You are in a sweet treat that’s hard to beat in today’s conversation. In this episode of our Student Showcase, we’re joined by Chris Clear, a self-storage entrepreneur who has grown his storage business from just 15 units to a $5 million conversion in just four years. Chris will share his incredible story of how he achieved such rapid growth, including the challenges he faced along the way and the strategies he used to overcome them. You won’t want to miss this episode if you’re a self-storage owner or manager. Chris’s insights will be invaluable to anyone looking to grow their business and achieve their financial goals.
—
Watch the episode here
Listen to the podcast here
Student Showcase: How To Grow Your Storage Business From 15 Units To A $5m Conversion In Four Years With Chris Clear
I have a very special guest coming and talking to everybody.
Thank you for having me. I’ve been in self-storage for a few years now. What I thought I would do is give a breakdown of what I did or how I got started while I got started and then a little bit about each of the facilities we currently have. Once I’ve run through those, I want to talk a little bit about how we’re running them and everything and what we’re looking for in the future. The very first storage facility I ever saw in person was in roughly ’84 or ’85 or something like that.
To give you an idea, I’ve looked at these things for a long time. I was around 10 or 11 at the time. A guy built one local in my hometown. It was a storage building that was built out of cinder block. I remember when he first built it. I heard my parents and some of their friends talk about how that was the dumbest thing they had ever seen. They couldn’t imagine that anyone would buy or build something like that because, after all, who would rent a place to store something? They thought it was crazy.
What’s interesting is over time, it went from that’s the silliest thing I’ve ever seen too every time we drove past, they would comment about how there’s somebody else at that place. That happened time and time again to the point that my parents eventually even talked about possibly buying land and building a storage facility themselves. They never did that, but that stuck with me and I always had an interest in business. That was something that I always thought maybe I would look into doing at some point.
As I got older, I owned a few different businesses through the years and am still on a few separate ones. Primarily, my main income comes from working with banks myself and a few partners. We own a credit card processing company and we work with those banks. I talked with bankers. I talk with business owners all the time. I’m always curious about what they’re looking to invest in and what the banks will support. Real estate is a great investment, but most of my banks love self-storage.
Mismanaged properties are a great investment. Click To TweetThere’s a handful of other types of passive investing that they like, but it seems like self-storage is one that they were willing to get very aggressive on the loan rates terms. They were willing to be creative because most bankers view a storage facility as literally money in the bank. It’s a cash cow. It’s mailbox money. They use all the little phrases that we hear people talk about, but that’s how they feel about it.
My thinking was if bankers love storage facilities and they feel that such a safe investment, banks are conservative and they’re not willing to make a bad investment or a risky investment. If it’s good for them, it should be good for us. Since we started in the real estate world, we have owned some commercial properties. We’ve looked at multifamily and other things like that, but I always went back to self-storage as the safest investment for me.
Getting started, I want to focus on the local market mainly because I want to learn the industry. Being in the payment processing space, I have a lot of clients that own facilities and I’m always able to ask questions, but I focused on my local market instead of doing something out of state because, frankly, I wanted to know how everything worked from the beginning. If I could run it locally, although running it remotely, then I should be able to do that in other areas.
Stacy, back when I was starting up, I was always looking for those mismanaged properties because I felt like that was the greatest opportunity to find something that was affordable, but at the same time, if you can purchase it based off of what it’s currently performing at, there’s a large upside. It’s a great investment. I mentioned before working with banks.
Is there a true supply of storage facilities to find good deals? I was looking at Pipedrive because we use it to manage all of our leads. I have fifteen virtual assistants that do nothing but call owners. Right now, we have $98 million in offers out. Owners want offers right now. We were calling owners a couple of years ago and I couldn’t get anybody to want an offer. The good thing is it’s just when we were starting out with the turnkey acquisitions. It was difficult just because I was training everybody how to do what I do, but we couldn’t get a lot of owners to accept offers.
Now, it’s like if an owner answers the phone and you talk to them, you say, “Would you be interested in just getting an offer? I’ll send you an offer?” Every owner wants an offer. It’s super weird. You can tell in a downturn, that’s the thing. In the downturn, everybody gets out of real estate investing and then in the upturn, everybody wants to get in real estate investing. However, in the downturns, when everybody wants to sell, in a downturn is when there’s no money, but there’s so much opportunity. That is what’s happening right now.
We’re going into the downturn and more people are wanting to get offers. In my personal opinion, if you are interested in self-storage investing, you should be learning how to make offers and making offers now. I’m not saying the price of what the owner wants and what you want to buy it for equal each other because that’s always the hardest part of the whole game. However, if you’re not making offers, then you’re missing out. From turnkey acquisitions, we got three facilities under contract. I know for a fact that if you make a lot of offers, you will find somebody who will accept the offer that you want. I’m just putting that out there. Make offers, make offers.
Mismanaged properties were our focus. As I said, I’m already working with banks. Those mismanaged properties, in a lot of cases, helped with the bank relationship because the bank, in some cases, were worried about what was going to happen with those properties. When I say I’ve done it all on here, I’m literally talking about I’ve done everything from taking the phone calls to rent the units, cleaning out the units, taking pictures for auctions, and all that.
I did that because I wanted to know what it was like, what to do and what not to do specifically as I brought somebody on to help me so that I could hold them accountable because I knew what needed to be done. I’ve had a lot of people who have reached out to me and asked me to help them out a little bit with getting started. A lot of them don’t want to do the work, but if you don’t ever do it, it’s difficult to know how to do it and do it properly.
That’s a piece of advice I would absolutely give anyone. You need to be willing to take those phone calls and clean out those units. You need to be able to do those things and that way, you can train whoever you’re bringing on board. The next bullet point is I did bring someone on to help me. I have a gentleman who was renting space to park a trailer. He was constantly reaching out going, “There’s some trash over here,” or, “I saw a car that I didn’t recognize.”
Be willing to take phone calls and clean out units to train whoever you bring on board. Click To TweetLong story short, he started helping me run these properties and eventually, his wife came on board to help as well. They have been an absolute blessing to us because they are able to take the phone calls now as well as run the facilities, meet with renters, work out payment arrangements, or anything that may happen. They’ve been invaluable to me. One of the things we did as we grew from one facility to now is we started to use technology.
When I first bought the first facility, I ran this place with a spreadsheet and a virtual terminal for credit cards. That’s how I ran everything. I did that for a couple of years, but ultimately, that’s not something that’s sustainable long-term if you want to grow. We use Easy Storage Solutions. I do quite a bit with it, but my managers are in it daily. The first storage facility that we purchased is in the storage mall and this property looks pretty rough the picture.
This is what Google has and that’s what I was trying to pull from but some details on it. I found this property by looking at another business that was for sale. I saw a sign for a carwash and when I approached the owners of the carwash about possibly purchasing it, they asked me why I was interested. I mentioned carwashes and storage facilities are two businesses that I was always interested in purchasing. They said they have a storage facility for sale as well. The storage facility was a much better value and had a lot more upside to it.
That’s this property. When we purchased it, there was this L-shaped building. That L-shaped building has 44 units in it. The bottom building was an old shed starting to fall apart when we purchased the property in 2019. On the left-hand side, there’s an old rusted-looking thing. That’s an old shipping container. Also, there was a camper, but that camper wasn’t there when we purchased it.
We bought the property with the plan of building at least two different buildings that would give us quite a bit more storage space. Ultimately, we’re in the middle of doing that right now. We purchased it in 2019. As I said, it’s 44 units. Our purchase price was 275 and that 275 was supposed to be for all 44 units rented and paying. As a lot of us know, that’s not always the case. I was able to work with the owner to do some partial financing and basically, they gave me a sale price. That’s what we want.
I went back to them with a couple of options. One was that I would pay their asking price because the money made sense, but they would have to do owner financing so that I didn’t have to pay out of pocket the 20% that the bank wanted me to pay out or I could pay less and or my offer would be less and they could not do the owner financing. They chose owner financing and it worked out great for us because a few months later, they came to us and said basically, “We really would like you to pay this off.”
The terms of the financing were that it was the same rate as we were paying the bank, which was 3.75% on the five-year note for them. It was twenty years with the bank. They started coming up about every month asking us to pay it off and I told them that we would be willing to do it, but we had to have incentive. Thankfully, at some point, they were desperate enough that they were willing to knock about $15,000 off of that.
At the time we took over, we realized that the income was well below what we had been told it was. I was still paying for itself, but that was basically about all it was doing. We immediately started working on getting the shipping container out of there. That took quite a bit of time. It took a lot longer than I thought it would, mainly because I was trying to give it away. If I tried to sell it, I could have gotten rid of it much quicker, but I wanted it gone. We wanted it out of there because it blocked a major area for parking at the time.
We finally got that out of there. As I mentioned, we wanted to expand. We’re currently in that expansion process. We should have done this, frankly, in 2020, but each time we started looking at doing the build-out, we ended up buying another facility. The current construction that’s happening, we have two buildings that are being built. It’s a mix of 10 x 10s and 10 x 20s. We’re all going to bring in some portable storage units to fill in some gaps on places where we can’t build on a permanent foundation because there’s some sewer lines that run below the property.
The city’s going to let us put those portable buildings there mainly because they could be picked up and moved if we had to for some reason. Ultimately, that facility that we purchased for $275,000 and as I said, we have less in it because the owner needs to sell it or the money quickly. The current appraisal is $425,000. We have quite a bit of equity in it and then the construction itself on those 49 units with the portable units being purchased and everything, that’s all going to come in under $200,000.
We’re going to be all in less than $500,000 on this facility with the post-construction appraisal of $825,000. It’s been a blessing for us from the very beginning. One of the things that was the game changer for us with this property was the moment that we started raising rates to the market. We started renting more units. I know that might sound crazy, but it almost seems like the old owners because they never increased rates. People were leery of why their rates were so much down below the market rate.
The renters that initially were getting weren’t the best ones because they were looking for the cheapest unit. Once we started matching the street rate of the competitors, our closing percentage went up. We are the most expensive or if not the most expensive, we’re right there as one of the highest rent facilities in the area.
How much are you paying to have those units? How much does all that cost?
We’re going to have just under $200,000 in it. That’s everything from grading. We are installing some French drains because there was a little bit of a drainage issue. Where the shipping container is, there is a fence line that runs right there. There are hillsides that aren’t very steep, but water does flow down those into the facility. That $200,000 includes a French drain that’s going to run along the property lines.
In this area at the top, we’re going almost fence to fence with 10 x 20 units. We’re going down here where this old building was. We’re moving the building away from the fence line so that we can access units on both sides, but we’ll have a 20-foot-wide building there that will be a mix of 10x10s and 10x20s. We’re going to set everything up as 10x10s initially, with 5x10s on the ends of the building. We’re going to have movable walls, so in theory, we could do either two 10x10s or 10×20 if we wanted to.
We struggle to rent 10x15s, so we just selected not to have those at all. However, in this area and lower area, we’re going to put portable units there because the sewer line comes across and then comes down through the property and then exits the property. We couldn’t put a permanent foundation there, but they will allow us to go ahead and put those portable units. It’s going to work out well. I’m visual, but I’m very limited in what I’m good at. I’m really good with Excel, so this is a rough layout of what the property will look like. This is that 44 units. It’s already there. This is the 10×20 buildings and then this is the 10x10s that are in Buda.
We have a second facility. Talking about how we found properties, I was driving past this place. I shoot a lot of rifle competitions. I was on my way to shoot a local match that I had never been to before. I didn’t know this facility existed. I came around the curve and saw a guy putting up a sign on this building and said, “Storage facility for sale.” This is 7:30 on a Saturday morning. I slammed on the brakes. I asked the guy if he was the owner. He said he was. I said, “Here’s my card.” I took a picture of his sign. I said, “Don’t even put the sign-up. I own a facility. I’m looking to purchase more. Let me call you on Monday and see if we can work something out.”
He laughed and said, “Okay,” and then I went on my way. When I left the match that day and drove by, he did put the signs up, but he was really surprised when I called him on the following Monday morning. We talked for a bit. I went out looked at the facility with him that afternoon and put an offer in the next morning that he accepted. We negotiated back and forth a little bit but as I said, I saw it on a Saturday, I made an offer on Tuesday and we worked out the details that day.
It’s a small facility. We only paid $77,500 for it. The reason I was willing to buy the facility, though, the guy who owned it had run it as a facility for a number of years, but he started having leaks and additional problems with the facility. As people moved out, he started using it as a place to store his equipment for his construction company. He also owns some multifamily units. He would occasionally put some furniture and things like that in those units so it would be out of the way but available when he needed them.
The only reason he was selling it was that he was going to turn it over to his daughter, but as you guys know, COVID was a thing in 2020. His daughter is in hotel management, and she basically said, “I don’t have the time.” In turn, he decided to fully renovate the property and sell it. It does only have fifteen units and those units are a mix. Primarily, it’s 8×8 units with this little short building. There are three units in that building. There’s a triangular shape unit that’s 6 foot deep and 14 feet long but as I said, it’s a triangular shape and is an oddball. There’s a 9×14 and then an 8×8 that’s on the end.
We purchased it completely empty. I was able to get inside and make sure everything was good. There were no leaks and no issues whatsoever. Also, because it had been so long since he had operated as a facility, he had never bothered to do anything with Google. We purchased this facility in August and it took until March for me to get on Google Maps. In the meantime, this facility is only about 6 miles away from the first facility.
It’s because we were full at the first facility, anytime someone called looking for a unit at our first facility, we would recommend that they take a look at this one. In March, we had 3 or 4 of the units rented, but as said, we weren’t getting calls and the only way we were getting rentals was because I was sending people there who called our first facility. In March, we finally got on Google Maps and I filled the facility in eleven days.
It’s the power of Google. The minute it was on there, the calls came in. I think one day, while we were on spring break, I rented seven units in three days while we were on spring break. It was incredible the difference it made just being on Google. One of the things that you can see, I mentioned about having Bluetooth locks. There is a gate in this facility and then there’s a lower gate, but with only fifteen units, there’s not enough revenue to justify using management software or installing a gate with a keypad and opener and all that.
What we did is I found these Master Lock Bluetooth padlocks. We have started to use those at some of our facilities. The way these work is really cool. Master Lock has a website you can log into. They also have an app you can download on your phone. You’re able to add users who, after they download the app to their phone and use credentials that are created by the system when you add them, they’re able to go to the facility and there is this blue light in this little circle that’s in the middle, that whole black area around there is a button.
The way that it works is when someone goes up to the gate, they open the Master Lock app on their phone. They push this button on the lock and this whole outside area will light up. It’s something green. When the renter taps the lock that’s now in green on the screen on their phone, it sends a signal to the lock and the lock will unlock. Everything turns blue and you just pull down and you’re able to access the lock.
I’m making it sound like it’s difficult. It’s incredibly easy and it has been a blessing for us because this has allowed us to run this facility fully remotely and anytime we would take a phone call from a new renter, we would simply get their card information, all their personal information and then tell them to check their email and follow the instructions in the email. It’s a Master Lock Enterprise Bluetooth padlock. It’s been a blessing for us and we’ve used a few different places.
Master Lock Enterprise Bluetooth padlock is incredibly easy. It will allow us to run this facility remotely. Click To TweetWhat’s neat about this as well is because we’re running this facility remotely like we do all of ours, if someone doesn’t pay, we can log into the Master Lock Enterprise website or we can use the app on our phone and we can deactivate someone’s access or pause it so that that way we’re locking them out the gate. We still overlock them at the unit, but we can overlock them at the gate or lock them out at the gate. It gives us the ability to control everything. It’s no different than if we were using an integrated keypad like we do at most of our facilities.
We have a couple of questions about that. Everybody’s interested in these locks. Will you have a record of when and who accesses it? How does the smartphone thing work?
I will tell you, it’s not 100% because there have been times when I went there or my managers have been there and the system doesn’t record that we’ve been there, but for the most part, when we log into the Master Lock Enterprise website, we’re able to see everyone who has access and then we can see when they’ve accessed the facility. We can also see if someone has never downloaded the app or if they’ve never logged in because the credentials are only good for so long.
We have one renter who, the day that they moved in, her son came to do most of the moving for her. When he got there, it just so happened, it was just pure luck somebody else was at the facility, so he didn’t have to use the app. As a matter of fact, he didn’t even understand it because his mother didn’t explain it to him. He put everything in her unit and to this day, that woman has never been there. Nobody has ever been back inside the facility to that unit.
We know that because their credentials expired without ever being used. You can log into it. Before we finish up, just so I don’t take a chance on wrecking anything since I’ve dropped off previously, I’ll see if I can get logged in to show everyone what that looks like. Simply by putting someone’s name and email address in, you can email them the invite and it’s super easy to use.
Do you need a network router?
No. It’s Bluetooth. There’s an internal battery within the lock itself. It’s weatherproof. I’m sure at some point, it could stop working, but there’s no internet needed. There’s no power needed. It’s literally sitting there connecting two separate gates and it works beautifully. As I mentioned, the property is small, but it does cashflow a little over $1,000 per month. It’s not life-changing money, but it’s a decent car payment.
Also, the great thing is we paid $77,500. Outside of purchasing the Bluetooth locks, at the end of the building, there’s a telephone pole. We did ask the power company to install a desk to dawn light there to give some lighting inside the facility but outside of purchasing the Master Lock and, we do have some solar-powered sailor trail cameras like you use for hunting or security, we have a couple of those that we use. One here is facing one opening and one that’s facing another opening. That’s the only expense we’ve had at this facility. There’s been basically no CapEx.
Even with that being said, the current appraisal is over $165,000. It’s been a great purchase for us. At the end of 2020, we were in the process of looking at doing the build-out at our first facility when this place came along. In 2021, we started looking at doing a build-out at the first facility again, but COVID was still a thing. I don’t know if you guys will remember what everything looked like as far as the supply chain. It was starting to become an issue and frankly, we were staying full, but we still weren’t sure what to do.
Ultimately, instead of building out, I came across another facility for sale. This particular facility, I looked at this property and talked with the owner in 2020. They weren’t ready to sell, but I spoke with him in 2021 in March of that year. For whatever reason, I felt like that day, I needed to go see him. I went walking into this round office building. Back in the ’70s, I guess that was a popular thing. When I walked into the building, I went in to see if he would be interested in selling. I had a relationship with this guy.
As we were talking, I happened to look and there was a 4-foot sign that said, “For Sale by Owner,” that he had made up but hadn’t put it out yet. It was good timing on my part. It is what it is, but I ended up talking over the details. To make a very long story short, we put in an offer of $950,000, which they accepted. We did run into some hiccups along the way.
One of the hiccups was that they signed a contract with somebody else after we signed a contract stating that they would sell it to them for $1 million. I guess he was trying to get the extra $50,000 and I didn’t know anything about it until four days before we were supposed to close. We ended up not closing in at the time we initially thought we would. The other buyers ended up suing the owner and he had to pay about $70,000 to them.
Ultimately, we closed in August and the other thing that held that sale up was it was in bankruptcy. I didn’t know that at the time. It was never disclosed to us until we had to go to depositions over the owner trying to sell it to someone else. When we took over the facility in September, every single unit was full. They were all jammed full. I think we had something like 25 units with no locks but were crammed full to the point that you couldn’t open the doors.
The seller had no records of anything. He did have some rental agreements, but not rental agreements on every unit. We took four months of going through every unit that we didn’t have any information on. We went through the units looking for something that we could reach out to people and thankfully, we found quite a few of the renters who told us they didn’t even know they still had something there. They were told that their unit had been broken into and everything had been stolen. There were so many Shady things that had happened there.
A lot of people were happy to come and get their things. We had a few people that ended up continuing to rent. As you can see, physical occupancy by the end of the year was barely at 51%. The economic was at 42%. We were breaking even and that was about it. My managers did an amazing job of continuing to work with renters and everything. By March of the next year, we were at 83% physical and 78%.
Currently, we are at 94%. Economic is at 94%. To give you an idea of what we’ve been able to do with this property, on our first year, we were struggling to do anywhere from $7,000 to $8,000 to $9,000 a month in revenue. Depending on the circumstances, we’re currently averaging around $14,000 to $15,000 a month. We had a few people about to be auctioned who came through and made the payments. We were over $17,000 in revenue.
Through a series of rent increases and fixing broken and unavailable units, we’ve been able to take this all the way up. From 2020 to 2023, we’re going to see an increase in revenue of over $50,000 just in one year. As I said, it’s a combination of rent increases and tenant protection. At one point, we have eighteen units that weren’t even rentable just because of broken springs and broken doors. The last little point here, the recent appraisal, this facility is now appraised at over $2.5 million.
We’ve actually turned away a couple of offers that were a little over $2 million. This facility is only 9 miles away from our first facility and we’ve had several people who tried to rent at our first facility and when we didn’t have a space there, we were able to direct them over to this one. It’s been fantastic. Using Easy Storage Solutions, that’s what we’ve used. I know Stacy and a lot of owners have had great success with Storage.
Many owners using Easy Storage Solutions have had great success with storage. Click To TweetFrankly, at the time we were getting started, I had several people recommend Easy Storage Solutions and it’s worked well for us. We only use their software. We initially tried to use their call center, but it did not work well for us. I’m sure it’s probably better now than in the beginning. That’s been the case.
Our fourth facility sits in between the first one and the second one. We have four facilities that are in a straight line just off of the interstate. It’s 9 miles from the first one to the last one. It’s not a facility yet. We purchased it because there is a 12,000-square-foot warehouse with a few offices built into the back and a small office built into the front, but the rest of it is an open warehouse. We purchased it because we’re going to take this 12,000 square feet and we’re going make that into temperature-controlled storage.
There is this little house that was torn down years ago by the previous owners. This entire open area is all gravel. The payment is there. We are in the process of getting everything ordered right now to not only build out the inside but also do the exterior. On those two acres, we’re going to be able to convert the warehouse to almost 100 temperature-controlled units. We’re going to build a little over 150 drive-up units, which will blend your 5x10s to 10x10s, 10x15s, and 10x20s.
To stay under an acre of disturbed land, we’re going to not develop the whole thing mainly because if we go over one acre, the EPA will require us to put in a catch bond. Instead, we’re going to use some portable units there and then some of the areas where we can’t put a portable unit and we can’t, we’re not going to build. We’ll use that for boats, RVs, and camper parking. What’s cool is the revenue potential at this facility is amazing. As I said, the post-construction valuation currently sits a little over $5 million. We purchased this property for $575,000. We’re going to have about $500,000 in CapEx between the build-out and some other things that need to be done there.
I think we’ll come in under that, but as I told my banker, I’m shooting highs to make sure I’m covering all the bases. That’s where it sits currently. Depending on the weather and depending on how long it takes for everything to come in, we should have units available at this property to rent starting in March of next year. It’s been a whirlwind for the last four years, but we’ve had a lot of growth and been able to add these different facilities. That’s where we are at this point.
I have a couple of questions. What’s the difference between climate-controlled, temperature-controlled, and non-climate-controlled?
I don’t remember who recommended this some time ago, but they always said you should be very specific with what you say. For us, climate control has always been explained to me that you’re controlling not only the temperature but also the humidity. At this property, the third facility, that round of building, is an office building. We don’t rent those as offices. We rent those as climate-controlled storage units because we’ve got a heat pump set up. We’re not only controlling the temperature, but also we’re controlling the humidity and all of that.
We have this warehouse that has heat, but it doesn’t have air. It has a giant fan in this lower end and it has vents that open on one end. When you turn the fan on, it draws air through the vents. You can cool the building to an extent during the summer by moving air, but we’re not actually air conditioning it. When we talk about temperature control, we’re controlling the temperature but not the humidity and that’s the difference, as I understand it, between climate-controlled versus temperature-controlled.
I was going to ask you. For the one with the circle building, how does that look inside? How many units do you have in there?
There are ten offices around the exterior of the building and then there is a small reception area. I’m almost thinking of you going into a physician’s office or something and you have the little window with the receptionist. The old owner maintained an office in that little reception office. We’re in the process of going through our attorney right now, trying to get his possessions out. He hasn’t been there in over a year, but he refuses to come and get his things. We’re working through her attorney to get all of his possessions out.
There’s also a conference area inside of there. We’re going to take that conference area and turn it into four additional units. What’s neat is between the offices that are there right now, we generate almost $3,000 a month in revenue from that office building. Once we add in the other four units in the conference area as we build out those walls and things, we will increase that by almost another $1,100. It won’t be long before that office building is almost $5,000 in revenue a month to us between some read increases and some other things that we’re going to do. As I said, it’s under $2,000.
Was your 147 units or whatever that you had on including those office spaces?
Yes, it is.
I love facilities like that where it’s like, “I can add this. I can do this.” It’s outside the box to get income coming in.
Also, our thought on it and just being blunt, the building was built in 1977 and of those ten offices, some of them have carpet. We don’t have two that have the same carpet, but some have carpets. Some have linoleum. Some have fake wood and some are concrete. Some of the offices have sheetrock, while others have paneling. When I look at what I would need to invest into renovating that office building to make those offices rentable as offices, it’s an enormous amount of money for maybe an extra $500 a month in revenue versus taking the offices as they are and running them as climate-controlled storage.
That’s a great idea because nobody cares what their floor looks like in a storage facility.
They don’t, and from how we’ve looked at it, we haven’t had to invest anything into that building outside. The building has glass for the front. We had the rap signage put on the windows.
Yeah. That’s what I would do.
That’s what we’ve done there. Doing it this way, we haven’t had to invest anything outside of having one heat pump go down. We’ve had to do a little bit of work with a new heat pump and a few small things. All in all, we haven’t had to invest a lot of money into that building and it’s providing a nice return.
Invest more money into that building. And that building will provide a nice return. Click To TweetYou got that facility for a great price.
We did. At the time, it was it was priced appropriately. The reason that the other company that the guy, I guess signed the contract with, the reason they sued him was they had a signed contract from him, but they were actively advertising it. They had assigned an agreement from him for $1 million, but they were actively advertising it for $1.25. They had people showing interest and I guess that’s why they were able to do something there. It needed a lot of work and we’re still doing things.
I’m now waiting on the roofing company to get me the contract to sign to add a new roof to two different buildings that look pretty rough. In the picture, they look rough and they look rough in person. We’re investing money into it and I would not hesitate at all. If we were going to list that property now, I would absolutely list it for over $3 million because I think the value added is there.
You have a lot of great facilities and I love the progress. You started out with these little tiny facilities and now everyone gets bigger and bigger. That’s how it works.
To me, it makes sense from the standpoint that I wanted to learn about the industry and I wanted to figure it out. I needed something where I could learn how storage works, but buying a smaller facility not only made it affordable because we don’t have investors. This is myself and my wife. We financed everything, us and the banks. All the down payments, the CapEx and all that stuff is something that we’re paying out of pocket. I’m not taking on investors.
Buying a smaller and low-cost facility allowed me to find something that I could afford, but it also allowed me the opportunity to be able to take those calls and do the work. There’s no way I could take on all these different facilities at one time and still run my other companies because I couldn’t take all the calls and do all those things. With only 44 units in that first facility, I could manage that in between meetings with my clients or whatever.
It made sense to me and it’s worked out well for us. As you mentioned, we’ve got offers in right now on three different local facilities that I don’t know what’s going to happen to them. Frankly, the wholesalers are driving the prices up. One of these properties, in particular, has been under contract with three different wholesalers that still hasn’t closed because they’re getting it under contract and then they can’t seem to flip it because when they start the due diligence, they realize that there’s a lot of work that needs to be done.
Eventually, we may end up with 1 or 2 of these just because we know the market and we’re willing to do the work. Now that we run all of these remotely, I am starting to look outside the area because we have a system that seems to work pretty well for us. I think we can we can test it in the other markets. I joined the Storage Nerds a little over a year ago because we were all renting the facilities and everything, but I wanted to see what other people were doing and the best way to do it to talk with them. That’s why the Storage Nerds is a great fit for us.
As I said, I love the Facility Owner Mastermind. It was so good. It was like sharing ideas and what’s working or not. There are so many things that everybody’s doing that, it’s like, “I should try that.” I appreciate you guys all hanging in there. Chris is doing a great job. He’s the perfect example of starting small and building your way up. There is nothing wrong with doing that. Thank you, Chris, for coming on and hanging out with us.
Important Links
