How To Overcome Challenges In Self Storage Syndication with Christopher Cashman and Terry Morrison

Welcome to Syndication Attorneys' free monthly podcast and live YouTube stream, where we talk about topics of interest to real estate syndicators and fund managers with the opportunity for live questions and answers before we sign off. I am Attorney Kim Lisa Taylor. Before we get started, please note that this event is both recorded and livestreamed and will be used for a future promotion posted on our website. And in a broadcast available to the public, you can ask questions at the end of the broadcast by raising your hand or typing it in the Q&A. If you don't want your voice recorded, then don't raise your hand. Just type your questions in the Q&A. But we do encourage questions either of me or of our guests. Information discussed during this free broadcast is of a general educational nature and should not be construed as legal advice. We would love to represent each of you that are on the call or that are listening to our broadcast if you want to know how to do that, you can go to our website at syndicationattorneys.com and you'll see a button there to schedule a free consultation and you can talk to one of our staff and we can see how we can help you. So anyway, today our topic is how to overcome challenges in self-storage syndication with some long-term clients, Christopher Cashman and Terry Morrison. And these guys have made a name for themselves in the self-storage industry. They've got some Kind of unique practices, I think, among some of our other self-storage clients. And we thought that it would be really helpful for you to see what they've done. They have built a portfolio of over 3,100 storage units plus 188 RV parking stalls in 5 states using over $10 million in private capital in just 2 and a half years. So that's phenomenal growth and it's amazing. So we're going to talk about some of the challenges they've had as they grow. And, you know, what things you guys should be looking out for. And it doesn't matter if you're growing self-storage or you're doing multifamily or any other kind of real estate asset. These challenges are going to be common pretty much to all of your growth strategies. So, Chris and Terry, welcome.

Thank you.

Welcome. Thanks for having us. Yeah, thanks so much for coming. And so let's just tell, you know, maybe One of you guys, you know, you can both talk about your backgrounds, but, uh, yeah, Chris, go ahead and tell us a little bit about your background, how you got into this space, and, uh, and why you think it's great.

Sure. I, uh, let's see, where do I start? Um, started back in the hedge fund finance, um, arena a long time ago. I ran a very small hedge fund out in California, and I was in real estate prior to that, much smaller stuff, single-family stuff, lease options kind of stuff. And then, uh, Got out of the hedge fund and I just couldn't grow it to the level where it was profitable. It was extremely fun. I love it, but just couldn't grow it to the level where it was profitable on our end. So got back into real estate. I read Dave Lindahl's book, the Yellow Emerging Markets book, and that's truly how I got back into the commercial real estate space. From there, I went to Jeannie, to everyone else involved in the Lindahl Group and went through some medical office, some student housing, some multifamily. into some office and then into some flex office. And then prior to COVID, I made a shift to self-storage and started researching it, went to some specific self-storage gurus, Mark Helms and AJ Osborne. And then just really my eyes just opened up. Nothing wrong with multifamily. I still own some stuff in South Carolina and Texas and stuff. But it just was much more amazing than I thought. And by amazing, I just mean the simplicity, the expense ratios being so much healthier. And I'm just able to free up some time for myself to do cool stuff because I got great partners and I really enjoy the asset space. It's a lot different than multifamily. That's pretty much where we landed. I met Terry at one of the Guru boot camps about 4 years ago, something like that. And we've been doing self-storage completely 100% since.

That's excellent. I remember I went to a self-storage— a couple— I've gone to a couple self-storage trainings, and I remember somebody at one of them saying that the dinette set in unit 1A never complains about the couch in unit 2A.

Well, you know what? It's funny. A long time ago, a long time ago, my close friend, Burge, out in California— I can't do the Armenian accent, but he loves when I try. He says to me, Chris, you need to look at self-storage. I'm like— and this was when he and I were doing Extreme Green Developments together. I'm like, Burge, why would I ever? Like, that's the craziest thing to me. I'll never forget it. Just sitting there and he literally said it to me. And now we joke about it now, but I mean, it's just metal and slabs and, but it's just, I'm so passionate about the math and the, just how you can drill down and make something amazing out of just simple, you know, tenants coming in for $100 renting a 10 by 10. That's it. It's simple in one respect, but then it's not in the other respect when you bring in dynamic pricing and value pricing and all the things that we do, the third-party management ideas and I get obsessed with the, with the numbers, literally the expense ratio and how you can drill down on that and, and move that needle. And like Dave teaches, just, you know, forced appreciation. It's, it's, it's a lot of fun. It's really a lot of fun.

Well, I'm sure there's some unique challenges with things people do in self-storage. We will talk about those in a little bit. But Terry, Terry, please introduce yourself and talk a little bit about your background and how you decided to hook up with Chris in this space.

Yeah, you bet, Kim.

Yeah.

Thanks for having me on. Hello, everybody. Terry Morrison. I'm based out of Salt Lake City, Utah. I have been an investor in the real estate space for about the past 12 years, primarily in the single-family area. I was doing long-term, short-term rentals, doing, doing some property management. Prior to that, for about 25-plus years, I was a sales executive selling enterprise software, and I really just got tired of doing that. I wanted a change, so I made the transition. I was an investor and I'd been doing that for many years, and I really liked the business model. Of the self-storage asset class. I mean, everything Chris said is the same for me. I like the model. I like the, you know, the resiliency of the asset class in up markets, down markets. It's a profitable, you know, high demand, you know, and in many parts of the country, depending on where you, where you look, it's underserved. So I just saw a lot of opportunity there. I wanted to get into that. And as Chris said, I met him in a, you know, we went to like a week-long boot camp to just get a bunch of data about the industry. And we met there. That's how we got hooked up about a little over 3, 3 and a half years ago or so. So since And since then, I've been, you know, pretty much solely focused on the self-storage space with Chris, you know, as his partner running, you know, running our operation.

That's excellent. And you guys have another partner and some support staff or—

Yeah.

Tell us about the other people on your team.

We've got Ed with us from some stuff in the past, a lot of Lindahl stuff. I met Ed through Lindahl. As you know, and from there he's kind of taken a little bit of a time off in a way, and Terry and I are moving forward. We've actually teamed up with Mark Helm on a couple projects, actually more than that now. We've got something in Utah with Mark. We've got some ground-up development in Lexington, South Carolina, right here next to me in Columbia. And then we're also looking at a 76,000-square-foot warehouse in Georgia that we've been putting in contract with. Mark. So it's great having him on board. He's like a coach. I mean, he is a coach and, but he's not, he's a partner and a teammate. So it's great. We have a lot of fun together. And I think that's one of the strengths that we have is we just build great teams and move forward. We don't need, Terry and I don't need Mark, but we want him because he's a great partner, teammate, coach to have on the deal. And he just brings a lot of value to the table.

Yeah. So, Kim, depending on the deal, we, you know, we have 3 other partners besides me and Chris. As he said, there's Ed Babenko, there's Mark Helm. We have another guy named Craig Engelfried that joins us from time to time. And then in our back office, we have 3 ladies that do a lot of our back office work in our, you know, operations piece.

Yeah. So, so anybody listening, okay, remember we mentioned at the beginning they built this over 2 and a half years, but when you guys first started out, you didn't have all this No.

No.

No. And, and, you know, Kim, you know, that's one thing too. As you grow and you scale, I mean, that's, to me, that's probably one of the biggest challenges to people listening out there that I would say that, that anybody has. I mean, I, I, I hear others talking about this too, but it was certainly true for us. And that is just the ability to scale. Like, as you start doing more business, looking at more deals, the workload grows and, and just, there's a lot of things to do and a lot of things and processes and things you have to have in place, technology, right? So how do you get all that in place. And you really have to do those things or it makes it really difficult to scale. And even to this day, it's— I still say it's a challenge every day when we get up, all the stuff that we have on our plate to get done and things that come out of the blue, the emergencies that pop up here and there. So, um, you know, you really, you really have to put those things in place and you have to get people to help you. You do have to delegate. I mean, there's no way Chris and I could do everything that we have to do if we didn't have people like yourself at Syndication Attorneys on our team. We consider you guys teammates. We have bankers, we have lawyers, we have civil engineers, architects, you know, a of different people, brokers, real estate brokers that we consider our teammates, GCs. And without them, we couldn't scale and do what we do.

Yeah. Well, and the same for our business. You know, we now have 13 staff members. You know, there's 4 attorneys. We have several paralegals. We have a law clerk. You know, back, we have admin staff. We, you know, most of our, the biggest concentration of our people are marketing. And most of my time at this point in my career, since, you know, at this point in the law firm growth, is spent on marketing, either going to events, speaking at events, coordinating events, teaching, writing, you know, or, you know, just figuring out how to promote the firm, meeting with our marketing staff and getting systems in place so that we can keep all that stuff going and growing. So it's, it's It's a challenge. It's just, you know, every small business has these same types of growing pains. Doesn't matter if you have a physical location, doesn't matter if you have an entire virtual office. If you have a physical location, you're paying for office space and desks. If you have a virtual office, you're paying for software and systems where people can all collaborate. So it's, you know, there's, there's, think about this as you're not just a real estate investor anymore. You are a small business owner and you are growing a business.

Yeah.

And your business needs support staff and systems in place.

And, and, you know, Kim, as you know, being in the, the legal area, it's, it's incredibly important to be organized and have your documentation and all that in place, right? Because everything we do every day is about documents and somebody needs this or that. And so you really do have to have all your ducks in a row on that. And we, we do try to, you know, beef up our, you know, our back office with people to help us do that, you know, using technology to help us do that. And you said on the advertising front, we run into the same exact thing. I mean, all the stuff you see us post out there on LinkedIn and our social media pages, I mean, we do some of that ourselves a little bit, but for the most part, we got people helping us with that.

I can't—

I do not have time to sit here all day and do videos and come up with, you know, cute little things to put on LinkedIn. I mean, I, I, I supply our marketing people with ideas and thoughts, and so does Chris, and then they take that, manifest it into something that is, you know, You can post it on the social sites. So we do need help with that. You, I just don't have time to sit and do that all day.

I know we've got a 20-something that does that for us. You have to have people that understand that technology. In fact, we've got TikTok and Instagram accounts that I've never logged into. If I want to log into Facebook, I have to call her. How do I do this?

Well, and one, Kim, one other thing that we've done that I think is really helpful is, you know, we also run a GP LP software platform, right, that really helps us keep all all of our stuff in an organized form and also the ability to present it to our investors and report information to them as we need to. So it just helps us with all that organization compliance and visibility to our investors. And we run a GP platform called Juniper Square. And I think that that's a useful piece of technology that helps us with those processes.

Yeah. And just for the people that are on the call that aren't familiar with those, so these are called investor management platforms. There's multiple ones out there. Juniper Square is one of the more robust ones. Um, there's also AppFolio is a very robust one. There's some that are more, uh, maybe startup-oriented, uh, Cashflow Portal. We have some clients that love InvestNext. Uh, but I do encourage our clients to get, you know, get involved with one of them. And usually if you decide you want to graduate up to a more robust one later on, you can always do that. Uh, but you've got to have a way to house all the information that you're gathering, that your team is gathering about investors, you know, characterizing which ones are accredited, which ones are not accredited, making sure that you've had all those suitability conversations, and then keeping track of who's in what deal, right? And what information are we posting for those investors and how are we disseminating that information to everybody at one time, whether it's tax information or status reports on a project or offering documents, you know, and it's better that you can house that in an investor management platform than trying to do it yourself on Dropbox or something like that and then doing all that stuff manually. It just can become very cumbersome. And that's why these platforms arose is because they saw the need and they've been really adept at, I think, filling that need and then also helping you keep your book, your distribution, you know, your schedules of distribution, you know, all the distributions that have been sent and things like that in place. So when you do your accounting at the end of the year, it becomes a little bit easier, right?

Yeah, that's a big, a big advantage of it, Kim, is, you know, pushing the K-1s out to all the investors and showing them that, hey, here's all the documents you need for tax purposes, reporting purposes. You know, as I mentioned in my intro, I sold software, enterprise software for 25+ years, and I used to be on the other side of that equation. I was trying to get corporations to adopt and implement and use software packages to help them with workflows and different things. And I will say to the, the folks listening in, it's, you know, it's not an easy process. It really isn't. If you think you're gonna go out and buy a piece of software and then just push the easy button, It really isn't that easy. You do have to invest some time. What I would recommend is you assign somebody or hire somebody if you're not gonna do it yourself to be your champion, your black belt that runs that system for you. But what it also does is it— for software packages force discipline, right? It forces you to have, as Kim said, you have to have all your stuff in line. It has to be in there. It has to add and it has to balance on the columns. You know, everything has to be Just where it needs to be. You know, you can't just be nilly-willy about it. So it does force good discipline. So it is good. But I will say it's, it's not— you don't just go out and buy it and magically it happens. You have to commit to it. You have to work on it, and everybody's gotta be focused on it because if you don't, it just, it just— the adoption fails and you've got an expensive piece of software license that sits on your computer and you don't use it.

Well, that and your investors get frustrated because all of these systems allow them to have their own login information. Where they can, you know, look at what's going on in their account. And if they look in there and they don't see any updates for the last 3 months, they're going to wonder what's going on with their money.

No, that's it. And then, and then, you know, doubt creeps in. It's like, oh, is this accurate? And all that. So you really have to pay attention to the details because you're right. One of the things that we did, and I thought it was a good thing that we did, we got good feedback. We went out to a couple investors that we know really well and we said, hey, we want you to be our kind of our secret shopper on this, right? We want you to dig through this, look at it, give us your feedback. How does this look to you? Can we improve it? What's confusing to you? What could we do better? And they gave us that feedback. Some of that we fed back to the software company, said, hey, why don't you report this this way or put this column here or put this data there? And of course, some of that we can't change. It's not our software package, but we fed that back to the, to the companies. But it, it did give, give us some insight from our investors on what they're looking for, what they like, what they don't like. And it just helps us understand how to, how to, you know, get the data to them more effectively.

And we do have a scheduled podcast. Of course, it's not till March with Perry Zhang of Cashflow, one of the founders of Cashflow Portal. And really looking forward to that and talking about how he's seen it transform syndicators and their businesses and their fund managers and really help them scale and grow. Because without that, you're trying to keep track of everything manually or on an Excel spreadsheet, or you're Hiring third parties to do it for you, which is fine if you, you know, for a fund, absolutely. I recommend a fund administrator. But for syndications, the more you can start getting that into an organized software system that's created specifically for that purpose, it's just going to help you feel more comfortable. It's going to give your investors more confidence in you.

Well, Kim, think about it. You know, if you've got one deal, you know, you might be able to manage it. But if you start getting deal 2, deal 3, deal 4, deal 10, the volume of information data that you have, it starts to just, you know, You get it crisscrossed in your mind, you forget where you put it. I mean, you really do have to, to buckle down and get those things in place because you cannot manage 6, 7, 8, 9 properties and deals. And then you got new deals coming up that you're looking at. You know, you can't do all that unless you've got some, some real, I guess, organization along the way.

Well, and you have investors that invest in multiple deals with you, right? And maybe they invest as, you know, a certain class of members in one deal and a different class of members in another deal. You know, there's no way that you can keep all that straight in your mind. When you have more.

Well, and they love it too when they can log into their portal and they can see, oh, I'm invested in these 4 deals and it lists them all out, shows exactly, you know, just like you would in a bank statement or your stock portfolio, right? It's just like that. You're looking at it, you're seeing exactly what you've got there, how much you put in, you know, all the information you want to see. So yeah, it makes it nice.

Yeah, it's easy to— without that, it's easy to like forget what you invested in. Believe it or not, we have people that have done that and we have people that have called us, clients that have called us and said, hey, we can't get a hold of somebody. anymore. You know, what do we do? Their check keeps coming back, you know, because they passed away or they're in a nursing home or, you know, they're just not available. Um, you know, so maybe having some of that stuff in place and, uh, you know, we'll kind of help keep track of that. One of the things I do recommend, I'm starting to recommend for everybody just because of that situation, is, uh, that you get a kind of a next of kin. Who do we contact if we can't get a hold of you and your checks start return— getting returned? Get that from the investors up front in case you can't, can't reach them, because that has happened a couple times. Uh, in fact, I think it's happened to you guys, right?

It has.

Yeah.

Many, many, not many, but a few times. Um, the last one was, um, uh, a multifamily, uh, sale up in Lexington, Kentucky. Ed finally got successful and, uh, tracked them down using a private investigator, no doubt.

Right. Yeah. And so that—

It definitely happens. It happens.

And that's not without cost. Yeah. And then, and then what do you do? So if they can designate somebody upfront that you're authorized to communicate with, at least to find out what happened to them. Right. So then you can figure out what to do. Maybe you don't have to give them details about the investment, but still.

But you know, this is accounting too. We have one guy that's a professional gambler. He's always in Vegas. He's never home. We send him checks all the time. He never cashes them. And every check that we send has that 90-day maturity thing and it screws up our accounting all the time. So it's funny because it's like, oh, it's— I know who it is. What's his name in Vegas? And he's like 40, but he's never home. He never cashes them. And, you know, we have to send them. That's what we do. So it's just sometimes it's kind of funny, the stories you get from these people.

But, you know, Kim, a lot of those legal docs that everybody— the applications they fill out, you know, accredited investors, you know, investor forms that we get from your organization, right, that we have to have people fill out. We put all of that in our investors portal so they can go in and reference that if they need to. Usually you don't need to look at those ever again, but if you do, They're there, and you can look that up. And then, you know, if that information that you referred to—next of kin, contact emergency numbers—all that kind of stuff—hopefully that would be there on those forms, and we could dig it up.

Right, right. Well, so let's talk about your business model. You guys have a little bit of a unique business model. You're not not buying just existing stuff. You tell us how how your model works.

So. Well, that's, it's a great question because we get a lot of people that bring us, we get a lot of deals from across the US, I guess you'd say. And a lot of folks, some really cool people that we want to help and do deals with, and they just can't find stuff. We find, Terry and I find stuff all the time. Luckily for us, that's just a lot of groundwork, I guess, to get there. So one of the things that we tell people when they bring us the deals is our criteria, emerging markets, simple Lindahl 101 stuff. stuff, emerging market population growth, jobs growth, some infrastructure ideas similar to multifamily, but not so precise. We do have a lot of very successful properties that are out in the middle of nowhere. You would think, why did we ever buy that? Well, it's some of our top performers. So back to your question, we don't buy assets and then just hold them for cash flow. The cap rates are so compressed now, it's harder to get loans, 7%, 8%, 9%. It's hard to pay investors. Anywhere from, you know, whatever, 7 to 30 on the back end when you exit. So what we do is we only expand, convert, or ground-up development, and it's usually expansion and conversion or combination thereof. We also have a target where we want to hit 60,000 square feet for the asset when we're done so that a REIT will be salivating and teed up to purchase or a private equity fund. So we kind of have an exit strategy before we know what property we're looking at. Terry and I just, we focus on killing deals. That's really all we, not all we, when we see a new deal, we're like, all right, you want to kill this? You want me to? And we'll try really hard to kill it. And that's really what kills it. Is it expandable to 60,000? You know, if no, just get off the phone or get off the email string. Is it a conversion like the one I mentioned earlier? 76,000 square feet is just the building. So we'll be able to do all kinds of stuff on the outside. We'll bring that to 100,000 square feet. And then the jobs growth, that's just a— don't have that, you're swimming upstream. So we kind of lay all these little tiny things on top of each other to tee up. What we've had is just great success when we end up selling or when we end up ending the construction or the expansion or the conversion and sitting on it for a refi or a cash-out. Does that make sense or did I miss something, Terry? Terry will fill the holes when I miss stuff.

I'll add a little bit to what Chris said. Chris, yeah, I was on mute.

Sorry about that.

Thanks.

I had to cough once and so I had to mute it. I'll add a little bit to what Chris has to say that, you know, we sometimes, you know, in self-storage, the old adage is, oh, it's got to be right next to a freeway and you got to be able to see it and it's got to have this fantastic visibility. And that, you know, that always helps. I'm not saying that's bad, but it just, you don't have to buy self-storage assets that are necessarily exactly in those types of locations. People don't do the old drive-by anymore. I mean, think about you guys on the phone. How many of you have bought anything in the last 5 years where you drove by and like, oh, I got to go in there and buy that? No, you look it up on your phone, you look it up on your computer, then you go there. So your asset doesn't necessarily have to be on a perfect location to own it. So, you know, we don't get hung up on that. But we do look at things like Chris said, we do feasibility studies to make sure that the demand is there for the asset in the area that we're buying in. And to Chris's point about jobs growth, that usually is a big driver of that. You know, apartments, growth of housing in the area, you know, things like that really help as well. So we do look at that. We look at rent, square footage of rent per capita in the area. And, you know, that tells you if you're oversupplied or undersupplied. So we look at a lot of those types of things. And like Chris said, you know, our model is to expand. We don't just— there are a lot of levers in the value-add model that you can look at. One lever is we raise rates, right? The other lever is we come in and we apply more efficient management. The other model is, or the lever is, we apply technology. We do all that. I mean, that's kind of table stakes. But then we go beyond that and say, look, we want to expand it. We want to add square footage. But not just the same square footage. So we might go in and buy a standard set of buildings that have 10 by 10 roll-up doors, exterior access, non-climate, right? But we come in and we add climate control, we add RV parking, we add covered RV parking, we even add some flex space sometimes. So we add different product types that have— honestly, those are almost every one of those are a higher rent per square foot than your standard, you know, 10 by 10 non-climate storage building. So it's a little more profitable for us to do it that way. And it gives us cross-marketing when we're pushing this information out on our website to people that want to rent storage. They look at it and say, oh, look, geez, we can— we have— they have climate, they have non-climate. And sometimes you get different audiences. So you're not just relegated to one market niche, so to speak. You have people that need to park RVs, you need people that want climate control. So it helps us, I think, with our overall marketing strategy as well.

Kim. I like that. Well, and, you know, jokingly I say this, but I think an ideal location would be like right next to the Amazon distribution center, right? So, like, from Amazon to your storage space.

You know, believe it or not, here's, here's a funny— I mean, we, we literally do this. We— I mean, it's not a, you know, an acid test rule, but we certainly look at it. But, you know, when you get, um, businesses like Dollar General, for example, or, you know, those types of stores, they go out and do all this marketing, uh, research, right? They do the marketing research. And when they put those stores in an area, usually they view that as having The same kind of clientele that we might be looking for for self-storage. There's growth in the area. There's apartments coming in. There's new housing starts. You know all that stuff. And so if we see a dollar general, we're like, oh, if we can get something closer to we're like, hey, that's probably a good thing because they thought it was a good idea to put their store there. So you know that's just a way to let somebody else do a little bit of marketing research work for us. But yeah, all that stuff is good. You know main thoroughfares are a big thing too. Your your property doesn't necessarily have to be sitting right next to the freeway, but it could be on a main road. that connects 2 towns together or a thoroughfare to a lake or a recreational area, those are great. So even though it might kind of seem like it's out in the boonies a little bit or off the beaten path, if it's on a main thoroughfare that's taking people to and from something or somewhere, it can be a good location in that regard too.

Well, that's great. And so you guys use professional management, right? So you'll, you'll buy the facility, you'll get it set up the way you want. And then you turn over the management to somebody else. Let's talk about that.

Yeah, we use— Chris, I'll jump in if you don't mind. We use a company called Copper Storage Management. They're based out of Nashville. Most people in the storage industry would know them. They have been in the business a long time. Bill, Bob, and Brett Copper. So it's a family business, but they've really ramped up and scaled. They got a lot of people on their staff now. So they've went, you know, much, much larger than they used to be years ago. But they do a great job for us. They run everything for us, you know, on our on our digital marketing. They run our websites. They go in. So let me just kind of back up. When we take over a facility, the day we acquire and close on a business, Copper has people on site, you know, at the location. They do an inventory, a walkthrough with the previous owner and any property manager that might have been there previously. They do the key turnover. They get all the codes, the websites, the phones. You know, just that whole physical handover of the business. Then from there on out, you know, they get everything into the computer, they get everything up on our website, they get it in our storage reporting software, and then we're off and running. So that happens literally over like a day or 2 period of time. And then from there on out, you know, they pretty much run all of our pricing, our price increases, our SEO, you know, our on-site Marketing. They do our flags, our banners, you know, all that kind of stuff that helps us, you know, promote the property. So they do a fantastic, you know, auctions when people don't pay. You got to kick them out. They run the auction process for us. So 100% management of that property is done by them. Landscaping, fixing gates, fixing a door that's broken, cleaning out people when they move out, you know, all that operational stuff they handle for us. Now we meet with them on a Well, it seems like we talk to him probably weekly, but we have formal monthly meetings with Copper to go over all of our assets and, and do all that. So Chris and I kind of manage from the top level as asset managers, and we, you know, give them feedback and input, and they do the same with us. And we really try to just build synergy and, and, you know, fix anything that we think needs fixed and improve the areas that we don't like. And they're a great partner to work with, and that model has worked very well for us.

Well, that's great. Well, and it sounds amazing that you found them, right? Because I imagine there's some other management companies out there that you've tried in the past that, you know, you just seem to have some synergy with this one that, that's working for you.

Well, and, you know, Kim, the thing about Copper, they have a long heritage in the self-storage business as operators, right? They ran, owned, and did this all themselves and they were investors. So they've been on both sides of the coin. They understand this industry. Inside and out. So it's good to have a partner like that. They're not just coming in and, you know, trying to learn the business or hiring a bunch of new people to come in and do it for them. They really understand the bolts, the ins and outs, and the nuts and bolts of it.

Well, that's amazing. Um, all right, so what, what's your future plans for your business? You know, are you gonna keep growing, keep buying more stuff, buying bigger stuff? More development.

Yeah, we're different.

Chris, why don't you take that and, you know, I mean, tell them about the challenges that we do see in today's market. But yeah, go ahead.

Yeah, our future plans have been slowed, if you will, because of the economy. So the main drivers of that are Terry and myself and Bernice, and we have structured something larger assets. And we're not against the smaller stuff that we can move out through the system quickly. We did LJ in 13 months. That wasn't our plan. I think our deck said 3 to 5 years, but it just so happened we got a non-solicited offer. It hit 30.02, something like that for the investor annualized. So we'll do that. But for the future, we're looking at larger stuff that we can have in the system longer for cash flow and not have so many properties to manage. It's hard though because you're creating an engine That's like a massive vessel that's very slow to turn. It's very slow to slow down. So what do I mean by that? You have all these investors like, hey, where's the next deal? What's going on? What's going on? You haven't, I haven't seen a deck in a while. And so you're being pushed by all these different forces. So it's not the easiest thing to just say, hey Terry, I had an idea. Let's do this now. You can't just shift and pivot. I mean, you can, I suppose, but to make everybody happy, you know, all of your people that rely on you, all your employees and And there's other employees too, Terry. I was thinking, well, we didn't, you know, there's Julie, Bobby, and I was thinking Copper. You know, we have a lot of assistance and they're all strategic alliances, strategic partners in the sense of Bobby and for sure Copper. Back to that other thought about it's not just Terry and me. There's a lot of people that do a lot of stuff for us. But to that question, we're looking at simply, the simple answer is less deals, larger deals. So, and then moving into more cash flow, we've been trying to sell some stuff. We had a lot of stuff in contract that might have fallen out because of the raise on the other side of the buy side, which is fine. They're really solid performing assets, so we're fine holding them. But at the same time, we want to move some of the investors into the newer deals that we have. And we've been lucky too. We just recently dropped the Kim Pref 8 down to non-cumulative Pref 7.

And Kim, I've got to correct— I've got to correct Chris on that. You know, always, always I'll be up to— I'll be— we'll be up to our eyeballs in lawyers, civil engineers, and bankers. And then Chris calls me, Terry, we got to underwrite this deal. It just came across my desk. And he does that every week. And I'm like, Chris, we don't have time to do that right now.

That's your fault. That's because, you know what, we get these— so these deals come from literally sellers of assets. And I'm up in North Georgia a lot. I'm on the ground a lot. So I go to North Georgia a lot. I go to South Georgia a lot. who've got lots of assets in each area. And you just get these random calls. Hey, I got this lady, she's 90 and she hired some guy to build all this self-storage. And long story short, she wants to sell it for, she doesn't care what, she's got all the metal on site and it's just weird stuff.

Yeah.

And then the one that I mentioned, 76,000 square feet, it's just, it's from a friend of a banker. But then we turned in, we turned him from a banker to kind of a friend. And all of a sudden through that relationship, this guy says, hey, I've got this huge warehouse. I used to do cotton and it's downtown. Do you want it? We're like, yeah.

So, you know, Kim, when we, when we first started, I mean, literally I was pounding the phones for the first 9 months. I was talking to brokers, brokers, brokers every, you know, day. I mean, that's all I did was talk to brokers chasing deals, looking for deals. But then once they know you're in the business and you build up a little bit of momentum, you've got some track record, as Chris said, then now we've kind of gotten it where deals are starting to come our way, right? We don't necessarily have to go out and chase them, whether it's from—

And they're off-market.

Attorneys. Yeah, off-market side. Attorneys, brokers, bankers, you know, GCs, you know, the suppliers, the guys that we use in the field that do all of our work, they'll say, hey, you know, got a buddy of mine that he's got a place that he wants to sell. You know, we get those kind of things. So, the sources of where that comes from can be anywhere and everywhere. And it is, it's good because you always want to see that. But I will say it does take some time to wade through the deals to figure out the ones you want to look at. And you do have to take the time to do that because if you don't, then they won't bring you the next one because they don't think you're interested. So, you know, it's kind of a— it's one of those things you just have to deal with it because it's a good thing, but it also takes a little bit of time sometimes to wade through those deals when they come across your desk.

Well, let's, you know, a little commercial break here for just a second.

I just want to let—

Before we go, I want to give credit to Dave for that because that's a lot of that stuff is just what Dave— it's Dave 101 all the time. He says, do what you say you're going to do. Be fun and easy to work with. And when Terry and I do that, our sellers and our— that's— we get deals and the sellers are— we have probably 4 sellers that are now our GCs on construction sites. And again, it's just simple Lindell 101 type stuff. So I got to give credit where credit's due.

Well, and I think what you guys told me when we were doing our kind of our pre-interview is you said we buy things that are broken, empty, and no income. Right. But that's where the value is, right? That's where you can really add the value.

Yeah, absolutely. Yeah, it's like the single-family home house flipper that looks for the most beat-up, junkiest house in the neighborhood because that's the one they can do the most improvement to.

Right, right, right. Absolutely. All right, well, I'm going to do a little commercial break here, uh, and then we're going to talk to you guys after that about how you're finding investors because we've talked a lot about your deals and how your deals work, but then let's talk about the investment side of it. But I just want to let everybody know. In case you don't know, I've written 2 books on capital raising. One is called How to Legally Raise Private Money. The other one, and that's kind of a beginner's guide, it's only 160 pages. The other one is called How to Raise Capital for Real Estate Legally. It's a more in-depth 300-page, 300-plus page desktop reference. So, you know, it's like, you know, hey, you want to know about some certain aspect, you know, doing a blind pool fund or something like that, or how to structure a deal, you can look at that chapter and you can just read that chapter. You can get one of those books for free just by texting the word syndicate to our phone number, which actually is 844-SYNDICATE, S-Y-N-D-I-C-A-T-E, if you're looking at the keypad on your phone. So that number is 844-796-3428. So text the word syndicate to our phone number at 844-796-3428. You're going to answer a question, have you raised money before? You say no, you're going to get the first book. If you say yes, you're going to get the second So if you'd like a free copy mailed to you, make sure you give us your address and we will mail you a physical copy of that book. And then I just want to remind everybody that we are going to have a live Q&A here in just a few minutes. So if you have some questions, I know somebody else, someone has already raised their hand, but if you have some questions you want to ask of Terry or Chris or me, please, you know, either type your question in the Q&A or raise your hand and we will get to you in just a few minutes. So back to you guys. Let's talk about, you know, how did you go about— you said you raised over $10 million. How have you done that? How have you met those investors? What kind of investors have you met and how have you gotten them to invest with you? What's that process like?

That's probably off our website because that's probably old data, but that's okay. We have to update that as we move through and that website is only self-storage. That website is more where Terry and I have picked up and grabbed the ball. I've done a lot of stuff prior to that with Ed and some other folks from Lindell. So to answer your question, I think it started when I mentioned my hedge fund days. It was a really small hedge fund, so it was not a large hedge fund by any means. So, but I did have a couple people that I had managed money for that there's a lot of integrity and trust involved in that type of situation. And that kind of parlayed into real estate for me from the beginning. And my LLC is, I've got a partner, Paul. He's a CPA that works for a, that worked, he's retired now, that worked for a firm in California, Mark CPA. So the principal of that CPA firm I got involved in a long time ago. And I, you know, it's funny, I remember back in the days, he, I would always try to get him involved. and he would say, I'm not gonna— he had a bunch of deals I'd see in his office. All the, like the Juniper that we have, he had some sort of software and he showed me all his deals and he is like, you guys don't even have anything like this. And so we're growing all the time, you know, so I'm always trying to get him involved in my deals. And he said a long time ago, I'm not gonna do anything until you do a round turn and sell something. And I hadn't. And then finally I kept bugging him and he finally got And before I sold anything. So it was just kind of fun. He's a great guy. I have a lot of fun with him. So I think just sharing with people what you're doing and even if you know they're not going to get in the deal, you want to just be open and honest and transparent. So if I know you, Kim, and I'm walking a trail with you, I say, hey, you asked me what I do. Maybe I've got a deal that I'm kind of closing out and the raise is done. And then I'm going to say, well, you know what, Kim, I'm going to send you some information and I'll send you all the legal docs and we can talk about it. And then I'll send you something that I'm pretty much done. I know you're not going to come in the deal. You might surprise me and say that you want to, but in my mind I'm like, you know, I know you're not going to come in the deal. So I'm basically just growing my future business. So I'll show you a deck, call you in a week or two. Hey, did you get that? Get a chance to review that deck? And then at some point you're going to ask me a bunch of questions and I'm going to ask you some, making sure it's a good fit for me from a financial standpoint. That's really important. Just the whole SEC regulatory stuff. Got to make sure you do that right out of the gate. And people are okay with that when you hit them with it. It's a little uncomfortable in the beginning, but you get through it easy. Your preliminary questions and stuff. And then if in fact you said, oh my gosh, I think I might want to do that. Me and my husband are thinking about it. I'm just like, well, you know what? That's actually full, but I will put you on the list for decks going forward. And I'm just building my database. And that's really what we want to do is experience You've experienced what I do. You've read through the entire deck. You had 7 questions. I answered them all. That's full. I do have a couple deals coming up in the future, and I will be able to send you a deck. So I'm not really answering your specific question. So let me get back to that. Mostly referral. You know, it starts out with the family and friends thing, but I don't like that. I wouldn't recommend that. It's the hardest stuff because you're constantly dripping, and if you're brand new, I don't want your brother in your first deal. So I think just share with people what you're doing and create success. You got to have successes. I don't care if you had a duplex that you owned for 3 years and then you sold it and made a little bit of money for your friend or your dad or something. That's a success story. So it's about business. It's about— it's simple stuff, but I know it's hard because I've been doing this for a long time and it was not easy. It's never easy. And the bigger the deals, Sleepless nights. So I'm not going to lie, it's tough. It's a tough gig. And when the market turns like it has, it can be really tough. Terry and I are successful because of a couple basic things. We're always here, we're always answering the phone. Communication is huge. All of our investors know that. They're texting me now for the next deal and you respond to them and you can slow down. And as you get, you know, I'm not answering the phone on the weekends So just, I'm not 24/7. I really never was. I'm in the trail more.

You've got to set limits.

Yeah, I'm in the trail more than the desk. But I think communication and just doing what you say, again, Dave's stuff, do what you say you're going to do. When you write the decks, don't say, you know, this thing's amazing. It's not amazing. It's a business opportunity. This is what we're going to do. We plan on doing this. We plan on doing this. Don't blow it up. Don't inflate it. Give yourself a little cushion, a little bit of a cushion. You know, our decks say say 18%, 20%, and we've all but one far surpassed that. So that helps when you outperform and exceed people's expectations. You know, I mentioned LJ only because it's history. The deck said, I don't know what it said, 3 to 4 years, 20%. It was 13 months and 30%. So when you do that, that, you know, those investors stay. I can't think of more And I can't think of any investors that have basically walked away. We have— they continue to roll and stay with us and look for the next opportunity. Yeah.

Kim, I would just add to what Chris said too. I mean, you can't be a secret agent, right? You have to tell people what you do. You have to explain to them what that looks like, share the data with them. And I think on the data side too, you know, we do put together professional-looking investor presentation decks. And those just, I think, give you credibility that you have all your ducks in a row, that you know what you're doing. And it goes to the stuff that you tell us about as our syndication attorney that, you know, it has to fit in all these boxes and it has to be properly presented. And so we try to comply with all that. And when you have that and you can share that with people and then follow it up with verbal explanation and Q&A like Chris You know, all those things help. I think you know having a website and doing a little bit of social media and just you know all of that, it does help add to your credibility because people are investing in you. They have to believe that you guys, us two, and our team are going to be able to accomplish whatever we've stated we're going to accomplish to generate them 20% annualized returns on their money. And if they trust us and believe that, and you know everything looks like it should, then you know I think your chances of. of getting people to invest with you or hire.

Well, all right. So thank you guys for that. I think that's just critically important. What I heard Chris saying is he talks to a lot of people and he follows up. And I will tell you, that's what most people don't do.

That's right.

People that don't have investors, they don't talk to anybody and they don't follow up. So, you know, we're actually forcing people— we have a mastermind that's available to every single one of our clients. events. We do it every Wednesday at noon Eastern time. It's either conducted by me or our other securities attorney, Mola Bosland. And we're getting all of our mastermind attendees to read this book, The 2-Hour Cocktail Party, and start mastering these skills. And this is a formula for creating 2-hour cocktail parties where you can network and just increase your circle of friends, increase your, your, your just your network. It doesn't have to all be investors. It's just interesting people because you don't Who knows somebody else and who's going to lead you to someone else. And it's just going to get you comfortable talking to groups, leading groups, um, you know, and, and getting people to talk about themselves. And, uh, all of that is going to serve you very, very well as you, uh, go on and, and start building your database of investors. Um, Chris has mentioned the trail a couple times. I want to tell you guys a little interesting tidbit about this. Chris is a long-distance hiker. And, um, so I happened to, uh, call him or I texted him a couple of years, I don't know, a year and a half ago or so. And I said, hey, Chris, have you ever hiked the John Muir Trail? And he's like, yeah, why? What are you doing?

You couldn't just say yes.

I'm thinking about doing it. And so, yeah, this is a plan that Chris and I have hatched for next August. So, we're going to— it's going to be a whole month, a couple hundred mile hike. My biggest concern with Chris as a client is that I'm going to have to have him sign some kind of a nondisclosure agreement because he's going to know stuff about me after hiking with me for a month, but I don't know, not out there in the public. Yeah, he's probably gonna have to—

I will learn a lot more than I know.

Yeah, he's probably gonna have free legal services from then on because he'll have blackmail stuff, you know. I mean, I don't know how that was gonna go, but, uh, either way, uh, I think it's going to be great fun. Uh, you know, super excited about it. And, uh, and it's, it's a big plan, and I'm actually thinking about a way to turn it into kind of a fundraising activity where, you know, get people to pledge miles and then donate it to a worthy cause. So we'll—

That'd be awesome.

Thinking about that. Yeah, that, that, that will be something that I can, you know, think about while I'm crying on the trail, right? Like, oh, I have to keep going.

That'll make us finish.

Yes, that's right.

A lot of people, a lot of people don't finish. I met a lot of people on the trail that were bailing and some were valid injuries and stuff like that. But it's, it's, it's an epic trail. I can't wait. It's— I'm excited. I'm as excited as I am to do it again because I know how amazing it is.

Yeah, he's done it twice already, by the way. So, so he's, he's already, already had this experience. It's new to me except that I have backpacked in the Sierras before and I love that part of the country. I, I— some of you might know that I'm, uh, my background is, uh, I'm also a professional geologist. So I started out as a, as a geologist and, uh, and then went into the practice of law. So So this is, uh, Sierras are near and dear to me.

So I will show you some granite. Yeah, there is a lot of granite.

I love that exposed granite. So we do have a couple of questions, uh, but before we go to those, uh, how can people reach you if, uh, they have questions for you? I mean, you know, is there a way for them to contact you if they're interested in investing, if they're interested in, uh, you know, bringing you deals or partnering with you, or just, you know, You know, Kim, I'll jump in on that.

I mean, we can certainly provide people with our email and mobile numbers on this call. You can go out to equanimitycapitalpartners.com. That's our website. If you go to the bottom of it, we have a Calendly calendar at the bottom. You can schedule something with us, 30-minute call. If you want to talk to us, we could do that.

That'd probably be the best way for people to reach out to you. And that way you can screen them and get them to the right people in your organization.

Yeah, you can, you can, you know, follow us on LinkedIn, Christopher T. Cashman, Terry Morrison on LinkedIn. And, you know, we respond that way as well. So either way, those would work.

Yep. Okay, great. And, you know, what kind of stuff are you guys looking for at this point in your business? What do you need to, you know, to— who are you still looking for on your team? And, you know, what is it? What are your needs? Always more investors, right?

Yes.

Always want to develop relationships with investors. And, and, you know, truly every one of you who wants to be a syndicator, that, that is your constant, uh, background goal, always, uh, making relationships.

And, and Kim, I can't— I just, I just want to stress to people, you know, that the investors are the engine that make all this work. There's a lot of moving parts, right? But they really are. Chris and I were on a call, we were looking at a deal with a, with a couple of folks the other day, um, in Alabama. They wanted our opinion on it and wanted us to come in and chime in on it. So we did. And they were, they were raising a certain amount of money, um, which was like 3 weeks out before they closed and they had only raised $50,000. And I think they needed, what was it, Chris? Uh, uh, $750,000, $800,000.

I think it was $1.1 or $1.2.

Oh, was it $1 million?

Yeah.

So anyway, they had to get $1 million. They were at And, you know, again, we looked at that one, we felt bad for them because they may or may not make that. And so my point is that, yes, it is absolutely critical to have investors because if you don't, the deals will not happen. So, I mean, that's just pretty much common sense, but I can't overstate that enough. So, yes, absolutely.

Yeah, you're constantly— you have 2 facets to any syndication. business. And one of them is finding deals and learning how to operate your company and to manage the deals and manage the property managers and all of that. But the other side is finding, talking to, managing, and cultivating relationships with investors, keeping them informed. So, you know, you really need people with skill sets on both sides of that to make a successful syndication business. So if you're thinking about this and going, oh, I don't like talking to people, well, then you're the person that should be doing the underwriting, and you need to be getting somebody else in there in your team who's going to talk to the Talk to the investors. You want somebody who likes to talk, likes to be on the phone, likes to be in communications. You've got to have that. So, you know, look for people with complementary skill sets. Like, it sounds like that's what you guys have.

Yeah.

And one thing I'll say too, Kim, you know, some folks will come at the self-storage business with the idea that they're going to try to do everything themselves, right? That they're going to self-fund these deals. And that's an okay model. I will just say that, you know, unless you're a very wealthy individual, you will run out of money very quickly. You won't be able to scale, right? So sometimes people, they think, oh, I want to buy a storage facility. It's like, well, yeah, but do you want to buy 1 or do you want to buy 5? What's your real strategy here? If you want to buy more, you're probably going to have to have partners, investors, syndications, because again, unless you have very deep pockets, you're probably not going to be able to fund very many of them yourselves. And I will say too, one of the challenges that we run into today is the banking environment. The terms that we're getting for banking is tougher. They make you put up more money, more capital down, so you can't leverage them as much. You need— you actually need more money these days than you did a year or 2 ago. So those are, those are, yeah, big deals that we have to deal with.

All right. So we do have a question. When expanding a facility, do you ever bring in prefab units?

Yes. Yes, we do. You know, so, so we We we we do a lot of construction, you know concrete and steel. We do a lot of that, but there are situations where we use these these prefab mobile units that you can put in place very quickly. Now the advantage of them: you can buy them, you can get them on site, you can get them installed in a fraction of the time that it takes to go through all the other stuff. We don't do those exclusively. Typically, the reason why is because sometimes banks will not. Loan on that property. So if you went to a bank and said, I'm going to put in a bunch of these mobile units, I'm going to put in 12,000 square feet, the bank would say, well, that's great, but I'm not going to loan you the money for those because they're mobile. Um, that's, that's one concern. So, and then the other concern is, um, you know, just making sure that, I, I guess, they're, they're, that you can do it on the property, that there are no regulations to keep you from doing it. Where we typically like to use those, Kim, is In nooks and crannies and areas of the property where maybe it doesn't make sense to build a building or it's too small. You can only put 4 of them here, so you use them as fillers. But the thing is, when you look around your property and all your little perimeters, your nooks and crannies, sometimes you can get another 3,000, 4,000, 5,000 square feet of storage in nooks and crannies that you didn't even think about, right? And, and those lease up just as well as your other ones do. They look really good. They're a nice steel metal building. Building and they look really good and there's nothing wrong with them. And we use them for that. So, you know, speed when you need speed, when you need nooks and crannies and just expansion areas, those work fantastic. But again, you got to be careful because like I said, the lending thing is an issue. And sometimes you might— we had— we got a call from our broker the other day. We were going to put a bunch of them on this site in South Carolina and he said the city changed their codes. They will not allow that anymore. So, you know, if we had tried to do that, we might have been in trouble later because, you know, if we were going to sell it in the due diligence period, it might have jumped up that, hey, we can't— these are illegal on this property.

So yeah, gotta cross all your T's and—

yes, long-winded answer to yes, we love those. They're great in certain situations, but we don't go out and say, hey, we've got 2 acres on the back end of this property. We're going to put 100% boxwell It's a pro— one of the products that we like the best is called Boxwell, and that's the ones that we typically have used. But we're, yeah, we're not going to put 100% Boxwells on a 2-acre expansion plot of land.

All right. Well, we did have one other question, and that is, please repeat the text number. So the text number that if you want to get a copy of one of the books I've written, you can do that either at our website. So you can go to syndicationattorneys.com and then look in the menu for the A free book tab, so you can do it there, or you can text the word syndicate to 844-796-3428. And if you're looking at the keypad on your phone, that spells 844 syndicate, S-Y-N-D-I-C, and then the number 8. Uh, 844-796-3428. Well, you guys have been super gracious with all of your knowledge. I'm impressed with what you've Can't wait to get out on the trail. I'm ready to go right now.

So, well, and Kim, you know, a couple of parting thoughts that I would say to folks out there is that, you know, you, you've gotta be tenacious. You cannot be afraid, right? Don't be afraid to fail. I know that's probably easier said than done, but you've, you know, you've just gotta roll up your sleeves and dig in. If you don't know something, talk to people that do, right? Get with some mentors, go do some research. There's a, there's a YouTube for everything. Go YouTube it, right? But, but don't be afraid to jump in and learn, roll your sleeves up and go for it and get a black eye or two. That's, that's how you have to do it. So everything isn't going to be perfect, the stars aren't going to line up, you are going to have hurdles, challenges, and obstacles. But you just got to grind through that stuff. And if you're not willing to do that, then, you know, go do something else. But it's a great industry. There's a lot of opportunity, but you do have to put in the time And, you know, get your head knocked around a little bit to get to the end of the, of the path.

Well, thank you so much for being great guests, and we'll be talking to you guys soon.

Okay. Thanks a lot.