The 3 Fears Keeping You From Your First Storage Deal

I sat in a room full of people who were doing exactly what I wanted to do. I was there. I was in the right room, and I was on fire. Not nervous, not skeptical, fired up. I'm sitting there thinking, "This is real. This is this works. It's gonna work because people are actually doing it." And the questions just started stacking up faster than I could write them down. I know I didn't sleep the first night. Who's going to lend me the money for this? Was one of the questions I had. How do I actually find one of these deals? How do I know if the numbers are right? Where do I even start? I wasn't talking myself out of it. I was trying to figure out how to get in it. And that's probably where you are right now. You've seen enough to know the opportunity is real. You're not here because you— someone talked you into it. You're here because something clicked. And now you need the actual path, the path I needed. Well, here's what I found. The path exists and it's not complicated, and it's not reserved for people with more money, more connections, or more experience than you have right now. I know because I've now acquired over 20 storage facilities worth more than $75 million in assets across multiple states and multiple verticals. And every single one of them started with the same question you're asking today. How do I actually do this? Well, today I'm going to answer that for you, and we're going to answer it together, actually. I'm Joe Downs. Welcome to the Storage Moguls Podcast. My company's acquired, as I mentioned, over 20 storage facilities, over $70 million in assets across multiple storage niches. I've got a few more under contract right now. I'm building pro storage facilities. I've seen this business from every angle, educated hundreds of students, and learned firsthand who succeeds and why. And that's what drove us to to build storagemoguls.ai, an AI-powered community with the tools, the structure, and the guardrails to teach people how to buy storage facilities. And that's exactly why I launched this podcast, to bring you the operators, the lenders, and the real people who've bought deals so you can hear their stories and learn this business from folks living it every day. Today, no guest, just me, because today's episode is about you actually. Specifically, why a smart, employed, motivated person who has wanted to do this for years still doesn't own a facility and what's actually in the way. And I'm going to take you through the 3 fears that delayed my first deal and tell you exactly what I found on the other side of each one. Because this process is identical whether you're buying a $500,000 facility or a $3 million facility. The only variable that changes is the size of the limiting belief. So let's get started. In true fashion, even though I have no guest, I'm going to ask some true or false questions and you're going to answer them. All right, I hope you're ready. True or false, roughly 70 to 75% of all self-storage facilities in the United States are still owned by independent mom-and-pop operators. Not REITs, not institutions. True or false? What's your answer? True. If you answered true, you are correct. The REITs— Public Storage, Extra Space, CubeSmart— they get all the headlines. If you're in major metros, those are the names you see. But they represent a fraction of total facility count. Most of the facilities in this country are still owned by individuals, mom-and-pops who built something they haven't sold yet. And what that means for you as a buyer is that the deal flow is massive. The sellers are humans, not corporations. And off-market deals, that's a real strategy. You're not competing with institutional capital on most of these deals. You're talking to a 68-year-old or 78-year-old who built something and wants to hand it to something— somebody else, someone who's going to take care of it. It's their baby and they want to make sure they're going to give it to and sell it to a great caretaker. And that's what we're going to get into today. The fears, the opportunity. All right. I want to, I want to talk about the fears that kept me from moving faster than I did, because I hear these exact same fears all the time. I get the questions when we do YouTube Lives. I see it in the eyes of people. All the students we educated, the academies they went to, I talked to them for the first time. It was all the same questions, all the same fears, and it's totally understandable. I had them. I'm not expecting you not to have them, but I hope you listen when I walk through them for you because they're just self-limiting. I had to learn that as well. So, and I don't— and I'm not going to get into dramatic fear either. This is not a horror movie we're going to walk through with a happy ending. I was never terrified. It's more like quiet, persistent doubt that turns into a reason to wait one more week, one more month, do one more hour of research, talk to one more person before you take action. I had all of them, all 3 of them. And they all turned out to be wrong. Not slightly wrong, completely wrong. So let's, let's talk about fear number 1. No one is going to lend me money. That was my first one. That was the first thought I had. Talk about self-limiting. This was the loudest fear in the room. It's the loudest fear in every room that I stand in with someone who hasn't contemplated or is thinking about this for the first time. I'm looking at deals that are $800,000, $1.2 million. $2 million and thinking, who on earth is going to hand me that? And here's what I believed. I believe that lenders make decisions based on who you are, your resume, your net worth, your track record in this specific asset class. And I was wrong. Here's what actually is true. Lenders make decisions based on the deal. Does the income cover the payment? Is the market healthy? Does the property have upside? A well-underwritten deal at a reasonable price—that's going to get funded every time. And that's not a slogan; that's just how the math works. Here's two terms worth knowing in plain English: DSCR, which is debt service coverage ratio. All it means, does the money coming in cover the money going out to pay the loan? Lenders typically want to see 1.2, 1.25 times DSCR coverage. What does that mean? For every dollar of debt payment, they want $1.25 in net operating income. Not gross revenue, net income. So net operating income is gross revenue minus expenses. So for every dollar of debt, not total debt, debt service, debt payment, your monthly payment, for every dollar of that, they want to see $1.25 or $1.20, somewhere in that range. Of net operating income. SBA loan, it's another term we're going to use. It's a government-backed loan built specifically for small operators and first-time buyers. It has a lower down payment, longer term, and it's designed for the person who doesn't have, I don't know, $800,000 sitting in a brokerage account. The financing fear is almost always a math fear dressed up as a credibility fear. Does that make sense? It's a math fear dressed up as a credibility fear. Who's going to lend to me? Why would they lend to me? I've never done it. I have no track record. If you learn how the math works, believe it or not, the credibility follows. Fear number 2: No seller is going to take me seriously. I thought you had to earn the right to be taken seriously, that sellers had some invisible filter and first-timers didn't make it through. I thought I must be advertising on my face that I'm a first-timer. How do they know? They're going to know. They don't know. Here's what I found out. Sellers talk to people who show up prepared and consistent. That's their filter. They don't care if you knew. In fact, a lot of times they prefer it. Prefer might be a strong word. A lot of times they love it. In a lot of cases, even though I'm North of the Mason-Dixon age line of 50, the sellers are maybe 80, mid-70s, and I'm someone in my 50s. A lot of our students that have bought recently are even younger. So the 75-plus-year-old seller looks at me, Joe Downs, Almost like their son. And some of my other buyers are students, like a grandchild, right? So they love the story that this is your first deal. They can't wait to help you through it. They love selling their baby to another family, as an example. So that's a— that's a— the, the whole first-timer fear is, is Or not take me seriously fear. That's in your head. I had it in my head too. What they really care about is how prepared you are. And prepared means you've done your homework. You know the market. You've got a rough sense of what the NOI should look like. You're not asking them to teach you the basics. They do want to make sure you're a credible buyer. Showing them prepared, showing them that you're prepared. Says you're a credible buyer. Being consistent with them— consistent means you follow up. Most buyers quit after one attempt. If you make 3 contacts over 6 months with the same seller, you're already in the top tier of people that seller will ever hear from. That's the bar. It's actually lower than you think. And if you show up, forget about it. You're N of 1. At best, you're N of 2. Fear number 3, no broker is going to take me seriously. Brokers control listed deal flow. And if you're a first-timer calling cold, yeah, sure, you're starting at the back of the line. But here's how you move up. You become the person brokers call first by making their job easier. That means you close when you say you'll close. You don't retrade. You don't go sideways and due diligence on things you should have known before you made the offer. What does that mean? And let me unpack the, the retrading as well. Certainly you retrade if something material comes up in due diligence or on a title or on the survey. Certainly you're taking that into consideration. What I mean by retrade is a bait-and-switch offer. In fact, I'll tell you a story in a minute exactly how we got a great deal because the buyer before me did that exact thing. You don't go sideways in due diligence On things you should have known before you made the offer means things that should have been discovered by you shouldn't be surprises. Brokers hate that. You can't call the broker in a panic. You can, but I wouldn't advise it, and it's not going to look good on you if you call the broker in a panic about something basic you should have known at the end of your due diligence period. That's not a surprise. That's actually advertising you don't know the business. At storagemongrels.ai, we teach people how to do all this so that you do show up prepared, so you do know the business. So there's no reason you would need to go sideways mentally, exhibit amateur fear. And a lot of times when we see that fear, where that first-time buyer starts to get a little nutty, it's usually over something that's really not that material. They just didn't understand the context within which it sits. So if you don't understand the context, if you don't understand, if you don't have somebody looking over your shoulder, if you're not buying storage facilities like you're bowling with bumper rails, That's when these things rear their ugly heads. I've got a buyer right now, a first-timer, who's 3 or 4 issues now deep into the deal that have popped up, that his first reaction was to go sideways. But because he's got us over his shoulder, because he's buying with bumper rails, he hasn't Been made to look foolish at all to that broker. We've treated each one of these issues that pop up, and folks, issues will pop up. We've treated each one with professionalism and the proper response, controlled, managed. Even if it was an issue, the proper pushback. What brokers don't want to see is panic. When you exhibit preparedness, When you exhibit maturity, that's when the brokers take you seriously. That's when you move to the front of the line. Back to brokers. The first 10 broker calls are simple. Just introduce yourself. Give them your buy box, your market size, your price range. Ask what they're seeing. Ask to be on their list. No pitch. Don't try to convince them to show you the first deal, the best off-market deal. They've never transacted with you. Just show up as someone who's curious, who wants to learn, who's interested in their deals. Ask them good questions. Don't waste their time. Don't tell them they're wrong. If you think they're wrong about something in their offering memorandum, Ask how they arrived at that. Ask them to help you understand how they arrived at that. Brokers love to help. They'll absolutely help you. If you do that consistently across 5 or 6 brokers, across various markets, you'll be surprised. The deal will start to flow. Now, let me tell you a story about Macon Self Storage in Macon, North Carolina, because except for fear number 1, a lot of what I just shared with you is exhibited in this story. And I say except for fear number 1 because this wasn't our first purchase. I don't remember the exact number, but it was, let's call it around 10 or 11. 10 or 11. So we weren't new at this, but we used an SBA loan. It was a $1.1 million purchase, and we used an SBA loan. We put 10% down. It had been under contract before for $1.2 million, and the buyer from Texas had never been there. The seller was obviously willing to sell. He even transacted over the phone. But the buyer, again, having never been there, never met the seller, tried to retrade it at the last minute, right before the close, thinking, what are they going to do? They tried to retrade it down to— I don't remember exactly. I think it was $950,000 or $1 million. Pretty significant retrade. The seller said no, and they kept the buyer's deposit to boot. It was after the due diligence period had expired, and the seller wasn't happy because the deposit they kept was only 10 grand. That doesn't stink, but when you had your facility quote unquote sold for $1.2 million and you had one foot out the door, And I don't remember exactly what they were doing, but I think they were moving from North Carolina to somewhere else. That left a pretty salty taste in their mouth. So by the time we called off market, because it wasn't listed, the seller was salty. Sure, it was for sale, but there were going to be some contingencies. Some contingencies. Some, some guardrails. Number one, seller wasn't doing business over the phone. He wasn't going to be retraded again. If I wanted to buy that facility, I had to be there in person. I had to meet him. I had to come see it for myself. So there was no retrade. I took that opportunity because for me, it was a no-brainer. You're telling me you want to meet me? I'm on the phone all the time trying to meet people and getting told no more often than I'd like. Nobody's hanging up on me. Nobody's mean. But yeah, you know, what's their incentive to meet me if they haven't really thought about selling? So here I have a seller who I know is a seller who wants to meet. Well, guess what? I'm there as soon as I could. And then I made a trip around it. And I went to see a whole bunch of other facilities because why not? So I went and I met them. I met the wife at the facility. She managed it. I walked it, I toured it. I built a relationship with her. They told me the whole story, the $1.2 million, what they wanted, $1.2 million still, where the seller tried to retrade, where they said no. Why they said no? I listened. It didn't hurt that I'm from Pennsylvania, and so was the wife. And it didn't hurt that in bond building and bond rapport building, in relationship building, we, through small talk, learned about the Pennsylvania connection and how my mother-in-law was from where she was from. Now, folks, you're likely not going to encounter something like that. That was relationship gold. Of course, they knew people, they had friends in common. A level of trust was built through familiarity that won't normally be built. But I didn't need that either. All it took me was to be there. I did what no one else Would do. There's a seller who's now building a relationship and collaborating with their buyer instead of transacting with their buyer. We didn't buy that facility for $1.2 million. We bought it for $1.1 million. That $100,000 was worth us showing up. Obviously, for us, it was worth $100,000. For the seller, it was worth it. The delta between $1.2 million that they were happy to sell it for and the $1.1 million that they were also happy to sell it for was the level of confidence and knowing it would be sold. In other words, the dollar amount was less important than the assurance of the close. Think about that. That's what you get when you build relationships. We used an SBA loan for this deal. I don't remember if seller financing was discussed, but I'm going to bring up seller financing in this moment because plenty of other deals work out this way as well. We get to seller financing numbers and terms through collaboration, through what works for the seller and what works for us. And it doesn't become about a transaction and a sales price at that point. There's other dials we're working with. I'm telling you both of these stories to tell you how important the relationship-building part of this business is. It breaks down all kinds of other barriers. A lot of those barriers are fears that you have, or they attribute to fears that you have, or the fears that you have attribute to them. And when you just start talking with these folks, The fears subside on both sides, for the seller and for you, the buyer. And the same is true with brokers. Start talking, start having conversations. All of your fears will go away. Join storagemoguls.ai. It's free to join. We'll show you the math. That'll take away the first fear. When you have the math in your back pocket, when you know how to source, evaluate, underwrite, negotiate, and close these, All of the fears go away. Fears aren't even in— we don't think of them. We don't talk about them. I know they're there because you're new. You know they're there because you're feeling them. You're not labeling them, but you're feeling them and you're having the thoughts. Once you have the education, the math, the know-how, once you have that as a tool in your toolkit, You won't have any of those thoughts that lead to fears. You'll just have excitement. Excitement to find the next one. Excitement to wield this new power that you have. It's intoxicating. It's fun. You'll become a deal junkie and you'll have a great time doing it. Here's what every one of these fears had in common. They were all relationship problems and work problems, not talent problems, not money problems, not experience problems. The lender fear disappears when you understand the math. The seller fear disappears when you show up prepared, and the broker fear disappears when you're in the relationship. And none of this requires a credential. None of it requires a track record. It requires showing up and doing the work consistently over time, talking to people and building relationships. And that's the only difference between the person who owns a facility And the person who's still thinking about it. True or false? The self-storage industry has never recorded a single year of negative revenue growth in over 40 years. That can't be true. What are your thoughts? The self-storage industry has never recorded a single year of negative revenue growth in over 40 years. Well, if you thought false, you would be wrong, 'cause the answer's true. Even through the dot-com crash, through 2008, through COVID, the industry grew every single year. The demand drivers, folks, are countercyclical. When people downsize, they rent storage. When they divorce, they rent storage. When they move, change jobs, or inherit stuff, They rent storage. This business performs when other asset classes are bleeding, and that's not an accident. That's the structure of the demand. Okay. As you know, I don't have a guest on this episode. You are my guest. And so therefore, that means you have to answer my final question. For folks who have been listening to the show, you know what it is. It's about the book Be Your Future Self Now. For those of you, if this is your first time listening, there is a book called Be Your Future Self Now written by Dr. Benjamin Hardy. It's actually about MrBeast. And I, and this is my closing question of all my guests. And since you're, you're my guest today, I'm gonna ask you this question. I want you to think about it and I want you, I want you to, to internalize this because It's a game changer. It's a life game changer. Just like storage can be a life game changer. This is really the first thought you need to have. You need to answer this question for yourself. Let me set it up for you if this is your first time listening. There's a book called Be Your Future Self Now, again, written by Dr. Benjamin Hardy. And the beginning of the book is really about MrBeast. MrBeast is the most followed person on the planet on YouTube. He does anywhere from stupidly insane things like counting to 100,000 without stopping to incredibly charitable things and everything in between. And when he was 17 years old, one night, instead of studying for an exam, he was already a YouTuber. And what that meant was he was a gamer. So I think he had— I think the story goes he had 8,000 followers on YouTube. So probably other kids watching him play video games, which I'll never understand. But hey, he's the most followed person on the planet, so I don't need to. Um, in either case, one night he recorded 4 videos Just him, just him looking in the camera. And they were about himself and the goals he was setting for himself. I don't know why he did it, but he did it. And he, and he did them, uh, in Cortés style, meaning he burned the ships. He recorded one, the first one to be released there. Yeah, to be released to the public in 6 months. Uh, the second one was a year, third 5 years, fourth 10 years. So he recorded all of those videos that night. And set them for public release on a schedule of 6 months, 1 year, 5 years, 10 years. And in those videos, he got pretty introspective with himself, but he also said to himself, this is who you're going to be. You're going to have this many followers. You're going to still be doing this. And he released it to the public, which meant he now had to live up to it. Just like Cortés burned the ships, there was no going back. Yeah. You were going to make this work in the new land. And by him setting those videos for release in the future, he was publicly burning his ships saying, I have to make this work now. So the question is, and the question I ask of all my guests, and the question I'm asking you today, what are you doing? What is your public statement to yourself? Write it down. Share it with somebody if you really want to go that far. Find yourself an accountability partner. Maybe it's a spouse. Maybe it's a child, maybe it's a parent. And tell them, 5 years from now, this is what my life looks like. Not, I hope in 5 years, or it would be nice in 5 years. I want you to say to yourself first out loud, and then to someone else if you feel comfortable, this is what my life looks like. This is where I'm living. This is how many storage facilities I own. This is how many kids I have. This is my— what my golf handicap is down to. Whatever. This is how many birds I've seen sightseeing. I don't care what it is. I want you to picture and paint publicly and put it out there what your life is in 5 years. In other words, if you traveled In a time machine, you got in a hot tub time machine and you went 5 years in the future like Marty McFly did in the DeLorean. What does he see? What do you see as a third party looking at your life? What do you want it to be? What is it? Whatever you want it to be, whatever you start doing today is a better way to say it, is what it will be. So ask yourself, Or tell yourself, what is your life like in 5 years? And then ask yourself, what are you doing today to make sure that happens? And really, to take it a step further, because this is what MrBeast did, he started acting like he had 10 million followers or a million followers. I forget the actual numbers. But his 6-month and his 1-year, it was, it was much less than— he only had started with 8,000 followers. I think he hoped he had 20,000 maybe. So he started acting like he had 20,000 followers. If I had 20,000 followers, these are the things I'd be doing. If I had a million followers, these are the things I'd be doing. If you want to look into the future at someone who owns 5 storage facilities 5 years from now, What are you doing? What would that person be doing today? Someone who owned 5 storage facilities, what are the, what are the day-to-day, hour-to-hour, week-to-week, month-to-month, whatever it is, what are the activities that that person does on the weekly because they have 5 storage facilities? That's what you need to be doing today. Every week on Storage Moguls, folks, we are covering the full storage vertical business. Self-storage is where we're going to spend a lot of time. We're also going to cover boat and RV storage, pro storage, industrial outdoor storage, truck parking, small bay flex, all of it. So please like, and more importantly, subscribe. Subscribe if you're on YouTube, like and share. We're everywhere, but subscribe so you don't miss the future episodes. And share. And I'm going to tell you why sharing matters. Sharing's for you more than it is for me. Because when you share episodes like this and other stuff, videos on a lot of content we have on the Storage Moguls channel on YouTube, you're telling everyone in your network that you're in this business. And that signal goes a long way, right? The more you do it, the more you're telling people that you're invested in self-storage. You're, you're, you're doing the blocking and tackling of self-storage. You're in the business. And you'd be surprised, 6 months from now, people, your people in your network, they'll think you've been doing it for years. So share something basic. Share something that hit you today. Give 'em a reason why you shared it. And go to storage moguls.ai if you haven't already. It's free to join. We got a ton of content there. It's a great place to start. Of course you can level up. You really want to get in this business, you want to start, you want to start finding your first storage facility. We can be the bumper rails that helps you. I don't think there's anybody better in the business than StorageMoguls.ai than taking people from 0 to 1, from, from curious to your first facility. If that's what you're looking for, join us. Check it out. You can level up yourself. You don't need a credit card to start. All right, folks, there is a seller out there right now who's ready for you to walk on that lot and buy their facility. So stop watching. Start moving, drive for dollars, send the LOI. We'll see you next week.