Are you a Prostitute, Thief or a Farmer?

All right folks, welcome to Monday Night Moguls. I'm Joe Downs. With me is Kristen Blanc. Kristen, how are we doing this evening?

I'm doing great, Joe. Excited to be here. How about you?

I am great. I'm excited for tonight. I'm gonna do a little bit of a 2-step dance here just to let people connect because I think there's usually just a wee bit of a delay. And I also want to just make sure we're on first. As you know, technology, not our forte.

It's all a learning curve.

Yeah.

And I'm glad it's you trying to figure it out, not me, Joe.

This is nothing. Is there an override? All right, well, Alvin says we're live. Gina sees— maybe Gina needs to update. All right, we're live. As far as we know, we're live. So we're gonna pretend like we're live. And we're gonna talk like we're live.

And it'll be recorded.

Yeah, all good.

So if they miss it, they can catch it later.

Well, again, I'll do the intro again. Welcome to Monday Night Moguls. I'm Joe Downs. With me is Kristen Blanc, and we will get into who we actually are in a minute. Um, but first I want to tell you why we're here, why we're doing this, what the show is going to be about, and what you can expect from us Each and every week. Um, first, this isn't really a show about self-storage or just about self-storage. That was actually the original plan, and the more Kristen and I got talking, uh, and the more we were planning the show, we were like, you know what, this show should really be more than just self-storage. So it's gonna be a show about entrepreneurship, because if you want to be in this business, first and foremost, you're gonna be an entrepreneur. So it's going to be about entrepreneurship, the decisions behind building something that gives you what you're actually after. And that's another reason we kind of pivoted to just self-storage. We didn't want to assume that people wanted to come here about, you know, just self-storage all the time, because what is self-storage? Well, and we will talk about it and you'll understand why, why we were going to pitch that— not pitch it, but make that the show first. You'll understand that even tonight, by the end of it, or even halfway through the show, you'll understand why. Um, but to be— to invest in self-storage, there's a series of decisions you need to make. And as we talked more and more about it, the— what became obvious to us is why are you making these decisions? Whether it's self-storage or not, whether it's single-family residential real estate, whether it's buying distressed mortgage notes, there were decisions that you made before that. And so we wanted to get to the core of that and see where that leads. So, um, what are those decisions? Well, maybe those decisions are about building something that gives you what you're actually after, right? So what are you after? Well, maybe it's your time back. Maybe it's money, more money. Maybe it's building generational wealth. Maybe it's, um, Retirement that isn't 30 years away. Maybe it's tax-efficient investing in real estate assets. Whatever your version of it is, it comes down to the same thing because becoming a business owner isn't about becoming the business owner or how do I say this? Isn't about who owns the business. It's not about owning the business. It's not about who owns the business. It's about what is the business doing for you, right? So really, so differently is, are you— do you own a business? Is that the goal? Or is the goal to own— or sorry, is you buying a job? Is that the goal? Or is the goal to own a business that's providing for you? So Kristen, in your own words, tell the viewers and the listeners— and this is also YouTube and it's being a podcast as well— so why do you, why do you think you and I have the right to launch a show like this in the first place?

That's a great question, Joe. And to be honest, I'm human, and you probably are too. And I've made a ton of mistakes.

Nice of you to make that assumption.

I've gotten it wrong. I've screwed things up terribly, and I'm pretty sure you have as well. And I think because of that, you know, we've collaborated and we want to share our stories so other people can learn through us. So hopefully they can circumvent some of the lessons that we did not.

We have screwed up, both of us. You like to point my screw-ups out all the time.

You're the one who typically does though.

And I'm sure you will on many, many episodes of the show. Here's something else worth knowing going in. Over the next 5, 10 years, there's gonna be a lot more solopreneurs and entrepreneurs created than at any point in history. A lot. Some by choice, a lot not by choice. Probably most likely because of AI, which means a show like this isn't just useful, it's going to be very necessary for most of you. So some weeks we're going to get philosophical with topics like what does financial freedom actually mean, because anybody or everybody defines it differently. Um, some weeks it'll be a straight how-to Right, how to do this, how to do that. Some weeks we'll bring on guests, might be from other asset classes. Um, we might have attorneys on, tax advisors, people who've built something worth talking about, right? Um, maybe some weeks we'll have 2 on at once, who knows. And then there's gonna be times where we throw up a deck, um, but only if the numbers matter, we want you to see the numbers, that type of thing, or if we're getting really specific, or if we have a guest that wants to. So, and we'll just mix that into the show. And yeah, it's, it's, it's going to have a storage slant. We're going to say it right up front because that's what we live every day, both of us, self-storage and other storage verticals that we work in here. But storage is not going to be the whole show. It's the asset class we found that works especially well for us. And who knows, maybe it will for you too. But right now, we're going to talk about all the ways there are to build wealth, and we're not here to tell you ours is the only one. All right, so who are we? I, um, Joe Downs. I, I'm CEO of Bellrose Storage Group, um, uh, of storagemobiles.ai. Um, I've worked in finance. I've owned a bar and restaurant in my past. I've raised, um, north of $90 million for 1031 exchanges. Uh, I, I started with a partner and still own a company that buys distressed debt, residential second mortgages. I've done hard money lending. Um, I've invested in, uh, residential real estate. I still own short-term rentals. Um, I'm an investor in multifamily. Um, uh, and, uh, you know, along the way I've done a lot of different things, but along the way I've made a lot of mistakes. I've lost money along the way. I'm not perfect. Um, I'm here because I think I've got stories to share experiences to share. And like we say over at Storage Moguls, you know, when we show people how to buy self-storage facilities, it's like one of our taglines is, it's like buying storage, it's like bowling with bumper rails, right? You know, you still gotta bowl the ball, we're gonna keep you out of the gutter. That's one of our taglines over there. I feel like that's what this show is gonna also provide differently between Kristen and I and the mistakes we've made and things we've been involved in. I think we've seen a lot. Have we seen it all? No, we're still learning, but we've seen a lot. And I think that's what you're gonna get out of this show is hopefully some wisdom. Getting thin up top and a lot of grays all around. So with that came a lot of mistakes and wisdom along the way. Kristen, what was your path here?

Well, my path does not sound as exciting as yours. My background definitely doesn't. Probably my life stories are more exciting. That being said, yeah, that being said, my background's business. I was in the insurance industry for 20-plus years, and then I switched into owning and operating residential real estate investing company, and then I moved into self-storage. I own some multifamily properties. I own some commercial resident or commercial real estate properties and self-storage as well. I ended up in self-storage the hard way through some life circumstances that I'm sure a lot of you would recognize and understand and probably have been through too. And I came out on the other side running a business that doesn't run me anymore. And for that, I'm grateful. And that's where I met you, Joe.

Exactly.

Life is great now.

I don't know if that was actually a positive way to say that. All right, so that's us. That's the show. That's what you can expect. Tonight specifically, here's the question we're going to chew on a little bit here, and it's a question you need to ask yourself because if you're here, you may be wondering this already. So if you're out there looking to invest in a better way for a better life, whatever that means for you, and I kind of ran through what some of those scenarios could be, the question you're probably asking is, will your money buy you the freedom you're looking for? Or just a job, a second job that comes with a bonus, unpaid overtime. Kristen, you've watched people get this wrong up close and personal. What's the trap here?

Well, I was one of those people that I watched get it wrong.

So, like how I delicately worded that question?

Yeah, yeah, pointed right at me. Thank you. Um, again, I learned through experience. I don't learn through others. I learn through experience. So I was one of those who thought everything looked really good on paper. The money looked fabulous. And what— and that's probably the problem, right? The money coming in looked great. But what I didn't realize, and probably a lot of other people realize, is that the money on the paper doesn't really show you the time that it's going to cost you to run that business. So to be honest, you really have to have a true understanding of what that business is, what you need to do to operate it, what it's going to cost you from your time, and what systems can you put in place. And you need to know both of those before you even sign and before you even purchase a business or an asset class. I learned the hard way, Joe.

Well, we both did, believe it or not. You were too kind to me. So Let's jump into it. And that— because that's the thing, most people can't say it out loud either. When someone tells you an investment going to give them freedom, what do they actually mean by that? What do they want their day to look like? I don't know that they can answer that question. Is it more money, same job? Is it their weekends back? Is it being able to leave the job without the phone running their life? Because those are all different goals, and most people never pick one. They just either look at the pro forma or, you know, whatever they see on paper, the dollar signs, and they get, you know, it's like a shiny object and that's what they go towards. And they don't step back and say, well, what does this mean? How will I operate it? Can I operate it? Do I even want to operate it? I mean, I've talked to a lot of business owners, not just in self-storage, in other asset classes, even in just business, not real estate. And I know people that owned Rita's you know, water ice franchises. And, you know, they all look great on paper, but, you know, you talk to some of those folks and they couldn't— I know someone that loves them. I know someone that couldn't wait to get out of them, right? So it all just depends on what that life, what that business is going to mean for your life and your lifestyle. Um, Kristen, what have you seen?

Well, I've seen that in my experience, and a lot of people I know, that a lot of— most of the times you can't get one without losing the other. And if you have both, then you have to be very intentional about how you set everything up. And truthfully, this was my old life. I moved from insurance into residential real estate investing, and I worked more hours. I thought I enjoyed it, and I did enjoy it, and I called it a win because I was making a lot more money, and I thought I had control of my time, but truthfully, I didn't. And Maybe that's fine for whoever's making the decision, but I just caution you that if you are making those decisions, that you just need to know what the deal is and the deal that you're making and what it's going to cost you.

So let's break that down for a second. You were in insurance and then you went into real estate. Did you think that move was buying you time, more money, freedom? What did you think that was? That was all of it.

I created my own prison though, but it was all of it. I wanted more money initially.

Mm-hmm.

Because I thought that would solve my time problem.

And that's what you had— you had before is the 9-to-5 insurance job. Was that roughly? Yeah. So, and real estate's always the first go-to, which I commend everybody for.

Residential?

Well, that's real estate is what I'm gonna say. And, and Typically everybody's first move is residential. Mine was, guilty as charged. Um, and I think I did all the things that you were doing as well. I was— well, I was broke when I first got into it. We'll cover that in another episode. But, uh, I started wholesaling and then I don't remember if we flipped that. I ended up getting a partner. We flipped first and then had a renter. We probably ended up with a renter because we couldn't flip. It's a long time ago and I might have blocked it, but I'm pretty sure that was probably—

Probably should have.

Blocked it from memory. But, um, That's, that's pretty much how most people take that first step. Most, not all, but most. And why? Because residential real estate is— we live in it, we've all rented it. You know, you don't typically— don't go from living at home with your parents to owning. There's usually a stop-off in between called renting. So you've, you've been there, you, you've had landlords, so you kind of know what it's like to be a landlord. Zillow's free. Um, they've got how many shows on TV that show you how to flip houses? Everyone you know—

Not real.

Right. So it, it's just the natural first progression, first step, first stop-off from, I want to, I want a better fill in the blank, right? More money, better life, more time, build wealth, tax invest, whatever it is, fill in the blank. That's typically the first And that's whether you're 22 or 42 when you're making that first move, right? So, you know, it's typically the first move. It's nothing wrong with that. I commend everybody that takes that first step. It's just, do we know what's entailed in taking that first step? And we'll get into that a little bit later. But in your words, sounds like you're saying you should pick your goal and then go shopping for the right fit. Which is something neither of us did.

Yeah.

Um, so for instance, if you want to keep your day job and invest on the side, a business that needs you all day is a problem from day one. It may be a good business on paper, might have a great pro forma, but if it doesn't fit your life and your work style and your work life, then it doesn't fit your life. Um, all right, so, and you said it yourself a minute ago, You were chasing time, not just money.

Um, well, I was chasing money, and then I found out I was really chasing time.

Okay, fine. Um, so let me ask you this: does the next dollar you earn need another hour from you at that time, another deal you have to go find, or does it keep coming whether you show up or not, right, when you're looking at these businesses?

Yeah. And to add on to that, owning it doesn't answer that. You know, you can own a consulting business and still work every hour yourself. You can keep chasing the next deal forever, which is kind of what I was doing. Or you can build a team that runs without you. And that's important if you, if you don't want to be a slave to your own business. And truthfully, the sign on the door doesn't tell you which one you bought. You have to truly understand that before you actually buy it.

And that's so—

you have to understand that. Yeah, asset class.

Yeah, I was just thinking about consulting, and my first thought was, of course you're trading time for money. But not necessarily. You have a consulting firm, and then you hire people and, you know, put it in place. Um, and I don't think, by the way, I don't think we're saying at all that working for your money is a failure.

No.

It's not. It pays the bills. It can fund your next move. A lot of times we have to work so that we can start investing on the side. Um, I, I think what we're trying to say is we just want people to know, go in eyes wide open. We want you to know what you're buying before you sign on the dotted line and be okay with that and then think it all the way through. So that's what we're gonna— that's kind of the theme of tonight. We're gonna talk through that. So, um, there's a blunt way to picture these these 3 kinds of incomes that I'm going to introduce to you here, right? Kristen, have you ever heard of the parable of the prostitute, the thief, and the farmer?

Nope, but I am not sure I like where this is going, and I saw the title on this episode, so I am curious what you're going to share with me.

Yeah, well, it's not actually a parable. It just sounds better that way.

But you're making— you're making stuff up. Great.

Here's what I mean by it. So the prostitute sells their time by the hour. You would agree with that? Um, doesn't matter what they charge. You could charge $500 an hour and have a fancy title— consultant, for instance. Um, but if the money stops the second you stop showing up, that's what you're selling. Agreed?

Mm-hmm.

So, Kristen, have you ever been a prostitute?

I, I knew I wouldn't like where this was going, Joe, but— You can answer that question any way you want. I got by your definition.

Well, we all have.

I can't believe I'm going to admit this on camera, but yes, yes, I for sure have been. And we all have. We all have, right? But Joe, I think I, I think I charged a decent rate though. Did you? Because I know you've been one too.

I, I would hope so. I would hope so. Um, how about the thief? The thief takes without building anything. What do you mean by that? They grab the quick win, the flip the shiny thing, um, but there's nothing left when it's over. You ever been a thief?

Yeah, I liked it, but it left me empty. I think.

What was that? What was an example of how you were a thief?

I wholesaled a lot of properties. So I really didn't have— I really didn't have anything. I didn't build anything. I just made connections. And I also lent a lot of private money for transactional real estate. And that was easy, just connections, not really building or doing or creating anything.

Yep.

I guess you are kind of creating, but not to the same extent as other ways.

Yeah, I mean, not— yeah, but we—

yeah. So I think for this purpose, I, I would call that a thief.

So we've both been approached.

You're taking, you're taking money out of other people's pockets to help them do what they want to do when they could have done it themselves. They could have found a deal, right?

But, but also at the— but the end of the transaction Like the prostitute, there's nothing left over. We have to do it again. Yeah, right. So we've both been a prostitute, we've both been a thief. Then you have the farmer. Uh, the farmer plants once and gets paid for years without babysitting it every day. What about farmer? You ever had any rentals?

I have had some rentals, and I hated every second of it.

Me too. Um, and that's the picture people have in their head when they, when they invest, right? They, they think, I'll be a farmer when I'm going to buy single-family rentals, right? I'm gonna plant it once, it's gonna work for years, you don't have to stand over it. Buying the field doesn't plant it for you, as you quickly learn when you're in residential real estate. Um, is that what happened to you? Did you come to that same realization pretty quickly as well?

I did. Not quickly, but I, I came to it. Yes. Okay. I like to learn slowly.

Yeah, I shouldn't have said— well, I was hoping you did quickly. Mine was pretty slow as well. Um, and, you know, I, I did the same, all 3, right? And I remember the day— I remember the days where I couldn't wait after my first single-family rental that was on paper gonna net positive cash flow, like $200 a month. I couldn't wait until I had 10 of them. Yeah, and then 20, and then 50, and then who knows? Because on paper and in spreadsheets it looked amazing, but we all know there's a lot more to that story.

A lot of headaches.

Oh yeah. So, uh, there's 3 reality checks you need to answer, or you need answers to, um, if you're going to buy or invest in any business, right? And I don't know if these are exactly the only 3, but here's the 3 that we like to lay out here, right? What will your personal day-to-day look like if you buy this business? So again, you're evaluating a business, whether it's residential real estate, whether it's a Rita's Water Ice franchise, whether it's a self-storage facility, insert hard money lending, whatever, insert business, you still need to ask these 3 questions. What will your personal day-to-day look like? You, Kristen Blum, me, Joe Downs, you, the viewer, the listener, what will your day-to-day look like if you buy this business or invest in this business? 2, can the role of the seller or owner that you're buying it from, can their current role operating that business be outsourced or hired for? Meaning, do you have to fulfill the role yourself? And 3, can you take a 2-week turn-your-phone-off style vacation off the grid and have the business still run itself? So there's a book called Buy Back Your Time written by Dan Martell, and he writes, if your business depends on you You don't own a business, you have a job, and it's the worst job in the world because you're working for a lunatic. I love that. Kristen, what's your take on that? Where is that right? Where is it wrong from your own experience?

Well, if I was speaking from you, it would be completely accurate, but me, not so much. I think the job part's dead on. You know, the same phone number, the same problems every day, day in and day out. And that was my residential real estate business and the grind that I had created for myself. But honestly, it wasn't the worst job in the world for me. I've had worse bosses for sure. I kind of liked working for myself. But, but you do need the systems and you do need the people. And the right people in the places. Otherwise, and I've said this before, you'll, you'll build your own prison and you won't be able to get out of it. Yeah. And I think that's kind of what his quote's referring to.

100%. And then if you're not a lunatic going in, you become one.

Yes.

Um, all right, so let's make this real because you've actually done this. You bought your own facilities. I mean, I, I have as well. Um, yours is a little different. And we can get into that if it comes up, but, um, before you closed on your first facility, right, did you really know what a normal week was going to look like for you? Or did you know what the normal week looked like for the seller? Did you ask those questions? You had— were your eyes wide open going in? What were you actually inheriting?

So you know me, you know that I love details, you know that I like to dig into things and that I need to see a path that is at least 90 to 95% clear before I can move forward. And I did ask those questions actually. So I did ask her what her daily, weekly, monthly activities look like so that I could have a good idea of what that was going to look like for me. Because my first facility I wanted to own and operate so that I could have a better understanding of what really goes into this business so that when I do get a third-party property management company, I could be a good manager. I could be a great manager and a business owner because I know exactly what needs to be done. And I thought I knew. I didn't. I got in there and it was a little bit different. So, but what I did was I started putting systems in place to help me free up some of my time and do things differently than how they were doing them. And really, that's the value-add creation to the storage facilities.

So that's interesting. So kudos to you, you actually answered 1 and 2 there. So you knew what you were getting yourself into, but you also knew you wanted to get yourself into it so that you could accomplish number 2, which is to either hire somebody or outsource it, right?

Yeah.

And in self-storage, we go third-party management would be outsourcing, right?

Well, Joe, if you recall, you know my story. You know why I got into storage.

I know, but the viewer and the listener—

They do not. But it was— I needed time. I needed my time back, and I needed income coming in, whether I was trading time for dollars. And so while I wanted to know how to operate storage, it was not my long-term mission to continue to operate the facilities. It was to turn them over to third-party managers. Initially.

Okay, so that, that was the goal getting in.

Yeah.

And do I ask this now? No, because I think it'll come up later. So the goal getting in was, I want to be able to turn this over to third-party management once I understand it, right?

Yeah.

And the reason is because you needed your time back because of the It's like a circular reference here. But yeah, because of your personal family situation, I feel like I'm dancing around unless you want to talk about it.

I will later. I think it comes up.

Fair enough.

Yeah. Let's just leave it at like, let's just leave it at you.

You had a personal family situation that required a lot of your attention.

Yes.

A medical situation. Can I say that? And, um, and so you needed the income without all the time?

100%. Okay.

Or at least the time you, you were spending on that treadmill of wholesaling and flipping and being a residential agent and being a landlord, right?

Yes.

Okay. So that's kind of the first exercise for anyone buying a business is Forget the title. You need to know what the owner actually does Monday through Friday and on weekends if that's part of the gig. And if there's already staff in place, you got to find out where the owner's job ends and the staff job begins, right? Uh, or the employee's job begins. Um, okay, so number 2, can the role of the seller/owner Be outsourced or hired, meaning do you have to fulfill the role yourself? Um, what does it take to hand the work over to somebody else, right? Those types of questions. So let's talk about what it actually costs to hand this off. Now you've already kind of already answered this part of it, um, Kristen. If someone's plan is I'll just hire a manager, which was your plan Eventually, right?

Yes.

What should they actually expect that person to be responsible for, and what does it cost to do it right? And I know it's gonna be hard to answer, that's gonna be very dependent upon the business, but yeah, can you give us the philosophy of how you look at that?

Yes, so I'll speak specifically to storage. Okay, whatever the plan is, you have to put a real cost on it. So when I was buying my first facility, I accounted for what it was going to cost for me to put a third-party manager in place because I knew that eventually I wanted to go that way. And if you're looking at the profit and loss statements and all of their financial statements, if the seller's been doing the work there for free and they're not paying themselves, right, this is important for you to recognize that because if you're going to use an employee or you're going to use a third-party management company, that money is no longer in the deal. So you just have to make sure that you are accounting for those additional costs if you are going to run it differently than how the previous seller did. And you actually need to know what that job is, the steps that they were doing, all the information, and you have to create a system and you have to put the people in place like I said earlier. Otherwise, you are just paying someone else to answer the phone calls That they're going to escalate to you. So you need to make sure you first understand the cost of what either you're going to pay yourself or what you're going to pay a third-party management company. And then if you're going to have a third-party management company for storage, then you need to make sure you have all of your SOPs in place, that they know exactly what they're doing and you know exactly what they're doing so that you're not going to be the one looped in everything and making all the decisions. going forward. Does that make sense?

Absolutely.

Okay.

Why did I look like it? I was—

no, I just didn't know if I was talking in circles or if it came out okay. I'm not sure.

I'm self-conscious about how I'm looking.

Were you listening, Joe?

I was listening.

Okay. Okay.

All right. So that's the first 2. Now the 3rd one. Can you take a 2-week turn-your-phone-off style vacation and the business still run itself? So Kristen, say the owner's gone for 2 weeks, customers still need help, bills still need to be paid, something breaks. What keeps running and what waits for the owner to get back in your experience? Like, how does that work at your facility?

So in my experience, for me, I can't speak for everybody else, My— I have a— the routine stuff is handled. I don't need to be involved in that. I have a boots-on-ground guy there that does all the routine stuff. He checks in with me when needed, and he only escalates things that are urgent or exceptions or that he's not comfortable making a decision on. So it doesn't happen often that I get brought back in because he knows exactly what he's supposed to do and he knows how he's gonna do it. We have a great Working relationship and trust.

Okay, so the goal, if I could sum this up from these 3, is it's not to know nothing about your business. You need to know everything about your business to run it and manage it, but you don't want to be the one person that everything has to run through. Otherwise, you have a job, you don't have a business. And we've all heard the expression working in the business versus working on the business. You can't work on the business if you're working in the business. And you should all be working on your business if that's what you're looking at. We constantly work on our businesses. That's the fun part of being a business owner. Working in it, being a potential bottleneck somewhere Again, if that's— that's a lifestyle choice, let's leave it at that. Some people will be very happy doing that, and I'm not here to chastise anybody if that's what makes you happy. In fact, that's what we're here to help people do, is show you how to become happy and fulfilled with a business, because working for somebody else is not the path to your financial freedom. Just usually isn't, folks. I'm not sure if when looking at opportunities, if you want to do this, if you're not sure what you're looking at, email us and we'll break the business down for you. You're looking at right here on the show. If you send it in advance, of course, we need it before Monday night to really break it down. And if you do, we'll we'll come prepared and we'll. We'll ask you questions and we'll talk about it. And or if you just want to ask on the fly, you know you're going to get what you're going to get—an on-the-fly answer. You know if you show up on a Monday night with a question. But if you email us at mogulsmonday@storagemoguls.ai, mogulsmonday@storagemoguls.ai, we would love to take a look at the business you're you're thinking about, and we'll ask you some questions actually back directly. Um, to make sure you've thought about these things. Um, all right, I want to talk about something nobody talks about in residential real estate, and this might be a little uncomfortable, but that's okay. And it might— this might be applicable to other asset classes as well. But, and I say it might be uncomfortable because it almost seems like the third rail of residential real estate. Um, I've already admitted— I was— we both have admitted we invest in it. Currently we're both invested in multifamily. I know that I still own, um, myself and as part of a portfolio, single-family homes that are short-term rentals, you know, Airbnb, VRBO, etc. So I'm not coming at this part of the show with, you know, a lightsaber and, uh, and I told you so. I am merely going to point something out. The rules have changed in residential real estate, and no one seems to want to talk about it. Complain? They do all the time. Do something about it? Well, what can you? The laws are the what have changed, but you can do something personally about it. And a lot of people aren't yet, or they're hesitant to, or they don't know what to do about it. And so they just keep playing by these new rules and hoping that the margins will get better, and I don't understand why. So before we get into storage specifically, I want to say something plain about the residential world. It was a good idea to buy an asset, build equity, get some appreciation, get some tax breaks with it. That part never changed. It was a good idea chasing those things I just said— buying an asset, building equity, getting appreciation and tax advantages— is still a great idea. All of that still holds true, always will. But how you do that has changed. Kristen, you've lived on the other side of this as well. You were a residential landlord as well, a wholesaler, uh, a home flipper, um, before the rules got worse, during and after even, probably a little bit. What changed from your perspective, from where you sat? When I say the rules have changed, what do you think I mean? Or what changed for you?

So What do I think you mean? I think you mean higher acquisition costs, higher taxes, higher insurance costs. But what changed for me really wasn't the law and the reduced profit margins, although they definitely got harder. It was my husband. He got sick and everything we owned— it made us realize that everything that we owned still needed us. Every property we had, every deal we were doing. We needed to show up for it. We were chasing the tenants. I was finding the deals, managing the contractors, selling the flip, you know, selling my flips, and then making all the calls and making all the decisions. I realized that nothing ran without us in the room, and predominantly me because I was the one who was running most of it. My husband still had a W-2 job. He would support me though. And that's when it really hit me and that I didn't need more real estate because truthfully, when I was looking, I created a goal for myself when we were in this situation and I immediately went to residential real estate and I put that goal on paper and I looked at the number of doors that I needed to, to reach that goal. And I quickly, quickly knew that, that, that wasn't the direction and the path that I was going to go into. Because I really needed something that didn't care whether we showed up or not. I needed money coming in on a consistent basis, whether we were there or not. And in my experience, I'm sure there's many people who have built— I'll use the word empires— or have built systems in residential real estate where they've stepped aside and it's working for them. But I didn't build that. I built it with me involved in every single decision, and I realized that I needed something different.

Yeah, and that's so true. And there's so many people that are— maybe have slightly different details, but the same story, right?

Yeah.

For me, well, it was the law. For me, when I look at this, that space, it The, the legal is the biggest factor of how the rules have changed for me. I, I have already acknowledged that I, um, have a distressed debt company. Before I ever found storage, one of the paths that I was on was to acquire real estate through the debt, not foreclosing on people and kicking them out of their houses, um, but there were plenty of, um, loans we saw, distressed loans we saw on already vacant homes. And, you know, I live outside of Philadelphia, so for me it was finding local opportunities because, you know, residential real estate, you want to be local. And I bought one on a house in Philadelphia, a first mortgage. Um, it was supposed to be vacant. It was not. Um, They were for— they were, um, the foreclosure was done. So I bought the, the, um, the already foreclosed loan and, um, or sorry, I bought the real estate that had sheriff's sale and, um, not realizing it was still occupied. It was supposed to be vacant. And it took me— I had no choice at that point, by the way. I tried to work something out with the, the guy that lived there. It was in the city of Philadelphia. And he just, you know, let's just say I didn't get into this business to displace people, but I had no problem displacing him. He was such an a-hole. And, um, it took me a year and several battles with the sheriff and the court and, uh, I don't know how many delayed ejection, um, hearings and, you know, delayed for this, and then there's winter and then there's this and then there's that. And by the way, they're running up water. Electric book because they don't turn any utilities off, and I own them all now. And so this guy's just living for free. And it took me—I'll never forget—I had my attorney after our—it was an April supposed to be an April ejection sale or April ejection whatever—and the and the they got another emergency stay. And I said, this is ridiculous. And like, what are you gonna do? This is the judge and the sheriff. And I said, I want the judge on record. And I had my attorney file an appeal that says, this guy has been going on for 12 months. There's no surprise here. There's no weather. There's no any reason that this shouldn't happen. And, um, I said, if you're gonna— I told my attorney, I want this judge on record that this is— he's allowing this to happen. And sure enough, the judge didn't want to be on record and allowed it to happen. So long story short, I, I got out of the whole thing, um, ended up selling the house. I never even, never even flipped it or, or rehabbed it to rent it. I was just like, I'm out of this. I, I don't want no parts of this business anymore. And it was in that moment I realized whether, whether you had to foreclose or eject, whether you're a landlord or whatever— and by the way, had another experience with all this during COVID Which anyone who owned property during COVID knows, people stopped paying, nothing you could do. So when I say the laws changed for me and the rules changed, it was the laws. You are— they're not on your side. And almost in every state now, there's still some states, you know, Texas, Missouri, whatever, that are fast closure, fast foreclosure, fast ejection states, um, but there's very few. And it's, it's just getting longer and more costly with more traps and pitfalls for the landlords about disclosures and this and that. And did you do this right and dot this I and cross this T? To the point where I said, I'm out, I'm out completely. The only one I had left after that was one single family left. It was my wife's first house. She refused to sell it until that tenant during COVID stopped paying. And then even she got sick and said, forget nostalgia. Let's get rid of this thing when they finally get out. So when I say the rules changed, those were the rules that changed for me, uh, and I had to go find a different asset class where the rules were on my side, no longer on, on my customer's side, which is, is ridiculous, right? Where— how have we gotten here? But we're here. So, um, if you're watching, if you're listening, and hopefully you're nodding your head going, yeah, you're right, I'm living that. I've had that experience. Or if you've never had that experience and you go into residential real estate, I don't wish this on you, but you're, you're, you're playing Russian roulette. You're going to have this experience at some point. You don't control the rules anymore. They're working against you. For what? For the, for the, the opportunity to own? Yeah, okay, the appreciation's still nice. Can you count on cash flow? We're going to get into other examples in future episodes, but can you even count on the cash flow? That $200, that $250 a month, that's gone in a repair. That's a washing machine, right? Forget roof, just a new dishwasher, fridge. There's your positive cash flow for the year. So, um, for me, it was, it was the rules, everything else, none of it just makes sense anymore. Um, except there's other asset classes where it does, like storage. Anyway, so we've acknowledged that we're, we're both in multiple asset classes. But we also both spent a lot of our time in self-storage, which is where we met and became partners. So let's put self-storage through some of the same tests that we just built for our viewers on YouTube and our listeners on, on the podcast. Kristen, does self-storage survive this litmus test that we're putting other assets through? How does it differ from a single-family rental?

Well, uh, Joe, before we get into that, I— you and I both don't live in landlord-friendly states, but I did invest in landlord-friendly states and still have multiple horror stories. So we'll have to combine them all and just share them throughout.

Save them for another episode.

Yeah. Um, well, you know, a rental house can look like a farmer's asset on paper. The rent shows up every month, but every repair is your call. If every move-out eats your weekends, If every 2 AM call hits your phone, that asset owns you and, and it's on your calendar too. And there's no emergencies in self-storage quite like there is in residential. And I, I'll just share just one little blurb. I did have people living in one of my units and my boots-on-ground guy called me up and said, there's people living in here. I immediately called the cops. I was on the phone with the cops. I see him on camera. And he's talking to them, and he kicked them out right then and there. They had 2 hours to get their stuff out.

Not 12 months?

Nope, 2 hours. And he asked me, he asked me if they could have 2 hours. The cop did. He goes, would you be so kind, they have their stuff here, to give them 2 hours to get their stuff out? I didn't need to give him 2 hours. He could have escorted them then. So things like that happen, but it's much easier to handle. And you're operating a business, you're not operating a home for somebody.

So, yeah, so the rent still comes in, but somebody's still doing the work to get it, right? So when we compare investments like you just did, or if you can compare yours, you're not just comparing income. So you get the residential income, you get the storage income, and this is on a good day, they're both coming in. What about the work behind it, right? What do you call that?

Well, I call it a job. I think anybody does, right? Um, and that's what I had. And what I found in storage is that it's like a farmer's asset in a landlord's world, that nobody lives there, like I said, and it's much easier to handle the problems. There's no true, true emergencies. You're not fixing somebody's toilet at 2 AM. And so that whole layer of work is gone. That whole urgency and immediate response is gone, which allows you time freedom, really, because you don't have to answer those calls and you don't have to solve those problems immediately.

Or even if you do, because someone's living in your unit, it's just a phone call.

It's not hard at all.

Kristen, walk me through one piece of that actually. Uh, at your self-storage facilities, can a customer pay without ever calling the owner? Can whoever runs the place see who's paid and who hasn't?

Yeah, and I'll be transparent. Um, autopay is amazing, right? I, I sometimes never talk to any of my tenants, and I'm not saying that's a good thing, but they can do everything online. They But where there's still work involved, and on the properties, on the facilities that I operate, I would handle this. But if I had a third-party management company, they would handle it. Or if you have an employee, they could handle it. But if their credit card transaction fails, right, then somebody would need to step in. Either I would need to step in, or the boots-on-ground person would need to step in, or the employee would need to step in and call the tenant and figure out why and have them resubmit. So there is some work to it, but not quite to the extent that there is when you're dealing with tenants.

And that's the whole point. That's why you go through this exercise. So even in self-storage, something can look automatic on the customer's side while the owner still has some work to do behind the curtain every day.

Joe, you and I, you're different though, right? I, you don't, you're not operating your facilities. You have third-party management companies. companies on them. So you would never get phone calls like that. You would never have to deal with that. And that was your choice, right?

You say that like I'm better than you, but it, but it does seem like you're jealous.

Um, I think I could get my— I could easily put third-party management companies in the 2 that I operate.

All right, well, tell us about that because you've lived this. You're on your— you run your own facilities, and that's the That's the exact test. So can you?

Yeah. So I guess we're answering the last, the last litmus test. Is this where we're going?

Yeah.

Okay, fine. So I, I absolutely can, uh, run these facilities without really being involved. But I said this earlier, I bought them with the intention of putting third-party management in place. But honestly, I, I've— after the 5 years, I, I don't need to. I don't need to bear that Because the amount of hours that I work on these 2 that I operate are— it's not worth turning over to a third-party management company. Does— is there profit in the company that I can afford to do that with? Absolutely. Was that my original intention? Yes. But the 2 facilities that I still operate, I probably am only putting in 10 to 15 hours a month in these. So it just doesn't make sense for me to give that up.

Yeah.

So I can go away whenever I want to. I can still operate these 2 facilities from wherever, and I have a boots-on-ground guy that can handle all the routine stuff. And the only time I would need to be involved would be if there needs to be an escalation or if there's an emergency. And I said this before numerous times, there's not quite that emergent— the emergent situations don't arise as frequently in storage as they do in in residential real estate, and they're easier to deal with.

And I think that's the whole difference right there, right? Your daily, weekly work is minimal. Yeah. Did you say 10 to 15 hours per month for 2 facilities? Yes, the 2 that I operate. Yep. So, so folks, that's, that's what you owning it instead of it owning you actually looks like in real life. Um, all right, Kristen, if the viewer and listener is following along, they Might be asking themselves, what's my next move? How do you answer that?

Well, I think this is going to be my favorite part of the show each week because this is where we're going to turn everything we just talked about into something that you can actually use. And I'm going to share this one sentence that we're going to start with, and it's, I want this investment to give me blank. And I just ask that everybody be specific. You need to know what income you're going to need, how much time you're really willing to give it, and you really have to sit with that and what you're willing to do for it. And then what I would do is I would go talk to the owner, whether it's a storage facility owner, whether it's a consultant, whether it's a redesign, whatever business you are looking into. I would talk to them and I would get a true understanding of what their day-to-day operations look like and what's all involved. And then I think you would have to think of what tasks do you still need to be involved in, or can you delegate and put systems in place so that you're not inheriting everything and you don't have to touch everything? To me, any type of business that I go into, and, and I know you are, Joe, I'm not quite as bad as you, but there are squirrels running around everywhere in my head. And I have 100, you've got 10 million, I'm sure. So we have all these distractions, and so we're constantly looking at different things. And I go back to my earlier statement, the numbers always look good on paper, but when you really sit down with it and really try to figure out what is it going to take from you personally, physically, and time-wise and financially, Does that meet your goals and the lifestyle that you're trying to create?

So the question worth asking yourself then is, um, are you buying a business or are you buying yourself a job? And it's kind of back to the beginning, and a lot of people buy a job without knowing it. And doesn't matter how much it pays, that's still the prostitute we talked about. It's just with a nicer title, right?

Yeah. So I typically— sorry, I cut you off.

No, good.

You sure? All right, I'll take over. So for me, moving forward, I, I would typically ask, um, I think I said this to you, right? For every job you wanna hand off, who is going to take it? What do they need to do to do it right? What it's going to cost you? And then run the 2-week test. You should be able to say what keeps running and what you're still gonna— and what you're still gonna have a say in. And I think that's important for all of us to do as a rule of thumb and as a test when you're looking at businesses or assets that you want to buy.

Yeah, and, and I'm gonna say this again, we said it earlier, there's nothing wrong with the job if that's what you're looking for. So just know that's what you signed up for. And, and I think, you know, basically we're back to where we started here, was will your investment give you freedom or another full-time job, right? So if it still needs you to run the day, plan for that. If the work's covered, the numbers work, and it runs without you start— without you standing over it, then you've got a real shot at the freedom that you were after. What if it's not quite there yet? What if it's like, like yours? Yours wasn't quite there yet, your first one.

Oh, no. I think it's good to know. I think it doesn't mean it's bad or good. I think it's good to know what needs, what needs to go into it. And you can decide if you want to fix what's missing, or you can look elsewhere.

Yeah, it doesn't have to be perfect. This is what we're saying, right? Like, you— yours didn't check all 3 boxes out of the gates, but you knew it would. So you went in eyes wide open, and that's the point. So folks, before we turn over to questions, um, that's what we're going to keep doing here each week— looking at what a business promises, what it really costs you, and how it's— how you can tell the difference. Different businesses, same questions. Kristen, any thoughts you want to leave our folks here with to chew on until next week?

No, I really— I like how this went. I think there's some good content, and I think we can build each week and go deeper into all of this. I'm excited.

All right.

Hopefully we gave them some things to think about and sleep on.

Yeah, I would— I'm going to leave folks with this question. Because I think it's a good one. When does doing everything yourself become the most expensive option? Because the work you hold on to can cost you more than you think. Folks, one more thing. I don't— do we have any questions, Gina? It looks like we don't, which is fine. First night, all good, folks. We'll see you next week. If you know, bring your questions. I'm not signing off just yet. I'm just going to I'm just saying, bring your questions next week. Don't worry if we're a little shy tonight. It's all good. Um, we— if you want more, um, storage, email us that as well. We're trying to keep this broad because, um, well, frankly, back to what I said in the beginning, I think storage is a wonderful vehicle. I think for a lot of you, not all of you, you will come to agree and, and probably take a look at it. And if you're interested in it, go to storagemuggles.ai. You can see what we're talking about. By the way, it's no cost to, to go there and sign up. Uh, there's no catch. We had a QR code on the screen there, but you can also just go to storagemobiles.ai. Um, and it's a free community. Again, we don't even ask for a credit card. Um, I think you'll come to the conclusion that it's a really, really awesome alternative to some of the other asset, uh, real estate asset classes. But the reason we didn't want to make it just a storage show is because I think we got to get to the root of why you're looking for something else first. And when you can answer that, like some of the things we talked about tonight— are you looking for more time? Is it money? Is it generational wealth? Is it tax-efficient investing? Then and only then, when you have clarity within yourself, then you can look at and weigh the different vehicles. Storage is a vehicle. It's a wonderful vehicle. Residential real estate's a vehicle. It's a great vehicle. There's other— Aretha's Water Rights is a vehicle. I'm not saying it's the best one for everybody. I'm not saying storage is the best one for everybody either. It's a great one for a lot of people. And yeah, we want to expose people to it because like us, we didn't know about it for 20 years later than we wanted to, maybe longer. So we are— we do want to bring, um, some sunlight to, to storage for all of you folks that only really think that residential real estate is the only place. We always want— we also want— wanted to get to the root of why you're even looking, because that's maybe more important than the vehicle itself. So folks, thanks for joining us tonight. If it was worth your time, subscribe, uh, I think it's follow on YouTube. Give us a like, a share, whatever the options are wherever you're watching or listening. We would appreciate it. Um, and stick with us each week. Um, I think you're gonna— I think you're gonna enjoy this show and what we bring to you each week and how it grows. So for Kristen Blanc, I'm Joe Downs. Thanks for spending time with us on a Monday night. We'll see you next Monday on Monday Night Moguls.

Thank you.