It’s one thing to think about self-storage investing and another to actually do it. In this Self-Storage University podcast we’re going to review the methods the pros use to find deals, analyze them, get them financed and operate them. If you want to succeed at self-storage investing, this podcast reviews the systems that work.
Episode 77: The Difference Between An Amateur And A Professional Transcript
Omar Bradley, one of the most successful generals of World War II once said, "Amateurs talk strategy, while professionals talk logistics" What the heck was Bradley talking about? Well, Omar Bradley was known as the soldiers general. He was typically out in the front lines with his troops. Very hands-on. And he knew that you can talk in broad brush about anything, strategy particularly, but it doesn't mean a thing if you don't take actions on it. And to take action required professionals to really figure out how you get the troops there, how to get the ammunition there, how to get the food there. All of those little, gritty, granular details that some people don't like to do, they like to talk big, but they don't like to do the literal particular items, and Bradley was very different. Bradley was always thinking logistics. Now, many people will say, "Hey, I wanna buy a self-storage facility. It sounds like an interesting idea." They get all psyched on the basic macro of it, but that macro won't make it happen. Macro thoughts are more for amateurs because they don't have enough momentum to carry forward to actually become reality. Professionals are more versed in the details, "How exactly is this going to occur?"
So let's say you wanna buy a self-storage facility still in the year of 2023, how do we make that happen? We're already at June. Well, the first thing you have to do is you've gotta get a lot more micro. You have to have very small action steps that you can tick off a clipboard, just like if you were a pilot getting ready to take off. So the first thing you'd wanna know if you're gonna buy a storage facility is where, what is going to be the footprint of the markets you are looking at. And for most people, the safest way to play that game is a four to five hour driving radius from where you live. So if you take a map and draw a circle about four to five hours around where you live, these are the properties that are accessible by car. You can leave in the morning, drive out, look at a property, and return in the afternoon. That gives you a much, much greater sense of control than if you have to fly somewhere, because let's face it, flying is horrible. You gotta book a flight, rental car, hotel, and you feel, "I have no sense of control." On top of that, you have to do it many, many, many days, or even weeks, in advance to make it fit your schedule. But jumping in the car, that's like an impulse thing. You can just say, "Hey, I'm gonna go and look at that property," jump in the car and go.
So the first issue is what is your territory? The next issue is what size deal are you looking for? You can't just say, "I'm looking for a self-storage facility," you have to say, "Well, what price range am I looking at?" And we know that because most lenders will require at least 20% down, which would be five times the amount you have to put down. So if you said, "I've got $100,000 earmarked for a self-storage facility," then the price range you're looking at it is about $500,000, but it's not $5 million. So you've gotta get more finite, more granular on where you're looking for the facility and what price range.
Then you gotta figure out what kind of facility you're looking for. I, for years now, have been advocating, writing and speaking on the fact that the successful part of the industry going forward will be suburbs and exurbs. I believe the time is no longer attractive for anyone to buy or own self-storage facilities in densely urban markets. I think people are going to be fleeing those markets, the industry is massively overbuilt, and I appear to be 100% correct because we're seeing declining occupancy and rents throughout America and all these urban markets. But as people flee the big city, they're creating new consumer demand in suburbs and exurbs, and these are areas that are not over-built. Very little construction there. So that's the future where you wanna be. So on that note, within that four to five hour driving radius time, I would look for attractive suburban and exurban markets. Now, how do you then find deals within that footprint? Well, there's several ways to find a self-storage facility. Number one, brokers. Brokers are an excellent source of listings. You have online listings. Now, online listings, primarily through LoopNet, while interesting, have never been our largest source of deals ever. And then you have cold calling and direct mail. Those are your four basic types.
Alright, so from a granular perspective, how would Omar Bradley approach then those items? Well, you need to create a list of all of the self-storage brokers in the US and start contacting them, reaching out by phone or email saying, "Hey, what listings do you have in this part of America, in my little footprint of where I'm looking for?" And then as you see little niche markets that you think are attractive, let's blast out of these niche markets to self-storage owners and the suburbs and exurbs, let's do it both direct mail and also through cold calling. Well, how do you do that? How do we get granular with that? Well, we need to make a list of all the self-storage facilities in the markets that interest you. You can do that on Google. And from that, you'll have to go to the tax assessor's database, which is not as hard as it sounds. It's very simple. You will enter the street address of the self-storage facility onto that online service, and it will tell you the owner's name and address, because the taxing authority is the only one in the world who has that data, and it's real time, because they're always sending taxes out annually. You can then, once you have the name and address of the owner, you can go to any online phone number reverse lookup service, and it will give you the phone number to call.
Now, if you follow what I just described, you will be able to start looking at deals nearly immediately. But if you go forward with the broad-brush plan that, "I wanna buy a self-storage facility," you won't ever find anything. It's impossible to go hunting for a storage facility with more of a shotgun approach. It has to be more of a focused effort, one that has actual granular steps to success. JW Marriott once said, it's the little things that make the big things possible, and that is completely true in self-storage. If you really wanna buy a storage facility this year, you can still do it. There's still time. But like Omar Bradley, you gotta think logistics. You gotta think, "How do I actually get this accomplished? What are my action steps?" And if you follow those action steps, you can still successfully get something bought this year.
This is Frank Rolfe, The Self Storage University Podcast. Hope you enjoyed this. Talk to you again soon.