Self-storage investing is one of the most thriving spaces right now. Everyone wants a piece of it and so many people are ready to either buy one or invest in it. How can you excel in a growing and highly competitive industry? Stacy Rossetti breaks down the fundamentals of self-storage investing to help beginners navigate this space with the right knowledge and expectations. She explains how to build your list of prospects, find the right facilities virtually, and get a facility under contract as soon as possible. Stacy also discusses the most effective strategies in raising money to fund your self-storage ventures and how to present offers in an enticing way.
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Self-Storage Investing For Beginners
My daughter, Lillian, was doing my makeup before the session. She put some earrings on me and did my makeup. I do not wear makeup at all, ever. She put some glitter on my face. I’m probably going to break out. Isn’t that funny? I was trying to clean up a little bit. I couldn’t even tell if these earrings are on. They’re so light. I wish all earrings were this light. I feel earrings are so heavy and bulky. When I was young, I used to wear earrings and stuff, but when I get older, I’m like, “Whatever.”
Lillian put my makeup on. She came home after school and was like, “Mom, I have a surprise for you.” For Christmas, I got her a makeup kit. It’s a little box and you open it up, and there are eyeshadows and stuff. It’s kids’ makeup. She’s done daddy and mommy. Over Christmas, she’s putting makeup on everybody. She wanted to do a little makeover for me.
We’re upgrading, and I’m excited. We did not make it for this episode. I wanted to have it for this episode, but I got one of these vibe screens. Does anybody know what this vibe screen is? I was so excited about this. The stand came in, but I didn’t get a chance to set it up and stuff. I’m going to stand up, and I’m going to be teaching you all. I’m excited about that. We’re going to have a different look for all the sessions, try to get a little bit more professional looking maybe, and teach.
Ariel Lynn works with me. She’s a community and marketing manager. She and I have been working on trying to organize the structure of the Monday nights. For everybody new here, I teach every Monday night for free. You can hang out with me every Monday night and we’ll go over something storage related. Starting in 2023, we’re going to try to organize it a little bit better. The first Tuesday of every month, it’s going to be Self-Storage Investing 101. It will be something like how you get started, what the first ten steps are, and as a beginner, how you get started.
That’s going to be the first Tuesday of every month. If you guys follow me, you guys all know that I teach, find them, fund them, and run them. First up, it’s finding them and learning deal analysis, putting your offers in, and getting it under contract. That’s find them. Fund them is, “Where do I get the money to buy these things? How do I purchase these things?” We talk about that. We talk about raising money, partnering, owner financing, creative deal structures, and things like that.
We have running. Running is obviously all things management. Getting it up and running, transferring ownership, onboarding the facility, and then automating and systematizing it so that it can be true passive income. That’s how we teach internally and how I teach all my coaching students. What we’re going to do for Monday nights is start doing that as well too. The first Tuesday is Beginner Self-Storage Investing 101.
On the second Tuesday will be find them, the third Tuesday will be fund them, and the last Tuesday will be run them. If there happens to be an extra Tuesday, then we will do a bonus session. I will have a guest speaker, probably one of my students come on and talk about one of their deals or something. We’ll have them come on. That’s going to be the new structure. Hopefully, you guys took note of that, and then if there’s something in particular that you want to learn, all you have to do is email us. Email questions at StacyRossetti.com.
After every Monday night session, everybody that signs up gets an email with a feedback survey. If you could fill that out and give us a couple of ideas of what you want to learn, we could implement those into our calendar because we’re trying to get a little bit more structured instead of me coming on and doing whatever. Stay tuned for that.
The door to StorageNerds is open. You guys are all on my list. Everybody should have gotten an email letting you know that the doors are open. Also, a text message. You’ll get either an email or a text message. Every couple of days, you’ll get this because the doors are open. I only open the doors in January, May, and September, and I only take twenty students during that time. The goal of those twenty students is to take you from stage 1 to stage 2.
Stage one is finding a facility, earning how to do deal analysis, and getting it under contract. Stage two is onboarding the facility. Within the next six months, if you join the coaching program, you should be able to get a facility under contract, close it, and own it. That’s the goal. If that’s your goal to own a storage facility, I’m going to highly recommend that you go to StorageNerds.com, fill out the application, and set an appointment with me to talk.
Getting Started
This is one of the first things that everybody should know about self-storage investing. In order to get started in self-storage investing, and this is about any property but commercial real estate, is it’s expensive. It’s expensive to buy storage facilities. In commercial real estate, there’s no money down, close in ten days, fast cash close, or anything like that.
Commercial real estate nowadays is expensive. There are no properties these days that you can close in under ten days or through fast cash. Click To TweetCommercial real estate is expensive. That’s why I have find them, fund them, and run them. The three most important parts of commercial real estate are finding the deal and knowing whether or not this deal is a good deal. For a lot of people, that’s their big thing, “I don’t know if it’s a good deal or not.” That means that you need to learn commercial deal analysis.
Raise Funds
The second step is the funding part. I’m going to tell you that the funding part is probably one of the most important parts because commercial real estate is expensive. I was talking to a student. They want to buy their fourth facility. They bought three and want to buy their fourth one. They used their own money for the first three or got them owner financed. Getting something owner financed is a great way, but even with owner-financing, you still need money to put down. Nobody’s going to 100% owner-finance something. The student that I talked to had this like, “Where am I going to get the money? I’m all out of my own money.”
If you want to leverage or want to become like Stacy and own thirteen different storage facilities, you have to learn how to leverage other people’s money. You have to learn how to raise money. This is one of the most important parts of commercial real estate. I want you to know that if you go through the application process and say, “I don’t have any money right now,” then it’s going to be hard for you to buy a storage facility. If you’re reading and you’re like, “I want to get in the storage but I got no money,” then the first thing that you should be doing is assessing.
You’re assessing yourself, “Why do I not have any money right now? Is it because I am spending too much money, I’m not saving money, or I’m not good with my money?” You can also ask yourself like, “I don’t have the money that I need right now to buy storage. What that means is there are two things. Number one, I either have to learn how to wholesale self-storage or I need to find somebody that has money and they’ll give it to me.” That’s raising money in order to do commercial property.
The truth is that commercial property is expensive. Gone are the days when you can buy a property for $100,000 or $200,000 unless you want twenty units. Even at twenty units, I’m not even seeing at $100,000. Twenty units are $150,000 now a lot of times. You have to know that commercial real estate and good deals are expensive. If you don’t have money to get started or buy storage, there are two things that you need to do. You need to learn how to raise money. You need wholesale so that you can make money. You need to be that middle person between the buyer and the seller. You find a facility, put it under contract, sell it to somebody else, and you make that cut in the middle, or you need to raise money.
As you go through the application process, essentially people that don’t have money are going to have a hard time doing this. I say get your credit and savings in order and get out and start finding people that will work with you. The truth is, everybody wants to buy storage facilities now. If you know somebody that has money, you should go to them and say, “I want to buy a storage facility. I want to own storage, but I don’t have enough cash to do that. Would you be interested in partnering with me?” You could be the money person and I’ll be the asset manager, and then we can split the deal. I’ll split the deal 80/20 and I’ll only get 20% or 75/25, and I’ll only get this much money.
The truth is in situations like that, you use it as a learning lesson. That way, you can buy storage. I hope you apply to StorageNerds and take to heart that we got to learn how to raise money. In my job, we have to find them, fund them, and run them. In our company, I am the funding part. I teach people how I’m investing in self-storage. I’m a coach and a teacher, but I’m the pitch person. I’m pitching. All I’m doing is pitching to investors all the time. The reason I did this is because when I started in real estate in 2011, luckily I had a coach that told me, “You have to learn how to raise money.”
What happened was I hired a consultant. This is the truth. For the first five years, I rehabbed homes. I was doing well. I had done, in one year, fourteen rehabs or something. I was doing pretty good, but I wanted to take it to the next level. I hired a coach. He sat me down. It’s our first session, and he’s like, “Stacy, tell me exactly what you do.” I was like, “I’m a flipper. I flip homes.” He was like, “No, you’re not a flipper.” I was like, “I renovate homes. I do residential redevelopment.”
He was like, “No, you don’t do residential redevelopment.” I was like, “I’m a contractor.” He was like, “No, you’re not a contractor, Stacy.” I was like, “Fine. Tell me. What am I? I don’t know what I am.” He was like, “If I tell you this, Stacy, you have to take this to heart. You have to implement and execute what I tell you. If I tell you what you are and what your job is, will you implement this and execute this?” I was like, “Tell me. Yes, I’ll do it.” He was like, “You are a fundraiser. That’s it. Your job is to raise money. The goals you had written right here, all these goals, if you want to take it to the next level, then you have to realize that you are a fundraiser. If you don’t do that, then you are never going to achieve the goals that you want.”
When he told me that, I was like, “He’s right.” I started going back and started everything that I did. You guys all know because you all follow me. Everything that I’ve done is all about raising money. Years ago, I had no idea that I was going to get into self-storage. We did 100 homes in 5 years and raised enough money to do that. I got into storage, and I had no idea I was going to get into storage. The last few years that we’ve been doing this, I pitch and pitch. I talk to at least 3 to 5 investors every day. It takes time. My very first pitch was to my neighbor.
I used to live on 10 acres and was walking my dog. I don’t live there anymore, but we had two trails. It was the short trail and the long trail. The short trail was around our property. The long trail went into our neighbor’s property. The way it was, there were three 10-acre lots. I had one neighbor over here and one neighbor over here. We all befriended each other and became family and stuff. We were walking between each other’s properties and stuff.
I was walking over on my neighbor’s property, and he was out working the land and doing his thing or whatever. I walked over. When I came back from the coaching session, I came back from learning how to raise money and do stuff like this. I was like, “I just came back from this coaching session. Basically, I’m learning how to raise money so I can go out and do more flips and stuff.”
He was like, “That’s interesting. Tell me more about it.” I started going off and telling him about it and everything I learned. He was like, “I’m interested in that. I’d be interested and maybe working together with you.” I was talking about what I was doing and stuff. That was my very first pitch. He’s like, “Why don’t we sit down and re-discuss it?” I came back and did a little presentation on my computer. I sat down and went over everything. He was so nice and he listened to me.
He has been lending with me ever since. He started out with $200,000 and now gives me $2 million. Over the years, he’s made $1 million off of me. He started out with the rehabs and moved over to the storage facilities. That’s from my neighbor whom I was walking my dogs and talking to them about it. I can go out and talk to people about what I’m doing, especially storage because everybody wants to get into it. If you’re in real estate, you want to get into storage. What I do and what you should be doing is using that to your advantage.
If you are the person here and you’re like, “I want to get into storage. I either have money and I can go out and do it on my own because I’ve got money, or I don’t have the money and I’ll either go to wholesale or find somebody that has money.” No matter what, you should always be talking about storage because everybody wants to get into storage somehow right now. I’m very blessed to be in this industry and have already been in this industry for years. There are people that have been doing it for a while and are doing way better than I am.
I want you guys to use this to your advantage. When you’re talking to anybody, it’s like, “I’m looking into storage. I’m learning how to find deals. I’m learning how to fund them. I’m learning how to run and manage storage. This is my goal for the year.” Start telling people that and being confident. “This is what I’m going to do. I’m going to buy a storage facility this year. I’m in the process right now learning how to do it.” The more people that you tell that to, you will easily be able to find people that have money. It doesn’t matter how much, but you talk and say, “Would you be interested in partnering and doing something with me?”
I’m going to tell you, a lot of people want to get in storage now. Obviously, you guys are here, so you guys are the same way. That’s my two cents on find them, fund them, and run them. Our schedule is set up now this way. It’s going to be Self-Storage 101, the first Monday of every month. Find them, fund them, and run them is in the next couple of weeks. If there happens to be a fifth week, we will have a guest speaker. One of my students will come on and talk. In the meantime, if you are interested, apply for the storage coaching program, I have two weeks to talk to you.
I’ll close the doors again and help those people find some facilities. My goal for this year is to help 25 people buy a storage facility. It’s a big goal, but I want people to be successful at this. That’s why the coaching program is important. That’s Self-Storage 101.
Finding Deals Virtually
I wanted to get into real quick, something that you can do to find them, fund them, and run them to give you a quick overview of how this all works. I’m going to share my virtual assistant step-by-step process on how we find deals. Remember, I’m the fund them part. The run them part is my husband. He manages all of our facilities and the whole team that does everything for all of the facilities.
In the find them part, I manage my virtual assistants, but essentially, my virtual assistants are the ones that find the facilities. If I can teach people how to find facilities, then I could teach a virtual assistant to do that. Why not hire ten virtual assistants and have them call all around the country and see if they can find storage facilities? That was my thought process. We help our students to find deals. We found a deal for a student, and he put it under contract.
It’s in Texas on the Arkansas side. That’s what we do. We help our students find deals. I don’t even do the find them part. All my virtual assistants do that. I do the funding part and my husband does the running part. You guys now know how our company and everything is set up. With my virtual assistants, what I did is I asked them, “Every single one of you, I want you to make me your ten-step process. I want you to write every single step that you do down in order to find a deal.” They all did this. We have one virtual assistant. Her name is Kim, and she’s the admin of all of the other virtual assistants.
She does skip tracing and stuff. Eventually, one day, she’ll be a guest speaker, and I’ll have her come and talk about what she does because she does skip tracing and stuff. She went through everybody’s processes and compiled them and made them into one big process. I’m going to show that to you, and then you guys can at least get an idea of what the process is. We may not go through all of it but at least it will give you an idea.
This is what they put together. There are a ridiculous amount of ways to find storage facilities and purchase them. What we do internally is build the list ourselves. You guys that have been following me all know that we go directly to the owner. I do not look on LoopNet, MLS, or anything like that for storage. We only go to the owners directly.
The reason why is because you get a way better deal if you do that. In every storage facility that I’ve ever closed on, the owner was not thinking about selling, and because of that, you build this trust and relationship, and then they’re willing to do more things for you and stuff. For one instance, we closed on a facility in Florida. The owner was not thinking about selling. We called him up, and he was like, “I’m taking the offer.” We put the offer in, went over there, met him, and started getting to know him. He’s a super nice guy. We talked to him quite often.
We got a very good close relationship. He’s like, “There’s a piece of land on the back end. I don’t need that. Why don’t I throw that in for you?” I was like, “I’ll take it.” He was like, “We’ll throw that in.” He threw half an acre of land in on the property. He’s like, “I’ll throw that in for you.” You are not going to get that when you talk to a realtor. They’re not going to come in and throw stuff in for you to close the deal.
Many times on many of the deals that I’ve closed and for students as well too, the owners are so friendly. You build a relationship with them, they work with you, and they want to help you and stuff. That’s the stuff that I do. That is why I going directly to the owners. When I say I go directly to the owner, that means you have to build your own list. You could buy a list if you wanted to, but honestly, we’ve bought the list before, and it’s not as good because there are so many changes and stuff going on.
Remember, I’ve been over this several times. We use Crexi as well on the backend to look up comps and the owner’s information. If you do not have access to Crexi, you are missing out on everything. Crexi has an investor site. You get the information of every owner of every property in the United States. You get all their owner’s information and everything. It’s like, “Here are storage facilities in Pocatello. There are four here. Right here, there’s this $600,000 and a $258,000 one.” These are all storage. Let’s click on this $600,000 one.
You could scroll down here. This is the storage facility here. Storage facilities are long, skinny buildings. In primary markets, they may be like buildings, but typically everywhere else, they look like this. You can see the history. Here’s the ownership. Here’s this one right here, Michael and Tony. They both own this together. You could click on it, and it gives you their information and their phone number. Sometimes it even gives their email addresses. See what all these email addresses you have right here. If you’re not using Crexi, you are missing out. If you want to use Crexi, I highly recommend that you get a demo from Grant. Grant is the person.
He will do a demo for you and show you how. This is only one part of Crexi, but I want to show you that we are all up on Crexi now with storage facilities, and you can always look at all the other stuff as well too. That way, you can get the owner’s information, call them, and see if they want to sell. You’re building the list not only through Crexi, but you can also get onto Google Maps. This is how all my virtual assistants do it as well too. They’re like, “I’m interested in buying a storage in Crawford.”
You could also pull it up, call all these people here, and talk to them. You could look all these up. You could even look their phone numbers up in Crexi. What it says right here is, “We are searching your target location using Google Maps and virtual driving.” This is what my VAs are doing. Add to that, getting into Crexi and getting the owner’s information. This is it. They need to get the contact information, the name, the phone number, the email, and the website. We do that using Crexi now. We’ve tried all different kinds of ways, and Crexi is the way to go.
The one thing I love about Crexi, too, is that you have access to every property in the United States and all their information. It’s only $100 a month. How powerful is that? For $100 a month, you have access to all this data. I highly recommend it. Those are the two ways I’m going to go over now, Crexi and then Google Maps virtual driving and then building your list.
We use Pipedrive to build our list. You do not have to use Pipedrive, but you can if you want to. I think it’s $50 a month or something. Pipedrive is a sales management software where you can keep track of sales and stuff. You can win and lose sales and keep track of it. You can keep track of all your leads. For us, because we’re putting in 5 to 10 offers a week or even more, I sent fifteen offers in.
I have one VA that, over the course of two months, put fifteen offers in. That is a lot of offers. We manage that through Pipedrive. You can have a spreadsheet and manager leads. The key to leads is follow-up. Our VAs are calling probably 500 facilities a month. We are calling them again over the course of the next three months. What we do after that is switch the VA out, put another VA in, and then they try.
This is a summary report of one of my VAs and what they did. I want you guys to get an idea. This is Christian. Finding a facility is not easy. You have to put a lot of work. It takes implementation and execution. My word for 2023 is execution. If you want to buy a storage facility, you have to grind. There’s a lot of competition. Everybody wants to get in storage. It’s going to take work and effort.
He started in May of 2022 to December 2022. He’s gotten very good. He started out a little rough, and we trained him. It takes a little while to train people and do it. You could see he did 1,231 leads from May to December and made 3,400 calls. Think about that. That’s triple the amount of half a quarter of the leads. 25% to 30% of the calls that you make are going to become leads.
You can see that’s now 3,442 from 1,231. How many hot deals do we get? We got hot leads. These are the ones that are like, “I’ll take an offer.” You can see that we have 34 out of 3,400 calls. Only 34 wanted an offer. Out of those 34, only 20 gave us all the information that we need in order to send over an offer. You need so much information in order to know whether or not it’s a good deal. Out of that, we got one under contract. I want to visually give you an idea of how much work it takes in order to find a deal. It takes a lot of work. What do you guys think about that?
I try to get this very clear to all my students that until you get a facility under contract, it takes a lot of work and effort. When you get it under contract, it takes a lot of work and effort to close it. After you close it, it takes a lot of work and effort to close and manage it. After about six months of owning a facility, then you’re like, “It’s the easy peasy, lemon squeezy.” Getting to that point is a lot of work and effort.
Getting a self-storage facility under contract and closing it takes a lot of work and effort. Click To TweetWhat’s the word? What did I say? Are you going to do that? What are your goals? How many calls are you going to make? How many leads are you going to find? How many offers are you going to put in? That’s the goal. That’s building the list, getting the information, and cold calling. We talked about that. Now you got a call and talked to them. Ask them if they’re interested in getting an offer. You never, ever want to ask anybody if they want to sell you. Ask them if they’re interested in getting an offer
You guys all know about my deal analyzer. Hopefully, you guys purchased it when I mailed it out. With the deal analyzer, what we’re doing is we’re sending out an offer letter that has four different offers in it. They’re only expecting 1 offer but we’re sending 4 different offers. Once they get those four offers, they’re going to either be or whatever, or they’re going to be like, “I need to start thinking about this. How much money am I going to make? Should I do something this?”
Everybody wants offers. Getting it from offer to under contract is the hard part because you have to get the number that everybody’s happy with. That’s the skill. That’s the hard part. Even if you’re putting offers in, like Christian here, he’s getting good at putting in offers, and running deal analysis. For him, he’s going to do very well. It’s going to take you time and effort to do this. Give yourself the patience to learn how to do this. At my very first, I only bought one storage facility in my first year and one storage facility in my second year. In my third year, I bought three. You’ve got to give yourself time to learn and execute. I always tell everybody, “Slow and steady wins the race.”
Cold Calling
Now we’re cold calling and talking to them. Maybe next time, I’ll talk about the script. I’ll do scripts for cold calling, and we’ll get into cold calling. What do you say when you talk to the owners? What questions do you ask? What do you need to know when you’re talking to the owners? Over the course of owning all these VAs, we have fine-tuned our scripts. They’re so good. I thought my students are using them.
I’m speaking at the ISS, the International Self-Storage Association. Their conference is in Vegas in April. I’ll be teaching there. Hopefully, you guys come meet me in person, that would be awesome. The session is going to be about how to get owners to accept your offer. It’s the scripts that we’re using and fine-tuned. It’s how you get the owner to listen to you, not only on the sale side, for them to sell to you not on the phone on the first step, which is getting them to listen to you to say, “Yes, I’ll take an offer. Yes, I’ll give you all my information,” but also on the, “Yes, I’ll talk to you about this offer that you’re giving me.”
There are these scripts that we have. I call them the Magic Scripts. We have the Magic Letter and the Magic Scripts. Only my students get access to those. I put the magic letter and the scripts into the course as well too. I can’t remember if we put them into the course. If you buy the course, you’ll have access to the Magic Scripts, or if you join the coaching program, you’ll have access to the scripts.
Cold calling is getting the owner to say they want an offer. We start compiling the Google Drive folder. This will be a very good find them session as well too. It’s one whole session on what we put in the drive folder. Everything that you need in order to make a decision on whether or not this deal is good goes into this folder. I won’t go in deep into that now. Essentially, all the information that you need in order to run a deal analysis is going to go into that folder. Also, we use Regrid.
How are the boundaries? What does the competition look like? You have to do a competitive analysis. What do the demographics of the area look like? All the things that you need are all right here. What am I saying right here? County information, competition, deal analyzer, executive summary, video summary, maps, street view of the property, and radius. All this stuff here, you’ll funnel it into the Google Drive folder. Everything that’s in that folder is what you would need in order to make a decision on whether or not it’s a good deal. It’s everything that a lender needs as well, too, outside of tax returns, P&L, balance sheet, and stuff like that.
Moving Data To Google Drive
It’s everything that you need. Also, if you were going to a wholesale deal, it will be everything that the buyer for the wholesale deal needs as well too. The next step is putting everything into the Google Drive report and getting all the necessary information. You got to analyze the deal. Whatever deal analyzer that you use, you use any deal. It doesn’t have to be mine, but you have to use a deal analyzer that can run a commercial analysis for storage facilities. That’s what you need.
You’re going to start looking at what’s the vacancy, what’s the unit mix, what’s the square footage, what’s the purchase price. What is the competition look like? Do the competitive analysis. What are the unit mixes and the price per square foot as is? What can you take it at? What’s the value? Can you take it from $0.50 to $0.65 or $0.32 to $0.70 or whatever it is? You need to be able to show that and run numbers on that. That’s what the deal analyzer is. The deal analyzer will show you the complete visual outlook of the property from now and also into the future. That’s what the deal analyzer is for.
Reviewing Deals
You review the deal. You look at the deal and say, “Is this deal good or not?” This is what they do. They reveal the deal. We look at the deal and say, “This is a good deal. Should we put an offer on this? What should the offer be?” This is where you’re making the offer. When we make our offer, we send it over. This is something I’m going to talk about at ISS as well too. We send over what you give an owner when you’re making an offer. Calling up and saying, “I’ll give you $700,000,” is not the way to make an offer or emailing your offer and then say, “I’ll pay $700,000,” or whatever.
You want to have your offer letter plus you want to have four different ways that you can on your offer. You want to have something that shows the owner why you come up with this number. How did you come up with this? You also want to have some credit credibility to them. We send over something that’s like, “This is Stacy Rossetti, and this is all the stuff that she’s done. Take a look at her and see what she’s about. Take a look at the numbers and how we ran the numbers right here. This is our offer.” That’s our whole set. It’s not like sending over text messages or emails or whatever because your job is to convince the owner to sell it to you.
That’s your job. That’s hard. The more credible you are and the more you have it together, the more you seem you know what you’re doing, and the more likely the owner’s going to want to talk to you. When we send over the offer, we always try to get them to meet me on Zoom. If you’re like, “Here’s our offer. Stacy says let’s meet on Zoom and discuss it. If you don’t want to meet on Zoom, let me know so we could get you on Stacy’s calendar and she could give you a call.” We talk and call. They always email over and also make sure that the owner gets the offer.
Getting Facilities Under Contract
It’s happened before where you send over an offer and never hear anything back. You’re like, “They ghosted me.” The truth is they never got the offers. They got lost in all their emails or something. That’s what that is. Finally, you get it under contract. Once you get it under contract, then the fund starts. You move on to the onboarding, and we’ll go over the onboarding process in the running portion. We’ll go over all the steps that you do that during the onboarding, but you want to get it under contract. That means you got to get the contract done, and it’s going back and forth. Sometimes it’s easy and gets done immediately, and sometimes, it goes back and forth.
The one that we did in Arkansas took a month to close because they got their attorney involved. You know how attorneys are. They get in there, and it was a 2-page contract, and now it’s a 20-page contract. That one took forever. We have another one that we got under contract in Utah. I said, “Can we send this over and DocuSign it?” He said, “Sure.” We sent it in DocuSign and signed it, and it was done in a day, so that’s it. That’s the whole process as well. That’s the process that the VAs go through. That’s the finding them all the way up to the funding them.
I talked a little bit about the funding them. I told you some of my stories on how we do stuff. The running part, we’ll talk about that next time. I could either do onboarding or I could do whatever you guys want. If you got suggestions, we could do that as well, too, on the running part. In a nutshell, that’s Self-Storage Investing 101, how to get started, and what you need to be doing in order to get started right now. Getting started now is obviously figuring out how you’re going to find them. Are you going to go to Google Maps? Are you going to go to Crexi or LoopNet? Are you going to build your own list? I’d love to hear how you are going to find your facilities knowing that you have to find a lot of them in order to put a lot of offers in so that you can beat the numbers game. It’s a numbers game.
Q&A Portion
I’m going to try to find some questions here. Kyle says, “I sent in an LOI for a facility in South Carolina that’s got 32 units and two 1,800-square-foot buildings. It’s on 1.5 acres. It’s in a tertiary market. It’s mismanaged and needs some work. They’re asking $275,000. How do I know if it’s a good deal?” This is the typical question that everybody asks me, and I get random emails about it all the time. It’s annoying. You’ll send me over a deal and say, “Is this a good deal?”
First of all, I’m not going to sit there and answer random people’s questions and stuff all the time. The truth is that you need to analyze that deal. You can’t look at a deal and know if it’s good. You need to know what the annual income is. You need to know what the vacancy rate is. You need to know what the total square footage is. Also, the total number of units, the purchase price, what the price per square foot is now, and what can you take it to.
What’s the value add plus those two? That’s just for storage. You have to analyze those two commercial warehouses differently from the storage because those are not the same. You can’t put those together because it will skew the price per square foot. You want to take those two warehouses out and analyze those separately. What’s the price per square foot? What’s the amount, the income that they’re making, and what can you take it to? You bring that together so that you can look at the whole deal by comparing the competitors and looking at all this stuff. You can decide if it’s a good deal. That is how you analyze something like that.
“Can your students hire your virtual assistants?” Yes. We have what’s called turnkey acquisitions. I only offer it to my students. Once you get into the coaching program, you can hire one of my students to find you a deal. “Are your VAs overseas?” Yes. They’re in the Philippines. Every single one of them is in the Philippines, and they are amazing. I have the best team of virtual assistants ever. They’re super loyal and do an amazing job. I’m very grateful to have them.
“Is there any resistance from the owners?” Yes. It’s America, and we’re calling in tertiary markets. There are people that are like, “They’ve never talked to foreign people before and stuff.” We call, and if it doesn’t work, somebody else comes in and calls, and eventually, one VA will click. “When do you do the full due diligence?” It depends from deal to deal, but we could do the basic stuff you saw to do the deal analysis, and then we’ll make an offer.
We’re making offers quickly. To sit there and get the P&L, the balance sheet, and all the stuff would take forever for the owners to do that. These six things are what we need right now. Once you give those to me, we run the numbers, then we’re relying on these numbers to be correct, and that’s what we’re going off. If the numbers don’t show that this is correct, then we’re going to have to change our offer.
“Are you going to be able to prove the numbers that you give to me?” That’s something that we would say to the owner in order to get the right to get the correct information. “Is franchising a good option for buying?” Does anybody have a franchise? I know there are franchise companies out there. There are two different things that you could do. One is to get a coach and do it yourself. The second one is to get a franchise, I guess. With the franchise, don’t you do it yourself and then have to pay all those fees? Why would you pay all those fees? I’m not quite understanding that, so explain the franchise to me. I’m not sure.
If you want to own a storage facility, I would learn it myself. Do it yourself. It’s as much work to do than to do it with a franchise. “What was the cap rate on the Utah purchase?” It’s 7% cap. We only buy 7% cap or higher. That’s it. That’s another reason why we put a lot of offers in. It’s because we only buy at 7% caps or higher.
Here’s one more question, “Can I make a list from Crexi?” Yes, you can make a list from Crexi. You can only do 100 names or something but you could pick an area and get the 100, and then you work that area and you can do another list and do another. You could do that. “What info from Radius do you put in the drive?” What we look up in Radius is, number one, permits and what’s being built new in the area. We can have lots of competition.
The permits are good from Radius. Also, the price per square foot and the total net capital. You want to be between 6 and 8. That’s what we look up in Radius. We look up the competition, but sometimes we usually use Crexi for competition now because Radius seems to be back old and stuff, not pulling it. “What are the six things you ask from the buyer?” I already told you that.
“When do you get their facility info?” If they want to move forward from our offer, then we say, “Now that we’re going to move forward, I’m going to get it under contract, and then you send me all the information so that I can take a look at everything.” Personally, for me, it’s getting the facility under contract. The truth is there’s a lot of you all out there that want to buy it. Everybody’s calling everybody right now. The faster you can be at getting something under contract, you can give yourself some due diligence to look at the numbers and stuff.
The faster you can get a self-storage facility under contract, the more time you can give yourself to do due diligence and review its numbers. Click To TweetIn some instances, we have one person that we offered $800,000, and he wanted $1.4 million. What we tell the owner is, “If you want that amount of money, then you need to give us your P&L, balance sheet, and tax returns so that we can look at those and see if what you’re making is worth that much money.” If it’s super way off of what we were offered, then we ask them to give the financial information as well too. We could maybe give a better offer based on their financial information. Overall, we’re all about building the list, making the calls, and then getting it under contract or so, making offers, and then getting it under contract.
That’s good for this episode. I appreciate you guys hanging into the end. I’m going to hop onto my pitch. It’s the Self-Storage Fund of America. If you want to be a passive investor and you’re like, “Stacy, this is way too much work. I want to invest my money in self-storage and I’ll let you do all the work,” then you go to StacyRossetti.com/fund.
I pitch right after this, and you could come to listen to my fund and maybe put some money into that as well too. I’m trying to raise money now on an amazing deal. It’s a $1.4 million storage facility in the prime Atlanta area market. It’s worth about $3.4 million. All I have to do is raise the rent. That’s it. I’m trying to raise the money for that. Hop on and listen to that as well too. I appreciate you guys hanging in, and I’ll see you guys next episode. Take care.
