Join us for a whirlwind of entrepreneurial brilliance as we spotlight Paul Beets, the mastermind behind six thriving storage facilities in just three years. Dive into the strategies, challenges, and triumphs that define Paul’s rapid ascent. This episode is packed with nuggets of wisdom from Paul’s journey – essential listening for anyone hungry for business success. From groundbreaking moments to scaling challenges, each anecdote is a lesson in perseverance and strategic vision. Ready to be inspired? Tune in for a high-energy ride through Pauls’ entrepreneurial odyssey. Whether you’re a student or a seasoned entrepreneur, there’s something in this episode for everyone.
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Student Showcase: Paul Beets From Zero To Six Facilities In Three Years
We’re going to have a special guest. Another one of my students is coming on, Paul. He’s going to go over his storage facilities. He’s been in the StorageNerds Coaching program for a while now. I asked him to come and do the Thanksgiving special. He’s going to go over his facilities and how he found them, fund them, and run them. I’m not sure if he’s going to do one or all, but he owns maybe 4 or 5 or 6. We’ll let him do that.
In the meantime, if you want to introduce yourself in the chat, let us know where you’re at, what you’re doing, and what you’re interested in in terms of investing in self-storage. If you have any questions on anything you want us to touch on, put that into the chat as well. Also, as Paul is going through his stuff, you could put all your questions in the chat, and he can answer them maybe as we go toward the end as well.
Brenda is saying that she’s packing and getting ready to go for her Thanksgiving. For everybody who’s trying to figure that out, for everybody who is hopping on, I appreciate it, and let’s get started. There’s a good group of us. I appreciate you. Typically, I teach you but every once in a while, I get the students to come on and do their thing as well.
Paul is here to talk about his facilities. I want to remind everybody too that it’s Black Friday week. There’s going to be a big Black Friday sale on my course and the Deal Analyzer. You should all be on the lookout for that. If you don’t own it, then you all should. The sale is only going to be this one week and that’s it. In fact, Paul signed up during Black Friday. How many years ago?
A few years ago.
It’s his anniversary now for StorageNerd. All right, you’re up, Paul.
My name is Paul Beets. We own six sell storage facilities. We’re going to go over two of them. These two are owned by our self-storage investment fund, Bigger Garage Capital. The first fund that we formed was Capital One. This one is now done, and we’re getting ready to form Capital Two. These are the facilities. I put it in the chat so you can easily click on it, but we’re working on getting occupancy up. A big part of occupancy is reviews.
If everybody could please go out to our two facilities in Muncie in Memphis and leave us a five-star review. You don’t have to say anything. In the review, just give us a five-star. That works. We’re going to talk a little bit about Memphis. Memphis is the most recent facility that we have purchased. We closed on it in late July or August. Stacy’s cadence is the way she structures her program, Found It, Fund It, and Run It.
I structured a little bit of this information about this location. The way we found this is it was on an unmarked facility, but we found it through broker relationships. I’m very fortunate I’ve got a partner who is a broker or whisperer. He knows every single broker from California, New York, Wisconsin, and Florida. They send us deals everywhere that they’re at, and he does the underwriting and a lot of the lending stuff.
When we found this, we negotiated to underwrite it using some of the templates and strategies of Stacy’s program. We determine this is something that’s a good fit for us. In this market, it’s a tough lending environment. Interest rates are a lot higher. They more than doubled since I’ve gotten started, but we were able to get a pretty good deal on what we believe is a good deal on this one. We brought on a lending broker. This is a broker that has relationships and contacts with hundreds of lenders nationwide. We narrowed it down to about 60 lenders, and we sent out a package from this broker about the facility, what we’re looking to do, who we are, and how many facilities we own.
We ended up going with Hope Credit Union. It always ends up being one of these small local credit unions. Most of our facilities are financed through Credit Unions. We got a 75% loan to cost. We didn’t get any extra CapEx money on this. It’s loan-to-value and what it appraised at. It was at 7% interest rate. That’s pretty high. The highest of all of our facilities, but we were able to negotiate a 30-year amortization.
What’s nice is a lot of commercial deals are 25 years. That makes the principal interest payment higher because it’s divided by 25 to 30. We were able to get 30 years on this, which is nice. A little bit about the facility, it has a 3,900-square-foot warehouse. That will be rented for about $2,000 a month. It has 266 units, and 35,000 net rentals square footage, and that includes parking. The way you calculate that is weird because you think about how many vehicles are parked out there.
It has an on-site billboard that is rented out for additional income. That’s nice as well. This is a breakdown of the actual facility. I pulled this off Google Maps. This is where the billboards are. This is part of the warehouse. The other part of the warehouse is right next to the storage and all of the storage. You can see that if we wanted to, we could probably expand this once we get it filled up. We have a huge parking.
The total parking is 60 units, which is what it ends up being. Maybe a little more, and the rest is regular self-storage, very mixed. You can use the 6x10s and 10x10s. That’s a little bit about the location. This is a picture of the facility. We got several pictures taken. We do this for our marketing purposes for stuff like this when we’re pitching to investors. The warehouse is out front. It used to be a furniture store, and there’s an office space. The first front piece is an office, and the back is some rooms. There’s another bathroom and kitchenette. There are two rooms back there where we’re using one for our IT closet.
It used to have an on-site manager who lives in this building. All of that is going to be rented out. You can see all the parking. This is an older picture, but even now, we have raw land way back on the fence. We could probably double. Put about 120 cars or vehicles on this property if we want to do that. A few more pictures of the site. We do have that automated gate. We integrate that through storage. It’s nice because when tenants get delinquent, we can lock them out.
This is a close-up of the warehouse. You can see there’s a door on one side, and it has a door on the inside. I don’t have any pictures of the interior of that building. The next facility was purchased in January. This is Muncie. That rounded out our total. When we formed the fund, it was a $2.5 million raise.
We raised a little over short of $1 million from that, so about $1.8 million. We use those funds to acquire both of these facilities. This is the first facility that went into it in Muncie, Indiana. This is an update to our investors that I shared, but this is a picture of the facility. It’s not as clear. I should pull down a better picture of this, but this has a building on site, what my partner calls a warehouse. A 2,400 square foot warehouse.
What it looks like is an old primary residence that’s been converted into office space. When you walk in, there’s an office, a hallway, then there’s stairs that go upstairs. There’s a bathroom upstairs, and it’s got a basement that’s not usable. When we bought the facility, that warehouse wasn’t rented at all. The previous owner didn’t even bother trying to rent it. We’re working to get that rented as well to add to the revenue for the property.
When we did our underwriting, we didn’t even underwrite to get any revenue from that warehouse. It was 171 units. This is the standard stuff that we add in there, but we acquired it in January, about 2.61 acres. There is room for expansion, but I don’t know if we could do another building. One of the things that we’re looking at doing, if you can see on the blurry diagram, there is some space on the end here where we’re talking about doing some parking.
That’s one of the good things when you have extra space that you might eventually use for expansion. Parking is a great way to monetize that empty space. We haven’t started parking anything out here, but we could expand this property if we wanted to. There is a new sign we put out in one of the buildings. You can see a picture of the front of the facility.
When you have extra space that you might eventually use for expansion, turning it into parking is a great way to monetize that empty space. Click To TweetWhen we purchased this, it had an automated gate, again integrated through storage exactly the same. You can see this is the warehouse that is half of it. When we bought this, it had a kiosk, and we don’t have kiosks in any of our facilities. We used it for a little while, but the service for using that kiosk is about $200 a month. What we found is tenants didn’t use the kiosk. We collected less money through the kiosk than we were paying for the kiosk.
We’ve got a nice website so people can go on, log into their account, and pay online. We don’t use the kiosk at all. Even though this little booth is here, we’ve taken down the rent sign, and it’s still there. We’ve just basically disabled it and canceled the contract for it. It’s not useful for our tenants. A few more pictures of the kiosk and the storage buildings. Here’s a good picture of the warehouse. As I said, I don’t know if it was a residence or if it was always an office building.
We did go in and do some renovations to it to make it more appealing. We thought maybe the reason why it wasn’t renting or the previous owner had trouble renting it was because it was dated. You can see some before and after pictures here where an old vanity and carpet. We put in a new vanity, some LVP, and a toilet. In this space, we put a little kitchenette so somebody had an office space. They have coffee, so I am working on getting that rented. Those are the two facilities that are in our portfolio for our self-storage investment fund. Are there any questions about those two facilities?
Paul, can you talk about management?
The management of the facilities uses storage, and maybe I’ll bring up storage. I’ll start with Memphis because I start with Memphis. When we took over, we had a huge exodus. A lot of Memphis was cash tenants, and we don’t do cash. We only do credit cards, or we can even do ACH, where you could pull it directly from your checking account.
When we started communicating with our tenants, a lot of them only wanted to do cash, so a lot of them left. We’re down to about 61 occupancy. It’s pretty thin. You can see 266 units. The other thing about this and this is when you’re looking for self-storage, you’re looking for a place that has been mismanaged. Even though it’s a nice facility, it was a mom-and-pop facility, it’s not been managed as efficiently as it could be managed.
It had a huge amount of past due and auctions that needed to be done. Basically, they were kicking the can. I think they did auctions once a year like a big hurray. We’ve got a process for managing our six facilities. We use Lockerfox, and it’s integrated into storage as well. When they get to a certain stage, we’ll get them auctioned off.
A lot of auctions are going on at this facility. We had five auctions, and they ended. We’re working to get that cleaned up. We’ve had some movements, which is good. Some of our marketing is working to get tenants brought in. For a while, we’re going to have quite a few move-outs because we’re doing auctions, and we still had some vacancies and people who weren’t paying. There were units that were full of stuff that we didn’t know whose it was. There are a lot of things that we need to do to get it cleaned up.
I almost got an empty building in Memphis. The blue ones are the ones that are occupied. The green ones are the ones that are available for rent and the gray ones are the ones that are not available for rent. We’re working toward eliminating the gray units, converting the reds to gray and green, and then eventually blue. That’s Memphis.
Let’s switch over, Muncie, and I’ll show you, Muncie. Muncie is a little bit better because we bought it in January. We worked through a lot of the tenant issues. We got everybody on the right path here. We’re about 73% occupancy. It’s been a little slow at Muncie. We’ve got a lot of competition in the market. We’re working on getting that brought up through marketing, just one move-in, one move-out but it’s been stable right around 73%.
We’ve got a whole building that is rented out. A few vacant and one gray one. You look at Memphis, and you can see all the gray units and all the red units. You can see that it’s not stabilized. We’ve only had it for a couple of months. You can see a big difference between that facility and this facility, where we’ve spent a lot of time stabilizing it.
We know what tenants are in what units and what’s going on with those units. We’re in pretty good shape with this one. Now we have one that’s test reserve. We need to get the green ones rented out. We’re in pretty good shape with Muncie. Depending on how bad it is, it can take 6 to 18 months to stabilize one of these.
What are you all doing for marketing to get them leased up?
We work with a marketing company. If anybody knows who Jim Ross is, he’s partnered with a company called Storage Management Solutions, Jess Casto. Our website directs to this SelfStorageUnitsNearby.com. This is our piece of their website, but because SEO is so critical for a single point. We benefit from a lot of the traffic. They’ve got facilities in all of these different states. It’s very similar to the way SpareFoot works.
SpareFoot is a marketing company that brings people to its website. Depending on what their location is, it will point them to a certain, whether you’ve registered and they charge you an arm and a leg. This is a very similar philosophy where instead of SpareFoot, it’s SelfStorageUnitsNearby.com. Not all of these different facilities are ours, but this one is ours. These are other storage operator owners who also work with the same company.
We benefit from driving that traffic to our facility. They do all the SEO, then we do the Google ads, but if our SEO is good. We should be able to perform well without Google ads and SpareFoot. I will say since we came on with this company, our SpareFoot leads have gone down dramatically, which means even though we’re paying more money than what we’ve paid in the past, the cost per tenant is much less because we’re not paying SpareFoot. Our SpareFoot bills have gone way down, which is nice to see.
If our SEO is good, we should perform well without Google ads. Click To TweetDid you decide to do this instead of Google ads, or are you also doing Google ads?
We are doing Google ads. It’s $10 a day. We get complaints all the time about how our ad budget isn’t high enough and how it’s limiting people’s seeing our facility. The truth is a lot of people find your facility through organic activity. One of the things that helps our search engine optimization and the reason why I ask for reviews is as your facility gets more reviews, that tells Google, “This is a real facility. They mean business. They’re doing business. People are interested in our business.” That raises us in the rankings. Reviews are even better than paying pay-per-click through Google or other marketing. That’s the organic optimization that we’re trying to go down.
This type of marketing is something that you can afford with what size of the facility?
What we’ve determined based on our footprint, when I look at our cost profiles, the way we manage our facilities is we have standard operating procedures and standard vendors that we work with. We have a camera vendor that is at all of our facilities. We use storage in all of our facilities. They have access control in all of our facilities. It’s a common cost profile or expense profile across all of our facilities.
When we look at our cost profile, what we’ve determined is that we need to have at least a hundred units. We’d like to have close to 15,000 square feet. That still depends on the market that they’re in because rates in certain markets will be lower, but the expenses for some of these services are about the same. In our cost profile, we are looking for facilities that are above 100 units. We probably won’t touch it in the future.
Now, we’re looking at 200, 300, or 400 facilities because if you’re looking to scale and grow your business, it’s much easier to run a 400-unit facility than run four 100-unit facilities. When you look at the facilities that we have, our Laporte location is probably the smallest because it was our first acquisition. When you look at all of our facilities as we acquired them, we’ve got one. We’re the only Michigan facility on the website. This was the second one that we acquired, and it’s a little bit larger than Laporte.
It’s like 119 units. When we go to Indiana, we’ve got Lawrence, which has a warehouse and storage. Even though it has 78 units, it has a warehouse. That warehouse brings in a huge amount of revenue. Between the warehouse and the storage, it performs very well. “Are you using an IG business account as well?” I’m not sure.
That’s Instagram. Talk about social media stuff is what they’re probably asking.
We don’t use Instagram. We were doing TikTok for a while, and we got a lot of views and followers, but it didn’t convert to leads. It didn’t convert to people moving in. There are some areas that we’d like to broaden out into. It’s one of those things where you only have so much staff, and you can only focus on certain things.
Probably, as we grow, we’ll branch out into some of these other areas, but social media marketing is not our strong suit. We do have a Facebook presence. I know we have an X account. It used to be Twitter, and I think we do have an Instagram account, but we don’t use those for marketing. We only use Google. We don’t use it for paid pay-per-click for leads. I heard you can do that, but we haven’t done that.
If you think about the main, if you’re going to rent a storage unit, where are you going to go? Are they going to go to Google Maps, Apple Maps, or maybe even just Google? That’s where you need to be. Nobody’s going to be like, “I need to go find a storage facility. Let me go to Instagram.”
It’s one of those things where if you’re on Instagram, you’re able to target certain people. As they’re scrolling through whatever, it might pop up an ad that might trigger them to, “I need to go store some stuff somewhere.” That’s right. It’s like, “I’ve decided I need to store something. Where should I store it?” They Google, “Storage near me,” and then that’s how we come up.
Through search engine searching, they’ve already decided that they need to store something. Whereas other types of marketing make more sense, like if you’re marketing Stacy’s course. Somebody may not know that they are thinking about investment or thinking about, “How I can find some passive investment,” Instagram will be a good way to target those people because maybe they have that profile. Stacy might have an Instagram pop-up and say, “I’m teaching self-storage.” That’s a good way for that type of business. It doesn’t fit well for self-storage.
Now you have Indiana, Michigan, and then Missouri. How do you put boots on the ground people?
That’s tough. We do have one person at each facility. The best way to find people, this is a nugget of wisdom for anybody trying. Even somebody who needs somebody to get a tree taken down. There’s an app called Taskrabbit. It’s only a phone app. I don’t think there’s a website, but on your phone, download the app, and I’ll put it in the TaskRabbit or maybe not.
It’s not available in all areas. As an example for our Muncie facility, when we wanted to find somebody at our Muncie facility. Muncie is a tertiary market. It’s outside of Indianapolis. We had to task grab. We only had Metro Indianapolis, but in Memphis, we were able to find somebody because we’re within the Memphis area.
The way we’ve always done it is when we need units cleaned out or doors repaired, we’ll basically hire them on the platform. They’ll go out there, perform the work, and then we get their phone number and their contact info. We start a dialogue with them and depending on what their situation is, if they’re on Taskrabbit and doing these odd jobs, they don’t have a main W-2 job. It’s almost like Uber drivers.
They’re out there doing odd jobs for people and getting paid to do it. Some of these folks we’ve been able to reach out and make a deal with them that they will come and work at our facility for a couple of hours 2 or 3 times a week. I would say 3 of our 5 facilities are our boots-on-the-ground people who came from TaskRabbit, and they’ve worked very nicely for that.
Eventually, we take them off Taskrabbit because it’s cheaper for us and for them, so we could pay them a lower hourly rate because Taskrabbit is not taking their cut. Usually, they are skilled folks who can do a lot of different things maintenance-wise. I’ll answer the first question, “How much money do you need to get started? Depending on where you’re looking in today’s market, with lending rates so expensive, you want to be able to find a seller-finance deal for low or no money down.
There are a lot of seller financing deals out there. We’ve heard in the mid-2000s people are picking up facilities for nothing down. Typically, depending on the size of the facility, they’re going to seller finance a deal or even a bank deal. They’re going to want 25% to 30% down. You might want lower reserves for maintenance or stabilization. If you’re buying a facility that’s $100,000, you’re going to need a $100,000 or $200,000 down payment. If you’re asking about our fund to invest in our fund, the minimum buy-in is $50,000. Stacy, I think yours is $25,000.
Mine was $25,000, but my offering is close now. Is your offering still open?
Our offerings are close, but we’re about to open up a new one.
That’s good.
Now, we’re doing the raising money, working with investors, and building a backlog of people who will be interested. Probably in February or March, we’re going to open one up.
Talk about your very first deal, which was the one in Laporte, all the way to the last one that you bought, like the history of funding your facilities because you went from very small ones to big ones.
For Laporte, when we first started, we formed an LLC, and we brought in friends and family. That’s okay for friends and family. When you’re doing this, you are offering security. If these people that you’re raising money from, if they’re not friends and family, you’ve got to be very careful not to run astray of the SEC, Security Exchange Commission, because you are offering a service or a security like a stock essentially.
In Laporte, we bought it for $450,000, and we built two more buildings. The bank finances 80% of the purchase and 80% of the build-out. I don’t remember how much we raised, but it was $100,000 or $200,000 that we raised for that facility. It’s a very low rise. We only have two investors, and it’s just four people in total. They’re all people that we know.
When we went to Carlton in Michigan, the Carlton facility, we raised quite a bit from friends and family. It was extending extended friends and family. Again, it was an LLC. We’ve got maybe 5 or 6 investors, and we bought it for $700,000. It needed about $100,000 or $200,000. We raised maybe $400,000 for that one. Moving on to the next one, it was Lawrence. Lawrence is much bigger. Lawrence in Indiana. Lawrence was more than $1 million. It was our first million-dollar purchase. It was $1.2 million. We did it with bank financing. There wasn’t a lot of CapEx. It was in pretty good shape. We probably raised maybe another $400,000 for that, and again, it’s an LLC. We did one more, which was Whiteland.
For this one right here, did you get bank financing?
We did.
It wasn’t mismanaged or anything? You’re just going to finance.
No, when you guys are out looking for deals, that’s one thing that I stress. There are deals out there if you’re looking in the right place. We do these quarterly updates for our investors. I don’t have any pictures of the warehouse. The warehouse was rented out to a doggy daycare. You can see these little suites that they built in the warehouse. They’ve got pictures. Anyway, when we bought this place, it was being marketed to industrial warehouse buyers.
It’s this huge big warehouse. It had two big overhead doors, and it was being used by a mail company, like a virtual mailbox company or shipping company. It was way below market, and what was happening was these industrial warehouse people were coming in. Number one, they were seeing that the current tenant was way below market, so they didn’t want to touch it for the price. They also saw this self-storage out back. It’s about 78 units, and they’re like, “What do I do that? I’m an industrial warehouse guy. I do triple net leases. I don’t want to deal with tenants. I don’t want to deal with self-storage. I don’t want to deal with any of that. I don’t even know what to do with it.”
A lot of them, if it’s not your niche, it’s trouble. We came in. Again, this was a broker relationship. My partner is the broker whisperer, and it’s in our home market. Our home market is in Indianapolis. What happened was our broker brought us in, and we were the first self-storage buyers to ever look at the deal and to ever walk through the deal. When we came in, we said oh, “It’s 100% occupied.” The rates were way below. He’d never raised rates the entire time he owned it.
For ten years, he’d never raised rates. They were way below market. It had an automated gate and it had this huge warehouse. When we were working with our broker, the broker was like, “We think that we can rent this for $14 per square foot.” If you multiply that out by 5,000. It’s 5,500 square feet, then divided by 12. That gives you what your revenue is going to be per month.
We make more money on this facility from the warehouse than we do from the storage. Because the warehouse is triple-net, and the utilities and stuff are almost nothing, we don’t pay any expenses other than taxes and insurance on this property. The warehouse pays for everything because it’s triple net. We pay a fractional amount of the insurance and taxes because it’s triple net. We do a fractional amount there.
There are deals out there like this. This is probably the best deal that we have because it doesn’t require any work. It’s kicking out the existing tenant and getting a new tenant, which our broker did for us. We raised the storage rates when we bought it, and we had maybe 10% vacate, and then it filled right back in. Now, we’re at about 90% occupancy, and it is probably our most passive investment.
Paul, I’m going to ask real fast before we move on. How did you find the tenant for this? We have a property. One of ours is like a conversion, and I’m like, “We need a tenant for one of our offices.” Did you put it on Crexi? How did you find them?
We work with commercial brokers.
Got it. That’s what we’re doing as well, but I was wondering if you had anything else you did.
We’re doing the same broker because it’s in the Indianapolis area. The reason why we bought Whiteland is there were a couple of issues where there were some environmental concerns. There was nothing proven, and people didn’t want to jump through the hoops to figure out what the environmental concerns were, and there is a gigantic warehouse that need a lot of work.
Self-storage people were coming in and saying, “I want the storage, and there’s a lot of parking, but I don’t want the warehouse.” There were warehouse people coming in saying, “I think we’ve put almost $300,000 into this warehouse. It needs a huge amount of work. There are environmental concerns, and there’s all this storage. I don’t know what to do with it.” We came and said, “We’re self-storage investors. We can make this warehouse work.”
The property alone, this facility, what we’ve been told is very likely if and when we sell this facility because the property is such a prime property in downtown Whiteland, Indiana, which is a tertiary market outside of Indianapolis. It’s likely that whoever buys it from us will buy it for more than what we paid for it. They’ll bulldoze the entire site and put up something new because the land alone is worth far more than what sits on it.
That’s crazy.
It’s in a great location. Once we get the warehouse rented out, we’ll probably make more money off of the warehouse than we’ll do office self-storage. We’re making about $15,000 gross per month off the storage and parking, but the warehouse will run out for far more than that.
Somebody was asking, why don’t you take cash?
All of our facilities are managed remotely. We don’t have a person sitting on-site at any of our facilities. The challenge is who’s going to take that cash? In Memphis, we kept the office manager, and we have boots on the ground that go out there and work on repairs, but we don’t have anybody who can collect cash. Even if we had somebody collecting cash, there’s always the issue of how much cash they collected, and they have to go make a deposit. When the deposit goes in, it doesn’t match how much they were supposed to collect, and if money goes missing.
It’s very difficult to collect cash. Even when we bought Muncie, it had the kiosk out there, and we had to have our boots on the ground go in, open up the kiosk, take the cash out, close the kiosk, and go deposit it. The kiosk did connect to the storEDGE, so we knew how much cash was collected, but it’s a hassle to transfer that physical money somewhere. We don’t do checks either, by the way.
We’ve got a couple of tenants that pay $50 a month to be able to pay us by check. Other than that, we don’t do checks either. Cash is a hassle, and we don’t have anybody on site to collect the cash. Even if we did, it’s how to get it into the bank and make sure that there are so many dollars when it was collected and so many dollars deposited. There’s a lot of overhead when trying to manage cash. Plus, most tenants will use a credit card, a debit card, or ACH from their checking account. I’d love to see storage do like PayPal or Venmo. I’d love for them to offer that, but now they don’t offer anything like that.
That’s a good idea. They should be able to do that. Why can’t they do that?
I suspect that they’ve made arrangements with merchant processors. Merchant processors make a lot of money and they don’t want to share that revenue or split that revenue. I would imagine Storable, the parent company that owns storEDGE, and a lot of other things. I would imagine that they’ve made some a deal with those merchant processors that they won’t ever offer PayPal. I’ve never made the request to storEDGE. I could put it in a request.
It’s a beta test for storEDGE. Let’s get him to put this word, and he knows the owner of the company.
We’ve had quite a few people or quite a few tenants ask us and they won’t take PayPal.
I wonder if there’s a way. Do you own your websites because we own our websites now?
Yes.
I wonder if there’s a way to embed PayPal as a button on our website.
Embed PayPal on your website. Click To TweetKeep in mind even if you accept it that way, it’s not integrated into storEDGE, then you have to have oversight and the linking. They paid through PayPal. Now we’ve got to update storEDGE. Probably, the storEDGE market uses cash. It’s disconnected from storEDGE, and the convenience and the ability to run reports out of storEDGE. This is what we collected in my book caping. It’s very seamless. In our business, the way we’re trying to run this, we’re trying to run it very lean and in an automated fashion as much as possible. That’s why we integrated with Storable.
All of our gate systems and camera systems are integrated. Everything is integrated and automated. On here, I can click on this unit, and I can rent it. I could get my dimension code and my gate code. I can move in without ever talking to my staff. It doesn’t happen all the time, but it happens 20% or 30% of the time. It’s basically a no-contact sale or no-contact new tenant. We try to get everybody on Autopay. We incentivize our tenants to be on Autopay. We try to get people even if they’re not on Autopay. We tried to get them to use the website to pay their bill. We penalize them if they call us to take their payment. It’s $5 to pay on the phone because we’re trying to get everybody to be self-sufficient and pay their bill.
That’s a good idea. You charge for people to pay on the phone then.
We do.
If you’re going to pay on the phone, it’s going to cost an extra $5. Other companies do it. Why can’t we do it?
This sidebar or go down the rabbit hole, we’re trying to book a travel for my mom on Spirit Airlines. If anybody’s ever called Spirit Airlines to talk to somebody, they don’t charge you, but they’re going to leave you on hold for 30 minutes. I was on hold at Spirit Airlines. My team, if we don’t answer it when it rings the first time, we’ll call you back almost immediately. In my mind, our service is so much better than a lot of those out there that make you sit on hold and wait. It costs money to have a staff that is answering the phone regularly. To reduce the need for that staff and to have them focused on other things to build our business, we charge for taking payments over the phone.
How do you incentivize people to do Autopay?
We offer them two ways to pay. They can either log into the website and it’s free. We’ll spend all the time in the world to help you get on the website. A lot of times, it’s, “I don’t want to go on the website. I don’t know about the website. I have a phone. I can’t do it,” then we say, “You can do Autopay.” We’ll put you on Autoplay. If you call in and say, “Put me on Autopay,” it’s zero dollars. That’s an incentive that you’re not going to have to pay to talk to us on the phone. When the Autopay runs, they don’t have to call and talk to us.
One final question before we end, what are your goals now for this next year because of the market, and how do you see it? Are you all going forward and buying some more deals? A lot of people are bowing out. What are you thinking about the next year or two?
I’m seeing a lot of deals. It’s one of those things, and Stacy, you know this. I’ve got the capital to buy, but I don’t have any deals, and now I don’t have any capital and there are deals coming out of the woodwork. We’re raising capital now. One of the reasons why my partner and I wanted to come on to this show is that we want to get our names out there. I’ve got lined up all throughout December shows that I’m going to be on.
We’re reaching out to folks. The stock market is okay now, but who knows in the New Year? We pay our investors over the life of their investment 15% annually. If you’ve got a self-directed IRA and you’re getting a measly 8%, you’re going to have to pay tax on it. If you invest in a Roth IRA, it’s tax-free 15% annually. It’s a great way to invest. We’re raising capital now. Once we get to certain critical commitments, we’re going to open up our fund probably in March.
We believe that there are a lot of deals out there now, Stacy. I know your acquisitions team has a lot of deals out there. We’ve found our own deals out there. There’s a lot of them out there. We’re seeing a lot of seller financing because owners are having trouble selling their facilities because bank financing is now probably closer to 8%. Our plan is if we can raise the capital from now until March, we’re going to open our fund. It’s going to be a $5 million fund, and we’re hoping to buy 3 to 6 facilities in that fund over the next, let’s say, eighteen months.
That sounds like my fund. I’ve raised $5 million, and we bought four facilities with that. It’s doable. It’s just a lot of work to raise money. You know that. You have to keep asking.
It’s a lot of work, but our investors, once they start getting those distributions and start to see the growth in their retirement accounts, our investors are very pleased. They wish that they would have found us earlier. We got to get the word out. There are a lot of great investment strategies up, but we believe self-storage is a great investment avenue, and we want to share that opportunity with as many people as possible.
Self-storage is a great investment avenue. Click To TweetIs your fund, is it where you’re going to have four facilities in one fund? We’re having an issue, but the thing that we’re having with our fund is that the first one that we bought is doing great. The second one, I bought was a severely mismanaged facility. That’s bringing down the income. We bought the last two in May, so we’re still building them up. That’s the one thing I noticed with having so many deals in one fund. Now you have to think about four facilities at the same time and getting those distributions out.
The way we structure this is we still do distributions. Each facility is owned by an LLC. Those LLCs are single-member LLCs and the fund is the owner. The way that works is those LLCs are individual facilities that pay dividends monthly up to the fund. As the fund collects all of these returns, then we pay that for whatever is available out of the fund. That’s why we do quarterly to our investors to keep them aware of what’s going on and what’s in the market.
That’s what we do too. One final thing is how has StorageNerds helped you to get where you are now.
I wouldn’t be here without StorageNerds. Stacy, you and I met. I want to say it was two years ago.
I think it’s been three years now. You did one year of finding then you started building up.
The whole strategy of how to find them, fund them, and run them. In our first facility, we found using the strategy that you teach. We found it that way. Funding them, we had small local banks, which is often what you guys recommend, then running them. A lot of the processes that my team uses are processes that your team uses, and that you teach your students.
We use StorEDGE. You guys taught a storEDGE. You showed us a lot of the automation that storEDGE can do. I know that’s the reason why you storEDGE. Eventually, I’d love to get to the point where we’re using call potential because there is a lot of additional automation, so now the call potential is part of Storable. There’s a lot of opportunity to work efficiently there.
We have Facility Owner Mastermind, which I love because everybody gets to tell each other what they’re doing. You get some good tips from the Facility Owner Mastermind as well.
I’ve tried to attend those as much as possible because it’s a different group. A lot of us are running our own facilities or having very similar, if not exactly the same issues. I do appreciate the separate Facility Owner Operator group that you host and continues to add value to my business.
We appreciate it. Thank you for hopping on and telling everybody your story. Everybody else, have a great Thanksgiving. Contact Paul and put some money in his fund. Hopefully, be aware of the Black Friday Sales that have been coming out, and I’ll see you in the next episode. All right, thank you, Paul. Take care.
