Manage episode 359982560 series 2557320
How to deal with problems with your properties? Why did I select self storage? How to get your first deal? Brainstorming exit strategies with your network. This is the talk I had with Beth Azor at her conference Women in Real Estate Investing Summit.
Watch this interview here: https://tinyurl.com/mr47yc8p Define "I learned everything I could about self storage"
Educating yourself, reading books, I hired a consultant that I heard speak on a podcast to help me analyze my first few deals.
How did you find your first deal?
It took me 2 years to find my first deal. I found it on crexi, I didn't have a team calling property owners to find off market deals, and the deal ended up being a portfolio of 3 car washes and a self storage. I didn't even bother asking anyone about car washes, that was mistake number one, and I didn't even go to a conference.
How many deals had you looked at before selecting this property?
Tons and tons, probably 1,000. It took me two years to find my first deal, I quit my job before finding it, which I don't recommend, you should find your first deal and then quit.
Where you worried about money?
No, I knew I could always get a job if it didn't work out. Everyone is fully capable of building anything from scratch.
What interested you to put an offer in this deal?
Car washes have a better cap rate because it's a much more hands on asset class, the numbers made sense.
What interested you about self storage?
Self storage is recession resistant, it does well in good times and in bad times. In good times people buy more, keep more and don't look at their credit card bills. In bad times, they downsize, they go from a 3 bedroom home to a 2 bedroom home and they need storage, and getting a storage is a lot cheaper than having that bigger home.
How do you like owning something outside of your market?
I went against my mentor's advice to buy things within a 2 hour driving distance from where you live and, for the car washes I don't like it, for the self storage, it's much easier to manage remotely.
How did you pick your lender?
You have to ask your local broker for recommendations, the sales broker in this case. The first couple of lenders said no. I kept going back to the broker to get more lender recommendations, and eventually one of them said yes. But 5 days before closing that lender called saying that they were switching the terms a bit, that because I didn't have experience operating a property, they'd like to retain the entire amount of the loan that I had in stock locked for the entire period of the loan. I called the president of the bank and I said, this doesn't make any sense, why would I even get a loan and not pay cash for it if you're locking my cash? We ended up meeting in the middle, putting a much smaller amount on hold for a couple of years, and after I prove myself as a good operator, they will remove that contingency.
You were now the owner of three car washes and a self storage, what happened on day 2?
Let's go to day 9 when one of the roofs caved! Thank God for Nationwide, they ended up paying within 2-4 weeks. The self storage has been smooth sailing, we have a local person that walks the facility about once a month, the tenants lease the units online. Today about 80% of self storage is still owned my mom and pops, and they're now retiring, they haven't implemented technology in their facilities. You can put cameras if they don't have it, you can install locks that will open with their phones. They are able to rent online, they get a unique code to the gate, you don't have to ever meet your customer.
Are all the car washes gone?
We're in the process of converting them, you have to keep talking to people and brainstorming ideas until you come up with the right strategy.
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