by driving around when I came to visit family.
How did you fund that one?
It’s a straight cash buy.
How much did you pay for it?
It’s $60,000 for 26 units.
Does it have an extra land on it? Was it just the unit itself?
No, just the unit itself. It’s in the little downtown area. There was no room for expansion. Closing in on year one, all expenses paid, we are going to get approximately between 15% and 20% cash-on-cash return, which I’m thrilled with. I’m happy with it. We have our expenses low. I’m doing a lot of the work myself. For 26 units, I’m not going to pay someone to do something I can do myself in that regard. For the big Florida facility, we are on storage. We have a website. I’m coming out of pocket not to have to deal with all those customers. To fast forward a little bit, we added a second small one here in Tennessee as well. It’s very similar to the first one, except that it’s an owner-financing purchase.
Can you talk a little bit about how you managed the first one when you were by itself now without the other one, so people have an idea? A lot of people do ask me, “Is it worth buying a small one?”
My wife and I debated on that for a good while. She was not interested in buying a small one because, as Stacy said, “There was no land. It’s hard to scale.” When you increase the rent on 26 units, even if you increase it by 20%, it’s not that much money. You increase your rent on 150 units by 20%. All of a sudden, your cashflow has driven up. I ran the numbers through your evaluator, and I knew I was still going to make money on it. This is not what they call a home run deal. This is a solid double but my cash-on-cash return makes it look like a triple for me.
Don’t pay somebody to do something you can do yourself.
It’s what everyone else their cash-on-cash returns is getting but 15% to 20% I consent with for the fact that I spend very little time doing it. We went through the process of getting on Google, and once we got on Google, obviously, they had a couple of reviews and got some photos up there. I’m managing our Google My Business page. Once again, it’s a small tertiary market. There’s one legitimate facility in town. That was a mom-and-pop one but the rest are very much mom-and-pop.
They are between 20 units and 50 units. The biggest one in town is probably 150 units. He’s not raising his rent, which is fine because he’s forced. I’m able to raise my rents. His fence is gated, fancy, and nice. Mine is not but he’s had a lower rate than I’m charging, even though my facility is not as nice as his. That’s nice because he doesn’t want to raise his rent. That’s okay.
What’s the population of that town?
There’s no way it’s 4,000 people. I don’t know.
You usually have no qualms about going into a small area to get your first deal.
That’s the thing. I wanted to learn how to run a facility before I bought a big one. That’s what we did. I spent basically 8, 9 months self-managing this facility and realizing, “Here are the questions that people are going to ask. Here’s what people are like.” The one we bought in Florida is also a tertiary market. I’m talking about where in the country, it’s like 700 degrees and half a year, and there was no airflow. There’s a highway that runs through the middle of the state. We bought a facility on that highway.
How do you manage such a small facility to keep the cost down?
We have four-line items for expenses. Basically, we have taxes and insurance, no doubt. We have had very few repairs that we had to spend on it. That’s nice. I bought a banner and put it up. The only other expense we have is our credit card expense. I run it through PayPal. Obviously, if it’s a $60 charge, you will get $58, and PayPal gets $2. Other than that, those are the only expenses we have except for joining the Better Business, the local community small business association because they rented a unit from us. I felt like it was the right thing to do. We get free ongoing advertising through our registration fee with them. It’s a simple process and not something that I regret doing at all. I like mom-and-pops to keep things local, help things grow, and help local communities grow as well.
For the next one that you got under contract or closed on, how did you find that one? Can you talk about all the different marketing that you did that led up to that?
That one, I started with Google Maps from overhead. I spent many years living in Florida, so I know the area. I know this about the small towns in the middle of Florida because my family is from there. My dad’s family’s from there. I used to fish 12 miles from this facility that we bought. I spent every Thanksgiving at this one lake that’s close to there. I knew the town that was closest to there. There were 6 or 7 small. It depends on what your picture is but in Florida, they are considered small towns.
I started doing the overhead image and scanning. This facility is large enough that as soon as it showed up on my list, I was able to see what it was. They had a website. It was a dad and son who are local investors in middle Florida but they focus on multi-family unit properties. For whatever reason, I found this facility a few years ago and purchased it. They took their hands off it and let their person run with it. She was not too concerned with making it fantastic or great. They let it go down a little bit. Once I contacted him, he said, “It’s not for sale but we want to take that money and invest it somewhere else.” Let’s talk about you buying it. That’s how that process started.
I was doing Google overhead. I will do the street view, and I could look at it. I can see that there was a fence. I could see there used to be a gate. I could get a rough estimate for how many units it was. We started the conversation. They have a website and use WebSelfStorage. He was able to provide me with the unit mix, what they are charging, their physical occupancy, which is different, and their economic occupancy. It gave me a good idea of what the facility’s worth. When I saw his expenses, that’s when I clicked into this one because I was looking at his line-item expenses, knowing what mine was, and talked to Stacy about what you would call small-medium facilities and what your expenses are with those.
I knew he was paying way too much for multiple things. His rates for rentals were pretty close to the street market value but his expenses were way too high. As I mentioned, it’s below 5 square feet per capita, which were floors in the 3 and 5-mile radius, and this is a tertiary market, so those are the ones you are at. For Florida, below five was a lot of deal for me. I said, “Let’s move forward with this.”
Florida is a good area. Think about the area that you are in, where there are markets that are growing so fast that the demand can’t keep up with it. This is essentially what happened in Florida. You find a lot of properties like this. You did some deal analysis on it. Let’s talk about funding. How did you come up with using an SBA loan, and what happened with that?
We had some capital available, and I wanted to use the least amount of capital possible because we weren’t done investing. Prior to doing self-storage, we have two cabins in Smokey’s. We do short-term rentals. We started that in 2019 and 2020. We purchased two of those once again while living in Jamaica. Those are doing well but we wanted to diversify a bit and didn’t want to have all our eggs in the same basket.
I have always been interested in self-storage. I was not accountable enough. Joining Stacy’s group helped me get to that point of knowing these calls are coming up and having a conversation with people like, “What are you doing? Are you sending out mailers? Are you cold calling? Are you sending a text and stuff? To answer your question, I got off track there. We chose the SBA loan because I wanted to put down as little as possible so that we have more capital available for more purchases in the future.
An SBA essentially looks at like income-producing properties. Does this property produce enough income? How did it work with the terms? What did they come up with?
If you have been around, there are a couple of big players in this game, one of which is Live Oak Bank in North Carolina, and the other person who had to run a mine was Covey. He’s almost like a lender-broker. I presented both Live Oak Bank and Covey with the deal, and Covey shops it to a handful of banks. When it was all said and done, the two packages came back and were very similar. I liked Live Oak better. To be honest with you, at this point, I don’t even remember why. Maybe the interest rate was it was a take lower or something like that.
They were very similar but I chose Live Oak. The customer service I had with them through the process was very good. It was a long, painful process but I was able to get into this purchase with only 10% down versus traditional. You might be at least 20% down, and you do what Stacy does. You are looking at different things with a higher interest rate and quicker refinance and stuff. This one was cash-producing and cashflowing as is even with his numbers. I did multiple phone calls with Live Oak.
They want to see a business plan and want you to talk through how you are going to make it better because they want to fund good deals. I put together a business plan and spoke to them about the changes that I foresee us making in the first year. They were happy with that and happy enough to say, “Let’s move forward with this.” It took forever. It did with so much back and forth. It saved me a lot of money as far as putting money down. That’s why I keep telling myself, “I can get with this.”
When buying a small facility, join a local community or a small business association. You can also get ongoing advertisements from them.
How long did it take to close? How long did you have it under contract for?
It’s five months, I believe.
I have been telling people if you want to do SBA, it’s going to be 4 to 6 months to close. What did the seller say about that? Was he okay?
They were okay with it. I was communicating with them about what was going on. Thankfully, because they do business in the state that we are buying, some of the delays were not Live Oaks’ fault. It’s not my fault. It’s the State of Florida’s fault and their backup due to COVID. At least one month of the closing process was the proper registrations within the State of Florida.
A business owner down there knows I’m not making that up. They know that it’s not my that’s not my fault. They were patient enough with that. They were getting antsy at the end. No doubt because it had been five months. Once we finally zoned in on our closing date, we were able to tell them that, and Live Oak confirmed it.
They want 1031, the money into something else. Once that got established, and they found some that 1031, that’s when they said, “We need to close by this date.” Thankfully, we did. We closed 5 or 6 days before we left Jamaica. It was a whirlwind of you having to overnight all this stuff, and thankfully, I have all the services available to me and got all the other stuff notarized. It saved me a lot of money to put down. I have more money for my next deal.
Tell us the price of this.
This one is $815,000. It’s the purchase price, so we put $81,000 or $82,000 down at 10%. They didn’t cut you a check for some working capital. We put 10% down and got a little bit of money back. That’s where I’m going to fix the gate with. I’m not going to be in the hole, so to speak, out of the gate. I got three months of interest-only payments to start out. I have a nice opportunity to collect funds and build the money in the account in case something else goes wrong. Another reason I was interested in the facilities, they had resealed the roofs. All the roofs have been sealed within 2021, which is not terribly expensive but it’s not cheap. It’s 165 units, and they had to replace over 100 doors, which if you know how much doors cost. It cost a good amount of money as well.
You got some stuff done. How much did they end up? Did you tell them, “I’m going to have to put a new gate in, so I’m going to need $10,000, or how did that work?
To be honest with you, either I haven’t done the homework or this was their own thing. They brought that idea to me. They said, “Do you need some working capital and this?” I was like, “Not necessarily but once again, it kept that money in our account to invest in something else.” I will take some working capital. I got a solid interest rate because, thankfully, we got locked in before April 1st and all that stuff. I was definitely below the interest rates, so that was a relief.
That was another reason I didn’t want to extend that one more time. We would have been into the new interest rate period if we extended it one more time. It would have automatically been driven up. They brought the idea of, “Do you need some working capital?” Somehow, they produced the number and said, “Is this number okay with you?” It was close to what I expected the gate repair to be. I said, “Yeah, that’s fine.” We went with it from there.
If they could do 10% down, it’s totally worth it but you have to be able to wait for 5 or 6 months.
The seller has to be patient. This was off the market. If it hadn’t been on the market, this would’ve never worked because they would not have waited. If it had been our marketing deal, they would have quickly cut ties with me and taken it. This is a cash buyer for many people. Not for me but for many people, this is a cash buy or a 50% down buy. They would have taken their money and closed in 30 days. I would have been lost for 45 days and probably would have missed it. It was an off-market deal, and we had started the conversation long ago, it builds a relationship and rapport. It allowed the sellers to be a bit more patient with that process but 10% down. It’s done, and that’s what we got out of with.
You have to be patient. If you want to do an SBA loan, honestly, I would put six months and tell the seller, “It’s going take six months.” Over time, it’s going to take even more and more time. It’s going to take a lot longer to close. You got stuck right into the time where they are doing all of the loan modifications, changing the numbers, increasing them that people are starting to freak out and stuff.
Obviously, in my dream world, I would have found this deal six months earlier because they were waving SBA fees. For example, mine does not. I have the fees on mine. For this long is around $17,000 or $18,000. It’s not cheap but it’s built into the loans. I didn’t come with that money for closing. In 2021, there were no fees for SBA loans. They were fantastic. It was so much better terms than they are now. Basically, many people jumped on this. With inflation and everything, they started making some adjustments. Several months ago, this deal would have looked even better.
It wasn’t there for me. I couldn’t get it closed in time. It is what it is. Looking at my numbers, obviously, we are weeks in, so I don’t know the real numbers yet. I haven’t seen the facility. I’m going down to see it. Most of it, I’m looking forward to seeing. That should be fun. Since I’m back in the US now and have access to getting down there, if I need to get down there quickly, I can. Living abroad was much more complicated, especially during COVID, because we were in Jamaica, for example.
The island was closed for a year. There was no inbound traffic for a year. We spent a year on the island, and the first facility that we purchased was during that time. I had some notarized papers sent in and wasn’t at the closing. That’s no problem. You don’t have to be in closings anymore. Obviously, I wasn’t at this Florida closing either.
The good thing is you had a family to take care of it. Do you have family nearby for this one? Are you going to be managing it? How are you going to manage this thing?
There will be a website and using storage as far as the renting goes. I found my boots-on-the-ground person through a Facebook group for the town it’s in. I tried two different groups. One was a garage sales group. I posted my information there. There was another one that was something along the lines of almost like a side hustle or side job Facebook group of people. They don’t want full-time employment. Obviously, Florida has many retirees, and they are looking for an opportunity to make some money. I found it and posted my information there. I cleared it with the moderator first to make sure it was okay to post.
She’s like, “Go ahead and post it.” I probably got fifteen responses. I read through them and replied to all of them. After that, I got probably six responses again. I cut it down to three people based on the responses that I received. I have a great uncle who lives 10 miles from the facility. I did a phone interview with all three of them. I had my uncle meet them in person to see what the people were. What are they like? What presence do they have? Are they going to be a good face of my business down there? He came back and said, “This is your winner.” The guy was terribly overqualified but he’s looking for something to do. He’s happy to do this and bringing good ideas to me already, which is good. That’s how we found him.
Call centers are not cheap and sometimes they’re not good. People are not really getting a lot for their money.
How are you going to manage everything? Are you going to be using storage? What kind of marketing? Can you give the demographics of the facility? How many doors? How many square footages?
It’s 165 units. The square footage is around 19,000. The demographic is a tertiary market and middle Florida. The square foot per capita is 5 miles less than 3 miles. Management-wise, we are using Storage. That’s our property management software. The guy is the one who builds our website. The folks that have been on before, I’m sure you’ve heard Stacy talk about him. If not, he’s the guy that we chose to do. He’s great with obviously getting the SEO out there. The good news is that when I have my consultation with the guy, he’s got this little nine-cube chart that looks like The Brady Bunch thing. It shows you where you are doing well as far as SEO and that ZIP code and those searches go.
Of the 9 squares, 8 of ours are green, meaning we are winning those squares. In this block around the area, we were winning on all the searches because of the fact there weren’t any others in the area. There was one that was maybe yellow because it was halfway between our facility and its other facility. Storage is the answer. I’m still going to be very hands-on when I need to be but I’m going to rely on the property management software and the website and those experts to help take care of those things.
Who’s going to answer your phones?
I’m going to put my two small ones in Storage as well. Every facility is going to have a local phone number, and that local phone number can ring through to either a recording, meaning like a voicemail or they can message through like the bot thing like a Google bot basically. I will get a ping on my phone to my personal number and screen through this other number. Somebody says, “I want a 10×10. Do you have 10x10s? How much are your 10x20s? Basically, I will monitor my phone and jump back on them when I can and let them know, “Here’s what I have.”
We are not doing a call center at this point. If it gets to where we are losing business or feel like that plan is not working or starts taking up too much time, we will switch to a call center. Call centers are not cheap. Stacy has talked about this quite a bit, and other folks in Storage Nerds talk about this. Sometimes call centers aren’t good.
People have talked about they are not getting a lot for their money. Basically, once we buy 1, maybe 2 more, we are going to switch over to what Stacy is doing and have one central person who answered calls at certain times a day or a week. Let that person have access to our backend stuff and know what’s going on at different facilities, and go from there.
What’s your third facility? How big is this?
Ironically, we went under contract and closed on that facility in 30 days. While we are working on closing the Florida facility, this facility I had my eye on for about three months. I say that because it’s a brand-new build. Through my family, I knew who the builder was. I approached him and said, “I’m interested in your facility.” He said, “Here’s my price.” I said, “No, thanks. I can’t do that.” I went back to him and said, “Will you owner finance?” I was basically willing to give him what he had on the property. I came back to him with “Here’s my price,” meaning he had built 18 units and 7 parking bays.
There was covered parking bays. The parking bay is going to be something that is coming down the road that grows quite quickly. This is very close to a lake, whitewater rafting, and camping. There’s a nice little market there for that. The closest covered facility is about 6 miles away but I’m closer to the lake. That’s going to have something to do with it.
This one has 3 acres, and that’s the other reason we purchased it. Those 18 units are full, and I got 5 of the bays full. Basically, in that facility, I have two empty spots. What’s good is when I closed in the first Tennessee facility and filled that one up, I started referring people who called me because the second facility was not on Google. However, I was.
I was getting phone calls. Every time someone called me, I would send them then the other owner’s name and here’s his phone number. I was hoping, and it worked out while I was filling our facility before we owned it. I was referring people over to that facility, “Call this guy over here. He’s got a unit. I know he’s got 10×20 or 10×10.” We filled it up. It’s now full. Literally, I was talking to a local bank here about adding on. We are going to add either 18 or 20 units. We haven’t decided yet but we are going to start the process of adding on another 18 to 20 units.
Talk about the owner finance terms.
Nobody won in this owner financing terms. He got what he wanted in the sense that it was a ten-year loan without a balloon and a fixed interest rate. The interest rate is higher. It’s 6%. We got into the higher interest rate to get into that interest rate. He had to bring his price down. You are moving money around if you are like, “It’s this or is this.” In the end, we are happy with what we pay for the facility. Now our cashflow is as is without an issue. However, when we add on the twenty units, obviously more or less, the cashflow is going to double. Once again, a double as far as baseball terminology goes on the investment.
He wanted a little bit of money down, so we put some money down and reached ten-year with a fixed interest rate. He would not compromise on was there were no early buyouts. In other words, we carried the loan the entire period or if we do want to buy out early, we have to give him what the end amount would be. He’s going to take an interest in it. He was content to make the interest that he’s going to make over the next ten years.
After running the numbers on it, as it is, I knew that it was going to clear money every month. Not as good as this first small facility that we had in Tennessee but it was going to clear good enough. Once we get that second building built, all of a sudden, we are looking at, “We are making real money again, not just some money.”
Number one, are you going to add on to this? Number two, how long is it going to take for you to start making some money on this thing? Why is that worth it to you?
Yeah, we are going to add on. We are already in talks with a bank here to add on. They have all the information they need. We should have that approved soon. It’s worth it to me because it’s 3 acres on the corner of two large local highways. It’s servicing an area that is not growing quickly but for a tertiary market, it’s growing in a direction that I like and of income that I like. The people that are buying in the area this facility is are commuting a little bit or they were working from home. They were making more money than the rest of the people in the area. Hopefully, they will have a boat or an RV, and I have a place for them to put it.
They need some storage for their son or daughter, who went off to college and is coming back now. We have a uniform. We are going to add on. It’s making money. It’s just not making huge money now but it is a buy and hold and a long-term investment. It is 3 acres in a fantastic location that has the potential to grow and expand going forward. We are not in a hurry on this one. It’s not as pressing that we make fantastic returns straight away but we will make good returns. I feel confident in that. We wouldn’t have gone down the route of buying it.
The truth is, honestly, where the market is at, it’s very hard to find deals that are totally awesome. The deals that they are buying are good purchases that are long-term holds that you can maybe value add by increasing the rates or by adding on. This is how it’s going to be. The reason why is because the market is so saturated, and there are so many buyers. It’s a seller’s market. There’s nothing wrong with looking at deals the way that you are looking at them. Maybe I don’t cashflow as much as I wanted to but over time, this thing is going to appreciate, and I’m going to value add it.
That’s why we bought this. If there were no land available for this one, I would not have purchased this one. I don’t know where you are at with this as far as investment goes but this was a gut purchase. I’ve seen this piece of land and was interested in building on it already. This other guy did that. He’s a builder by trade. My family knows this guy. My wife is telling me she knows this guy, and he builds good stuff. I didn’t have to build it. I bought what he built and filled it up for him, basically. I bought the facility from him.
If the price isn’t right for a facility, try to owner finance with the seller.
Somebody asks like, “How do you value a storage facility?” Essentially, everybody says it’s NOI and cap rate but the truth is the way you value it is based on your own risk level and what you want to do with it. It could be a low cap rate in a secondary or tertiary market. The question is, “Can you raise the rates? Can you value add the property? Can you add on?” Determining how you are going to evaluate the commercial property is key. Commercial real estate investing is not black and white. It’s not anymore. It can’t be. You have to make sure that you understand value-added opportunities.
A lot of it has to do with what that person wants from their investment. All of our assets that we own cashflow. I don’t need everyone to cashflow as a homerun. I don’t. They are holding and growing items. We are happy with the returns that we are getting. If everything goes right, we do feel that Florida is going to be a strong cashflowing item. Once we add onto the second facility, I feel the same way about that one. The first facility is what it is. It’s a small facility. I have no problems with it. The tenants there are extremely low maintenance. Every time someone moves out, I increased the rate by $10 and rent it to the next person.
I have a waiting list of three people. They pay on time. I got one guy who hasn’t paid. The other ones pay on time. If I added up, it would be less than two hours a month I spent in that facility. Even counting my boots-on-the-ground person, I would say we spent 4 or 5 hours a month dealing with that facility, and that’s it. I don’t need a ton of money out of that. It is doing what it’s supposed to do. It’s cashflowing and increasing in value.
As Stacy said, I’m value-adding in the sense that I’ve raised the rents, basically 20% across the board. I lost one person who was also moving out anyway but I filled that unit. It’s, “What does that person want from their investment?” For me, I like investments that don’t require a ton of time, do make us money, and continue to grow over time. That’s why we are in self-storage and short-term rentals.
Another thing is that I offered the opportunity of education to you. Getting and buying something that’s small and learning how it is, there are more values in that than most other things anyway. We should add one to that.
I’m a risk-averse person, generally speaking. The fact that I was able to buy that small Tennessee facility learns how things work. You can read how everyone else does it but that doesn’t mean I’m going to do it that way. The way that Stacy and Pete do it is fantastic. I’ve mimicked many of the things that they’ve done and do. There are a few things I’ve done a little bit differently because it works better for us. Getting in and buying that facility and helping me learn on a small investment that if it goes wrong, I’m not going to die.
If you mess up an SBA loan, things go bad. My obvious goal is to learn how to run a facility well, and value adds the SBA one. You have to keep the SBA loan for three years or you pay a stiff penalty to refinance earlier than that. After three years, we will see what the interest rate is. We will see what the property is worth. We will see if we want to refinance and pull money out of it. We will cross that bridge when we get into it.
You should definitely be able to double the value of that property, though.
Back when I brought it to you a long time ago now, you said, “You should offer on this.” I said, “I should have too,” and I did. It took forever to cross the finish line but we did. Now we are there, done with it, and that’s good. It’s a matter of taking the next 90 days and tightening it up, making it look better on the book side. As far as cosmetically, if you have ever been in the middle of Florida, it’s sand and concrete. It’s not going to look better in that regard. That’s fine. Nobody cares about that. They can put their stuff there, and can they pay for it? Yes, and yes. That’s good.
I appreciate you coming and hanging out with us. We are at the end. Everybody in the coaching program appreciates your story. If Matt can do it, anybody can do it. He started with a small facility, and now he’s already on his third one. How long have you been doing this for now?
I’m 15 months in, and we’ve got 3 facilities purchased.
What’s your goal for the rest of 2022?
My goal is to have 500 doors in 5 years from the start. When I started in 2021, I wanted to buy 100 doors a year. My goal is to have 500 doors after 5 years.
Slow and steady wins the race. You are on the right track, go and get it.
All I know is what my next two years will look like. I don’t know anything past that. I like to do 2 and 3-year goal blocks. As you mentioned, those folks are investing in self-storage from abroad. It’s doable. Make sure you have access to a notary that will make things much better and save you a lot of money. If you do, go for it. It is what it is. It would always take the way it is now.
One person asks, “How do I verify that my boots-on-the-ground person is doing something?” That’s where I do have my safety net is my uncle living down the road. He did the interview for me. He knows these people. I can easily send my boots on the ground person to do blank, whatever it is. Three hours later, I can send my uncle to see if it was done. Thankfully, we are not to the point yet of me having to question this individual. If and when it’s important to keep sharpening iron. I’m going to do that. I will send him up there and make sure these things are getting done.
We will go from there. We will make sure that he’s doing his job and that I’m doing my job in the sense that I’m paying him and taking care of him, valuing his opinion, and listening to things that he’s saying. He’s seen the facility much more than I have. I will meet him face to face, and that hopefully creates some continuity between us as well.
I got asked in my coaching calls, “Do you ever buy any facility site on the scene?” I think about it. I’m like, “I have bought a couple of them.” They all look the same, honestly. It’s not like the storage facility is so bad.
The ones that look fancy and pretty, we are not buying anyway. I don’t want those. I can’t afford those. No, thank you. I will buy the ugly one the same owners had for twelve years and never raised the rent. I buy that from him or her and be happy with it, raise the rents in a year, and go with it.
Thank you, Matt. Everybody else, thank you for hopping on. Take care.
