The Real Way To Build Wealth in 2023

We're saving capitalism. Capitalism is about individuality. It is about individual progress and opportunity. And the system that's created around it has certain structure and rules. So you do need to know how to play the game. This is how you play the game so that it works for you.

That's the beauty of the small business model in Main Street America. There's no glass ceiling. As much intelligence and hard work and a little bit of luck and elbow grease, man, we can do some amazing things as Americans. Welcome everybody, to another episode of Main Street Business podcast. And we're interviewing Main street mogul, someone that's making a difference in Main Street America and capitalism. I'm excited to have with us here today AJ Osborne, the host of Saving Capitalism, a new podcast. He's also done so much in the storage unit industry, probably the biggest investor in storage units as an educator, just launched a private equity fund. We've got lots to talk about there. And his personal story is so compelling too. We're just honored to have him here. Aj, thanks for finding some time for us.

Thanks for having me on, man. I appreciate it.

I appreciate you. Well, I want to get right to it on a topic that both of us are so passionate about. We recently had a chance to talk about that, and that's the topic of capitalism, which is really just maybe misunderstood or people aren't realizing how important it is or how it's starting to be missed. What's your take on the country's perspective on capitalism and why did you start a podcast?

Yeah, I think, you know, the overall economic forces that have been around for the last 150 years are mind blowing. Is, is really an understatement. I think we're, we're in a time where most of the fruits of that system has been realized and the rest, and the fruits that are being produced are more incremental and even behind the scene. But the generation, the like, the next last two generations that we, we have, they have no knowledge of really a world prior to this version of globalization and commerce that we have, and they weren't. There's, there's a big disconnect in understanding where the fruits come from that we're all eating. And I think that there's a huge misunderstanding of capitalism, first of all, in general, its function in society, how it works, how it runs, and particularly the United States blend of capitalism, capitalism that is so unique and how that actually affects every single day of their lives. But more importantly, how it's a system that works for them. And we have an educational System that is not. That doesn't teach this at all. So we have a complete educational system that doesn't talk about these forces that are behind the scenes 247 working and how they can have those forces working for them every single day. And so then there's this huge disconnect.

Yeah, yeah. And on this note of maybe lack of knowledge or apathy regarding capitalism, what's ironic to me is now we have over 50 million working adult Americans with a side hustle.

Yes.

Estimates are now it's over 40 to 50% of working adults have a small business. But I don't think they equate that with capitalism. It doesn't make sense to me. Like they own a small business, but they're not realizing it.

Yeah. And I think it's because once again, capitalism is something that has in general been coined to ideology and other things that don't have anything to do with its actual structure, meaning that you can own capital, the means of production, that society is dictating those things. And also we see the fruits of labors of countries that may not be capitalistic, and they're attributing to that where we don't need it. Which if capitalism, though, was unleashed really in the 1800s by the United States in a form that had never been unleashed before, but that allowed, that breed of capitalism allowed within the mid-1900s for the United States to create a global security network of global trade and stability that the world has never seen. And during this time, we've risen, we've eradicated 90% of all extreme poverty in the, in the world, excuse me, has been eradicated. It is so tremendous the what has happened that most people can't even realize that change. And that's one of the biggest problems. The United States secures backs all the countries. Capitalism is not a individual thing. It's a, it's a multinational thing. It's, it spreads across countries. Even socialist companies get the benefit of capitalism, meaning that it is our military that they use. We secure their lines of trades, which allows them to get goods and services. We actually produce the technologies like pharmaceuticals, medical equipments, goods, services that can be manufactured across the world and then delivered to them. It's so almost overwhelming. And two, it's just so built into everything that people don't even realize it anymore, and they don't realize the benefit. And it's easy to throw the baby out with the bathwater, I think.

Okay, so let me ask a very poignant question. When you start a podcast called Saving Capitalism in a Nutshell what are you trying to save? Are you just trying to get people to become aware that capitalism is okay and good or what?

No, we're trying to save capitalism for them. So it's actually an individual thing. We believe you save capitalism by bringing more people into capitalism. So every person that comes and starts to utilize the capital, capitalistic forces that guide across the world, they're not being left behind. The problem is that society, we have two camps now. And it's like you have capitalist and then you have others and the capitalist meaning just people that are getting, taking advantage of it and then other people that aren't would in which they could. And it's something that I love talking with you about because you're teaching people, listen, you can take advantage of all these things. They don't know about it, they don't know how. So for every person that we can teach to say you're in a system that can work for you, but you don't either know how or you're not allowing it to every person that gets brought into the system, we're saving capitalism. So the more people that participate in it, the better it works for everyone and the better. And you save capitalism for each individual person. Because capitalism is about individuality. It is about individual progress and opportunity. And the system that's created around it has certain structure and rules. So you do need to know how to play the game. That's exactly what you do. You teach people this is how you play the game so that it works for you. Because in the United States, people say it's not fair that some people playing the game get the benefits and not. Well, we have choice here. So nobody should force you to play a game you don't want to be in. In the United States, you could be a socialist or a capitalist or whatnot. It's your personal choice. And that's great. That's how we want it to be. But because it's also a personal choice, that means we're not bringing people in and forcing them to know how to take advantage or use all of that. And so then all of a sudden we got a sit education took a whole nother role, and now the vast majority of people don't know. So we want to bring people in.

Yeah, I really think. And, and I want to get to storage units here because what you've done in that industry is just phenomenal. And I'm, it's so exciting. But I love this, this gosh, this deeper conversation. But to me, I think it's a matter of Educating people that they are capitalists. They just don't know it. Because when they start that little side hustle, they may not want to admit it.

They're capitalist.

And. And it's almost like when my mom used to sneak broccoli into a casserole. You know, I'd be like, I don't want any broccoli. And I'd eat the casserole and go, oh, there was Barkley in that. I think a lot of people are like, yeah, I gotta go make some extra money. And then they start a side hustle and they go, well, you're a capitalist. Well, I don't want to be a capitalist or something wrong with that. No, that's part of the education is capitalism is good.

Goes amazing.

Yeah. Taking care of yourself and your family and your future. It's amazing.

It's amazing. It's freedom. It is the only true form of freedom that we have. Because government cannot give you unfiltered freedoms. That doesn't exist. But capitalism allows you to build a future that you want. Meaning that if a government created a future that you want, they're taking away a future from other people that they don't want. Because not everybody wants the same thing. Capitalism allows everybody to create the future in life that they want. And that is the most amazing thing in the world to me, because it. Capitalism is the protector of civil rights. And the moment that you step into the idea of I have a side hustle, and you take your investment and buy a car and start doing Uber, you are a capitalist. You are using capital to create means of production to the economy in which you benefit. If you have a 401k that is your money, you are allocating capital to get a return and a benefit from it. You are a capitalist. It is not held to kings. It is not held to a higher social archy that doesn't allow it to not go down to everyone. Capitalists, capitalism spreads that benefit from the top to the bottom. Not the benefit of return, the benefit of opportunity. Opportunity, you just have to know how to take advantage of it. But that opportunity exists without capitalism or not. It's just who gets access to it. All capitalism does. It says everybody gets access to it.

Yeah, I love it. Well, incredible thought and I, and I appreciate your efforts in this area and I wish you the best in this, this podcast. I want to let everybody know, get over there to saving capitalism. AJ Osborne link will be down in the description. But on a personal note, do you. If I, if I may. Yeah. You were a W2. Wage earner working in a hospital. And. And for Those watching on YouTube, this might blow your mind here, AJ used to be you were quadriplegic at one point due to a terrible disease that. And. And you've come back, and. But you didn't go back to work for the man, if you will. Did you find capitalism in those dark days of trying to create income in a business when you could barely move? How does it relate to that? A little bit, yeah.

It saved my life. I had assets in which I saved up capital, and I deployed it, and I owned the means of production because I owned the means of production when I had my W2 job and I was literally out of the blue. One moment I was fine, the next minute my leg stopped working and I couldn't. We didn't even know what was happening. I was sent into the hospital, which I was put into a coma, then on life support, and I was trached tubes to keep me alive. I was fired from my job in the hospital because I owned those means of production. Nobody could take that away from me. Nobody could steal my means of production and say, we want it and you don't need it. And by me having those means of production, it saved my family's financial life. We could pay bills. We didn't lose our house. We didn't. You know, we had all the same future. My. I could come out of it, and I could build and I could create a life that I wanted for me and my kids without having to either, you know, try to figure something out. I mean, we didn't even know if I'd ever walk again. Like, I was taken home, paralyzed in a bed, and I could still work, I could still do things, meaning that I could still be in control of my future in a way that it would be impossible for me if I was on government assistance or something else. So it literally saved me and my family's financial life at the moment, but also future, which allowed us to progress and help others.

Well, what an incredible learning experience about the beauty of capitalism when it saved you and your family's life. Financially, if not even emotionally and physically, it was a lifeline. But even on a smaller note for some of you out there right now, I would say this. Tell me what you think, AJ that there's people out there picking up that second or third side hustle to try to make ends meet, and capitalism is blessing their lives. Let's own it. Let's go at it, and it's okay. And so you came to have terrible experience but there's others out there that are just, even at a minor level, desperate, this tough out there financially right now.

Yeah. I mean, what inflation has done for our buying power and the economy is going through massive changes. Right. And what I learned, especially when I went in the hospital, is that I don't my job, I don't own that. I don't own the means of production. So that could end at any time and I had no power or authority over it. Even if you have a side hustle, at least you own your ability to generate that revenue that is not predicated on someone else giving you those rights. It's, you know, it is the ultimate power for individuals to change their personal condition and setting, even if it is just an Uber. Like what would 1500 bucks a month do for most people? Change their life. That's their house payment. Right. I mean, that is such a big deal. And a lot of people put, I think capitalism and all this to you talk Wall street and all this is not what we're talking about people. We are talking about individuals that can make a living and spend time with their family and take care of people the way that they want to. And that is, that's amazing and incredible that we, you know, we really can do that and take it to a level that. Yeah, I mean really, the sky's the limit. It's up to you.

That's, that's the beauty of the, the small business model in Main Street America. There's no glass ceiling and we can all as much intelligence and hard work and a little bit of luck and elbow grease, man, we can do some amazing things as Americans. And it's such a neat opportunity, which brings us to deploying your capital and your business model that you did from the hospital bed and home as you did recovery and physical therapy and came out. And God bless that. What you were able to do and how much hard work, I can't even imagine. You fell into the storage unit industry and buying storage units and you've just created a fund so other people can participate in this very profitable segment of the real estate industry. What tell what attracted you, if I could, to storage units first? What was the angle or what opportunity fell in your lap or did you seek it out? What kind of happened?

Yeah, really, we, we wanted to disassociate our time with our money to be able to make money while we slept. And real estate is always one of the first thing that's just a staple to do that you can own the means of production. It's not correlated with your time. And you have a real asset that gives you tax benefits and can produce cash flow while it's also creating wealth. And so something we wanted. But the problem was for me is I wanted to be more actively engaged and I wanted to be able to control the revenue in a way that I was think I was more used to on the business where it seemed like for most real estate it was really just like you bought it, it makes you a little money and it may go up, it may go down. Right. You know, all that stuff where storage, it didn't have tenants, it didn't have toilets. But there was all these levers that we could pull to change the income because real estate is valued by its net income, what it produces. Right. So if I could buy an asset and change that underlying gross revenue and increase that net income, then I could increase that valuation. So what we did is we would buy them from underperforming mom and pops, we would turn them around, we would refinance them, take our money and profit out. We would still own it and it still produce cash flow. Then we take that money, reallocate it into another one and do the same. And we were able to build, me and my two partners a portfolio of $150 million. After we, after I got out of the hospital, I said this, it was so important to me and everything I said, I'm going to open up, I'm going to create a company where other people can come and do the same thing. Long term investment, they get to allocate their capital, we turn the assets around, we refinance, we give people their money back and profits and they still own the asset and cash flow. So our goal was that the same thing that I got, we would continue doing the exact same thing but allow others to come along with us and to get the benefits from it.

I love it. Now you also educate people that are like, hey, I, there's a little storage unit in my corner of the world and I see it down the road and boy, it's still so antiquated with a crappy fence and never know when you can get in there. It's a, it's a. You love those because you can freaking turn them around. But you have some educational courses and a workshop this fall up in Cordelane and all sorts of education, help people do it if they want to try it. It's a lot of work.

Yeah. I mean at the end of the day we, I, when I was in the hospital, I was literally in my wheelchair and I Decided I'm going to do two things. I'm going to let other people join me and I'm going to teach. And I just felt like that's what I owed it and I thought that's something I can do even out of my wheelchair. So I was like, this is going to be. It was, it was my new mission, it was what I'm good at. And I thought, I want to share that with everybody else. And you know, when we got started in storage, it was not what people view it as today. Right? Storage is a hot thing and everybody's talking about everyone. Nobody wanted to invest in storage when we got started, banks didn't even want to allocate money. So we've had 20 years of doing this and I have a company with, you know, 100 plus employees all around this. I own, own a software company that does property management systems, a national brand. We built infrastructure in this industry. I sit the board for the tech company and also the largest co op in the industry. I also have the largest podcast in the industry as well as the industry's best selling book. Because I said I'm just going to give all the information out and that's, and that's what I did. I wanted to teach people, I wanted to allow people to come in to learn and those that said, this is great, I love it, but I don't want to do it, okay, then you can invest alongside me. And those two things became my mission. I've done it every single day since I got out of the hospital. And it's to try to help others get into this amazing industry and then allow on their own or with us. And it's been an amazing ride. And I think that the, the industry as a whole is so vastly misunderstood. That's the first thing. A lot of people think that storage exists because people are hoarders, but that's actually not true. It's an actual economic function of, of rising land prices, regulation and the overall drop in means of production in general. So what's happened is a dollar buys you more. But space is so incredibly expensive. So people that use storage are not just people that are stashing stuff in there, they're also businesses. We've replaced a lot of transit, we're talking last mile distribution, contractors. There's all of these economic uses for storage because of the economic place that we're in. HOAs, you know, in the 80s, if we wanted space, my dad wanted to, he could build a garage on the side back of his house, right on the side of the house and you could park his work trailer out in the front yard or out in the front street. You can't do any of those things anymore. Right. And land is too valuable to do that kind of stuff with anyway. So it's an economic play and it's one that is highly needed, especially through technology and the way we have to store and utilize things. So it's one that's not going away at all unless we think that land prices will all sudden get very, very cheap and regulation is going to go down. I don't think anyone believes that.

So, no, I love it. I love it. And I love that you've kind of owned a large part of Idaho with this. You've really gamed the freeway systems and where people are traveling. I know you teach a lot of this in your course. I thought it was phenomenal. I had a chance to hear you speak on that topic, specifically of finding the right storage units. Just give a little sneak peek of what someone might learn in your course. And then I want to get back to the fund and how people can get involved in that too that are like, I don't have time for all this. But for those that are anxious to get into the business, what do you give us?

A little peek in our communities and what we teach about book and everything else. We, we really focus on the individual market and supply and demand. That's first and foremost. So I like to tell everybody that you can be the best operator in the world and be in a place that has oversupply or little demand and you will fail. You can be the stupidest person in the world and be in a place that has high demand and you will succeed. So that's the first thing. And so we look at it and I have assets across 10 states, the Midwest, all over the West, Phenix from Washington, Idaho to Nevada to Arizona, Kansas and Oklahoma, on and on and on. We develop, we do conversions and everything in between. And that's the first metric. The second metric is operations, and that's the big part of it. So how you operate, I can say this a lot.

A lot of people miss the fact that structure storage units is a twofold process. It's real estate and a business a hundred percent.

In fact, that was how when we started, I didn't understand real estate. I didn't get this appreciation and that this thing with cap rates is stupid. I didn't. Yeah, I was like, I literally, I teach people why cap rates don't matter and we don't buy off cap rates and we. I viewed it and I. And I wrote the book, which is literally how to turn real estate asset into a thriving business. Because self storage is a business that is overlaid on top of real estate. And that's where the advantage comes in. Because you can do something with it. Right. And so exactly. You can find an asset and literally do simple measurements and see how you can increase the revenue by 30%. Like it's, it's. It's amazing. And, and that doesn't really exist in real estate. So it's like I figured out like, oh, wow, we can get our cake and eat it too. Because most of the time if you're pushing values and income like that in real estate, there's a lot of capital expenditures involved. Right. Where this is operational that we're talking about. And two, it's not complex or complicated because the vast majority of the industry is owned by mom and pop investors that have just had it. They've held onto it forever. They don't really operate it at all or do much with it. So the opportunity for investors is. Is unprecedented in the real estate world.

Yeah. I love it. Well, your book is phenomenal. I want to recommend everybody get out and pick it up. It should be on your shelf. It really is the Seminole book in the industry. That's the investor's guide to building wealth in self storage. I think I got that right.

Yeah.

Right.

Yeah.

And I. Fantastic. We'll make sure the links down below. I'll be at your Coeur d' Alene event this fall. I think it's September or October. Is it?

Yep, that's right. It's September. Last week of September.

Oh, beautiful area too. I used to ski Sandpoint as a kid. I grew up in the tri cities. Love it. But this fund now, I take it it's probably reg D accredited investors and they can. Okay. And they can request information. How do they give us some resources on. Tell us a little bit about the fund. But I know you have to be careful what you can promise.

Yeah, yeah. 100 patients.

But a little bit about it. Like what can people hope to see?

So really with our. Our funds, we are. We want investors to be. Be in there for the long term because a lot of investors want that. They don't have a lot of situations. We're trying to do two things. I'm trying to get investors to be able to compound their money, which means we got to get their cash out and back to them, plus profits quickly. But then we want them to hold the asset, the wealth and Create long term income and profit and do it in a way that is the most tax favorable route. So instead of selling it the refinance, we allocate tax and profits but it's done in a different way than a cell. So you do not have the exposure of all the taxes which are just kill you when you sell an asset. So we, we are finding underperforming assets and turning them around. We did this prior to 2008, I did it through the Great Recession and after. We've never lost a prop property, we've never had any problems with that and we, because we are actually that's what we do. We find underperforming assets. And so with our new fund when

they're underperforming you can only go up ex.

So with our fund we've already got seller financing deals that we don't even go major brokerage. We have expansion opportunities that we're building on. And these are just core fundamental, incredible areas that we go in, we build on, we turn them around, we buy them directly from owners. We're not even going to the bank. So the investors are getting in at these really low cost because I have the construction management, the architecture firm in house, we have the debt brokerage in house. So we're doing actually the debt with the owners and we're structuring it. We don't have to pay all those fees and then we get those things and we're turning them around and the pro and the investors get all the benefit to that with us. So it's a really cool system. We really, really like it. We, we view our investors as partners because we're in it for long term and that's how we treat them. It's the same strategy that we've been doing since the early 2000s and works well.

I love it. Where can they learn more? For those that are wanting the education piece, the investing piece or both.

Yes. Self Storage Income is our, our, our large investing arm. You can get all the education, everything there. You can also click invest with me. If you want to go directly to the private equity firm you can go to Cedar Creek Capital and Cedar Creek Capital is the equity firm part where people can invest. But Self Storage Income too, you can go there and it has a thing that says investors with me or it's learn from me where you can find the podcast and the book and everything else.

I just love it. I love it. I started to create a map of I'm not going to tell anyone where of an area I've got To keep my buy box that's right close to the chest and trying to map every storage unit owned privately by a mom and pop and start looking at their number of units and start looking at just basic value models. And you teach a whole curriculum on this. But that's not excited to me just doing that research and trying to find where opportunities might lie and learning that supply and demand you. The story you tell of making sure you have more storage units between Spokane and Lake Coeur d' Alene because everybody wanted to pick up their boat and then drop it off on the way home. Just saw a huge market there. And that was so insightful.

Yeah, no, I love it. And that's the fun part. Finding that once it's like. Once you see it, it's like you can't not see it. You start to see the opportunities everywhere. Once you know what to look for and how to. That's that I love that. I love the looking for opportunities, finding them and being able to say, wow, I can't believe that other people haven't either taken advantage of the scene and going out and getting the deal done. It's. It's. It's just. It's fun for me. I love playing the game.

Well, and just as we. I was able to be on your podcast recently, and within just a day or two, I had an opportunity to talk about capitalism with some young people. And it really was important to me to be able to have that talk and be. Have it top of mind awareness to do it. And I want to. I want to let you have the last word. But I will say this to everybody listening here. I want to challenge you that when you talk to a young person, young or old, male or female, day job or no day job, if they've got a side hustle, say, hey, that's so cool you're into capitalism, taking care of your future. And they might be like, capitalism, what do you mean? And say, no, that's it. It's capitalism. It's true. Poor and try to educate people that it's okay to be a capitalist. I. I don't. I want to challenge all of you. What do you. What are your final words or thoughts on that too?

No, 100%. It's, you know, once again, re reinforcing and teaching people about this incredible thing and what's come about it. And I think there's a lot of people that have such. Miss it. Like they have this negative feeling towards it, so they don't want to do it. And then when they're doing it. It's like they're. It's strange, right? It's like they don't want to either admit that they're participating, and it's like, that's a great thing. That's a good thing. And how do you change lives if you do not have means of production? And at the end of the day, I think you should be the one that decides that. I don't think that a government that could get somebody that you don't like should be the decision for you. So I think taking control personally and using capitalism to do that is incredible.

I love it. Well, aj, thanks for spending some time with us. We wish you the best in your life's work to change the world. You're doing it. And thank all of you. Thanks to all of you, the listeners that make this possible. Please get in the description below. Take some action. Follow AJ's podcast. The more educated you are, the more difference you can make in people's lives, too. So thanks again, aj.