EP 548 – Self-Storage & Real Estate Deals In Atlanta With Stacy Rossetti

NCS 548 | Investing In Storage Facilities

NCS 548 | Investing In Storage Facilities

 

There are so many different types of properties that you can invest on in the market these days, but the one kind you may not be looking at are storage facilities. Investing in storage facilities has so many upsides that it’s almost shocking that not too many people are getting in on it. Stacy Rossetti of the South Atlanta Real Estate Investors Association joins Scott Carson to chat about why storage facilities can be a big deal for you. Too often, storage facilities are left out of the equation when people consider investing in properties, but that shouldn’t be the case. Let Stacy show you why it is you should be looking at these kinds of properties, too.

Listen to the podcast here:

Self-Storage & Real Estate Deals In Atlanta With Stacy Rossetti

I am extremely excited to have a special guest. One of the things that we’d like to do here on the show is trying to focus on specific markets occasionally. We’re buying in a lot of different places across the country and invest in a lot of places and we’ve got an audience all across the country. It’s always nice to bring in a subject matter expert. Somebody who has boots on the ground and has been invested in a specific area for quite some time, I’m excited for our guest. She’s been an investor for many years. She’s gone from rehabs or rentals to commercial buildings and storage facilities. She’s also the owner of an amazing REIA group that I was lucky enough to speak at. I was blown away at how awesome the club was and what she does for her members. I’m honored to have Stacy Rossetti join us from Atlanta. Welcome, Stacy.

Thank you so much for having me. I’m honored to be on the show.

We’re glad to have you. I was honored to come out there to the South Atlanta REIA and speak there. I was blown away at the amazing stuff that you’re covering. As we come out from the end of the year to the beginning of the year, people want to do something new. They want to start becoming an investor. They want to quit reading or watching Flip This House or Flip or Flop and take action. Why don’t you share a little bit about how you’ve grown your club in such an amazing event and talk about how you set yourself apart from others?

I became an investor many years ago. I live in the South Atlanta area. If anybody knows the Atlanta market, everybody lives indoors in Atlanta. North Atlanta is where all the action happens. In the South, nothing happens. When I first started, I was driving 1 to 2 hours to get to the real estate investor meetings and network at all the different networking events that were out there. I’ll be driving for so long. After about a few years of doing that, I was like, “I’m going to start my own group.” That’s what I did. I started it in the South. I called it Way Down South Real Estate Group.

It was a monthly meeting. People would come and hang out. I was the facilitator of the group. I would always bring in awesome speakers. It grew quickly because there was such a need in the South for something like that. After I did that for a couple of years and that was getting on average 100 people every single meeting to come, I was approached by the National REIA to start a REIA, a Real Estate Investors Association. They asked me if I’d be interested in becoming an affiliate with them and starting a REIA. I moved from the Way Down South up to a Central Atlanta area. That’s why we changed it to the South Atlanta REIA.

Now, it’s a huge organization. It’s a great community. It’s a very progressive community. We have a lot of different groups in the real estate industry that are here in Atlanta. They’re either networking groups, people could meet and talk or they’re facilitating education. It’s a meeting where you come, sit down, get some education for an hour or so and then you leave. The difference between those groups and my group is that I’m trying to build a community gap. I’m trying to build this community where we can not only do deals together because everybody wants to do deals but essentially lean on each other in times of challenges and be able to ask each other questions, “Is this a good deal or not a good deal?”

We build all these different niches around the city where you can learn pretty much anything that you want. The South Atlanta REIA is a real estate investors association and it’s got the main meeting. It’s also got about twenty niche groups that we call Super Groups. There is a vacation and short-term rental, lay-in, wholesaling and rehabbing. We’re starting many different awesome groups. We’re starting a mobile home. I’m leading one that’s called Deals Are Done on the Playground. This is going to be for parents that want to come on Sunday afternoons and let their kids play at the playground for a couple of hours and then talk and chat. Essentially, it’s solving the problems of investors. Whatever they need, that’s what the South Atlanta REIA does.

We have all these different groups and then on top of that, we do webinars, workshops, bootcamps and teaching every single type of niches out there. We had my very first virtual summit, which was completely awesome. We had over 1,600 people register from all over the country. I was blown away. What was awesome about that virtual summit is I got all the experts in our community and I asked them, “Would you be interested in doing a one-hour live webinar and do it over a weekend?” They all said yes. We had eighteen different webinars from local investors here in Atlanta. We had 60 to 80 people per webinar coming in and listening. I was like, “This works. This is awesome.” I’m still getting comments on that virtual summit.

We’re very progressive. We’ve got webinars, bootcamps, you name it, whatever niche, anything that you need. We have a lot of activity going on. The purpose of the South Atlanta REIA is affordable financial literacy. Everything is geared toward being able to learn how to invest in real estate but doing it on a realistic budget. It’s not something like $20,000 to $50,000, but something that people can afford to get into. Maybe later down the road, if they want to get a mentor or something like that, they can do that. In the very beginning, when you’re first starting real estate, a lot of people don’t have the money to do stuff like that. We geared towards that and then helped them to grow and keep on top of that journey that they’re trying to do.

The great thing that I love is you’re not doing it all by yourself. Congratulations on the virtual summit. We’ve been doing those for years in the note business. I love that you brought in people. You gave everybody the opportunity. The idea is to serve.

We did it for free, so we gave and served.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: There are a lot of different groups in the real estate industry all over Atlanta.

 

One of the big things I love when you had your meeting there and when I was there, you came in, you had people networking at first and then you had speed networks, you had a vendor area. You also had some opportunity for people to visit and talk about what events were going on, the haves and wants. You had me come in for 1 to 1.5 hours to speak. You provided many opportunities for people to plug into different things.

When you come to the main meeting, it’s an experience. You get there at 5:00 and there are free food and alcohol. You then get me to mastermind. I mastermind for an hour. I answer everybody’s questions. I solve everybody’s problems, whatever challenges you have. We move on from 5:00 to 5:30 to 6:00 to 6:30. We do a new member orientation where I go over all the benefits of the South Atlanta REIA. From 6:30 to 7:00, we do speed networking where I make everybody there go and talk to everybody else. The point is you have to learn your pitch. You have to learn how to introduce yourself and you get to meet other people and builds your team and stuff. The REIA is not like you go and sit and wait for the speaker. I’m going to make you learn, use your brain and get out of your comfort zone. We have all of our awesome speakers like you coming in and teaching and talking all different types of subjects and stuff. We network afterwards and I try to kick everybody out between 10:00 and 11:00.

Kick them down to the bar downstairs or wherever you’re at. I know you moved locations, so you go to a bigger spot. One of the things I want to ask you because people are looking to learn and network. You can’t be a wallflower and be successful as an investor. Would you agree to that, Stacy? You’ve got to network, ask questions, whether it’s speed dating or showing up on a regular basis to take stuff in.

You can’t come in and sit. You’ve got to get out. You’ve got to talk to people. That’s the whole purpose. You can’t invest in property. You can’t do deals if you don’t have a team or that community around you. The main meeting of South Atlanta REIA is the first step. It’s a gateway drug into the real estate investing world. After that, you get this confidence like, “I do have my pitch or something. I can go out and try to talk to other people at other networking events.”

You’ve been an investor for many years now. Atlanta has gone through a bit of a downturn many years ago. We saw a lot of distressed debt. Let’s talk about the Atlanta market. What are you seeing there? Are you struggling for inventory like we are here in Austin? Are you still seeing a lot of deals in different ways? Let’s talk about ATL.

Atlanta market is annoying. Any expensive house, I would say $300,000 or more, is sitting on the market. We don’t have enough people to buy houses. Anything less than that could go a little bit faster, but they are taking quite a while to sell. I would say $150,000 to $200,000 houses are selling rather quickly, 30 to 60 days on the market. Anything over that is taking longer and longer. I know this because I still have a couple of houses on the market that I’m trying to sell that I can’t even sell. It’s annoying. The Atlanta market is tough in the housing market. Airbnb market, for instance, is hot. Everybody wants to do Airbnb. My suggestion for that is to go on to Airbnb. Look in your area and see how many houses are in that area. If there are too many, don’t do it.

The commercial market in Atlanta is hot. I’m wholesaling commercial deals because people want to buy commercial. The apartment market is not too good because it’s too expensive. If you want to do apartments, you’ve got to go outside the perimeter. You’ve got to go 1 to 2 hours outside of the main Atlanta Metro area. What’s happening is inside the Atlanta market, it’s slow. There is too much inventory and not enough buyers on all aspects. Once you go outside of the perimeter into the burbs and stuff, it’s getting a lot easier, but it is slowing down.

Wholesaling has always been a strategy for a lot of people. Are you seeing a lot of wholesalers who are finding success? You said Airbnb. Are you seeing a lot of people using owner financing to move some of these assets as a popular thing too?

Yes. We are focusing on creative deal structuring. This is what you’re going to have to do in the coming years. What’s happening is all of the properties that are out there are the lowest of the low properties that all have issues. They’re either in foreclosure or pre-foreclosure or they got title issues. I remember back in the day when we would get all kinds of awesome houses, we close in seven days and it was awesome. You can’t do that in Atlanta. All those houses, all the good pickings and stuff are all gone. You have to get creative with all the deals that are out there. That’s any type of commercial property and also residential properties as well. You have to be creative in the market coming up in Atlanta.

We’ve talked with others before here with the note investing side. We still think owner financing as a viable option. We’re going to see more subject-to deals popping up in the next few months. People can afford it. They can’t carry this stuff. They over overpaid for assets, but they got some great financing in place. It makes it flexible. Georgia has the second-fastest foreclosure laws in the country behind Texas. We were thinking fast here.

Texas likes to put its foot down. Georgia too, we don’t want to put up with anybody’s crap. It is good.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: You can’t do deals if you don’t have a team or the community around you.

 

When I was there, we talked about how Georgia has a requirement if you’re going to buy distressed notes. Besides selling your owner finance, you’d be buying notes as well if they want you to be a licensed mortgage broker unless you’re using your self-directed IRA to fund those stuff. That’s something to keep in mind. I’ve talked with other people like, “You need to find a mortgage broker there that understands.” There’s a lot of them in there in the Georgia market, originators and then either purchase assets under theirs and partnering up with them and take things down. We still see stuff there. Georgia has still been a pricey market because of the faster foreclosure laws and things like that to keep in mind. You’ve done some cool stuff that I’ve been watching sitting here chuckling because I love the creative side of what you’re doing. You mentioned wholesaling commercial deals, but you’ve also added a commercial flare to your stuff. Can you talk a little bit about what your focus has been?

What happened was I got pregnant. While I was pregnant, I had twenty rehabs going on. I was thinking to myself, “I am going to have a baby and I have twenty rehabs. What do I need to do?” The idea was I’ve got to get rid of it because when you have a baby, you can’t do twenty rehabs. I was like, “I need to get rid of these rehabs, but I still need to have this income in.” The rehabs that I was doing were volume. I wasn’t making $50,000 to $80,000. On average, it’s $15,000 to $25,000 on a house. I did a lot of them. It was very cookie-cutter and I knew how to do it. We did the same rehab over and over again after that. It was running like a business, but I couldn’t do that with a baby. I got pregnant in 2016 and the goal was to get rid of all the rehabs. I had twenty rehabs at a time. We stopped buying houses in 2017. I still have two houses from those twenty houses that I still haven’t sold yet because the market here is crazy.

During that time, I was like, “What can I do to supplement that income so I can have some income coming in but also build wealth and add value?” I told my realtor, “Start looking for stuff for me to invest in. I’ll do apartments, quads, storage or whatever.” He started looking around for me and he came across a storage facility that was in Fayetteville. I live in Peachtree City and Fayetteville is right next to us. It was maybe a twenty-minute drive. It wasn’t very far. This storage facility had been on the market for five years, the reason why is because it was valued at when it was full. When I talked to him and met the owner, I went over there to look at it. I was like, “This might be a good one.” When I looked at it, I was like, “This is not worth what he wants. This is worth half of what he wants.” He was valuing it based on when it was 100% full. This is what realtors do. This is what everybody does. They value it based on what it should be, not what it actually is. It was only 25% full. When I look at storage facilities, not only do I look at the as-is value, but I also look at what I can be making. If it’s 90% full, what am I going to be making?

I’m more of a value-add person and the opportunities. I talked to the owner and his name was Big John. It was Big John’s storage. He was 88 years old or something. He had built this thing many years ago in the ‘80s or whatever for some extra income on this property. He had his office in this little property over here. It has one long strip of 64 units. The awesome thing though is it had parking all the way around it. It had 50 to 60 parking spaces. What he had been doing is that first of all, he was a cash-only business. Secondly, especially with the parking, he was like, “Okay, go find a spot.” There’s no organization at all. When you went in, there were cars everywhere. They would be parking angled and sideways and all this stuff. He wasn’t managing it properly. When I looked at it, I went through and I was mentally counting, “How many cars could I put here?”

We talked about the units and he was like, “I am 100% full.” I was like, “What is your rent roll?” He’s like, “I’m making about $2,000 a month or so.” I was like, “If you’re 100% full and you’re making $2,000, you’re either not charging, your price is right or you don’t know what you’re doing.” We come to find out he was 100% full, but nobody was paying. Half of the units had been full for 5 or 10 years and he never even cleaned them out. When you’re looking for storage facilities, you talk to owners and you hear stories like this, this for me is a gold mine. What you have to do when you do that is you have to buy them. All you have to do is buy it and then you have to go through the auction process to get it all cleaned out. You then have to organize and automate it and then refill it up so that you can get it to 90% full. You get that income coming in and you have that value-add as well. You can sell it later down the road or you can refi out and get a cheaper rate or whatever you need to do.

Did he have financing on it or was it free and clear?

It was free and clear. Most of the storage facilities like this that you find are all going to be free and clear. Most of them are going to be older guys that are working and trying to make some money but are not into it anymore. I’m going to say 80% of the owners that I talk to are all like this. It’s not a business, it’s a hobby. That’s how I have to look at it. He was selling it for $500,000. When I talked to him, I was like, “Nobody’s going to buy this for $500,000. Number one, you don’t have any books. You can’t give me anything. There’s no bank that’s going to loan this money to me because you have no ledger. You have no P&L. You have no balance sheet. I can’t take this business to a bank. They’re going to laugh at me. I’m going to have to go and find a private lender to fund this and I can do that. I can find a private lender, but the thing with private lenders is if you went to a bank, you would get 5% to 6%. With the lender, you’re going to get 9% to 10%. I’m going to have almost double the amount of interest because I have to borrow that money because you didn’t run this property correctly. Because of that, I have to offer you this much money.”

I offered him $200,000. He looked at me and he was like, “No, I’m not doing $200,000.” I was like, “This is what it’s worth. I’m telling you right now. We’re going to have to come to an agreement on what we’re going to be paying because I’m going to be around this money.” In the end, he was like, “Fine, $250,000,” which is about what it should be anyways. We put another contract for $250,000, which is like $0.45 to $0.50 on the dollar. I got it at half the price. From then, my husband and I in that first year were cleaning the facility. We’re getting it organized. We’re internally trying to figure out how to manage this thing so that we can manage it from our phone. We try to automate it. We had to train the tenants because the tenants were paying cash and they would pay whenever. They’d be like, “Here’s $50. Here’s $100. I’m paying for the next five months, here’s $150” or whatever.

There’s no track of whatever it is. We had to clean all that up and train the tenants. They had to be drafted on the first of the month every single month. We had to get them to understand they had to park in their own parking space. They couldn’t park wherever. We create a contract and then put it into the system so that we could email out the contract and people would electronically sign it. Our business became 100% virtual. We probably met most of the tenants after the first year. I haven’t met a tenant in a few years. We virtually automated it and now that facility is 100% full and there’s a waiting list.

We’ve been investing now for a few years and it took us a good two years to figure that out and do that. The way that I looked at it is I wanted to make sure I had enough money to pay the bills. With storage facilities, there are no bills. That’s the best thing about storage facilities. You have only the mortgage, taxes and insurance. Unless you have an office, but when you first start out you don’t want to get an office and overhead because then you have to pay for all this stuff. You can’t afford that anyways a lot of the time unless you go into the bigger ones, but then you’re buying a business. You want to buy a business. You want to buy an investment. Essentially, we have taxes, insurance and mortgage. We have our marketing, how we market. We also have the software that we use on a monthly basis and that’s it. Those were our bills. The bills come out roughly to around $3,000 a month. We’re at 100% full and we’re making around $7,000 a month. One facility is making on average $3,000 to $4,000 extra net a month.

The best part about it is we rarely get any calls. We can handle it all from our phone whenever we want to. Once you start getting more and more facilities, you want to have an office manager. We have an office manager because we have six, but on your first one, you don’t even do that because your calls are not going to come in that often. It doesn’t take a lot of time. As an investor, I’m thinking, how can I schedule my life around making money? How can I work less and work smarter but make more money? For me, storage facilities are one of the best ways to do that. Now, I have this $2,000 a month of income coming in. On top of that, I went to go refi this building out. I was like, “It’s time to refi it out.” My lender is telling me that this storage facility is worth $650,000. This is crazy. I bought it for $250,000. I would never borrow that much money because you have to pay all that out, but I could go and sell this for $500,000 if I wanted to easily. In a couple of years, I’ve made $250,000 on an investment that takes maybe five hours a month.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: You have to get creative with all the deals that are out there.

 

You got to love that stuff. That’s what I was going to ask you also. You got a traditional private loan and you went and got an institutional loan.

I did. I had to get and convince a private lender. The way that it works for my private lender is it’s an interest-only loan. He goes up to five years because he’s like, “Whatever.” As long as he gets that monthly payment, he’s happy. That’s all that matters to him. It’s a principal-only loan and after two years, I can refi out. He wants me to hold onto that facility for at least two years, which is okay. You then budget that into your numbers. You can then refi that out over the next couple of years. It goes from 9% or 10% down to 5% or 6% because that’s what commercial loans are right now. I’ll essentially cut that mortgage in half. I’ll make that extra money plus I’ll have that value. Maybe we’ll sell it. That’s a good one.

You’ve been targeting those in your local area by not doing the conventional things that people are doing. You’ve been on driving around and looking at ugly properties and tracking it down.

After that first facility, I got the itch. I was like, “I need to get more of these. This is awesome.” I’ve been investing in storage facilities for the last few years. The first year, we bought one. The second year, we bought one, and then the third year, we bought three. We’re going to buy at least three more. The way that I do this is I have a realtor that goes online and looks on for all the storage facilities. I’m going to say that 90% of all those storage facilities are priced way too high. If they can’t come down significantly, then we can’t buy it. They have to calculate realtor fees. Anything commercial is always way more expensive. Attorneys are costing more and all this stuff. The numbers most of the time did not work out.

What I started to do was drive for the storage facility. Everybody always talks about driving for dollars and driving for deals. I drive for storage facilities. I get in my car and I drive around for several hours. The first step that I do is I map it out. When you go to Google Maps and you type in, “Storage, Jasper, Georgia,” all of the storage facilities in the Jasper area and the surrounding area are going to come up. You’re going to have an idea of where those are. Those are not going to be the ones that you’re going to buy. The ones that you’re going to buy are not going to be on the map because somebody that’s 80 years old can’t even open up a computer and work on the computer. One of the ones that we have under contract, the owner uses Post-It notes to manage his business. That is not going to be on Google listings. If you ever put anything on Google listings before, you know that it’s difficult to get your business on Google listing. You’re going to fill all that stuff out. You’ve got to get a post on. You’ve got to come back and put it all in. It’s this whole big shenanigan thing that you have to do. It’s difficult. That’s why a lot of businesses are not even on Google listings.

The ones that you want to target are not on Google Maps. You map everything out so you can get an idea of where everything is. Where there are several, there are several that are not on Google Maps. I’m coaching somebody to get into storage facilities. She’s like, “Take me around. I want to buy a storage facility.” I said, “Let’s do half a day of driving for storage facilities.” We got into the car and I was like, “When you get into your car and you’re driving around for deals or storage facilities, you can’t be listening to audible or music. You have to be focused alert and looking around. These are not something that is going to pop out at you and you’d be like, “There’s a storage facility.” Only the big ones ever do that. Only CubeSmart and Extra Storage and all these are popping out.

We’re driving around and we go to the first one. This is the one that she had found on the maps. This is exactly how we do this. We called it up for practice and the office manager answered. When an office manager answers, you know that they know what they’re doing. They have somebody that’s working and doing their job for them instead of them doing the job. That’s the first idea that you know they know what they’re doing. Every time I talk to an office manager, what I say is like, “This is Stacy. I’m calling you about your storage facility.” They’ll say, “Are you interested in the unit?” I said, “No, I’m interested in your storage facility. I want to buy your storage facility. Do you think the owner would be interested in selling?” They go, “No, they would never want to sell. I know they would never want to sell.” Every time I talked to an office manager, they always say no because they don’t want to lose their job.

I said, “Is it okay if I send a letter to the owner and discuss it. I’ll have my contact information on it. If he ever decides to sell, can you give it to him and let him know that I’m always willing to talk to him about buying this facility?” “Yes, you can do that.” That’s what we do. We create a master spreadsheet and we keep track of all the different storage facilities that you’re in contact with. We mail letters on a regular basis to them to keep like, “It’s still me. I’m still here,” or whatever. I have my office manager handling that. We then keep driving along. We’re talking about life and whatever and all of a sudden, out of the corner of my eye, I see it, the gold mine. I say, “Look.” She’s like, “What?”

There was a storage facility behind a commercial building that you could not see. She’s like, “Oh my God.” She told me she never even saw that ever. I was like, “Pull in there and let’s go up there.” We drive up and we go behind this commercial building and there’s this storage facility that’s fenced in. It’s got three rows of units, which is a bigger facility, but there’s no sign anywhere, no phone number. The best thing about storage facilities too is when you’re driving around, there’s a sign with a phone number. You don’t have to go out and skiptrace. You call that number because that’s the number. There’s no sign, no facility, nothing.

I was like, “We need to buy this one.” I drive her and I look at the commercial buildings. There are no signs for the commercial buildings as well. I pull it up on LandGlide. It’s an app that you can use to pull up public data and stuff. It’s an awesome app. I love this app, but it’s $10 a month, so everybody knows. I pulled up the public data. I looked it up and it showed the owner of the storage facility and the two commercial buildings right in front of it. The commercial buildings were looking rundown. The storage facility was also looking rundown. It was some name like Thomas John or something like this. I was like, “He doesn’t even know what he’s doing. He puts the property in his own name.” I was like, “You have to call this person. You have to call them and talk to them and start building rapport. Tell them that you want to buy this facility.”

When it comes up on LandGlide, the phone number’s not there. You have to do some digging. You have to skiptrace. You have to find out who the owner is. You have his mailing address, but you don’t have their phone number. That’s was her homework. She’s supposed to call and figure out where the owner is and put an offer in. That’s how easy it is. If you drive around, look and pay attention to what you’re doing. I guarantee you will find an abandoned facility because they are out there everywhere. I’m closing on an abandoned facility now. It’s easy to find them.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: With storage facilities, there are no bills for you to pay.

 

That’s the thing because you’ve talked about the prices being different. We were talking about how in Texas, everything’s way overpriced. Some people will have an idea and think about what it’s worth. When it comes down to it with no paperwork and no tracking, it’s worth a whole lot less. There’s a big difference in prices that you’re seeing. You’re closing on one now. How many units and for how much?

It’s 76 units and I’m closing at $163,000. I looked in Texas because I’m very interested in buying stuff in Texas as well. I’ve been keeping my eye out and I’m even looking out in the countries. I’m looking 2 to 3 hours outside of Atlanta. The prices for storage facilities are ridiculous. I didn’t look in the middle of nowhere, but in the surrounding areas of Austin, it was not feasible. We talked about this. What’s happening is there are rarely any mom-and-pop facilities in the area because of all those big buildings. Austin is such a hot market. All these big companies came in and bought all the mom-and-pop shops. They then built them up and made them all nice and fancy. Now, there’s too many. There are not enough people to fulfill the need of what’s happening. A lot of them were selling, but they’re selling for either the price that it should be appraised at if it’s 100% full. They’re selling at the price of maybe what it’s appraised at. You’re not going to make money on it. I highly recommend steering clear of Austin.

Dallas is a little bit better than Austin but still, Dallas is the yellow area. It’s not green. It’s more of a yellow. If you’re living in the middle of nowhere in Texas, you may be able to find some mom-and-pops. What I’m saying is that out of all of the storage facility market, 15% are the Big Box owners, U-Hauls, Extra Storage, public storage and all that, then 85% are all mom-and-pop shops like me. We’re a family-owned business. Everybody can check me out. It’s Ms. Lillian’s Self-Storage. If you’re saying, “She’s lying” or whatever, you can go check it out Ms. Lilian’s Self-Storage. That’s all of our facilities. All those mom-and-pop shops are who you want to target and you want to talk to or family-owned businesses like me trying to run some businesses. Those are the ones you can add value to.

Are the ones that you’ve talked to have financing in place that you’re going take over?

It’s the one thing that I love about storage facilities. I talked to one owner and I was like, “I want to buy your storage facility. Sell it to me, please. I can pay $250,000 now. I can close next week. I’m ready.” He’s like, “No. If I sell you this facility, I’m not going to take cash for this thing. I’m not paying no capital gains tax on this thing.” These facility owners are smart. He’s like, “I’m not paying all that money upfront. I need to pay that over time.” That’s how so many are. Out of the five facilities that we have, two of them were owner finance because they didn’t want to pay the capital gains tax.

I have one that’s twelve years at 6% interest. I only had to put $25,000 down. Can you imagine? I have deeded a storage facility for $25,000 and all I have to do is pay a monthly payment for twelve years. He’s like, “You can refi it whenever you want out.” I’m like, “Why would I do that? It’s 6% interest. This is the same as going into a bank.” I’m like, “No, you’re my bank.” A lot of them are like this. You have to know how to talk to them and how to offer some things. Some of them don’t even know how to do that.

I’m talking to one. I was like, “Why don’t you owner finance this? You don’t have to pay the taxes,” because that was his issue. A lot of them have that issue, “I don’t want to pay that tax.” “Why don’t you owner finance the deed then? I can give you $25,000 right now.” It’s something like that. You do a lot of creative deal structuring within. Once you get good at it, you can start even later down the road if you want to, you can offer property management. I can make it now because we know how to manage facilities. Investors come to me and they’re like, “I want a facility, but I don’t have time to manage it.” I’m like, “Let us manage it. We’ll manage for you. We know what we’re doing.” There are lots of good nuances and some that you can do once you get in and educate yourself on how to do it.

There are many opportunities out there. People get discouraged without even taking action. The whole point of getting it in the car and driving around, that’s the extra 5% that most people aren’t doing. It’s that little extra 5% of spending an afternoon driving around with Ms. Lillian, if I remember correctly.

That’s my daughter. Her name is Lillian. All of the facilities are named after her. They’re all going to her. That’s another thing too. This is all for her too. When she’s eighteen years old, I’m going to be like, “Surprise.” Every time I go to a storage facility, she’s like, “Mom, I’m bored.” I’m like, “This is your life. This is your wealth here.” She’s like, “Can I watch Peppa Pig?”

The ones that you’re taking over, how long on average does it take you to get them back up and running full?

It’s going to take at least six months up to a year. Most of them are going to be at least six months up to a year. I have one that I’m trying to wholesale right now in Dublin, Georgia, which is almost completely empty. You would treat that as a new construction deal? That’s like you can hit the ground running on that one. Most of the ones are going to take you awhile to get in there, clean it out and try to figure that out.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: The ones that you want to target are not on Google Maps.

 

What’s funny is we’ve dealt with the Bank of Georgia before from Synovus Bank. They have stuff available, especially for self-storage. They’re interested in keeping the paper on their books if possible and allowing somebody to take over an asset. They take the financing from non-performing and carry the loan to do performing for it with little dabbling and partnering with you in some cases.

I wholesale one like that. The owner dies and they took it over. They managed it for several years. They hired somebody to manage it and they kept it on the books. After five years, they were like, “We’re tired of it. We need to get rid of it.” That does happen quite often as well. They’ll manage it and then down the road, they’ll sell it. I wholesaled it. Those are good for wholesale.

How small or how big are you looking at? What’s the number?

My sweet spot is anywhere around $200,000 to $400,000 because those are the ones that don’t need office managers. You don’t need an office there. Once you’re getting 150 to 200 units, once you’re getting bigger, you’re going to need somebody there to help manage it. I don’t want to pay for that. For me, it’s always like overhead, then if you can do it virtually. We have around 450 doors or something like that. We’re like, “We need somebody to help us out a little bit.” Up until that, it’s a part-time office manager that work ten hours a week and that’s it to help us. She does all the auction process stuff and the things that we don’t want to do. That’s what she does.

Are all your units gated?

They’re all fenced in. The ones that have gates are the ones that are most of the time pains in the butt because the gate is always breaking, you have to go down and fix it and stuff. We have three of them that are fenced in and have a lock on it. We change the code every single month on that lock. If you pay, you get the code. I’m telling you those work so much better than the ones with the gates. Everybody’s like, “I need security. I need cameras.” We only have one facility that has cameras and a gate. We have two facilities that have gates. One facility has a gate and cameras. The gate is always breaking. The cameras are always breaking. It’s a pain in the butt. For me, I don’t even care about stuff like that. I only care about how much money am I going to be making? They don’t care. The tenants are still moving in. There are some people that are like, “I have to have all the bells and whistles.” That’s fine but go find someplace that’s $150 to $200 a month. That’s not us. We subscribed to those tenants that can only afford $50 to $100 a month. There are people out there that are like that.

Are you taking an average or looking at your competition in the area?

Yes. When you purchase the storage facilities, you’ve got to go online and you’ve got to look at your competition and see what they’re charging as well. You’ll see random stuff. You take the average of that is what you do. On average, it’s going to be around this much money.

What are some of the things you’re doing to help get the word out? Especially if you’re taking over facilities that are vacant. Are you putting up a sign and then starting to market via social media or flyers. What are some of the things that you’re doing?

That’s the hardest part of the entire process because you, as a business owner have to learn how to market your properties. We’re learning things like SEO, Facebook ads, how to market on social media, how to do Google AdWords and online PPC and stuff. Essentially, that’s what you have to do. There are also syndication sites too where you can pay, these syndication sites paid to be at the top of the list. You don’t do that. They do that for you. It’s like an in-house marketing company and you can do that as well. It’s not that expensive, but you have to budget that. You have to budget marketing into your monthly budget. You can do things like dollar move-ins and referral programs and all kinds of different things to get them in. You have to learn how to market.

That’s the extra juice right there. Just because you own it, it doesn’t mean they will come.

NCS 548 | Investing In Storage Facilities

Investing In Storage Facilities: The ones that have gates are the ones that are pains in the butt because the gate is always breaking, and you have to go down and fix it.

 

It’s true. You have to become a marketer. It’s like in any business. It’s like in real estate investing. You have to market in order to get the phone to ring. It’s the same thing for the storage industry. You’ve got to market to get the phone ringing.

We’ve got readers that are interested in self-storage and doing this stuff. If they wanted to reach out to you to either get trained by you or mentored or learn more about you, what’s the best way for them to do that, Stacy?

I have a website called StacyRossetti.com. If you’re interested, I want to do some more mentoring and teaching on this. We’re trying to put some programs together, but it’s not quite 100% there. Everything takes longer than what you wanted to take. You can also email me at Stacy@StacyRossetti.com if you have any questions or anything like that as well. I’m here. I want to help as many people as I can to get into this industry because I feel like it’s the best-kept secret that nobody knows about. If you are interested, contact me, I can help you out.

What time and where’s the South Atlanta REIA meeting for those that are in that area?

The first Wednesday of every month is the main meeting. You can go to SouthAtlantaREIA.com. You can see all of our events and also we have an app. You can download the app. Search South Atlanta REIA and it’s a calendar app. It’s a calendar event so you can look and be like, “I’m free on Friday. I can go to this one.” You can register right there on the app. We’ve got lots of events. It’s going nuts. You got to get involved. Come hang out with us.

As always, Stacy, thanks for being an awesome guest. Once again, everybody, you can reach out to her on her website. If you’re looking for self-storage or looking for deals, give her a phone call, reach out to her. You never know. She’s got her books. She says she’s wholesaled a few deals, made some investors out there and made a little bit of money doing that, but also made some happy investors on the other side.

I’m going to start a podcast, so I want you to come and talk on it.

I’d love to be on it. We’ll be glad to help you out there if you need to get it rock and rolling.

Thank you so much, Scott.

Same to you. Go rock it out and give my best to your husband and your daughter.

Thank you.

As Stacy shared, there are deals out there. You got to look for them. Go out and look for the ones that the grass is tall. There’s no signage. It looks unkempt. You never know what you can negotiate by going out, knocking on some doors, pick up the phone and making some phone calls. You never know what you’re going to get when you ask. Feel free to ask away and you might be surprised at what you’re going to get. Go ahead and take some action. We’ll see you all at the top.

Important Links:

About Stacy Rossetti

NCS 548 | Investing In Storage FacilitiesStacy Rossetti has been an investor for almost 10 years…from rehabs to rentals to commercial buildings and storage facilities, also owning the South Atlanta REIA, teaching and mentoring students about investing and storage facilities.

Stacy Rossetti has been renovating homes since 2012. She loves taking older homes and restoring them and takes great pride in the work she does. She has always had great interest in the community and wanted to help spread Real Estate industry knowledge amongst other hard-working people. She was inspired to create a non-competitive, awesome community for those individuals – now known as South Atlanta REIA. Between many other things, she loves to travel and spend time with her family.


Love the show? Subscribe, rate, review, and share!

Join the Note Closers Show community today:

Leave a Reply

Your email address will not be published. Required fields are marked *