EP NNA 64 – Self-Storage Deals Made Easy With Stacy Rossetti

NNA 54 | Self Storage Deals

Self Storage Deals

 

Self-storage businesses provide customers a secure space where they can store things they don’t need right now but can’t bring themselves to throw away. The average storage facility unit in America is around $90 a month, and it has become a big business with nearly 1 in 10 American households using one of about 50,000 facilities. On today’s show, Scott Carson talks with real estate investor Stacy Rossetti about her process for finding self-storage deals and her simple plan of making it easy to operate. Have you ever done a self-storage deal? Find out if it’s about time you do by tuning in to this episode.

Listen to the podcast here:

Self-Storage Deals Made Easy With Stacy Rossetti

I’m excited to be here with you and I am honored to have the special guest. It’s always nice as you travel the country and you meet with other real estate investors, educators, and people that run REIAs. I’ve spoken at hundreds of REIAs and meetup groups, investment clubs across the country. You always know when you meet somebody special, somebody who’s got a big heart not only for what she’s doing but for the people that she comes in contact with. For a while, I wanted to get her on Note Night In America on a Monday night or with Note CAMP, I thought what a great way to have this be dedicated to somebody who’s doing an amazing job out there. For our audience reading this blog, you are in for a treat with my friend Stacy Rossetti. Stacy is the Founder of the South Atlanta REIA club. She’s an active real estate investor and educator. She’s got a huge heart for helping people in our community get over those mind hurdles, mind blocks in investing in real estate. She has done an amazing job in super simplifying down the self-storage business aspect and she’s an active investor doing some amazing things. You’re going to love this episode. I’m honored to have Stacy join us here. What is going on, Stacy? How are you doing? 

I’m doing well. How are you?

I’m doing good. I know you and I are both a little brain fried for being asked in my webinars and conferences, but I’m glad you’re here. I know that our audience is looking forward to this as well too for you.

I have been investing in real estate for about ten years. When I started out wholesaling and rehabbing and then I got pregnant in the year of 2016 is what happened. When I was pregnant, I was doing twenty rehabs at one time. If anybody knows anything about rehab, certainly one rehab, you’re already running like a crazy person. Think about when you’re doing twenty rehabs at a time. In my mind, as a mother to be, I was thinking to myself, “How am I going to have this baby and take care of this baby and be a mother when I have all these rehabs going at the same time?” I started thinking about passive income. The thing with rehabs is you don’t know when you’re going to make any money. Whenever you close on the deal is when you’re going to make money. I said, “Let me start thinking about passive income.” We had acquired a couple of rental properties along the way, but we hadn’t saved any money, which has been living off the money that we had made.

I told everybody that I know that I want to start looking for passive income. That’s how it started. People started sending me deals and I got sense of a deal and I looked at multifamily. I looked at that every time I’m available, that you could do passive income. I’m thinking about buying a portfolio of twenty houses or whatever. I came across this storage facility and we’re going to go through and talk about how to get into storage and all the different things that you can be doing to get into storage. While we’re here, if you want to chat, if anybody here has done a storage deal, you can put it in the Q&A. I came across this self-storage, and I’ll tell you a little bit about it as I tell the story about myself. The good thing is that this storage facility was only a couple of minutes away from my house. It’s 15 or 20 minutes away. In my mind, I was like, “This is going to be good because it’s right around the corner from me.” I drove up. I took a look at the storage facility and it’s not this one in the picture. It’s a different one. It was super-duper dumpy. It was horrible. It was run down.

There was a long row of storage units and then all the way around it was parking. It looked like it was built in the 1980s and the owner gave up on it. What happened was I went and I talked to the owner and like, “Tell me the story about your storage facility.” He had built it in the 1980s and had it for almost 30 years or whatever, and he was tired of it. When you look at the storage facility, you could tell that he was tired of it. He did not want anything to do with it anymore. He said his wife wanted to retire and move to Florida. What I found out is it had been on the market and had been for sale for five years and nobody had bought this thing. What you need to be looking for storage facilities so that you can find something like this, but he had it in the market for five years. Nobody bought it. This was in 2016, right at the beginning of 2017.

This is when the market was hottest and the reason why he had it on the market for $500,000 was because if it was full and making money, it would have been worth about that much or more. The problem is that it was full and he was making no money at all. I asked him, “How much money are you making per month?” I counted out all the units and there were 60 or 70 units all the way across in one row. There were probably around 40 to 50 parking spots. In my mind, I was calculating those numbers up and trying to figure out how much it was worth. He was only making $2,000 a month. You can calculate this out. The average storage facility unit in America is around $90 a month. He had his storage facility units. He sold them anywhere from $35 to $50. He should have honestly been getting around, on average, $75 to $80 a month for those. The reason I found that out is because I called all the competition around him and he was half the price of what everybody else wants.

NNA 54 | Self Storage Deals

Self Storage Deals: Self-storage is the best-kept secret in the real estate investing world.

 

In my mind, I quickly calculated that was okay on average. Maybe there are 100 units on the end. There are about 120 spaces and units for let’s say $75 a month. It comes out to a lot of money. It comes out to quite a bit of money every single month. He was making only $2,000 a month. I said, “You’re only making $2,000 a month. You should be making so much more.” He was like, “Yeah, I told you they were full.” He said, “I didn’t say that they were paying. I said they were full of crap. I’m not going to clean them out. That’s it. I’m done.” In the end, what happened was I offered him. He had hung it on the market for $500,000 and I offered him $250,000. He said, “I’m not going to take that.” I said, “That’s what it’s worth so that’s what I’m going to offer. You’ve had it on the market for five years and nobody’s going to buy it. The reason that nobody’s going to buy it is because nobody can go and get a loan from this. Nobody can go to the bank and get a loan for this property because you have no P&L and balance sheet.”

He had no records of anything at all. I said, “The only way that somebody can come and borrow money, go to the bank and buy this is if you show them that there’s income and you can’t do that. Because of that, I’ll buy it, but I’m going to have to go and borrow expensive money to buy this.” I’m going to go with a private lender to lend me the money. It’s going to be double what it would be if I went to the bank. A couple of days later, he must’ve thought about it and he called me back and I got that property for $250,000. That was my first property. It took us a good year to figure out what we were doing. That facility does not scare me at all because it was like a rehab for me. It’s a storage facility instead of a house for me to get in there, clean it up, and get on. There were tires everywhere. There was no organization to where the car was parked. It was like, “Yeah, go find a spot.” The units were completely full. He had never cleaned. When people didn’t pay, he never cleaned it out. He didn’t evict anybody. He didn’t do any auctions or anything. It took us a good year to get that sucker up nice and clean. We’re making between $6,000 and $7,000 a month on that property.

Our monthly expenses for that property are around $2,000 a month. That’s it. That’s the one thing I love about storage facilities is that there are hardly any bills at all. Our electric is $50 a month. There’s no office or anything like that. I buy the ones that have no offices because I don’t want any overhead. I spend $50 a month on pest control, $50 a month on electric, spend some money on marketing, but little money on marketing, and mortgage and insurance on that. It comes out to around $2,000 a month, that’s it. We’re making at least $6,000 a month. On top of that, we’ve added so much value to that property that it’s worth between $500,000 and $600,000. It took us a year to add that value. We could have sold that property a couple of years ago and made $500,000, $600,000 on it. We’re holding onto it because that’s what we want to do and we’re buying as many storage facilities as we can, but that’s the tip of the iceberg of what type of properties are out there.

When you get into the storage investing world, the way that they work is there are three different types of storage investing out there. This is what I tell all my students. There are mismanaged properties. It’s like the one that you’ve read, people don’t want them. You have to come out of pocket every single month for them. I wasn’t making any money for many months. We had to come out of pocket a lot of the time. The first year we had to come out of pocket to afford all the bills and get it on fixed stuff and all. Another thing with mismanaged property is that you can’t go out and get a loan for those. You have to borrow private money and the lender has to be okay with you holding the note for 3, 4, 5, 10 years. I have someone who used to say ten years is fine. You have to be able to hold that note because you can always refinance out later once you get it up and running but the first year or two, you’re going to have to have somebody hold that note. That’s mismanaged properties.

Number two is you can buy a cashflowing property. These are properties that are not mismanaged. They’re viable businesses that are doing fine within the industry. That means you can go out and find a facility, let’s say 75% or fuller. They’re almost full or fuller. You can buy those facilities as well too. All of a sudden, you start making money every single month. It’s a cashflowing property. It’s a business. There’s not a lot of value add to those properties. If you can find properties like that in double-digit cap rates, then that’s a good buy. Most of the properties when you go and look online and stuff, they’re not going to be done with it. It calculates. Do not go online to look for storage facilities because realtors get into the middle and realtors think they know how to analyze deals and they think they can sell them at 5%, 6%, 7% cap rates. We don’t do that. We buy double-digit cap rates or higher facilities.

You could do cashflowing properties and you can do mismanaged properties. What I do is I mix and match a facility and I have to come out of pocket $2,000 every single month. I’m going to go out and find a facility that’s also making $2,000 or more a month to offset that mismanaged property. I figured that out how to do that along the way as well too. I’ll balance it out by buying a mismatch property with a cashflow engine. I’m in the process of buying three more storage facilities and we’ll close in the next couple of months. I bought a mismanaged property. Instead of buying these, it’s going to offset that cost of the mismanaged property.

The third way that you can get to the storage investing is you’re building. You can go out, share the land and buy it. You can do a feasibility study and buyer mental study. You can go out and rezone it if it’s zoned agriculture. You have to go and rezone it. You’ve got to clear the lot, lay the foundation and put the buildings up. I personally do not want to do that because I’m too lazy. A lot of people do that in the investing world where they’re like, “No one’s going to buy and put a storage facility up.” That’s how you can do that. That’s a lot of upfront money is what that is. You have to buy the land, hold the note for the land and then you have to do a feasibility and environmental study, and get it rezoned. That could cost upwards of maybe $30,000 or something like that to be able to afford the land and all those studies that come with it. You have to be able to buy all the materials to build and get it built.

NNA 54 | Self Storage Deals

Self Storage Deals: When you get into the storage world, not only does it take time to find a good deal, you also have to run it.

 

From there, you’re starting from scratch. I said, “I spent all that money. I got to build, get it all filled up. I got to market to get it filled up.” A lot of people don’t think about the whole process. They all want to get into self-storage and I get it because I personally feel like it’s the best-kept secret in the real estate investing world, but nobody listens to me. You have to remember that when you get into the storage world, does it take time to find a good deal, a double-digit cap rate deal? You have to fund that deal depending on what type of scenario that you pick, but then you have to run it. I say, “Find, fund, run.” When you run it, you have to understand how to truly manage a business. When you buy a storage facility, you are buying a retail business. You are buying a business that you have to market and you have to find tenants and train your tenants and you have to manage your business like a business.

A lot of people don’t even think about that third step. We are not going to do that. We’re going to find, fund, and run. We’re going to learn in that running section. We’re going to truly educate ourselves on how to make money and profit from them. It’s not as easy as it looks. That’s my intro to me and everything about me. There are challenges in the self-storage industry that people don’t think about. Some of the challenges are you have to find motivated sellers. What did I say about where you find storage facilities? You do not find storage facilities online. A lot of people go online. The lazy people go online but lazy people don’t get the best deals. I was like, “Would you be interested in selling a facility?” He was like, “No. I want to buy another one.” I said, “I have a couple here around the area, I’m looking to buy one.” He’s like, “Let me ask you, what cap rate do you get?” I personally get anywhere from 12% to 18% cap rate on my storage facilities. I told him that and he was like, “What? I only get a 7% cap rate.” I was like, ” Believe me, I know. That’s why I could never buy your storage facility because you’re not making enough money for me.”

Finding motivated sellers and finding sellers that truly understand what you are going to offer them. When you talk to a seller, you’re going to be offering them how they can save on their capital gains and they can make money by not selling their property out with cash. You’ve got to teach all of this to them. Number one, finding motivated sellers. Number two, closing deals. That’s the hardest part. The three that I’m going to buy, I drove by in a storage facility and I had one and I called that. I thought I had one and I called them up and I said, “Would you be interested in selling?” He’s like, “I never thought about it.” I said, “I’m looking for some storage facilities. I was right around the corner from you. I already had six. I’m looking for a couple more.” He was like, “I thought about it.” I said, “Would you be interested in a meeting?” He said, “Yeah, okay.” I said, “What about right now? Come up.” He’s like, “Okay.” This sits around and does nothing all day.

The storage facility, he owns it. He doesn’t know how to manage his properties. Personally, I’m out looking for storage facilities all the time but not him. He’s managing the storage facility. I went up and he showed me the one that I was interested in. He’s like, “I’ve got two more.” He shows me the other two. He took me around and shows me his cows. He showed me around his house. He said, “This is my house. This is my daughter’s house. This is my business. I own that property.” That property took me all around. He drove me around and showed me everything. It was for two hours. In the end, he was like, “I like you.” Swapping storage facility stories and some stuff like, “What about that tenant?” He was like, “I had this tenant and this thing.” I’m telling you, this is how storage facility owners are. You can’t buy a list. You can’t nail the run. You can’t do anything like that because the people that you’re going to be buying it from are not that type of people.

After I spent a couple of hours with him, he’s like, “I don’t want to sell it. I don’t think I’m selling the properties to you.” He said, “What do you want to pay for it?” I said, “I’ll pay this.” He’s like, “That wasn’t my number.” I was like, “What’s your number?” He told me his number. I was like, “I’m not going to pay that much. Sorry, that’s too high.” I wanted $550,000 and he wanted $620,000. It wasn’t too bad. I was like, “No, I’m not going to pay that much. He was like, “That’s what I want.” I said, “What about when you’re financing? I’ll pay it if you owner finance it to me.” He was like, “No, I wouldn’t do that.” I said, “Remember that you’re going to have to pay capital gains on the $620,000 that you get. If you owner finance it me, you can offset that capital gains and push that out. You can pay that later. Think about it and let me know. I want to pay $550,000.” He was like, “I’m not going to do $550,000.” That’s okay.

A couple of days later, he called me up and he said he’s going to owner finance, “I’m going to come up with some money.” He’s going to owner finance that money as well too. I went out there, spent time with him and got to know him. He decided he wanted to sell it to me. That’s how the storage industry works. You have to be able to close the deal. You have to be able to find those types of sellers and close the deal. You’ve got to be able to make offers. Honestly, all I do is call people up and ask if they want to talk, then I go out and I talk to them. I didn’t take a look at the property. I introduced myself a little bit. I’ve been investing in real estate for about ten years. I’ve done over 100 rehabs. I’ve completed hundreds and hundreds of transactions. I’ve taught hundreds of thousands of students, like you in all types of real estate investing. I love teaching people how to invest. That’s my thing. It’s my passion. I own six facilities. We’re about to buy three more and we’re going to close. I’m always looking for more.

NNA 54 | Self Storage Deals

Self Storage Deals: Lazy people don’t get the best deals.

 

My goal is to buy as many storage facilities as I possibly can because it gives you the type of life. At least it gives me the type of life that I want. For instance, I’m in Pennsylvania visiting my husband’s sister. My storage facilities are in Georgia. We have been up here in Pennsylvania, New York area for two months. As soon as COVID started, my husband went up to spend time with my family, the same with his family. That’s it. He took my daughter and he said, “I’m going to hang out. I’ll put the family, make sure they’re okay and take care of them while we’re doing all this.” He’s been fixing the roof and leaks in the house and doing this stuff. I was like, “Do you ever work?” He works 1 or 2 hours a week. He manages all of our facilities. I buy them and then he manages them. We’ve set the business up so that it’s completely automated and systematized and we are completely hands-off.

He only has to work a couple of hours a week to manage all of our facilities. We have around 60,000 square feet of storage and in the storage world, that goes off of square feet. We have around almost 500 doors. I’m not a big player, but we’re slowly building over the past couple of years. We’re building our portfolio up. I love the storage facilities. This is an abandoned storage facility. People don’t believe me when I tell you there are abandoned storage facilities out there, but there are. The one that I bought in January is completely abandoned. I found it, drove up to it, no sign, nothing. When I saw that, I was like, “Yes.” I was excited about that. You have to know how to find things. It’s hard to find these things but they are out there.

Did this one have the underlying debt on it? How did you pick this one up?

No. This one, we were trying to get in touch with the owners, but this is not the one that I bought in January. The one on the first page on my first slide is the abandoned storage facility that we bought in January. This one we drove around and we found it. I was excited and I was like, “Take a picture of me.” We are still trying to get ahold and skiptrace the owners and they’re gone. It’s like everybody’s dead. It’s one of those types of things where the person that owned it died and the family members also died and now it’s sitting there. We’re trying to figure out who we can get ahold of to try to get ownership of the property. It’s completely abandoned and there are trees that are growing next to it. You have to be able to find these things, but they’re out there.

If you are interested in getting the Six-Step System that I’m going to talk about here, text to 818818 the word REIA and you will get my Six-Step System. It’s a lead magnet. It’s a template of all the steps that you need to do in order to do what I’m going to be going over here. Here are the six steps, that’s what you need focusing on when I give you all of the nuts and bolts to get started in storage investing. When you think of your business as a self-storage and owner. You’re going to think your business is having six different departments, only five of the departments. The last one I’m not going to go over, which is liquidations. When you think of each department, you’re thinking of the next step. You have the office admin setting up your office. You have the marketing to find them, acquisitions department next, and then you have finance, management, and liquidations.

When you download that template, you’ll get all six of these steps. It will show you step-by-step and then within each of the steps, we’ll go over what I’m going to go over. Office admin, marketing, acquisitions, finance, management, and liquidations. You have to set your office up, get everything all set up first. You’ve got to start marketing to find a storage facility and you have to acquire the storage facilities. Once you acquire, you have to start finding money out for them. You’ve got to manage them and run them properly. After that, if you want to sell, you can sell them all. You can hold on to them. Those are the six steps. In your office admin, these are the things that you have to focus on. You have to focus on, number one, setting up your phones. That means that you have to have a personal phone and a business phone, which I’m sure a lot of people already have. When you have your storage facility, you want a separate phone, even for your storage facility.

Essentially, the way it started out for us is we have my personal phone and I had my business phone that I can call source facility, owners too, or whoever wants to talk to me too. The tenants are going to call and people that want to get into your storage facilities. They’re going to have your own number. It’s like three lines. When you buy one, you’re going to three different lines. You want to be completely electronic because when you’re going to go out and look for storage facilities, what happens is you take your phone with you, you’re going to look at these storage facilities and then you’re going to take pictures. You’re going to have all these pictures. What do you do? At least what I do is I have Google Drive right on my phone. I create a folder right on Google Drive. I name it like Butches Storage Facility or whatever it’s going to remind you, “This is the storage facility.”

You create the folder on the Drive and inside the folder is where you’re going to upload all your pictures because what’s going to happen is you’re going to go around, start looking at storage facilities, and they’re all going to start wanting together. When you see one storage facility to get them all, they all look the same. They’d be different colors. You want to make sure that when you’re out and about that you’re using Google Drive to create your folders and putting the pictures right into your Drive. I’m an organized person. That’s why I talk about going electronic. When you’re looking for storage facilities, you want to be as organized as you possibly can. You’re going to be out looking for storage facilities. It’s time-consuming and it’s endless. You want to be as organized as you can. Mrs. Lillian’s Self-Storage is the name of our storage facility. Inside that folder, we have one folder and it’s Lillian’s Self-Storage and then inside that folder, we have all of our different locations.

We have six different folders. You open that up. Every single one of those folders within each of our locations has a whole bunch of folders, the auction processes, and all the different things that we do within all the closing documents. It’s nice and organized. We have to share with our team and share it with everybody. You need to be able to set up an LLC. It’s a buy and hold. You want to have an LLC, it’s a pass-through company. What we do honestly is we have LLCs for every single one of our sports facilities. You don’t have to do it that way but we do it that way because we want to protect ourselves. Finally, you want to start building your team. You do need to have realtors that are looking for you. I have realtors that are looking for storage facilities in case you never know. You want to start working on like, “How can I find these facilities or how am I going to advantage these facilities?” You want to work on building your team.

NNA 54 | Self Storage Deals

Self Storage Deals: Looking for storage facilities is time-consuming; you want to be as organized as you can.

 

When you’re marketing, the first thing that you need to do is to pick your market. What that means is that the facilities that I focus on are going to be about $1 million or less. The sweet spot is maybe $300,000 to $600,000. You could buy cheaper and more expensive ones. For your first time, you have to think to yourself like, “How much money do I have to spend? How can I leverage my money?” In the commercial real estate world, it’s the 80/20 rule. That means you’re going to have to put 20% down and borrow 80%. Unless you find a private lender that’s going to fund it, number one or number two, you get it owner financed. You still have to put money down though. I’m going to have to put a little bit of money down for this $600,000 deal. He’s like, “I’m not going to fund that much with no money down.” I have to put some money in.

Even with the private lender, they’re going to ask you to put some money. You always want to think about 80/20 rule. With the market, I don’t know where you all are from, but inside big, huge cities, it’s not going to be easy to find any storage facilities. Why? The rule is that 85% of all storage facilities are mom-and-pop shops, 15% are REITs, and 15% are big-box companies. The big-box companies come into Atlanta, Orlando, Denver, Boston, Austin, Dallas, and all these big companies and they buy all of these storage facilities. It’s rare in the major metropolitan areas, in the bigger areas that you’re going to be able to find any storage facilities that you can afford or that you would even want. Who wants a big ass storage facility to sit there and manage all that? No, you want to build passive growth.

You want to have good-sized facilities, not $2 million, $3 million, $4 million, $5 million, or $6 million facilities. With the market, you have to go outside of the city. You’re going to have to go out in the burbs and all of our storage facilities are hours away from us. Atlanta is here and puts all around here. I know Scott is in Austin. There isn’t nothing in Austin. Everything’s too expensive in Austin. He’s going to have to go way out. We’re thinking about moving to Austin. We’re looking for storage facilities way out of Dallas. I have a student in Dallas and he’s way south. I did find a couple of rundown facilities in Austin in the south area, but they wanted so much money. I was like, “My gosh.”

I haven’t bought anything in Austin or even Travis County. There are better deals outside of it. If you do move here, we’ll partner up on some stuff.

Driving for storage is what I call it. What that means is that you want to go onto Google Maps and then you type in storage in your area, whichever market that you’re going to be in. You’re going to be outside of the country where you live and you may already live in the country. I have no idea. Do you want to be outside of the major metropolitan areas? You go onto Google Maps and look up storage, self-storage, storage, mini-warehouse, and warehouse or what you want to do. You get an idea of like, “Where are all the storage facilities?” Take out all those big boxes, all the REITs. Take out the ones that have 3, 4, 5, 6, 7 of them. Take out the bigger ones and then look for those mom-and-pop shops. Those are not the ones you’re going to buy. You have to buy the ones that are not on Google because the ones that are not on Google are the ones that are the best deals.

What does that mean? You’ve got to drive for storage. One of my most favorite things to do is get in the car and drive and wander around. I don’t wander around. We can strategically do it if you want. It’s my own time in my car. My daughter, she’s four years old. She’s not bothering me. She’s at home or whatever. I get some free time. Essentially, the goal is to find the storage facilities that are not on the map because I’m telling you, the ones that are not on the map, 50% are on the map and 50% are not on the map. Every single storage facility on mine is not on the map. I’m getting double-digit cap rates. The reason why is because I get to them first. They have no idea how to run the facility because they can’t even figure out how to put their damn storage facility online. I teach and educate them on what their prices are, what the value of their storage is.

I buy it and I manage your property properly and I raise that value. That is how I find storage. That is the hardest way to find storage facilities. As I said, there are easier ways to do it and you could probably send out letters or whatever everybody else is teaching. I’m telling you, the best deals are what I said. You have to acquire the property. What that means is you have to understand how to run deal analysis on a commercial deal. Deal analysis means you have to understand ROI, cash-on-cash, return, yield, cap rate. In the storage investing world, we talk about cap rate, yield, ROI, cash-on-cash, square footage, population, latches, doors, all the boring stuff but you’ve got to learn how to do that. You can’t run comps on a storage facility. You have to run it based off of the income.

What you can do is call around at the competition, see what they’re charging. What is the average of the five closest storage facilities and how much are they charging? If it’s a mismanaged facility, you can base your opportunity cost off of their costs. That’s acquisitions. I’m not going to get super deep into it, but at least it gives you an idea of what you need to be doing in the acquisitions field. You have to make offers. We already talked about creative deal structuring and you have to make offers. It’s like everywhere else, you’re not going to get anything unless you make an offer. Finance, we did talk about creative deal structuring and you’ll hear more and more about this in the recession. I beg you too, a lot of people get creative about it. You can borrow private money, creative deal, structuring private money, hard money. There are lenders out there. Lenders love storage facilities. Storage facilities are recession-proof.

You make money on the downturn and you make money on the upturn. It’s awesome. That’s why lenders love storage facilities. I talked to one lender and he was like, “I’ve never had a full closure on a storage facility.” You can never, ever rarely do you find storage facilities that are coming for auction or anything like this. It never happens. When it does happen, they go for ridiculous prices. I’m like, “I don’t even deal with those.” There’s a lot more storage facilities coming on the market. If you notice they’re the bigger ones. The bigger ones are having a lot of trouble. That’s why I say don’t buy a big one because what’s happened is, they’re charging $100 to $250 a month because of their overhead and how much it costs all this type of stuff. Our storage facilities are rarely ever full, except one is full. Even the one that we bought in January is already halfway full because people can afford $50 to $120 a month, but people can’t afford now especially $150, $250.

NNA 54 | Self Storage Deals

Self Storage Deals: Storage facilities are recession-proof. You make money on the downturn, and you make money on the upturn.

 

They’re moving from those climate-controlled units to those non-climate control units. We focus on non-climate control because we cater to that niche. There’s nothing wrong with climate control, but as long as you’re not spending an arm and a leg, because a lot of people are shorting, they can’t afford it. The guy that I’m buying the three storage facilities from, he had a climate-controlled facility, he stopped it. He’s like, “It’s not making me money at all.” I took it off and started charging her on the rates. Now it’s full. It’s 100% full. He’s the cheapest guy in town. That’s good. See the cheapest guy in town. That’s another good thing about that one because I can raise the rents. Commercial lenders, there are many commercial lenders and SBA loan is one of the perfect loans for storage facilities.

If you can afford 20% to 30% down, I highly recommend getting an SBA loan because their percentage rates are cheap, between 2% to 5% and 6%. Get an SBA loan and go to a commercial lender, might be a little bit more expensive with the commercial lender, private money lender, hard money lender, creative deals structuring. If you’re going to wholesale storage facilities, I wholesale storage facilities as well too. You can use some big bucks. I have a student wholesale storage facility. He made $100,000 on that deal. He put it under contract and in 30 days, he closed on it and made $100,000. I wholesale the storage facility and I made $55,000 on it. You can wholesale storage facilities as well too, but you do not want anybody to know that you are making that much money. You don’t want the buyer and seller to know. You have to do transactional funding.

What that means is you’ve got to borrow enough money to close that deal and then borrow for 24 to 36 hours or however long you need to borrow for, and then that way you can separate those two costs out. That is the finance department. Management, I’m one of those people that you find, fund, run. When you run a facility, you’ve got to put your foot down. You have to train your tenants. That means that the date that the money is due is the date of the money is due. We do a due date. “The money and the rent were due on this day. You’re late on this day.” You have overlock on this date and auction process starts on this day all within the same month. If you have not paid your rent by the 25th of the month, the auction process starts. The next month, if you’re worrying your stuff it’s going to be auctioned off. We rarely have anybody who doesn’t pay.

A couple of people here and there, we have auctions, but not often because we train our tenants. In the beginning, and the reason I do this is because for the first year, we didn’t know what we were doing. People will say, “No, I can’t pay this month.” I was like, “Screw that. This is the new rules.” I set it out and I was like, “This is it. If you don’t like it too bad.” After that, I put my foot down. Train your tenants. Go all electronic. You can be anywhere in the world and still make money on your storage facilities. I’m telling you a lot of storage facility owners struggled because you have to go in, sign the contract to meet them and take them out and give them the keys and unlock the facilities. We don’t do any of that at all. Online, you can reserve your space, sign your contract, and move in five minutes. As soon as COVID started, we started to market that out. We’re all electronic. You can move in five minutes. We don’t have to meet you.

We’ve got many people that wanted to move in because of that. That’s where I tell people about electronic. Not only do you get to create passive income based on having this life that you want and dream up, you get to build passive wealth as well too. Don’t get them to travel. You have to understand the auction process and the tenant law in your state. Every single state is completely different. What happens in Georgia, New York and Pennsylvania are completely different than where you are. You have to truly understand the auction process and tenant law process. Automate and systematize so you can scale up, you don’t have to be there. I called one storage facility owner and I was like, “I’m interested in selling and buying your storage facility.”

She said, “Yeah, I’ll sell to $1.4 million.” I’ll pay $600,000 for this thing. I was like, “Are you there all the time?” She was like, “Yeah, I come in to work all the time.” I was like, “Don’t you get bored? What the hell?” She was like, “Yeah. During the first week, it’s super busy.” She was like, “It’s slow. I was like, “Why are you not going out and trying to find other storage facilities to buy and stuff?” I thought that’s a mismanaged property right there. Trying to save money, but she’s not utilizing her time. That’s the end of the presentation. I have some more webinars if you’re interested and that’s it. You can find me on YouTube at Stacy Rossetti Teaches. I have a couple of questions. How did I get into self-storage? The outlook for the next five years is good.

Especially now with people that aren’t paying mortgages, no offense, but see as we did, people moving into houses, moving into apartments. When they downsize, they put stuff in storage. When they aren’t paying their mortgage, they can’t pay their rent. They’re sure not paying their storage bills. As we see a lot more of that middle-class being squeezed, we’re going to see an increase in rents. We’re going to see a need for more self-storage.

Plus, in the downturn, everything is fine and the upturn, people are moving out and moving in and things are happening. I wouldn’t personally build a storage facility now because you have to wait and see, but there are many storage facilities out there that want to sell. If you talk to them, they’ll sell it. It’s like, “Why build a new one?” I’ve estimated one before.

We have a question, “How would I do this from California?”

I do have students in California and they’re not buying in California. You can’t find anything in California. You can find a lot of storage facilities for sale in California, but they’re super-duper expensive. They’re good deals, but they’re $8 million or something like that. Who has that? Who wants to buy that? My students, what they’re doing is they’re looking, for instance, where their family is. One of my students is in Southern California and he has family in Minnesota. He’s from Minnesota. He’s looking in Minnesota. The truth of the matter is if you set it up correctly, you could be anywhere in the world and selling your storage facilities. This is something that you can be completely virtual at. If you don’t want in California, I would look maybe in Nevada, Arizona or Idaho, wherever in California, or someplace where your family is where they could help you to be the boots on the ground.

With your properties that you don’t have an office, I know that you’re doing a lot of it. Are you planning to have some staff that’s managing the phones in one spot for all 6, 7 as you grow that’s within a 30-minute drive or close to where everything is so they can go out and meet people?

We have about 500 doors and we have an office manager that manages that. She works about 25 hours a week. We’re going to add on another 200 doors and she’s going to move to full-time. We have boots on the ground person that goes out once a week to overlock, clean out the unit, and pick up trash because everybody wants to pick trash. He works once a week or twice a week. That’s all we got.

If you have not texted the word REIA to 818818, do so. There are some great goodies on there. I love it. I did it. I love what you’ve got there, Stacy. That’s awesome. It looks sharp. I’m looking forward to this. If you do move to Central Texas, we’re going to have some fun. My buddy, Eric, who’s on here was like, “There are a lot of small towns around Austin, Texas on the outskirts.” That’s a big state. The Self Storage Memberships Association website, we’ve pulled the list of memberships at over 2,500 self-storage names on that list all across Texas. There are a lot of opportunities here, especially between here and Dallas. There are a lot of back roads with small towns.

West Texas, South Texas, East, it’s the central air. There’s Houston, Dallas, San Antonio, and Austin. Everywhere else it’s like, “I’m getting out there. I’m going to find some stuff. I don’t mind driving.”

Take her up on an opportunity. Text to get and download the forms. You’ve got a great class as well that you teach on this too, Stacy. You’re passionate about helping your students and making some things happen. Next time you’ve got one you’re looking to wholesale, I would love a phone call. I would love an email and seeing it. 

Usually, it’s one of those things where you make a phone call and somebody wants to buy it.

You’ve done a great job. Thank you, Stacy. We’ll be in touch some more. 

Take care.

That’s going to wrap it up for Note Night In America. Go out, do something, take her up. Stacy knows what she’s talking about. She’s boots on the ground. She’s not afraid to roll her sleeves up and get a little dirty and that’s the best way to learn. She’s done it there and she can save you a lot of headaches. When we start off with your often bootstrap trying to make things done and she’s done an amazing job doing that. Take her up. Text the word REIA to 818818. I don’t care where you’re at. There are some opportunities around you. Maybe not in the heart of the city, but on the outskirts. It’s something that we’re also doing a lot of as part of our marketing when we do get beside your note business. Go out, take some action. We’ll see all the top, everybody.

Important Links:

About Stacy Rossetti

NNA 54 | Self Storage DealsReal Estate Investing – My Journey, My Career My Life

As a real estate investing expert and coach, I have built my name on the results I have created – for myself and for my students.

Investing in real estate has changed my life, opening doors for me and my family and affording me an outlet for all my creative and entrepreneurial energy. Through scaling up a renovation company in Atlanta with hundreds of transactions to learning to invest passively through creative financing deals and storage facilities, I have not only overcome many trials and tribulations, but systematized and organized my days so that I can run several successful businesses.

Day after day, I work hard at what I do, striving to stay ahead of the curve by building on my knowledge and making shrewd decisions. This did not happen overnight, of course. My early days in real estate were slow, exhausting and hard, but little by little, I earned a sense of what worked and what I needed to do to achieve consistent results. Because I taught myself all this learning through experience and mentors, the process was gradual and required the utmost diligence on my part.

Today, I own and operate South Atlanta REIA. A real estate investors association, South Atlanta REIA is exactly the tool that I would have wanted when I was getting my start, something that aspiring and established investors can turn to, a means to cutting your learning curve dramatically. In addition to investing in real estate myself, I have since discovered another passion in my life – coaching and empowering others. Whenever I see that I have guided someone toward a breakthrough or helped them to transform themselves professionally, I feel deep fulfillment, confident that I am on the right path and reinvigorated to go out and do even more.

As a coach and teacher, I specialize in helping my students navigate real estate investing, rehabbing, and storage facilities. These are all complex, involved topics, but I have honed my ability to communicate the intricacies – and found ways to demystify them efficiently. Seeing the light go off in my students' eyes, I know that the magic is happening, and in everyone I teach, I recognize myself – wide-eyed, hopeful, firmly believing in all the opportunities that real estate investing can present. For years, I have connected with my students through workshops, offering a glimpse into the thought processes and techniques that have led to my success.

In order to share my knowledge with as large an audience as possible, I am currently expanding beyond person-to-person coaching, developing two online courses: Systematizing Your Rehabs to Scale Up and Self-Storage Investing 101. Both of these courses draw on my years of experience in real estate investing and break down my ideas and strategies in a way that even beginners can digest.

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