The Real Cost of Self-Storage Management

Most people who buy their first storage facility spend months worrying about the wrong things. They obsess over the cap rate, the financing, the offer price, and then they close and they find out the thing that actually determines whether this deal works is the thing they barely thought about, how they're going to run it. My guest today has been on every side of that problem. He's bought facilities with family capital. He's built a management company from scratch, internal systems, KPIs, a full operational playbook, and then he watched it get acquired. Now he sits on the brokerage side and watches first-time buyers walk into the same traps he spent years building his way out of. He knows what breaks in year one because he broke it. That's where we, we're starting today. I'm Joe Downs. Welcome to Storage Bobo's Podcast. After acquiring and building over 20 storage facilities across multiple storage verticals worth over $75 million in assets, I've seen this business from just about every angle as well. And the one thing I know for sure is the people who succeed learn it from people who've already been through it. And that's why this podcast exists. Every week, I'm going to try to bring you the operators, the lenders, the buyers, and the industry pros Who've done real deals, so you can hear exactly what it looks like, what went wrong, and how they made it to the closing table anyway. Because at Storage Moguls, we do one thing better than anyone: we take people from curious to owning their first self-storage facility. That first deal is the hardest one you'll ever do, and it's the only one that changes everything. If you too are curious and want to get in the game, go to storage moguls dot ai and start your start your journey. All right, I'm fired up about today's conversation. So. And because of— so let me introduce my guest, Alex Erbs, who's a director at Equicap Commercial, which is a brokerage specializing in self-storage acquisitions and dispositions. And before Alex joined Equicap, he co-founded Gateway Storage, which was a family-led acquisitions arm that bought and operated multiple self-storage facilities. Then he founded Erbs Management Group in 2022. Built out a full internal KPI system across the portfolio, and watched that company merge with the Storage Mall, which is a third-party management platform. Alex has been a buyer, operator, owned a management company, and now is a broker. Alex, welcome to the Storage Mobiles Podcast.

I'm happy to be here. I— this intro is just— I— yeah, I've done a lot of things, and when you say it like that, I kind of forget about some of this stuff. Like, oh my God.

As, as my kids would say, Alex, I am glazing you, but I'm glazing you for a reason because you've got vantage points that most people don't have. And I love that they're all wrapped up into one big ball of fun named Alex Herbs. And I say that because I know Alex, folks, and he's a lot of fun. All right, Alex, speaking of fun, true or false? Third-party management companies typically charge between 6% and 10% of gross revenue, and most first-time buyers don't model that cost before they make their offer.

I'll say true. I mean, I could go into a few deviations of that, but overall historically true.

How about that? You are correct, sir, on both counts. Yes, the standard third-party management fee in self-storage runs 6% to 10% of gross revenue depending on facility size. Market and platform, which is maybe where you wanted to deviate a little. Yep. So on a facility doing $250,000 annual revenue, folks, that's, you know, $15,000 to $25,000 a year. And that number can be a meaningful change as to whether a deal pencils or not. And most first-time buyers underwrite assuming they'll self-manage, and we're going to get into that, then discover post-close that for various reasons they can't or won't, and the economics shift and the buyer gets this right Builds both scenarios into their underwriting before they make the offer. So you are correct, sir, and that is the cost that blindsides a lot of people. So, and we're going to get into that, like I said. Listen, folks, every person who ends up in this business got here some way, and the path always tells you something about how they see the business. And Alex has one of the more complete paths I've ever seen, as I alluded to in the opener: a buyer, an operator, a management company founder, broker. It's the full arc of the industry in one career. So. Alex, take us back to the beginning. Gateway Storage, I think family capital, right? No institutional backing. Whose idea was this? Why storage specifically? And what did that first acquisition actually look like?

Yeah, well, yeah. So there's a lot to unpack there. So, so I'm going to go first into why storage specifically. I don't think it was even so much Like, oh, real estate storage or anything like that. It was, you know, truly, actually, my uncle has been in this industry since about 1999. He's been doing storage before anybody even knew what a storage unit was, you know, back then, buying facilities up in the upstate New York region, et cetera. So when I was late in high school, I kind of took an interest on it.

Wait a second. Your uncle's not Uncle Bob, is it?

No, it's not Uncle Bob. He is in upstate New York. He's actually Uncle Pat. His name's Pat Bailey there.

So Uncle Bob's cousin Pat.

Yeah. That was my joke for a year. They said, we should rebrand to Uncle Pat's and have competing facilities and see how it goes. And he did not like that joke. I thought it was funny.

For the, for the listener folks, Uncle Bob Storage was a huge— were they a REIT before they were merged with Life? Yeah, they became Life Storage, which is rebranded to Life after. Yes. Right. They rebranded to Life Storage. Now, of course, then they were acquired, of course, by Extra Space. So, yes, that was the inside storage joke there.

Yeah.

That's the dad joke version of self-storage there. So I apologize if it was bad and didn't land, but go ahead, Alex.

Sorry. Uncle Pat Storage. No. So he was the founder of the storage mall at that time, and I was very fortunate to just out of high school start working for him. I kind of joke on the side, like I was still going to college. I'm like, hey, I'll help you find facilities. I'll write letters. I'll help you with some of your operations. This is, 2014, 2013, when websites were really just starting to boom and just getting some operations in place. So I was helping set up structures, et cetera. I'm from the St. Louis area. My father and I had an opportunity in the St. Louis area to buy a small facility. It was 165 units. It was only about 25 minutes from our house. You know, it was kind of a—

What year is this?

2016 is when we officially closed. It only took us 8 months to close that one, Joe. It was a fun process. And it was nothing that— it was not even us. It was when you don't file your tax returns for a few years and you're doing an SBA loan, it kind of screws the process up a little bit in that. So we could go— that is one of those acquisitions that I could probably go on for days and days about the number of red flags I avoided. But I'll look at it that way is I was so excited to get into it and my dad and I were, we never owned a rental property. It kind of fit all of our criteria and we were like, we're going to do this no matter what. It was going to happen and it turned out very well. So I'll just leave it there for now.

Well, no, I'm not leaving it there for now.

I don't know if we want to unpack that now or later. That was the intro.

There's so much material you just gave me to ask questions about. So Uncle Pat was the inspiration, but you dad, you just took a leap. What were you and your dad doing before this?

Yeah, so my father still to this day is a CPA, so he's an accountant by trade. He was working for different companies in controller roles, et cetera. I at that time was a college student still. I just was studying to get my construction management degree and construction background. I always liked operations. I thought I would go into project management more so of building buildings, building different products, et cetera. And so that was kind of the nice blend of he and I as business partners is he was the accountant who took, and then I was more of the operations and idea guy. So basically I had all the ideas and he said no, or where's the money at? One or the other usually. So it kind of walked me off of the ledge because I was the young excited kid in storage that If, if I could have, I would've probably been building buildings and doing as much as we could as fast as we could. So he was kind of the leveling factor.

So you, but he also understood the numbers part of the game. And you, it sounds like you were, you know, young, full of hope with grit, determination, and a smile. Right. And can talk to people and, and that, listen, we see that all the time come through our communities of, you know, people we educate, father, son, husband, wife, you know, teams. So it's, that's why I wanted to tease that outta you. It was like how I, I want, I want folks listening to understand, it's like you can't— you didn't come from real estate into this business. You came from— you came out of college. Your dad's a CPA, and you had Uncle Pat as inspiration.

If you'd like to really know, even Korea, it was Uncle Pat was the inspiration on that because I saw him doing it. And, you know, I didn't know specifically on self-storage. I knew I wanted to kind of have an entrepreneur background. It just was, you know, it's kind of the old theory. You see somebody else doing it well, why don't I give it a try? And that was really what it was. And so, you know, you can run it and all. I mean, compared to what we were doing then is he was still working full-time as a CPA. I was still in school, so I was taking facility calls outta my dorm room there. I mean, it was literally what was going on when we were first—

I love this.

Yes.

This is fantastic.

And my roommate hated me. Yeah.

This is the classic American self-storage story. Like this, this is, I've talked to so many people. I mean, you all have different stories, but they're similar, right? Yep. The dynamics are, the details are different, the dynamics are the same.

Yep.

Now, that's great. What you said, 100, 120 units?

It was 160 or so units around there.

160 or so units. What would you pay?

We paid at that time, it was 2016, it was about 20,200 or 22,000 square feet or so, 160 units. We paid $740,000. On that at that time.

Do you remember what the cap rate was?

It was roughly, I remember, I remember thoroughly. It was just about, it was like an 8.5 to 9 cap based on his existing numbers. And I was all excited 'cause I'm going to push that from, you know, from the 8.5 cap, we're going to get this to a 10 cap by year 1. And this is going to be, you know, I remember I had all that in there and this is before rates even suppressed more, obviously. Like even then paying, we were like, oh, should we be paying an 8.5 or 9 cap?

This is so high, like, or it's so Low.

Like, you know, looking back on it, I should have bought everything. I mean, I think you probably had that, Joe. I should have looked at that. Was that an 8 cap? You know, at that time.

This guy thinks this is multifamily 8 cap. Yep. Hilarious. What was— assuming it was value add, like you were looking at pushing rates or occupancy or what?

Yeah. So I'll unpack that a little bit here. It truly was, I mean, I would probably looking back on it now, it was really a C minus, maybe even D+ property. It was just out, it was in the St. Louis MSA. It was a gentleman who I call him one of those guys. He did work there full-time. He was the owner. He worked there full-time and he was kind of one of those, I'll do anything for a dollar kind of guy. And it was, he would cut a deal if they'd pay cash to him, of course, is pay 3 months and pay cash and I'll give you the 4th month free. He actually, the funniest ones were, He really would just be the jack-of-all-trades sales guy. So he would, he had U-Haul sales there. He had carports, like he would actually sell like carports and like sheds, like, like those, like a cook shed, they called them. They were like the ones where you can move the shed to your house. Like he would sell the sheds to them. Oh my God. And the funniest, I think, of all of them that he would also sell, and this thing was still sitting on the lot when we bought it, it was a Bomb shelter. So he was selling like bomb shelters to people. So they had like, like molded bomb shelters sitting on the back of the lot that you could go look at like a display.

What?

Like this guy had everything. It was crazy. And then like, yeah.

Monty Hall here.

And then the last one that was funny is he had some extra land back there and we did it for a few years. I'm not gonna lie. It worked out well. Is, is they actually had a fireworks tent that would rent the lot from them. So if you just want to really get an idea of what this place looked like, it was barely any cameras, barely any lights, no fence or gate, bomb shelters, carports, sheds laying everywhere. And then they throw up a fireworks tent for 2 months of the year, but that fireworks tent paid a good chunk of money. So I was fine with it.

Fireworks in the summer, Christmas trees in the winter, maybe?

It was literally, it was your place. And if I look back on it now thinking the crap Again, I'll keep saying this, the crap we did there, not in a bad way, the crap, I'm like, just the stuff that happened there and the, again, red flags we avoided that we'll unpack here in a second. It just was almost hilarious. I'm like, why did I do all this? But we were just excited and we wanted our first deal. And I will say, I learned most of my storage career, I can relate something back to something happened at that facility pretty much every single time.

It had to be a treasure trove of education, which you're alluding to. When you bought it, Alex, was, do you remember, this is 10 years ago, so do you remember what was your goal? Was it, was this the first of many or was this the first and let's see what happens?

It was gonna be the first of many. This is where we learned from the industry and what we saw here. And it was kind of our goal, my dad and I's goal going into it is we really didn't wanna bring either a ton of Outside capital. We didn't really want other partners. We were, we already had ourselves as partners and wanted to build something. Our goal was, and again, let me even step back a little bit. We were, we still are, I mean, I don't think it's that crazy, but we were very much a middle-class family. We didn't ever have rental properties. We didn't have a ton of cash laying around. I was very fortunate that I had the ability to go to like a private high school, but that was a lot of tuition and costs. So there was not a ton of extra cash flow. And that was a big thing whenever we looked for sites was, We need something that we can really focus on the management cleanup, not maybe so much the operation or the physical CapEx cleanup. Like we don't have a bunch of cash to go replace doors or go replace light fixtures and something. We were like, we need to do, so we're going to spend the first year or 2 that was going to be focused on just getting the operations streamlined, getting better software in place, getting systems in place, rent increases, the whole works, your typical stuff. And if we would do that for a few more years, then after a few years we'll refinance, we'll take some equity out and we'll use that as a down payment for the next site with that. And we'll use that and we'll just rinse and repeat every few years and really do that was the initial goal on this whole thing and use that as just secondary cash flow at the time there was kind of the, before we even got into it at all, that was kind of the goal.

Here's a, an interesting question. We alluded to Uncle Pat being your inspiration, and you've agreed to that. I'm gonna ask a weird question based on that then.

Mm-hmm.

A lot of folks getting started in this business have family members who are influential, sometimes in a negative way though. When this deal, this specific deal came up, Uncle Pat looking over your shoulder, was he helpful or was he more of a naysayer? That's a garbage facility. You're wasting your time. You lose money. That type of attitude. Which way did he go or wasn't he involved at all?

No, he was involved and it was very much, he was very positive about it. He was very, you know, I think it can really do well. I think, you know, I probably could have gotten him involved a little more in some of the underwriting and some of the things we saw, but I think it was like, It almost was a little bit of, we're going to learn our own lessons too. Like, I don't want to have it that it's lean on one person or the other, but like when we went to get lending and we went to get the bank on that, it was actually, it was like, oh, he's really kind of going to be our guidance on this. And that just made the bank more helpful. And we would go to him for support calls and other stuff when it was even getting ready for, hey, what would you do in this situation, et cetera. But I think it was also a little bit of us forging our own path too, of like, We got to, for lack of a better word, step on our own landmines and figure them out too. I don't want to blame, and I still do this to this day, I take responsibility for the stuff I own and the things I do. I don't want to have to blame somebody else for that. God forbid something went wrong there.

So he was there if you needed him, the appropriate amount of support, but you guys were forging your own path. No, that's great. Listen, a lot of people don't have that. That's why we created Storage Mobiles, right? So we could be the guardrails for others. Talk to me about the dynamic between you and your father. You got a family situation, father-son. I'm assuming the relationship was pretty good going into it 'cause you agreed to partner together. What was it like during the search? And then, you know, I always joke with people, dog chases car, dog catches car. That's the easy part. Now what is the, you know, what does it, what does the dog do once they catch the car?

Yeah.

That's the now what scenario. Now you're partners. What's that like in the early goings with Dad?

So he fired me 3 times and I fired him twice on that. We had our own fights. And you know what? I think, so let's back up a little bit. We kind of knew our strengths and weaknesses. And I think I'm a little more extroverted and outgoing and I like, again, I'm obviously now I'm in the brokerage world. I like the sales or the chase, the sales process, working through that, et cetera. He likes I mean, I don't, it sounds funny. He likes the numbers. I don't know how much he loves the numbers anymore. Sometimes he's like, I don't want to deal with being, you know, what is the depreciation today? He knows how to do it, but he doesn't want to do it all the time. And so I think we had a good balance to each other that really, we knew our roles going into it. I think after, it was really after we bought this facility and we started doing the operations of it, I think we got a little more, I think we weren't fully ready on some of the operations that we thought we were. I think we were like, oh, it's storage and there are only going to be a handful of calls, et cetera. And some of this was naturally what happened at that facility because again, the previous owner was cutting deals with everybody and doing things. And I think everybody, and I'm going to make a quick broad statement, Joe, for anybody on this call, Everybody wants a value-add facility. We all love a value-add and we love, oh, it's really mismanaged, whatever. Mismanaged is not easy to fix. I think some people always like, it's really funny, like we spent a ton of time there. We were very lucky. It was 25 minutes from our house or 30 minutes or whatever it was. We spent a, that first, we bought it in May of 2016. I think we were both working full-time. We were spending almost every evening after work there. Trying to resolve some sort of issue that happened with that site there. There was a lot of messes. It was a lot of wrong paperwork, a lot of issues. And so, you know, a value-add deal, of course it is. It's a very good— and there's a lot of opportunity when you see mismanaged. But I think we were not as prepared going into it for just some of, I think some of the— because we were taking the calls ourselves. We didn't have a call center, we didn't have a third-party management group, et cetera. We were not prepared because then he was taking calls for part of the day. I was taking calls for part of the day when we just put our work schedules on when it was. And I think we just weren't prepared for just some of the customer conversations, to say the least. Is these customers— is you learn a lot about customers and just— I was going to say client relations. That's not the word, but almost people watching. Like you learn a lot more about general society when you talk to some of your storage tenants on a frequent basis and as to what you know, the background is in their life and everything else, because they'll give me the story.

So yeah, you know, true melting pot.

It's a true melting pot when you have a storage facility. Yes, correct. I learned the difference between jail and prison from one of my tenants there. I didn't know at that time. I was young and was too naive and didn't know that jail and prison weren't the same thing, and she corrected me very quickly on that. So there you go.

Hilarious. Hilarious. 2 more, uh, sort of personal ish questions. One kind of tongue-in-cheek jokingly here, but you, you, you jokingly said your dad fired you 3 times. How bad did it get? What was he— were you still passing the cranberry sauce at Thanksgiving or—

Oh, we did it too much. That was the problem. My sisters were like, can we stop talking about storage for 5 minutes? Like, not at the dinner table, because I am the oldest of 3. So my younger sisters were still at, you know, still at home and everything else. And a lot of our conversations revolved around some sort of storage unit. And yes, it was always, we have never, you know, not, you know, never come to, you know, odds against each other. We have just learned that we as partners have very different approaches. I am a little more extroverted and I'm going to really tackle things head on. I think that's part of that, you know, maybe brokerage nature that I have now is that we're going to go resolve the problem. We're going to solve it quickly, efficiently, et cetera. And some people may not like how I resolve it, but I'm going to get it resolved. You know, again, he liked to joke with, I was, I can sometimes come in as blunt as a baseball bat as some of this stuff, but it's where he is a little more, I think, analytical just with the numbers background, et cetera, on some things. Well, let me think about how this is going to be versus I'm a little more, I know I'm a little more, let's go quick action here. And so I think it's just, it's just knowing your partner's personality traits that it's, it took me a while because especially going from, hey, I'm a high school kid, this is my dad, you know, we have a father-son relationship, to now we are— I'm in college, I'm just trying to learn what my career is going to be and other stuff, and now we are business partners. And you know what's funny, Joe? Having a loan puts a lot of money on the line and you're going, oh crap, this is a lot of our money into this and we're trying to figure out how does this play out, you know? Like, how, you know? So—

And thanks for diving into that because I'm asking because a lot of first-timers, a lot of people we see are usually somehow related. You know, husband and wife is the easiest, the most common, but you got brother-in-laws, you got siblings, even neighbors, right? Where there's familial relationships, even if it's not technically family, it's like family. And, and you're gonna have conflict, but it sounds like that conflict is just growth. And it sounds like you and your dad got through it and really ended up on the other side where a lot of people end up was respecting each other's strengths and being glad that You each have strengths and weaknesses, and that as a team, you can, you can move the ball forward together once you, once you respect and trust each other.

And Joe, let me, let me add to that really fast. I think it's big on partners. Just, I mean, I think this is— I didn't realize this and it worked out very fortunately compared to some other partnerships I had. Make sure you really set out, whether it's a husband and wife duo, father-son team, whatever team it is, whoever your partner is, make sure you really work out Who's doing what? I mean, it just sounds so simple and like, let one person do their job and not— I've been in partnerships with other people that are, hey, we are both outgoing, extroverted operations guys. Well, guess what? Someone still has to count the cash at the end of the day. So can I do the books? Yes. Do I like doing the books? No. So it's kind of like, you got to make sure you know the, you know, know who you're getting in bed with, for lack of a better word. Is that, is it going to, do you guys have complementary, exactly to your point, do you have complementary skill sets? Or do you have, you know, the same skill sets that are just not going to help for the overall picture?

Yeah. And if you don't, how do you work together to find the resources to complement you so you can each work within your own unique abilities? And that's a very strategic coach, Dan Sullivan. That's a member of that community and live and die by it. Totally. You mentioned some of your strengths carry you forward in— you've carried forward into brokerage. Which is the perfect segue because that was my last question I wanted to ask you about you personally is how'd you, how, why you've done all these things, which amazing self-storage. You've really touched the business from every angle except maybe lending. You haven't been a lender, right?

I don't want to be a lender. I can already tell you that's not good enough. Yeah.

How, how'd you end up in, in brokerage? Why, why brokerage? I mean, you're, you're certainly naturally suited for it. That's a compliment to you and, and anyone listening, if you know, Alex, Equicap, phenomenal as an individual and as a firm. I will vouch for them. But why you brokerage?

So I'm going to go back a little bit. I think it's kind of been— I've really over the last, I'll just really say 10 to 12 years at this point, been fortunate enough to see it from different sides. And so back about 8 or 9 years ago, after we had just bought our first handful of stores, we ended up buying more than just the first one we've talked about there. When we, you know, when I was doing it, I was approached when I was getting out of college is, hey, do you want to go into the brokerage world and do you want to do this? And I, I don't think I had my own confidence at that time, you know, because I was young, I was getting out of school and I'm like, I need a job that can pay. I can't wait a year and a half, 2 years to get my first commission check. And, and by the way, I was very clear on I don't also want to be the broker that's I'm trying to sell your site, but I also want to buy it too, because we were still in acquisitions mode. My dad and I were in spots That we were still in an acquisitions mode, that we wanted to buy more facilities and keep growing and doing things. And so it kind of was just some, a kind of series of events, I would just say is like, hey, we had our own facilities. And then those same brokers actually that I've talked to for years, including some of the team at Equicap and some other lenders actually at the time, we actually, they were saying, hey, we really need somebody like yourself or just like The setup you have, because we were running remote facilities. We were doing kind of remote management before it was really cool. Like today, it's cool. Everybody does it. You know, before then, it was like we were doing e-signs back in 2018 when nobody knew what an e-sign was. You know, at that point, or you know, really doing that and doing you know, one manager running five locations. You know, and some other cool things. And so, the at the time I got approached and they said, "Would you want to do? Would you want to manage some other people's facilities for them?" Especially especially facility owners in these secondary and smaller markets where some of these big management groups won't go to. And I'm getting to the brokerage comment, Joe, is along in there. But would you go to some of these secondary markets at the time? This, I mean, this isn't that long ago, but like 2018, 2019, really early 2020, these big players would not go into small markets. There was not a lot of management groups. I mean, I'm not saying that I was— We know.

That's when we started self-managing our own because you couldn't get— you couldn't get anybody there. You couldn't. And if you could, no offense. Well, actually, offense, offense should be taken. They weren't good. They were terrible. At least the ones we found.

And that was the interesting part. It was like Extra Space, Public, CubeSmart, etc. Like they would only be in the big markets. So I'll take Missouri as a great example here. And what was always interesting to me, the 3 biggest cities in Missouri are St. Louis, Kansas City, and Springfield, Missouri. So Springfield's the smallest. Those big REITs wouldn't go to Springfield, Missouri. There was 500,000 people in that market, but they still said that was too secondary. And it was like, so that's kind of where we really started on the management side. Because I mean, even at the time we owned a bunch of sites in the St. Louis Metro East, which is the Illinois side, the REITs wouldn't even go across the river from St. Louis. They said that was too rural. You know, I was going to say rural's not the word, but you know, too tertiary for them was across the river where It's St. Louis MSA. So it was just interesting. So we got approached, would you do management for some others? And I said, you know, I'm young and let's just see what happens. It was kind of like a sure, I guess if there's a need for it, we'll find out. And I remember one of the brokers called me like a month later and they go, where are you at on that management idea? I said, I have a name and a web domain. They go, great. I got a 500-unit facility in central Missouri. Will you take it? I guess I'll figure it out. I guess I'll— 500 units?

I'm waiting for you to tell me there's a 100-unit facility that nobody would manage. 500 units.

That one was funny because actually it really, really, really, I will always think it actually was on our team, Ann Blackwell, who brought it to me with that and said, hey, we got this deal, Central Missouri, and nobody else would go out there. Would you go do it? And it actually worked really well because the client, Was very, very difficult to work with, and she wanted me to have my ducks in a row, for lack of better word. Like she's like, okay, where's your marketing material? And here's me going, I'll get it to you tomorrow. And I'm going, oh crap, I got to spend all night putting marketing material together because I don't have any. Like it was like, you know, it was really a little bit of fake it till you make it, for lack of better word. And I'm like, and and it really was kind of leaning on at the time with management. Hey, this joke was. You're going to get my full attention because you are my full attention here, and I can't let this fail because I got to make sure this industry goes well. So if I need to be at this facility every day for the next year and a half to make sure it goes well, I will sure damn do it. Pardon my language there. Moral of the story on that one, which is crazy of this, Joe, this is 2020, and as we know, COVID started then. We were a week from closing and the owner dropped out of the deal because she was afraid of what was going to happen, or the seller, Excuse me, the buyer dropped out of the deal because she was afraid of what COVID was going to do and how the market was going to be. So she did not buy that deal. And I mean, I was ready to like, I'm going to quit my full-time job. I'm going to go manage this lady. And COVID hit and it came to a screeching halt. And I was like, oh, maybe this management idea is bad and etc. Sorry.

What was the acquisition price?

Oh, I couldn't even. It was, it was still dirt cheap. It was, I mean, she should have bought it is all I'm going to say. I forget.

And not dirt cheap. I'm wondering how many millions she walked away from.

Oh, oh, her due diligence money and other stuff. Her money went hard, her bunch of due diligence stuff. So I mean, she spent almost, I think it was like $100,000+ in due diligence that she walked away from. And I believe she was in a 1031 exchange too. Oh my goodness. So it was not a pretty situation with that, to say the very, very, very least. And that's why we were all very shocked. And again, no one knew the world was shutting down. I mean, this was literally like March 31st is when all this was happening and no one knew. What was going on. But it worked out extremely in my favor because it forced me to get a bunch of stuff together I didn't really have, like materials and marketing and systems, processes written out, et cetera. And so right after that, I was already in conversations with some other groups and ended up getting 3 smaller facilities that you would more expect, 150 units, 200 units, 300-unit facilities, and got those and scaled up the management group from the 5 little facilities we owned To, by the end of 2020, we were at 13 locations, 14 locations, something like that. End of '21, we were at 27 locations or 28, I think. And by the time we merged with, or sold to my uncle and the storage mall in 2022, we were at about 40 locations, you know, before his portfolio there. So we almost 3x'd ourselves every year, basically.

Wow.

With that.

So it was just, I was trying to do math in my head. That's really good growth in a short period of time. Obviously you laid out KPIs, you had systems in place. I alluded to that in the, in the opening there. You sold the, the management company.

Yep.

And then you put on a broker hat.

And yeah, I was gonna say, I didn't even get to your question here. So what, to the question, to the question and why I get there, what I liked during the management process, and I think this, I really learned this. And so I already knew I really liked the chase. I liked the sales side. I liked finding the facilities. I liked meeting the owners. I liked giving them like, hey, I'm going to help you build your business. I really enjoyed that. I still thoroughly enjoy that today. I love the consulting and the coaching and the business side of it. It's always been, I always joked is I would've loved to be a teacher. Just, I would, I just, it's always been part of what I do. It's just, I would like a little more money than sometimes what teachers get paid. So there you go. So I've always liked that of the management group. And I always helped some owners on the side whenever you're in the management. I had my real estate license. I helped them look buying their facilities. I was kind of already doing it in the backend, helping them make sure it was a smooth transition and closing. And I still like the operation side. I'm not going to claim that I am at all any kind of expert operator. I am not the most amazing person out there, but I know how to do operations. I'm not Saying I'm the best at it or whatever. And it was never my strongest suit, but it's kind of one of those, it's not my strongest thing, but I can do it. That's kind of my joke. And, but I really like the sales side. I like the hunt. I like meeting owners. I like finding deals, et cetera. And so I saw a natural progression into more of the brokerage side because I was like, management, I'm going to tell you guys this, and this is not, this is kind of the secret behind the curtain. Management's tough, period. Even whether it's for yourself or for other people or forever, management's not easy. And sometimes it's a very, I'm going to say, thankless task. And I'm not trying to look for thank-yous or pat on the butt here, but it's kind of funny. It's like somebody told me this years ago is, you started a management group. So if you ask an owner, is the facility going well? They're going to say, yeah, I did a great job picking the location out. And if they say, oh, the facility's doing bad, no, why is it doing bad? Oh, because management sucks. So you're never going to get the credit either way. You're not going to get the credit of if they're doing really well there, they're just going to get the credit of they did that. And I don't think it— this is making it sound like I wanted the credit. I think it was getting very repetitive for me and it was getting very, you know, almost a little tedious. And I was like, I'm ready for a change. I don't want to get out of storage. I like the storage asset class. I still own facilities. I like the coaching, I like the consulting, I like telling people how we can get, how can we get more value out of something? And so it was kind of a natural progression with the team at Equicap to say, hey, I think I really want to go into the brokerage world. I get to continue consulting and coaching and really doing what I love is the deal finding. My dad's kind of stepped back a little bit from, he doesn't really want to be as much in acquisitions mode. He's a little bit more towards retirement mode than it is That. So it's kind of been a natural way for me to be like, hey, I'm not in that same acquisitions mode I was in 2018 when I was first approached about this. Now it's— so, you know, it's been a very, very amazing, you know, transition in this last year, and it's gone very, very, very well.

And I would say a natural one, a natural evolution for you, you know, just in who you are. And that's great. Alex, true or false? Self-storage facilities under 200 units are almost never professionally managed.

I'm going to say true on that.

Yes. I saw your hesitation. I know why. But, but yeah, I think we're looking for a true answer here. And it's because most first-time— and the reason is, and the reason I highlight under 200, because that's what we're actually trying to show first-time buyers. There's an amazing market. of under 200-unit facilities out there. And that market, most common entry point, you know, under 200, at that size, there's not a lot of third-party management companies, A, that will manage there. I know there's more today and certainly better ones than when— than we can even manage ourselves. But a lot of times it doesn't even pencil to have a third party. You almost are forced to, especially the smaller you get. All right. And this is exactly why the self-management question is so critical at the acquisition stage that we alluded to earlier. So folks, If you're buying in that size range, the assumption you, you, that you should be, that you're, that you potentially are running it, at least you need to underwrite that scenario as well as a third-party management scenario and even a hybrid scenario in between. And your underwriting needs to reflect that. And Alex, there, there's one fear I hear more than almost any other one from first-time buyers, and that the fear that keeps others Or keeps otherwise qualified people, I should say, from making offers on deals that would absolutely work. And I want to name it out loud and deal with it directly. And the fear sounds like this: I don't know how to manage a storage facility. I've never done it. I don't know what I don't know. And if I mess up, I'll lose the deal, lose my investment. I'll have nothing to show for it. Alex, you might know a thing or two about this, having— Done it without ever knowing how to manage a storage facility. Then you build a management company from scratch. You know what that fear looks like 'cause you lived it, that year 1 fear in particular, probably day 1, week 1, month 1, quarter 1, year 1, right? What was the scary version of management in your head before you actually did it? And then what did it actually look like after?

There are so many tidbits to unpack there, but number one, there's always going to be some sort of fear towards something here.

Yeah.

And I mean, there is going to be this thing I'm going to say that I tell this even when we were in management and managing for others, you're always going to learn something new in a facility and you're not going to know everything that's going to happen there. Something's always going to change there. So number one, it was always, I think surrounding yourself with supportive people is very key. Whether it's your community, Joe, or if it can be like self-storage associations are great. State associations are great around there. I really got involved in those and learning some of those different, just meeting different members and other local resources. But I think the biggest fear is a lot of people are doing this because they want financial freedom generally. I mean, I've rarely had somebody that's like, I just don't want to make money. I don't think that's the case. And so when it's the fear of, hey, Like, you know, when we first did it, I mean, we literally had a home equity line of credit against my parents' house on that. Like, oh, if this screws up, we're not paying our bills. Like, this could be weird. Or like, hey, our name is signed on the dotted line. If this goes really bad, I mean, there's a lot of the fear of what could happen there. I mean, when I started the management group, that was the other one. I was, you know, hey, I Pretty cushy kind of entry-level job. Like it wasn't too bad, whatever. I'm going to go quit to go run somebody's tiny facility in central Missouri and, you know, at the time make only probably a few hundred bucks a month on this. Like, what am I doing? Like there's always going to be a, what am I doing here? And so I think it's obviously basing your decisions on, you know, what are you, what are you trying to accomplish down the line? I think that's also the key here too, because I've joked for years with different owners is, hey, the best market you can go into is a market that's turned over. A bunch of facilities have turned over in the last few years in a secondary or small market. What do I mean by that? Well, I mean by that is a lot of those facilities then most likely have loans, and because they have loans, most of those owners are probably going to work their ass off also to try and do really well there. So that means they're going to continue pushing rates, they're going to continue increasing rates, they're going to continue you to, to work hard. Now you just have to work just that much slightly harder than them. You know, my, my dad joked for years, you can do well in storage in spite of yourself. So even if you're terrible at this, in the right market you can. Yeah, in the right market you can. Yes. Now that doesn't always exactly— it doesn't always—

You said something really, you said something really interesting I want to unpack a little bit, um, because it made me think of something I never hear anybody talk about, We talk about the fears of management. Um, I don't know how to run, I don't manage it, you know, like I just set up for you. But you said we had a home equity line out of our house. Well, really your dad did, right, on his house?

Yeah.

And that made me think, wow, when you have that much leverage on the line, you know what one of the benefits of managing yourself is? Control. When you, when you hire a third party, In a lot of ways, even if you're not giving up total control, you're giving up optical control, right? You don't know what's happening on the day-to-day. That's why you hired the third-party management. In a lot of cases, we don't want to know what's happening, right? That's why you put them in place. You just, you want to hire somebody you know is doing a great job and going to do a great job and then execute. And then the numbers tell you whether they're executing and doing a great job. But the gap between that day one and, and that first quarter report or whatever, when your home equity, uh, when a loan on your house and a home equity loan is on the line, that could probably be unnerving for people, right? There's a lot of trust there. You don't really talk— I've never, I never really hear— I hear people talk about the fear. I don't hear them talk about the benefit. I mean, there's many other benefits. You alluded to some, uh, one of which is you get to learn the industry from the inside out and how this thing actually really operates. There's a danger with, with that, of course, is you don't want to be a control freak and micromanage and all that stuff. However, we shouldn't discount the level of control that you gain when you manage yourself. Did you feel that when you and your dad were learning the business and operating facility 1, 2, and 3 even?

Yeah. Oh, absolutely. Like, that's not even— it's just, it's one of those I will say that even before even I answer specifically that question, I tell most owners, even when I was in management, brokerage, etc., and again, it depends on the deal size and some other stuff, depends where you're starting. If you're starting with a small to mid-sized facility like you've alluded to, Joe, and that maybe, you know, 50 to let's just say sub-300, you know, 200, 300 units, I think you shouldn't self-manage for a while. You need to be able to see what's going on in this industry. You got to see, and you see it firsthand, you see all walks of life, you see all the different things. You learn all the different details. You learn how the operating system works. You learn how I got to go set up a marketing platform of Facebook ads and Google My Business when it was still going. You learn a lot of almost, I'm going to say this, kind of stupid stuff that you probably wouldn't even think about until you're there. And so I always tell a lot of owners jokingly, you probably should start self-managing. And then guess what? If you get tired of it and you're like, hey, I did this, I don't like You're now going to have that much more of a respect level when you do hand it off to a management group because now you have a, you know, the bar that they're supposed to hit. It's not just going to be, okay, I leveraged, you know, I leveraged my house. Let's just keep that example. And I'm going to give it to a management group and I hope they do really well like this. And basically, and if it doesn't go well, guess who they're going to blame? The management group. You know, they're going to say, oh, it's all their fault, et cetera. Versus when it's you on the line, guess what? You're going to learn a lot of stuff. For lack of a better word, on the fly. It doesn't matter how many, you know, no offense, Joe, it doesn't matter how many courses you go to of yours before you buy a facility, you're not going to learn some stuff until you're hands-on with that and you have a customer. You know, how do you deal with a break-in? You know, it's funny, no one ever talks about it. Break-ins suck. Like, it's not a fun conversation. I could tell you all this stuff. It's not fun when the day after you close, by the way, they got broken into. What do you do? You know, the second, the third day after we closed, Joe, there was a raccoon in the unit. What do you do with that? Like, you just can't even make it up. You're like, are you serious? Like, where is that in any of the school, like the rule books here? You don't know. Like, what do you do with that? Like, do you call, you call an exterminator? But it's like, at the time it was kind of a joke is, Joe, we didn't have money to go hire an exterminator. We just did a giant down payment and other stuff. So my dad took Rocky the raccoon across the river and, you know, put him out in the woods. And there you go. Like, it just— you don't— you're never going to know what you don't know until you try it there. And again, it's very lucky that storage is historically a pretty simple industry compared to most other businesses that you can usually do pretty well, you know, with giving just, you know, again, obviously some effort and putting some time into learning this and getting yourself educated on the systems there.

Totally agree with everything you said, including it gives you It gives you the experience, the optics, the wherewithal to even then eventually manage a manager. You'll know what the BS factor is. You'll know where they're trying to bury the bodies, and they're not going to get it by you if you've managed that facility. You know what economic occupancy is. You know they're hiding delinquencies and occupancies, et cetera.

Yep.

And on top of that, It helps you with your next acquisition. You, you see facilities with compl— through a completely different lens the next time you walk one. When you're an owner who manages one and has, and has been there day to day in the grind, you see, you, you see what's not gonna work. You see the holes, you see why a facility might be underperforming. And it's almost like it gives you a, a, a third power, right? A, a, a superpower. And, you know, obviously you, you've definitely, You've really taken that and run with it, and look what you've been able to do with it, which is—

I wish you could spot the red flag.

Yeah, exactly.

You can spot the red flags quickly on what's going on.

How about— I, I almost don't want to ask you this question, but it's— maybe you have an answer. Uh, I'm not gonna hold— I'm not gonna hold your feet to the fire to— what would be the 3— I'll give you a range— 3 to 5 KPIs you, you, or if you were extolling advice to somebody that a new buyer that you would track on your first facility from day one? Like, what, what breaks first, right, when the owners skip them? What are the, what are the most important things from kind of— you transitioned it, you know, you're running— where, where's your eye have to be? What balls are they on?

So, okay, so a few of the things that I always— I like, I like to tell people, take a look at here. And one of the big ones before, I'm not even going to say before you transition here, I've become really big on, I'm going to call it historical performance, whether it's you operating it or somebody else. And okay, so what do we mean by that? This is number one, making sure you get year-over-year data of what happened at that facility, even if you or somebody else owned it. And I'm going to say the example of, you don't know what you don't know at certain sites until maybe you look at some of the historical numbers. And when we see it say historical, like, hey, Every year in spring, this place gets a bump, like every year because of its, you know, college season, it's moving season, whatever it is. I've seen in the fall they get a bump because they're putting their boats away, whatever it is. I like looking at historical data because that's always a great level set of when you go, oh crap, we had a bad month here. Okay. What does a bad month really mean? Like, okay, yes, the revenue's down, but if you look year over year, Actually, last August you also had a terrible month. So obviously August is always going to be bad for you or whatever it is. Maybe there's a reason. I always joke, it's, you know, we have a facility that we personally own in a college town. So guess what? Spring is amazing. And then the off-season is, I'm not going to say it's bad, it's just as low. So if you try to compare those, it makes no sense. Like it doesn't do that. So year over year historicals I'm big on is comparing what it was before. Number 2 is really taking a look at your— yes, physical occupancy does not equal revenue. I think probably that seems to be preached a lot, and especially people coming from another asset class, like you mentioned, multifamily, something else. We want to be 100% full. Yeah, I think we all know that's not really the case here because we actually want to say, what is that economic occupancy? Like, I really want to look at it not so much, you know, what is that economic occupancy and what is the revenue amount with that? Because I can be 100% full with, you know, 100 people in the units. Let's just say it's a 100-unit facility and there's 100% full and they're all rented at $10 a month. That doesn't do anything for you because guess what? You're only making $1,000 a month versus I could be 90, you know, 90 units full at 90% there and charging $50 a month. Guess what? You're going to be making more money doing that than you are the other way. So I think some owners get really hooked on that. We need to be full, we need to be full, we need to be full versus kind of, I'm going to say, like you said, 2 or 3, it's going to be number 2 would be like the actual economic occupancy of what the revenue is. And then also truly looking at your variances. So I'm going to kind of say number 3 is your variances of what your gaps are between obviously what current customer's paying and what street rates are paying and vice versa there. But I'm going to kind of take it even one more step further on that. My favorite report at any facility as a broker, as somebody else, is the occupancy statistics report. Most softwares have it, most can do it. It's going to give you the biggest picture because I think when people look at occupancy, they think, oh, this facility's failing, it's 70% full or whatever it is. It's at 75% full. We just can't get past it. And the first thing I look Is I go, I look at every individual unit size and see what's going on. And I say, well, actually your 10 by 10s, 10 by 15s, 10 by 20s, and 10 by 30s are all full. You just have a crap ton of 5 by 10s that nobody's renting. So your physical occupancy of 70% tells me nothing at this point versus actually you need to be raising your rents pretty aggressively on your larger sizes.

Yep.

So I think that occupancy statistics report, really looking at those different categories and per category that of what those rates are is huge. And a lot of first-time owners miss that because they're just so focused on, I need to rent units, I need to rent units versus, hey, you need to rent 5x10s, but you need to raise the rents on 10x30s and find that balance in between there.

And maybe combine 5x10s to create 10x10s if you have a supply-demand shortage there or, you know, excess supply in the 5x10 case.

Absolutely.

And that 100%, that's what— that's actually funny. That's what we teach students is there's— you, you've got your market, and then you— every unit size has a market, and you need to understand the unit size market within the, the collective market. And I love what you said earlier about occupancy and rate, the relationship there. One of the things that attracted me to, to self-storage was, look, I spent some time in my history raising a lot of 1031 exchange money for multifamily. office and some hotel deals. And what I learned about hotels was really interesting. I mean, in, in a hotel, you're managing rates by the night. A hotel never wants to be 100% full.

Nope.

The reason is, well, they have something we don't have, which is an expense layer, a cleaning expense layer, and, and maybe some other staffing expense layers to every bandwidth of occupancy that they deal with, right? But more, most importantly for a hotel, it just means they're not charging enough. Now they manage the rates by the night. Multifamily manage the rates annually. And one of the things I loved about storage was we manage our rates monthly. Well, really we can manage 'em daily, but we're, it's really a monthly rate. So we kind of sit in between the two, but closer to hotel without, without the, what I would call the, the operational intensity of a hotel. And, and that's actually one of the things I love about storage. Not to mention we're dealing less with people. Certainly in multifamily, you're dealing with people living there and habitating, uh, and you are in a hotel, although they're transient, um, you're dealing with them less. And that's— there's just so many— obviously, you know, we don't, we don't need to glaze each other over storage. That's why we're here talking to each other about it. But, uh, one of the things I love about that—

yeah. I'm gonna add 2 funny things to that. You're completely right. The reason I like storage, I've always joked with people, is you're not dealing with anybody's livelihood. Period. At the end of the day, it's their stuff there. You're not dealing with, if the toilet breaks at 2 o'clock in the morning, they want to get their toilet fixed. You're not dealing with somebody living there and the issues involved. The other one that I think is funny you mentioned, and this is also, I guess, another little learning thing that's, I mean, I guess it's not really a secret at all. It's just, I never really talked about it a ton. You know, in the last couple of years, I ended up buying next door to one of our storage facilities. There was a 2-property industrial building there. And I almost was funny. I'm like, I kind of liked it because it had some of the cool buzzwords, Joe. It's kind of the, oh, it's flex space. It was bigger. It was like a 5,000 square foot building and an 8,000 square foot building. And it was the 8,000 square foot building was triple net. And the back building's kind of more, it could be like a flex space, kind of like you talked about with Pro Storage. But I, you know what, you don't know what you don't know. And so it's been funny because I've now seen kind of a different industry. It really is not the same here. And it's to your, exactly your point. I'm kind of seeing why I really like storage Instead of 2 tenants, because I have a 2-tenant property here, which by the way, the day we bought it, of course the month-to-month tenant gave us notice they were moving out. So now I went from 100% to 50% full in less than a month and a half of buying it. And then, so a move out or 2 in storage doesn't really hurt you there. And then the other thing that I like that you mentioned is in storage we can move on a dime. If I don't like something, I can A/B test things all day long. I can try this rate and see if it moves the I can raise this person's rent and do this. I can do this, I can do that. The industrial buildings, they're kind of funny again because industrial's a great little industry and it's not, it's again, larger flex space. Well, the funny thing that's kind of about this is I have a 3-year lease, which is awesome, but I don't really have any levers to pull there. I pulled everything. I'm done. Like, it's kind of like you just sit here for the next 3 years, which I guess I'm not mad about it. You know, I would love, I'm like, ooh, but my return's really not changing too much on this. This is exactly the same thing. Like, I can't exponentially grow this like you can a storage facility. And I was kind of like, you know, I kind of sounded like this should be more my retirement package, Joe. Like I really should wait and buy this like 30 years from now and just sit on it and say, there you go. And it's kind of like, you know, so it's just kind of funny when you compare it to different industries like that. It's totally the great part of storage here, to say the least.

Totally agree. And folks, hopefully what you just heard is in this part of the conversation is management. It's not magic. It's not the thing that should stop you from making your first offer either. I mean, I know we talked about this being a fear. It's, it's, you just, it's a system. It's learnable. And the people who build it well, like Alex did, build something that eventually has value beyond the facilities themselves. And you can take that knowledge, that management knowledge, and like Alex was just talking about, into other asset classes. And so the fear of, I don't know how to run it, is real. Alex experienced it. We experienced it at Bellrose. My partners at Storage Moguls experienced it. But the answer to that fear is not to wait. The answer is to build the system before you need it with people around you who have already done it and been through it. Like I always say, you know, the best way to learn how to bowl is with bumper rails, and that's the best way to buy a storage facility as well. Alex, true or false? A storage facility's net operating income as reported by the seller is almost never the same as what a new owner will actually collect in year 1. That's gonna be a tough one for you because you represent a lot of sellers.

Yeah, hold on, I'm like, was there a negative in there? It's not what it is. True. Yes, a lot of times that their P&L is not going to be the same P&L you have. Yes. I had to follow that. Like, wait, I think I missed a knot in there or something.

Hold on.

There you go. Yeah.

True, true. The gap is usually wider than the buyers expect. Sellers report NOI based on how they ran the facilities. This is kind of the angle of the question. Below market rates, unaddressed delinquency, owner-managed labor not priced at market sometimes, right? The process of adjusting that number to reflect how you would run the facility is called NOI normalization. You know, in plain English, you're not buying the seller's income. You're buying what the property can actually produce under your management structure. So it's important to keep that in mind. Alex, you've watched a lot of first-time buyers. You know the ones who close and the ones who are still looking 18 months later. What separates them?

I'm going to go to the very quick. The answer is I'm going to, I guess I kind of hate it. It's like ambition basically. Like how badly do you want to really hop into this here? Because there is always going to be a reason not to buy a facility, period. Doesn't matter what facility you look at, you can always find a reason not to. Can you find a reason to want to? Like there's a lot to like about, I mean, that's what it's funny. Like I feel this way today about the listings I bring out. I don't want to just bring anything out for market. I want to be excited about saying, hey, there's a lot of pros to this site here. I can find negatives. I can even tell you the negatives. Maybe a lot of brokers will try and walk around and we can talk about some of the negatives and talk about what's going on. But I see so many people that, I mean, there's already some that I've talked to from when they just wanted us to manage for them. They never even bought a facility. They've been looking for 5 years. They've been looking for 6 years. They just, they can't find a reason. They're looking for reasons almost not to buy it. And there's an analysis paralysis, for lack of a better word here, that I think people get into sometimes because I looked at it and, well, this could happen, or, oh, this rate looks a little bit different. And, oh, you know, I'm like, and sometimes I think where I started with is, and this is hard, it's hard to do it and it's a little different because I got to, I always step back and look at it. I am a little different. I was still in college. It wasn't all my money. It was some of my dad's and family money. So I mean, that was, I was kind of almost for jokingly the third party to my father. Like, I'm going to push you to do this. We're going to do this. And because I didn't have as much on the line as I have, I'm younger. I had, you know, there wasn't a ton to lose at that point.

Yes.

I get there's always something to lose there, but the financial freedom that can come from storage is going to be great. And the amount you're going to learn getting that first deal done, getting in there and just making it happen will teach you more than you can do and will get you the success to be ready to talk about the next one here. Because it's very obvious to your kind of your question, Joe. It's very obvious when it's a first-time buyer. And it's kind of funny when I like when people actually just tell me, hey, I haven't bought a facility yet, I really want to learn, et cetera, versus it's almost some people that try and act like they know everything about storage, which I'd rather just flat out tell me you're a first-time buyer. Let's talk about it. Let's see how much you know. Let's go from there. Don't—

so let me, let me cut you up because you might, I don't want you to be giving away an answer to what I'm about to ask because this could be part of it.

Oh, perfect.

There you go. So let me, let me ask this, this way. For the listener who is the person you just described, right? Who's been thinking about it. And, and let's all, I wanna skip everybody to the same place, right? We all have different entry points into this business. Like you said, you, you were in college, but you're, you had your dad and, you know, I'm, I'm assuming you didn't have a, you personally didn't have a ton of money, but you, you had the wherewithal, however it was.

Yeah.

It came about. Let, let's fast forward everybody, no matter what their entry point was, So let's— that's behind us. That question's behind us. Financially ready for what? For whatever facility they're financially ready for, whatever size they're financially ready for, right? So I don't want that to be part of the question here, part of the answer. I want you— I want you to answer this more to the person who's financially ready for something, but can't pull the trigger for whatever fear it is that's holding them back. What say you to them?

Well, you have to start somewhere. I'm going to jokingly say it that way. I mean, it's kind of almost as simple as you got to start somewhere. You will, again, go also with— this is going to sound so funny and it's hard. It's just funny because I get it. I'm in the brokerage world. I want to go off data. Sometimes just go off your gut. It's funny because I get this a lot with some of these first-time owners and We have a listing right now and all I keep hearing, I like this facility. I like it. I just, I know there's a lot that can happen. I mean, I keep hearing this from person to person. They're like, but the numbers just aren't where I like them to be. I say, well, why don't you like that? Their rates seem a little higher than the market. I'm like, yeah, but it has everything that, that's why you like it. Because it's a nice facility. It does what it's supposed to. It does what it's going to. So sometimes you have to go off your gut. I mean, there's a period in the discussion there. I mean, if the numbers are pretty much everything lines up the way you want, I mean, it's like sometimes you just have to jump in because then once you get in there and you know, and go from there and say, hey, this is lining up and this is exactly what I want here, or not even exactly, it's close to what I want here. It pretty much checks every box. Like you gotta jump in and you're gonna learn 10 times more and be way more experienced to go from there. Because that's what we did on our first deal. We didn't really love the location. It wasn't the best area. We didn't love all this stuff, but it was like, we got to learn somehow and we're going to learn feet to the fire here with that. And we just got to jump in and do it. And that's why we got very successful with that. So don't be afraid to jump in and just, again, it's never going to check 32 boxes perfectly, period. And if it does, there's probably Probably 50— there's probably another 50 people looking at it too with that. Generally. Love it.

That's great advice. Listen, it's great advice. All right, last question. Nobody gets out of here without answering, and hopefully it's a, it's a beneficial question to you as well. Um, I want you to think about this before you answer it. Um, there's a book called Be Your Future Self Now. It's written by Dr. Benjamin Hardy. Um, it's about MrBeast. I'm sure you're familiar with who MrBeast is. Do you know what he did? How he became so famous?

I don't know all the background, but God, the guy is giving away a lot of stuff with a lot of money there. Yeah.

Yeah, that's, that was my introduction to him as well. I had no idea what the background was. My kids would watch the insane videos he would put out and every now and then I'd catch him. When I started reading this book, I was blown away as to who actually this guy was. He's still very young. He's, I think he's only 27 years old. He's the most followed person on YouTube on the planet. When he was 17, instead of studying for an exam, he was a YouTube gamer. He's one of those guys that filmed him playing, uh, and filmed himself playing games. And I think he had like 8,000 followers on YouTube or something insanely stupid for just watching someone play video games, which I'll never understand personally.

Yeah.

However, um, that night he recorded 4 videos of himself, um, and released them in the future. One 6 months, One, uh, to be released in a year, one in 5 years, one in 10 years. The 10-year was just released last October. That's why this is all, um, very fresh. So he was—

How many do I have?

Turned 27, I think, last October. Um, in either case, the premise is he, like Cortés, burned the ships. He publicly put it out there. This is where I'm going to be in 6 months, 1 year, 5 years, and 10 years, and I better start doing and acting like that today. So the question is, Where are you in 5 years? Alex Erbs, where are you? If we had a time machine and we teleported 5 years in the future, who are you? What is your life like? What are you doing? How big's your portfolio? Answer any way you want. What, what is it? Paint that picture for me. Not your goals, what you are doing, who you are. And the question then is, what are you doing today to make sure that that happens, if we got in that time machine, that that's who we would find?

Oh my God. These are just— yeah, I like more of the questions about operations, Joe. It's easier. No, just kidding. I think 5 years from now, I think I'd say I'd still be in brokerage. I really like brokerage. I enjoy it. I think I just, I almost took the long way to get here. So I think I'll always be in the brokerage world with the And specifically in self-storage brokerage. Our portfolio, we have 9 locations right now, and I say 9, and by 9 it's very much, I mean, there are a couple larger ones, but then a lot of auxiliary sites around it. So I think we'll still buy some. It still happens that some small auxiliary sites come around it that we'll still do that. And there's probably a good chance, very honestly, I'd like to buy Still buy real estate. I think that's part of— I know some people don't love their broker buying stuff, and that's— I'm not saying I'm going to buy in the markets I'm selling here. I think we'll end up buying in some different markets in different areas here. And maybe, you know, we— I work specifically in Missouri, Kansas, Illinois, you know, central US. So it might be buying some stuff more in the Southeast or in other areas that, you know, are other listings of other brokers and stuff. Because I enjoy the operations, I enjoy ownership, and I think it actually gives me an edge as a broker is having some of the operations. Background and knowing how, you know, what to look for and what to have here. So I think that'll happen. And honestly, you know, on another almost kind of personal note, you know, I'm engaged now, so probably will be married. And, you know, we're looking at some other businesses, not even in storage, but outside of it. So more operating type businesses and other stuff that I think it'd be a very good chance that, you know, we will own some different businesses. I don't know what those will be. I think storage will always be around. There will always be that. There will always be brokerage. I think that just have some other operating businesses.

All right, so let me help you with your answer. I—

okay, clean it up.

I, Alex Herbs, in 5 years am a broker who's kicking ass in self-storage. I have grown my portfolio from maybe not even more than 9 because I might have sold some, but I've grown my revenue to X level, which you don't have to share.

Yep.

But I'm still in storage. I'm growing my portfolio the way I want to grow it, in a way that's producing more more passive cash flow revenue than it is today.

Yep.

I am ex— I am— have such financial independence that my, my engaged spouse at the time, in 5 years from now, presumably, unless you're gonna drag this thing out for 5 years, my spouse and I are— have such financial independence that we are either looking at or own other multiple businesses that fit within our lifestyle, make us happy. And today, To make sure those things happen, I am doing what?

So, well, I'll go reverse order there. Obviously, we've been looking and talking with different business brokers and different other just business owners and planting the seeds out there if they ever want to sell and have a conversation. Other facilities, that's been an easy one, is just continuing to discuss with owners and different scenarios come up and just seeing what happens and being ready. And setting myself up that we have the capital ready to go if we want to go buy something, but we're not rushing to make a deal happen. It's just there. And the brokerage side, kicking ass, taking names. We got a little 20, just as of this recording, I think we have $25 to almost $30 million under contract and another $30 million in listings behind that. And I think it's only going to get better as I don't think we're going to stop hustling here. So let's get some deals done and call me if you want to talk.

I love it. Speaking of which, how does our listener reach you, Alex?

Yeah, again, I'm very— there's not even one specific way. I don't— I maybe should be better at social media. I do a lot on LinkedIn though. I am on LinkedIn, so that's usually an easy spot. Message on that. Email me, alex@equicapcommercial.com.

Very easy with So Alex, A-L-E-X, at Equicap, E-Q-U-I-C-A-P, commercial.com.

Yes, sir.

We'll put it, we'll put it in the show notes as well.

Perfect.

Um, Alex, I love that answer. Um, and here's what I keep coming back to. You, you're the rare person who's actually done all of it. You weren't just a buyer advising buyers or a management company advising operators. You actually built each piece, lived each piece. Now you're on the side of the business where you watch other people navigate the same decisions you made 10 years ago. And that perspective is actually— it's irreplaceable. I mean, that's— you've earned that. So if you're listening to this and the management question has been the thing keeping you from sending your first LOI, I hope this episode answered it for you, folks. The management problem is solvable. Alex solved it. StorageMoguls.ai is where you can learn how to solve it for your first deal as well. Every week on Storage Moguls Podcast, we're covering the full storage verticals: self-storage. We're going to introduce later boat and RV storage, pro storage, industrial outdoor storage, truck parking, small bay flags—all of it. So please like, subscribe, and share based on something specific that hit you today. Folks, there's a seller out there right now who's ready. So stop watching, start moving. Drive for dollars. Send the LOI. We'll see you next week.