Day 90: How to Transition Into and Manage a Self Storage Facility: Complete Operations Recap

Howdy folks, and welcome to the Section 6 recap of the Storage 100. Did I say that right? Yeah, Storage 100 Section 6 recap, transitioning and managing deals. Going to give people just a second or 2 or 10 to log on, but I read something recently where you're You really shouldn't because it's not fair to the people that are on time. So it's quite the conundrum. So I'm splitting the difference, giving them just a couple more seconds, and we are off. So welcome, as I said earlier, to the Storage 100. Section 6 recap. Still slow playing it a little bit. I like the rule, but we have busy lives, right? All right, so I am Joe Downs with Storage Mobiles, and over the last 2 weeks we have covered everything from your first 30 days after closing to customer service, security leases, delinquencies. We did some capital raising, kind of shoehorned that in the beginning. And tonight I want to tie it all together. And by the way, if this series has been valuable to you, imagine having an entire community behind you like the Storage Moguls. You can join for free at storagemoguls.ai. That's storagemoguls.ai. It is an AI-native platform with GPT tools, multimodal learning across every storage vertical. We're launching in a few short weeks. And you will be able to join for free just like the Storage 100 and then advance at your own pace. And bonus, the first 500 to register for all that free content just like you get here will also get a very cool free tool, a quick deal analyzer that we built and we use all the time ourselves. So it's yours for free if you're one of the first 500 to register at thestoragemodels.ai. All right, we've hit a huge milestone in this section, moving past theory and into advanced mechanics of running a successful storage business. Uh, and this section was all about the details that turn a good deal into a great protected and tax-efficient business. We focused on building your financial fortress, ensuring you keep what you earn and protect your investors. And these strategies separate the serious operators from hobbyists. So tonight we're going to recap the key takeaways from each module in this section and look at the roadmap that got us here. And it's a pretty good view of the 4 pillars that we mastered in this section. So the financials, operations, legal, and tax covered a lot of ground here across these pillars, and you should feel pretty confident about your ability to manage the money and the risk because the pillars build on each other. You can't manage the business without a solid financial plan, and you can't protect your assets Without a strong legal framework. So we move past just finding the property and focused on the mechanics of the deal itself. And remember, the key takeaway is that you have to master all 4 of these areas to succeed, and then if you so choose to later scale. So let's start by reviewing the financials, which is where every successful deal begins and ends. Remember we talked about the financial reality check? It's crucial because it forces you to plan for the inevitable, the valley of death in year 1. It's coming. Negative cash flow, it's normal during the initial lease-up phase. Don't panic though. You won't panic though because you planned. You planned for this by setting aside working capital because we covered this. Conservative underwriting is your shield against default. Never assume 90% occupancy by month 3. Remember that. Realistic projections will save you from that financial disaster. We introduced the waterfall structure, which is the financial architecture that aligns interests with your investors. And this is the financial planning that allows you to sleep at night. All right, so that was a quick recap on understanding the money part, which means now we need to turn to the operations that generate it. So the first 30 days, remember, they're the most critical period for setting the foundation for long-term success. Your most critical hire is the manager, where in the hiring process you need to prioritize their sales ability, reliability, and attitude over their previous storage experience. Those— all those things matter more than their storage experience. Can't teach that. You can teach them storage. They are the face of your business. Management software is the brain of your operation. You might choose a cloud-based system that automates payments, move-ins, And gate access— you don't have to be there. Establishing standing operating procedures, or SOPs, that will ensure consistency. Document every process so the business runs without you. These are the things we covered. And now with the operations foundation set, because you'll have them set, then we look at the entire structure with a solid legal framework. So we took a look at the legal framework because it needs to be your financial fortress, protecting you and your investors from lawsuits and disputes. The private placement memorandum, or PPM— remember, that's your warning label. It discloses every possible risk to the investor, which protects you from litigation if things go wrong. And the operating agreement is the rule book that defines how the company's run, covers the profit splits, voting rights, what happens if a partner dies or gets sued, for an example. And then the subscription agreement is the ticket. That's the actual contract where the investor commits capital. and agrees to the terms of the PPM and the operating agreement. Remember, good contracts make good partners. Then the final piece of that puzzle, the tax strategies that ensure you keep your hard-earned profits, because it's not about how much you make, it's about how much you keep. Remember when we talked about the K-1 form? That's your report card passing through the paper losses that offset your passive income or other passive income. This is the magic of real estate. And then cost segregation— that's the ultimate tax shield, accelerating depreciation to create massive deductions in year 1. You must use this on every acquisition. Then there's the 1031 exchange, which allows you to defer capital gains taxes indefinitely by rolling profits into the next deal. So you can literally swap your way to generational wealth. These strategies help ensure you keep maximum amount of your hard-earned profits. All right, now let's shift gears and talk about how important the engine that drives all this wealth is. What engine is that, you ask? The operational excellence engine. That is where the rubber meets the road and where you protect your asset value. It's the difference between a successful facility and a headache. Remember when we talked about the golden rule? It's simple: be friendly but firm. You're running a business, not a charity, and consistency creates respect. Proactive communication is key. Notify tenants early and remind them often. Silence creates anxiety, but updates on situations, well, that builds trust. So, you have to enforce your rules consistently. Late fees and auctions are not optional. They protect your revenue and the value of your asset. All right. We've covered the structure and the taxes. Now, let's zoom out and see how these— all these pieces fit together To create the big picture and shortly get to our incredible guests. So this slide kind of brings everything together from Section 6, showing how the structure and the strategy create that generational wealth. We spent the last week on the advanced stuff that separates the pros from everybody else. Remember, the legal framework is your shield protecting your assets, defining how the money is split through the operating agreement, and then operations being the engine generating the consistent cash flow that fuels the growth. You need a well-oiled machine because finance is the fuel. Using smart debt and tax strategies maximizes returns and minimizes your tax burden. But when you combine a great deal with a smart structure and zero taxes, you create a powerful engine for wealth. The deal gets you started, but the structure and tax strategy builds wealth and helps you keep it. But you can't do that unless you know how to operate it. So What happens? And one of my favorite sayings is in in in storage when we're teaching people through our through our academy and through our our platform storage mobiles platform is dog chases car, dog catches car. I mean, you're out. We're always out there looking for the storage facility, and then we find it, and we negotiate. We get under contract, and then it's now what? Right? Dog chases car, dog catches car. Now what? So. The Now What people are here, and I am so excited because I know them personally and I partner with them, and I'm excited to, to expose them to you. They've, they've, they've, uh, they've mentored a lot of folks that, that, or they've helped co-mentor a lot of folks, um, that I've been involved with and my company Bellrose has been involved with. They're literally not just teachers and preachers. They are out there doing it themselves with their own facilities Every day. So they're not just mentoring others, folks. They're, they're out there actually pounding the pavement, driving for dollars, doing all the things, the grind, the grit, doing all the things that it takes to source, evaluate, underwrite, and close and manage self-storage facilities. So who better than Rod and Kristen Blanc to bring in here? If I can change these scenes and bring them— here we go. Rod and Kristen.

Hi, Joe.

Welcome to the Storage 100. YouTube series. Seriously, thank you both so much for being here. It's honestly everyone should be honored to have you guys here because like I was just saying, I think you guys could hear me. It's not just what I love about how what we do and how we do it, you know, is we're not just teachers and preachers; we're actually out there doing it. So there's been folks following this series and then always catch us. live, so they're— they might be, uh, watching it at a later time because we can see the views and the shares. So thank you everybody, and the likes and the subscribes. Uh, anyway, uh, we appreciate it. So, but for them, Rod and Kristen, it's so awesome that we get to— you know, they get a window into you because most people don't, don't have that. And I know we have a lot of folks that are looking at stores, they've been following the series, they're following along, they're trying to figure out where the entry is, but You know, and they've, and they've had chances to talk to, to, you know, Jack from Bellrose about underwriting, and, and Tim. Um, and even last, uh, our last live, we had Anne Mino talking about SBS, which I think it's starting to come together as real for people. Like, they're starting to chase the car and realize they can catch the car here with, you know, finding a storage facility and, and, and, uh, and actually negotiating and buying it. But then it's literally like the, oh shit, right? Uh, now the work actually begins. Like, the fun part's over, depending on that, you know, who you are. For me, the fun part's over once I hand it off. But, um, you know, you guys take care of the really important parts, like the how the money is actually made and how we don't lose the investment, how we grow and how we make a lot of money. So, um, thank you both for being here. Um, can you give me a little window, or give, give the, the listener, the, the viewer a little window into, um— well, I guess I don't, I don't want to jump too far ahead here. Uh, well, yeah, no, no, let's put your mentor hats on first before we get into who Ryan and Kristen are and how many facilities you bought and what you do on a day-to-day. But let's talk about the mentorship role. So Jack and I, you know, through through the mentorship program, we we help students find deals or they found the deal and we make sure it's the right deal. You know, all the guardrails are in place and you guys are just an extension of the guardrails. What's the when when we hand a student off to you? I love how I'm taking a lot of credit for this. When Jack hands a student off to you, what are what are some of the where do you step in? What do you do for them? I know Kristen. You both have interaction, um, immediately in different ways though. What are some of the things you guys do? And then if you wouldn't mind, what are some of the mistakes that you see people almost make? I know we don't let them. Where do you see the confusion or the, or the, the potential pitfalls or, you know, mistakes we help keep them from making? I don't know if, um, who wants to go. Kristen, why don't you go first?

Sure. Um, well, we obviously get handed off from Jack. They're under contract, and so Rod and I meet with the students.

And Joe. Jack and Joe.

Of course, Joe. Sorry, I didn't mean to insult you.

Jack without Joe.

So, um, so Rod and I get introduced to, um, the students that are under contract, and we sit down with them and we go over due diligence checklist. We also let them know what seller deliverables that they need to start requesting ASAP. We help them go over those seller deliverables because there's a lot of data and information because the broker or the seller have created this picture in the And it's your job to come in with owner's hats and make sure that the story that they're telling you is actually accurate and the numbers match up and everything matches up. And if not, you're constantly reevaluating your pro forma based on your findings. And so we come alongside them and help them do that. We also— I'll let Rod step in now because he's a very integral part of actually going out and visiting the site. with them and through an owner-operator lens.

Before we get to— I'm super excited to get to Rod in a second, but before we do, what, what are some of the examples? Because when you say the, the seller deliverables, can you get— walk through what some of that looks like?

Sorry, that was broad, but we definitely need the rent roll, right? We need financial statements like profit and loss statements. We need tax returns because we are verifying That they're receiving the rents that they're saying they're getting. We're verifying how up to date these payments are. We need to find out how many people are in auction status, late status, lien status, all of that. We need to take their profit and loss statements and verify their income that's actually coming in, what expenses they actually have. We need to compare that to their tax returns to make sure everything is lining up. We are also asking for a property management summary from there, just to get a better understanding of the number of move-outs that they're getting in on a monthly basis, the number of move-ins they're getting in on a monthly basis, the number— the rents that they're collecting, the late fees that they're collecting, any auction fees that they're collecting. And I think there's a— there's probably a list of 30 things in the seller deliverables that we're asking for, but those are really important. To help create a financial picture, right?

So I, I have an interesting analogy, and we're gonna get to Rod in a second because Rod's gonna take us to the physical site, and we can probably imagine what's gonna happen there. I still want Rod to go through it, but where I think a lot of people— or what I don't think they understand, Kristen, is what you were just talking about is, is what Rod's gonna help us— and again, I don't want to steal anything from Rod here, but he's going to help us understand what the physical status of the facility is, right? And we'll get to that. But Kristen, what you're talking about is the financial and management status of the facility. You're basically saying we need to know, and we require to know exactly how this seller has been operating this facility, from not just from a financial standpoint. Some of that, by the way, we had in advance, the P&L So yeah, because that's how we made the offer. That's how we got ourselves under contract.

If you're lucky. Some of them don't have that.

True. But we've put together enough of a picture to, to understand that we wanted to spend money on contracts and attorneys to get to this point. But what you're saying is there's— you're doing a financial inspection.

Yes.

And an operational management inspection of that facility. Both to— tell me if I'm wrong here— both to verify what was being told, but also find the holes and the gaps in the story that was told. Is that, is that an accurate statement?

100%. Uh, very accurate. Um, there's a lot of shortfalls there too, and people who aren't experienced with storage and what they're looking for, you know, because the brokers will tell you that they're 90% occupied Right? But then you get the rent roll and you see— let's just use an example. They have 100 units, right? They're 90% occupied. But you look at the rent roll and you can tell that maybe the managers aren't doing what they're supposed to be doing, and they probably have 20 people in auction status. So are you really 90% occupied when you take over? Because day one, guess what you're going to have to do? You're going to have to start sending them notices. You're going to have to start either collecting or auctioning off those properties. process. So you need to make sure where you are from a stabilization standpoint when you're taking over. Um, and a lot of people miss that, honestly. They go based on what they were told and don't really know how to dig into the details.

Okay. And is it fair to assume that— I'm gonna use auctions and overlocks and, you know, um, units with statuses like that, right? Or there might be some unknown statuses or statuses that don't match up with what you're being told, right?

Yes.

Might be a nice segue into switching to Rod here. Is it fair to assume that that analysis is happening at or before I go see the facility, if I'm the buyer, with Rod, who's going to walk me through it so that I, I know, hey, these 15, 20 units, we need, we need you to lay eyes on them, we need to know what's going on with those? Is that, is that something that also happens as part of this process?

Yeah, uh, yes, we typically try to get the latest information before he goes out and meets the— meets the future buyers, right? So that we can go through— we can't open these units up, right? But we just need to make sure, is there a lock on this? What's going on with this?

No, but, but with the owner there, right, the seller there, we can ask specific questions about certain units and lay eyes on them. Like, hey, this one says it's rented but there's no door on it type of thing, you know, as an example, right? Is that fair?

Yes.

Some of that happened. Okay.

100%.

All right, Rod, you've been waiting patiently and I appreciate it. I know you're chomping at the bit to get involved here. And understandably, because you do such an incredible job. The feedback I get, both of you, the feedback I get from students working with both of you is incredible. But Rod, what's a day in the life of a day with Rod like?

Let me answer that.

Kristen, Kristen, don't answer that.

We need to extend this like 2 or 3 hours.

From— here's the qualifier— from the eyes of a student who doesn't know you as well as your wife.

So the other day, uh, one of my students, uh, really put a good analogy of it. Like when you go and buy your first house, you know, usually you have like your dad or your mom with you and they're kind of saying, hey, you know, don't worry about this, we're Don't worry about this. This is okay. Uh, you can live through that. That, that's really the analogy because, Rod, you're, you're like our dad. You come with us onto the storage site that we're gonna buy and say, yeah, the tires are good. Hey, the roof is okay. You know, and, and that's what it is. But we look at the whole facility, right? And, and one of the questions I asked him was, hey, you know, when are you owning this, right? And the student's like, yeah, I'm going to be, you know, closing in 60 days. No, no, no, we're walking the day like you own the facility, right? This is like your facility. What is wrong? What is, what is necessary that you see or you have issues with or you just don't understand? And then we, what do we, like Kristen said, I'll take the rent roll. I'll take any other reports that they have, if they have a survey or otherwise, and we touch every lock. We do. And it's just to say— and it's basically to verify, is, is that person real? Is that— oh look, this one says it's rented but there's no lock on here. And we ask in person, hey, can we open any unlocked units? You know, and if we do, if we do find something, we always say we'll take pictures, show them to you as soon as that happens, so they— that we know that we're being totally honest. Um, and usually you find one or two things that are like, hey, we just found out this unit needs to be cleaned out because these guys left the big trash and we The owner typically thanks us. Hey, that's great to know. Um, we find out, you know, hey, I got 20 of these things, they're supposed to be overlocked. How come there's only 5? You know, did they get caught up? You're showing me the rent roll because you're just— that's validating your financials, right? You're on site, and, and this is, this is kind of the, the math validation. You're doing a physical audit of the actual sheets of the renters that are there, right? So that's only one aspect. The other aspect is, hey, how does it— again, it's dad walking around with you at your new house, like, can, can I get away with this gravel, right? Is that going to be okay? How's this fence working? Oh, it squeaks really loud. Is that a bad thing? You know, and then I start talking about the what I call the wants and needs, right? Everybody wants the Cadillac, right? But you know, when you're buying from a mom-paw or you're buying like a in the secondary tertiary market. You may be buying more of the lesser model. Let's just say you're buying the GMC, you know, you're buying the Honda. You may not be getting the full Cadillac because you're not paying for the full Cadillac. Now, there are people out there buying the Class A's, and, and you can do that, but typically the first ones that, like, Kristen and myself, you know, you're buying in a tertiary market or a secondary market, and you're buying from like a mom-and-pop or otherwise that hasn't done a good job But they're not going to go and paint the facility. You may want that. That's where we got the wants. Oh, I'd really like to see this thing shiny. Well, yeah, but it's rented, right? You're renting a space. Somebody wants a roof on it that doesn't leak. Somebody wants a door that works so they can lift it up and down, and they want it to lock. That's what they're asking for. Yeah, we start defining that.

And for, for folks who, um, weren't catching what Rob was saying there, and because I've said this, use this analogy a lot as well, you still have an inspector there. You have the property inspector there, just like you have a home inspector. But Rod's analogy, which I use all the time, and I, I should be more sensitive for those who have had a father there with them, who were fortunate enough, like I have been, and sounds like you have been, to have a father, their father, father-in-law, whatever, walk a property with you to just give you the peace of mind because they've been through it all before, you know. And I'm thinking of the The home inspector's job is the CYA, and I love our home. Our our home. I almost said home. I love our our property inspector. We use fivefold technology. David, phenomenal. He's gotten a little more reasonable over the years, but you know the job is still the CYA, right? So it's really nice to have someone, a different set of eyes whose job is not CYA, right? Whose job is not to point out every single thing. So Their job is covered, but in doing so scares the living daylights out of you into buying that house or that storage facility, right? Because if you just add up everything that they say could potentially be wrong, you know the deal doesn't make sense anymore.

Right?

Nice to have that father or the the rod father with you to I just came with a rod father. I just came with a new nickname for you.

Yeah.

Two for two, two days in a row here. Um, let's go with it. Let's— you got the Rodfather with you.

You got the Rodfather. Exactly.

Who's basically, you know, saying, look, and that was your point, this is nice to have, right? Because there's always that first-time home buyer is like, I don't know, the roof isn't exactly 30, it's, it's 5 years old. It's, you know, or, you know, you don't know what you don't know. You don't know if it's good or bad when you're brand new, right? And that's the same situation here. You don't know if this is a— like you said, you brought up the gravel. Is that gravel just fine? I remember my— the first time I started looking at storage facilities, I was like, gravel? We got to pave that. Well, that would be incredibly stupid in a market where nobody cares. By the way, this thing's full and it's gravel, so they obviously don't care.

Yeah.

Um, and everyone in the market's gravel. But, you know, my head, not knowing, thought We need to pave everything. Well, that's incredibly stupid. So where was the rod father for me? Um, I didn't have a rod father, but now our students have rod fathers. Um, no, we had mentors. But, um, no, but that, that's, that's literally it. I just wanted to make sure people understood what your role was.

Oh yeah.

When you're— so when you're there on site, you're still there with an inspector who's going to deliver—

Oh yeah.

A report you paid for, but you're walking around going That's a, that's a nice to have, but this we have to have. This is a deal, a deal stopper here, right? And I want to take that opportunity to ask you just to highlight some examples that you've been on tours with students recently, site visits with students, and we saw— you saw, like, I— we saw, Rod was there in spirit, um, you saw, um, you know, this or that. What are some examples of things that were showstoppers— or not showstoppers, I shouldn't say that because the students went on to buy the facilities— but were items that needed to be renegotiated? And, and what were they? What were some examples of it? And, and how much did that help having you there? And what did that save them?

Yeah, so a couple examples. Uh, one of them, when we were on site, and it's usually Another thing about being on site, and when you get there, is you get to figure out the traffic out front, right? Literally, first thing I do is I just, I just listen, you know. Is it loud? Is it quiet, right? I like to have loud. That means cars are driving by. But sometimes you run into, uh, um, actual people, tenants there, and you ask them, hey, you know, hey, we're looking to help out the management company. You just kind of— you don't tell them exactly you're buying it unless the owner's already told people to sell it, or if out there, but you kind of say we're just looking to make sure there's improvements, kind of helping out the owner. What do you not like? And we get that immediate feedback. Like one of the facilities, uh, we got said, hey, look, that drain down there is sunk down so much that my truck trailer— my truck, uh, tongue on my truck for my trailer hits it and drags through when we go through, right? Well, the inspection said, hey, this needs to be kind of fixed, but When we actually said, heard it from the the actual customers, when we went back and talked to the to the actual broker on that deal, said, "Hey, look, this is a liability, right? These guys are ruining their cars, and we don't buy liabilities, and you should not be selling a liability." So it helps to work on that negotiations. Other things we would find is like, you know, not all the times you this the if you're it's like a. You're a remote owner and they're, they're operating, not all the time they get to see it. And sometimes their, their boots on ground doesn't. So you're kind of auditing their boots on ground. One of the facilities we found just happened to have a, a leak and it caused the wood to rot. Well, when you have rotting wood, you also get termites. So that ended up having to get renegotiated. So in those 2 deals, uh, the first one, I think he ended up getting $25,000 Hello. 70% seller subsidy on it. The other one, he ended up getting close to 75% overall, said and done, with other things that we identified through the thing. Now, we weren't picky, we were just like, hey, this is this thing. Like, one of the things there when we were there, like, a— like, the inspector can only see what the inspector get into. So one of the sites actually is the same guy who had some wet spot There's a building on it, right? And the inspector said, can't get in the building, it's locked, right? Well, all this— we're supposed to be able to have access to the actual operations building. Well, we told the, uh, told the seller, hey, look, we can't buy this not knowing what's in this, this unit. So you need to open it up, take pictures, and send it to us so we know that it's empty. Well, when they opened it up, they found out somebody was living in it. We would have had to take care of it. Had he bought that, right? The owner had no idea that anybody was even living in it. Even the boots-on-ground guy had—

He wasn't on the rent roll, Kristen?

Nope. No, no, it was like a spare building, right?

It wasn't— it wasn't a storage unit. It was— No, no.

And then after we found that, it was a house.

They saw it when they went there for the site visit.

Yeah, yeah, it was pretty funny, but it became a great office for the boots on ground. He was like, oh great, my old owner never did anything with it. So those— I mean, all these things have added up. We've— there's several others that we found out that, you know, you hear certain things that the seller says. Like one time the seller said, well, somewhere over here is a septic field, and we look over there and he's got some storage units on it. We're like, well, we definitely know that we need an ALTA survey, which is basically a site survey. It tells you everything that's on the site and what's been under the ground or above the ground based on historics. Well, we found out that he actually built the storage units on top of an active septic field.

Smart.

So again, we don't buy liabilities. So that was a $20,000 move.

It wasn't even his septic, was it? Wasn't it the neighbor's?

No, it was the neighbor's septic.

It was an easement.

It was an easement into the thing, so he had no idea. This guy had bought it five years before us, had no idea, put buildings on it. He never did his inspection. He didn't have the Rodfather on top of him, and it just you know.

He likes to nickname Kristen.

Gone through those things. So having that experience has saved you know future liabilities. It's saved on on actual having to take care of certain things because. Certain maintenance items need to be covered, and we should point all those out. We go at night and we go at day.

Yeah, I mean, and it's critical that, that you do all that. What actually, uh, why, why do you go at night? You might as well just share that.

Well, you want to see, one is what's the area like at night, right? Is it— is the area around it bad? Am I got hoodlums that are hanging out because I don't have enough lights or I don't have enough cameras? Can I get into it if I say that I have a 24/7 gate access?

Right?

Those things. Is it dark? Can my wife go to the storage facility on her way home to pick up some extra Christmas stuff? Because I love Christmas, as you guys know, and bring it home. If the facility is dark, she's not going to go. Absolutely not. Right?

She—

and I don't want her to go.

I don't think I'd go anyway. I'd send you. But that's a story.

But that's the whole thing.

We need to know. 65% of storage decisions— I think 65% of storage decisions are made by the female. So that's, that's critical. But, and, and that's so important, like, Rod, that, that extra effort, that little bit right there is what makes what you're doing and Storage Moguls and the academy and the education so important. You don't get this everywhere.

So just add to that real quick because We always tell the students, look, just because we're finding these things doesn't mean the seller is going to give you any money. So it's very important that we run our numbers, including all the stuff that needs to be fixed, to make sure everything still works, right? You need to find where you need to be, right?

That's such a great point, Kristen, because the deal— I think what you're, what you're trying to— or maybe one of the messages, you might have multiple messages, but one of them I think is The deal still needs to work on its own, and the deal doesn't even get to you guys unless it works on its own. So I think maybe what you're adding on there is if we do find these things, it still needs to work on its own because the seller might not play ball. And now it's a business decision, I think. What else did— I cut you off there, so I apologize. What else did you want to add?

No, it has to work on its own because if they don't give you what you need or what you're asking for, if it doesn't work on its own, then you need to get out. Or if it does, then you then you should stay in, right? It would just be a bonus if they did give you this seller credit or they did fix these things, right? So you still have to really scrutinize and underwrite the deal and know your numbers based on all of this information that's coming into you. You're constantly reevaluating based on what information you're receiving. So you know where you need to be.

Right.

For instance, Rod and I bought our second facility. We bought it, we bought it at such a great deal. But when we did our inspection, we knew that we needed to replace roofs for $60,000. We tried to renegotiate the deal and the seller said no. But guess what? Rod and I still bought it because we knew it still worked, and it worked very well even with putting in $60,000 for 8 new roofs.

Yeah. And Joe, just to add to the key point, so when we walk away and we get the inspection report from Fivefold and David, right, I'm— we've already walked the site. So the cliff that he shows in that first page of how much these things will cost We're well aware of what it is, and as a matter of fact, usually when I leave, I say, "Okay, as soon as we get David's report back, we're going to already be planning on calling these guys to get quotes. When we see something is actual need to be fixed, we will go and get three quotes from three local contractors so that you not only have you walk the site, you've also have an inspection report that talks about it. And now you had a third-party person who comes in and says, "Yeah, this this is going to cost us to." fix, and it probably needs it because here's an electrical issue. Or, hey, yeah, I did a roof inspection for you after we saw that it had some potential roofs, and you have about 2/3 of these roofs done. And it gives you that thing to say, look, you were telling me that I'm buying dry facility where, you know, people's stuff is dry, but actually I'm buying now a liability because it's a leaky roof.

Yeah.

And those are the portions that we are able to work directly through. And having their eyes, having their own eyes and my own eyes, and then The third party. And David, you really have a strong case for any renegotiations you need to do.

Doesn't mean they'll give it to you, but—

Doesn't mean they'll give them to you, but you— that goes back to your math then. Okay, I budgeted $20,000 in my capital expenditures for any fixes I need to do. I have to put in $100,000 with the roofs. Is he— and the best thing about it, now I tell the broker, they have to tell the next person. So That next person is going to know right at the start. Maybe they didn't know initially when you went through, but now it's an obligation for that broker to disclose these items.

Not only that, they don't want to have to, and they don't want to—

yeah, they don't want to have to go through this whole process again. Exactly.

If they really— if they're truly a seller and they're reasonable people, they're going to work something out.

Exactly.

Um, I was about to let you go, but we have a question from From Dallas. Let me throw it up here. Um, show it. So when you say the deal has to work on its own, what minimum in-place DSCR do you personally look for before feeling comfortable moving forward, Kristen?

Thanks. It depends. Uh, it depends on what bank you're financing with. I typically like a 1.25 within the first year. Um, I think Anne was on last week. What did she tell you? They wanted the first year to be 1.15?

Yeah, I think SBA is 1.15. They can go a little lower if it's a special situation. If you're stabilized or trending towards stabilized, I think that's where they want to see you. It also depends on, you know, there's other complexities of the deal, but yeah, typically 1.15. I think 1.2 is ideal.

Yeah, and that's if you're fully stabilized and operating, right? Right, if not, then obviously it's gonna take a few years to get there and you need to make sure you have operating capital to cover you during that time.

Yep, good question. Anything you guys would like to add? Any advice to any couples like yourself out there that are thinking about going into storage to save their marriage? No, I'm kidding. I'm not saying that's why you did it. Um, or, you know, here's the classic sets of people. You got the couples like you guys, you got the 2, you know, brother-in-laws, right? The, the neighbors that are friends or whatever. Or, um, or not to alienate the power women, Kristen, especially since you recently spoke, uh, or you did a webinar to, uh, was it InvestHer? Was that the organization?

And I will tell you, since I've been in here for 6 years, I, I was the only woman in that room for a long time. And you even see it, Joe, now there's more and more women.

Yeah.

And whether they're spouses or whether they're on their own, right?

Well, because it does— it's not a— doesn't need to be, nor should it be considered a male-dominated business. There's nothing to do with it. In fact, I think women probably be better operators than men, but that's me being sexist. Sorry, men.

Well, I agree with you, so—

But I'm probably right. Um, so to, to all those groups of people, um, what advice do you have for them? They're thinking about storage, so maybe they're a single-family buyer, rehabber, flipper. Maybe they were what you guys were in 2012 to 2019.

Yeah, we were in the residential field.

What would you say to those people?

Get out now. You should have gotten out a long time ago. Um, Rod and I— well, Rod was a W-2, but I was running the residential real estate company, and it was a grind. I loved every bit of it, but it was a grind from sunup to sundown. And our life situation changed, and we needed to have a consistent stream of income coming in. where we weren't trading our time for money in the same way. Um, and that's why we got into storage. And my— I think I've told you this many a times, Joe— I wished looking back I would have skipped over the residential. I learned a lot of lessons there, so I'm truly grateful for it, but I let the fear of a commercial asset class hold me back, right?

Yeah.

Reality, I think it's easier So profitable.

You nailed it. It's so much easier. It just doesn't seem like it from where, from where we cut— we came from. And I mean, I came from the residential background too and had different, very, you know, ways into this space. But, um, it, it's— I remember my first time sitting in an academy, it felt like there's no way I, I can't do this. Why am I even here? Um, and It is so attainable. The bar is so low for, for people that are in residential that, that, I mean, if you could do that business, you could do that. You know, I earlier I said I introduced you guys as out there in the grind, but Kristen, I think I lied. I don't think you grind.

I used to. I'm recovering from the grind. I'm a recovering grinder and I need to slow down.

I, I say that, and I say that in a respectful way, meaning You used to have to grind in the residential business, I guarantee it. I think you're just able to work smarter, not harder today, and there's nothing wrong with that.

No.

It's a different kind of grind. It's a mental— it's not even a mental grind. It's not, it's not anywhere near the stress level, is it?

No, not at all. And I control my time, right? That's, that's one of the biggest things that I've gotten back is is being able to control my time.

Yeah, and that's—

The storage business runs whether I'm there or whether I'm not, you know, um, and the residential didn't. It was us.

Yeah, no, that's so— it's so critical. It's so important. Rod, any parting words?

All right, just kind of what Kristen is saying, right, right. The owning, uh, in the retail, uh, residential, it was, it was work.

And you, you turn—

take the money, you turn it right back into something else. Guess what? We have a lot less money in our deals now, and we're turning money back on a constant basis.

Yeah.

So I'll— I mean, we, we're— we bought our first facility for less than the first flip house that I bought on auction when I called Kristen and said, now I have a house. So, um, And I'll tell you, although that house was great, this first storage facility is probably going to be 4x the profit level that we got from that first house, which was almost 6 figures.

And no— and nowhere near the brain damage.

And no, and no, I, I got this cool hairdo from residential. I'm not trying to grow it back. As you guys can see, I'm failing. But, uh, It's okay.

Yeah. And there was another question in there, Joe. Do you want to read it?

Oh, there is. I didn't see it.

Um, and it's a great, a great one that Rod can answer.

Oh, great. Thank you for cueing me. I didn't even notice it. For those transitioning from military or law enforcement into real estate ownership, what habits or traits have you seen translate most effectively into becoming a successful storage operator?

Rod, are you retired military?

There might be a chance that I'm retired after 27 years, both enlisted and active duty. Seen all kinds of stuff. I think it's the ability to take in the information, logically parse it out, and take action and not be afraid to take action. Right? So all the You know, military, we're leaders, we're willing to move forward, we're willing to find out what I don't know and continue to move forward. So in storage, it's not hard, right? You have the mindset of, okay, this is a bad day, but it's not as bad as the days I've had. So you'll never find a day in storage that even equates to a boot camp day. And having gone through that experience, everything else was, hey, That was yesterday. What do you got today? And that mindset allows you to easily transition to owning and operating a storage facility because you're gonna be like, wow, this is easier than, you know, any day I had in the military. Because you can absorb, understand, and then execute it. And that's what people get afraid to do, right? People get afraid to actually execute. What you're saying about With women being better, better probably operators on some of the search. I agree with that as well because they're not afraid if they hurt somebody's feelings, right? Which is great.

Wait a minute. Whoa, whoa.

I'm not touching that in our situation. I'm not touching it.

Yeah, they're not afraid to execute. And that's the best thing about it, right? You train them and they'll execute. As a matter of fact, I train them on self-storage through my—

And I think that's why Rod and I have been so successful, right, is because he is very good at executing. I, I am very good at analyzing, underwriting, understanding, getting all the information I need to make that decision. And I need more information to make that decision than Rod does. Rod will execute at 60%. I need 80% certainty, right? Or 85% certainty. But then he will go and, and get it done. He— and I feel like that's— otherwise, I'd still be here analyzing. And he's like, nope, we're going now, right? Like, he— I didn't give him the authority. But our residential— we just got into residential real estate. And we got our first house because he bid at a tax lien auction. And I wasn't there.

I would have loved to have been at the kitchen table that night.

Uh, it's just when he called me to told me and told me that we are now owners of real estate with a pool. We should have saved that conversation.

But what a new house with a pool.

That was a great question.

It was a good question.

Great, great questions, both of them. Thank you, Dallas, and thank you, Rod and Kristen, honestly so much for, for joining us. And just the wisdom and the experience that you guys have and, and how, and how much you help our, our students and, you know, past, present, and future. So, uh, again, thank you guys for taking some time tonight. And, um, I'd ask everybody to give you a round of applause, but they can't.

We didn't even get into managing facilities, so there's— we could go on forever, right?

Well, don't worry, there's more series coming up. You'll be back.

Can't wait.

Careful what you ask for.

I know, I shouldn't have said that.

All right, thank you both. Uh, I've got a couple more, uh, things to announce here, but, um, again, I just want to say thank you to both of you. And, uh, let me get on with the show here. All right, so again, uh, thank you. Thanks to Rod and Kristen so much for joining us tonight. Um, and folks, they aren't just Uh, talking heads, uh, they're social proof. They're, they're out there doing this, uh, for a living. Uh, they are storage moguls, actually. So, um, all right, well, we've built the machine and now it's time to learn how to drive it for maximum performance. So the next 2 weeks, Section 7, is all about scaling your empire when it's time. I might even bring Rod and Kristen back for this too, because this is kind of where they come into play as well. So you need to shift your mindset from being an owner-operator if your goal is to now scale to a CEO. Um, your job is to manage the managers, not clean the units. And we're going to show you how to run multiple facilities over the next couple weeks from anywhere in the world using technology. And this is the true definition of passive income, folks.

It's—

we'll dive into the portfolio strategy, focusing on acquisition methods. For rapid growth and achieving economies of scale, if that's what you want to set out to do. And finally, we'll cover advanced automation, implementing AI— my favorite thing— call centers, and smart entry systems to drastically reduce your overhead. This is how you build a legacy, not just a job. And we are now officially in the final stretch. So before you get too upset, I can finally announce tonight, because I'm a little crazy, That where the Storage 100 ends, the sidewalk begins. I'm kidding, that's a little Shel Silverstein there. Um, but it does, it's going to lead us right into the Boat and RV 100. That's right, you heard it here first. When the Storage 100 is complete in a few short weeks, we will head right into the Boat and RV 100 as well. So the final night of the Storage 100, I will kick off the Boat and RV 100. Because the show must go on, folks. There's too many awesome verticals in storage. We might as well cover them all. So, uh, but first we need to finish the Storage 100. So Section 7 starts tomorrow. Scaling your portfolio starts tomorrow with Day 91, dealing with problem tenants. Uh, you now have the knowledge to find, fund, structure, and operate self-storage if you've been following along the Storage 100. Uh, and this is the beginning of your career as a storage mogul if you want to be like Rod and Kristen. We encourage you to connect with us on all platforms, stay current on market trends and advanced strategies. And if you enjoyed tonight's conversation with Ryan Christensen, please like this video, subscribe for daily updates, and share this content with a friend who's serious about building wealth. Uh, in fact, share with your whole network. Show everybody that you are on your path to becoming a storage mogul. And folks, if you want to keep leveling up alongside other serious operators, you should join Storage Moguls. Join our community for free. StorageMoguls.ai. StorageMoguls.ai. Do it now and get that free GPT deal analyzer only for the first 500. So do it now.

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