← Real Estate Rookie
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- [00:00]
A
What if the asset class that most real estate investors completely ignore is the Exact1 producing $29,000 a month in net operating income for today's guest. She found her first deal using nothing but Google maps and a phone.
- [00:16]
B
And what if she negotiated a $3 million deal with 0% interest and a 10 year balloon while she was pregnant and still working a full time W2 job as a personal.
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A
This is the real estate Rookie podcast. I'm Ashley Kerr.
- [00:35]
B
And I'm Tony J. Robinson. And Ricky. Today our guest is Bree Hartman. Bri went from one accidental rental to building a $6 million plus self storage portfolio of over 100,000 square feet. She specializes in finding off market mom and pop storage facilities that most investors never even look at. And she structures creative deals that produce serious cash flow from day one. So, Bri, super excited to have you on. We had a recent guest on Self Storage, but your story is even more unique. So thank you for joining us today.
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C
Oh, thank you. This is so exciting.
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A
Bri, let's start at the beginning. You describe your first rental as accidental as getting into real estate investing. So what happened and how did that one property eventually lead into Self Storage?
- [01:17]
C
Yeah, so I think my just like story is kind of unique. Where I didn't come from real estate and I did a W2 employment for fish and wildlife. And I actually, I laugh because I bought my second home right across the street, like literally diagonal. And I went back and forth. I'm like, should I rent this out? Should I not? So I ended up renting out our primary home. And during that, like renovation of that primary home, we did like all the baseboards, all the, I painted like every single room. And while that I was like listening to a podcast and they said like, you know, self storage, no toilets, no tenants, no employees, less problems. And at that point I'm like, oh my gosh, like this might be my, my thing. Like I'd have to own 20 of these houses. And and so, you know, we put that renter, a renter into that house. And that was that big point where we figured out we had, we had baseboard damage with a service dog that did like $7,000 of baseboard damage. And we got, you know, a call at like 1am and so that was my just like big wake up call kind of during COVID of like, wow. Like, you know, renting the houses is really hard. Like that's going to be just another job. And so that's really when I, you know, went out and I was like, I got to Find something else. Like what is that one thing? And so I actually purchased a ticket to go to a self storage conference while I was pregnant. I was like 10 weeks pregnant. I'm like, okay, it's either now like when you're pregnant, you're like, I've got nine months to make something happen, you know. And so that was my, my big push and I flew like randomly. I was either crazy. My, my husband was like, you're not absolutely crazy, but you're pregnant. And so yeah, go to Vegas and go to this conference. And that's how I discovered self storage.
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A
Tony, you'd probably be more motivated in life if you got pregnant. So.
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B
It's, I'm laughing because it's funny. I always tell my wife like if I could carry the baby, I would totally do that. Like I'm, you know, it's like very sentimental guy but like just like that's the one thing that a dad will never get to experience. So anyway, that's a story for a different day.
- [03:21]
C
No, but it's actually crazy though because like when you are, you know, you're becoming a parent, your first time parenthood and you're like, I, you know, like I need something that is not working right now. Like what is that? And so the joke in the family really was is the baby going to come first or is the storage facility going to come first? And so, and so like the, what happened, which is absolutely wild is that you know, like in my family knows like when I put my brain to something like, you know, you make it happen. But I was a personal trainer, gym owner and I was underwriting storage deals in my lunch hour and, and from there it took us nine, about almost nine months. And so I found the perfect facility, you guys, in the middle of Louisiana, out of all the places like I live in Sacramento, California. And we actually ended up purchasing that facility in 2022, the very, like the, the very start of 2022 and on a BR. An SBA bridge loan to an SBA product. And so it was very much, it was just a very. And so you never can choose. I think that was the first lesson parenthood is that you're, you're really like, you know what, like I could plan everything and try to make this perfect, but it's like, you know what, you just gotta go and you gotta bet your on yourself and go all in. So I actually gave birth 10 weeks after we bought our first facility.
- [04:37]
B
Yeah, that's, that's a very busy newborn. Newborn experience. And I want to go Deeper on that first deal, Brie. But before we do, I think the question that's in the back of my mind and what a lot of the rookies are probably thinking as well, is that commercial just feels like something that is maybe out of reach for a lot of rookie investors. And you had done one deal, so it's not that you had, you know, amassed, you know, years and decades of experience before you made this transition. Why did you not feel that it was too big of a leap or what? What gave you the confidence to say that? I can go from buying one single family home as a rental to jumping into a large commercial real estate property that's, you know, thousands of miles away from where I live in my hometown.
- [05:17]
C
I wish I had a more complex answer, but I love that, like, ignorance is sometimes blissful, right? Like, we can kind of. It's a mindset shift that you can really overcomplicate some of the items. But my biggest part was I have nothing else to lose, you know, you know, as a mom and, like, you know, might as well let's go in and just do it. But I, you guys, I was scared. I was scared out of my boots, I would say. And I, you know, I signed away my home. Like, this is the biggest part is, like, I signed away my home. I literally got life insurance on myself. They. The SBA actually required to have life insurance. And I was, you know, you're very. Just unsure of it all. And then at some point you're like, you know what? Let's do it. Because what if you don't? Like, I think the better question to ask yourself, like, if you don't do it, you know, what is that outcome? And it's the same, you know, being. Being stagnant or doing something bigger and better. So. But there is something, because this was a. My first home was, you guys. 300,000 in Sacramento, California, to a $3.1 million SBA, you know, facility. And so I went in with two other partners that are not my family. So that's another big part of Leap of Faith is to explore partnerships and. And when, you know, like, a deal works, cash flows and it does well in good times, and also it can actually make and break the bad times. That's when you're like, okay, you know, you've done all what you can do, and you're jumping in.
- [06:43]
B
Walk us through that first deal again. You're in California. You said the property was in Louisiana. How did you find this facility? Were you. Were you just driving around Louisiana one day? And you stumbled upon the, you know, were you networking with brokers in that market? What was your process for finding that deal?
- [06:57]
C
Yeah, so actually this, this first property that we found, like I, so I pride myself as a storage deal finder. Like I love to find deals and cold call off market owners. And so we would bring different, like, properties and different facilities to each other, to my two partners that I met at this conference randomly. And so I thought I was going to be the person that brought the facility to, to purchase. And actually my, my business partner did. He found it from a wholesaler and he brought it to us and said, hey, this one works at Pencils. And if we all divide and conquer and all three of us come into that and then do an SBA loan with, you know, 15% down, we can make this happen. And so that was the big push was, you know, we actually didn't end up finding that one. And then we actually went and found our other one, our seller financing one three months later. And that was from cold calling.
- [07:49]
A
Bri, how did you find a wholesaler that was even finding these self storage deals? I mean, you think of wholesaler and you mostly think small, multifamily or single family homes. Was this a wholesaler that was specific just to self storage or they just kind of went after a bunch of different asset classes?
- [08:09]
C
So I actually didn't find that. My business partner was the one that found that wholesaler. And so that's what's so unique is that, you know, when you partner up with other people, like, they can also bring you deals. But yeah, they specifically, they are very specific in doing self storage. I think they did self storage and industrial, but they brought that to the table and I was like, you know what, I will pay a wholesale fee all day long. Right. If it works. And I think that's the biggest part because I've also have done some wholesale deals to other people without, which is ones that are not in my buy box. And it worked all day. Right. For other people. So yeah, I think that's the best benefit of like partnership is you can divide and conquer and you can have three people that are deal finders out there to find that right property.
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B
So, Bri, you mentioned SBA lending for this first deal. Two, two questions. Number one, why did you go SBA versus other forms of financing and what were the actual terms of that loan and of that purchase?
- [09:06]
C
Yeah, so I think that's the best bet with self storage is that it's a business as well as commercial real estate. And so There you're able to go get an SBA loan, which is business association loan. And you can either put, you know, the advantage of this is that the government helps you, right? They want to help business owners get in with a little bit lower down payment. And so we actually put 15% down. You put 10 or 15% down with an SBA loan. And that was the biggest reason was that, you know, I was in with two other partners. So three of us total. All of us, you know, we're like, how are we going to buy this $3.1 million facility? And it was very much like, let's go the SBA route. Even though there is some scary parts to sb and some of those parts are, you know, like art is the loan fixed, prepayment penalties. And so there's a lot of pros and cons, you know, and learning objections that we had to, I think sacrifice, you know, in order to get in. But I think it's during, it was during the craziest time and this was, you know, in 2022 when you guys interest rates were going up from, you know, 4% all the way up to, you know, like 7, 8, 8%. And so it was that time where we actually ended up doing an SBA 504 loan. And so that's the one where you can put 15% down. And we actually ended up. You have a certain percentage of that loan is locked in for 25 years and then you have another percentage that's locked in for five and it's rotating every five years and refixes. And so it does. The, the cons of that is that you are locked in at a 10 year prepayment penalty. But that's the thing is like, you know, how do you get in, right? How do you actually get into this industry when you don't come from money, you don't come from a real estate. And there are some sacrifices that I would do it literally over again. Even though they asked for like everything under the sun. I'm not joking you guys, documentation, DMV stuff, you know, tax returns. They even ask you to, you know, put your home up. And they also asked me to put life insurance down just in case anything happens. So I do think it is like, it's a really good decision to, to think about like, you know, what makes sense for that property, how are you going to make it cash flow and then for you, like, how can you get in? You know, not only relying on other sources of funding.
- [11:21]
A
Bri, do you want to break down the Numbers on this first deal for us.
- [11:24]
C
Yeah, so this first property was. So it was a $3.1 million facility, about over like 55,000 square feet. And so it was divided between like almost 300 units. Half of it is climate controlled and the other half is drive up. And then our biggest play, you know, on this deal was it was about 20 to 15%, depending on the unit size below market rate. The owner himself was tired. He's like, hey, I want to move to South Carolina, I want to get out of here. And I, yeah, I'm wanting to sell now. And so we saw that there was a huge need to put like a website text stack on there as well as increase the prices. And then immediately within the first eight months, we actually put in 67 RV and boat spots into that to add value right away. And in addition to that, we had a cell tower that also pays us money. And so buying this, you guys, in 2022, and then we're here now in 2026 buying it for 3.1 million, we've been able to increase those prices about 67% over these past like three and a half, four years. And so our next, you know, maneuver, because it's different phases, you know, when you put together a business plan is it was, the first thing was, hey, how do we add value immediately, right? How do we increase prices by 15, right. Just slowly, just to get to market rate. The second part to that is how do you stabilize it? How do you fill it up, right, to go into your like more 90% occupancy. And then the third part to this is you always want to think about is how can we add more units, right? So our goal is to add another 40,000 square feet of climate control to that facility in the next like year or so. And so we've had, you know, a long seven year kind of Runway. And then our goal is to sell it, you know, to possibly a REIT and to 1031 that to go buy some more storage facilities. So it's important when you think about buying like a storage facility, it's always about how do you enter and then how do you exit, right? Like, what is it worth today? Always buying it based on that price. And then if you bought it and you put your business model on top of it, where can you get it to, you know, right? What would that exit look like? And then making sure that you have a solid market with supply and demand in the self storage industry.
- [13:39]
A
Now, Bri, what about the second deal that you went into and you Kind of mentioned it a little bit as to, you got this deal from cold calling. What did you do for cold calling? Was this going through the yellow Pages and just you yourself calling? Did you use skip tracing? Walk us through that process.
- [13:57]
C
Yeah, so I think a lot of people, you know, don't like, think about that. Businesses are very much owned by baby boomers, right? And self storage, RV parks, like, we're kind of, I mean, people have been putting this more into the news, but you guys, there's about 60, 68% are still mom and pop operators. And so that's over like 30,000, you know, storage facilities throughout the U.S. and so, you know, I always say, like, what we want to buy, like our buy box is we want to buy, you know, facilities that are in third or fourth tier markets and those are, you know, not in large metropolitan areas. Those are normally with a population of, you know, 5,000 people, all the way up to 150,000 people that are growing. And so very, very easily we can kind of center in on where are these cities and markets that are actually growing and where are people moving to. And so we actually create lists like this. So we'll go on Google Business. Literally, you can just open up Google business because millennials, you know, how do we find other businesses nowadays? Like you could literally a Starbucks, right? You go into your Google Maps or Yelp and you look it up. And so if you click, if you're looking for storage, you literally go into Google Maps, put self storage, and you open up your screen and you'll see all the storage facilities that are listed. And a lot of them, if you go down the list, most of them don't have websites. And this is what's absolutely fascinating is that you'll kind of go into these markets and we like to prioritize storage facilities that either don't have websites or they have a website and they had the rotating E where it says GoDaddy.com, right? And so we put those, literally prioritize those first and then we start calling them. And it's shocking how many business owners own self storage, that they've owned it for 10 to 15 years. And they have a Facebook literally as their website. And so we know that is an unsophisticated owner. And that unsophisticated owner, you know, is definitely not utilizing the SEO of Google Maps or anything that they can to actually rent up. So we'll call them and just do. We'll call like literally cold called. So what I got really good at when I started because, trust me, no one wanted to talk to me, you know, because I didn't own storage in the beginning when once I bought my first facility, then I was like, okay, game on. So we centered in this buy box, and I would cold call for two hours. And it was, you know, prioritizing ones with no websites, and it took us about three months. And so I just started off that call very simply, kind of like just residential, like, you guys do it. But it's like, you know, hi. Hey, Is this, you know, Greg at Main Street Storage? He's like, yes, it is. You know, I say, hey, my name's Bri Hartman. I actually own a facility down the way. And I drive by, you know, once in a while, and I just wanted to see, like, if you would ever consider just an offer on your storage facility. And then silence, let them fill in the blanks, you know? But it's simple. And they normally will say, like, no, right? And. And I'm like, hey, not a problem. You know, I just want to, like, how did you buy your first facility? Like, how did you buy this facility? Tell me your story, because I'm trying to buy another, and I'd really like to know how you bought this one. And so that opens up to, like, a relationship. And so I really wanted to, like, walk you guys through that. And so there's so many times that I've spent meaningful conversations, like, we don't care about how many people you call. It's more about, like, how do you have meaningful conversations that last more than four minutes? Right? Because that's a relationship. And then you follow up, because you. You bet. You know, this guy that I connected with, he's like, yeah, like, I love fishing. And, you know, my wife wants to move out, out of state in Louisiana because her grandkids are in another state. And I promised her that. And so I called multiple times, and the gentleman was like, okay, fine. Let's, you know, let's. What's your offer? And so that was that perfect injection point, right, where you're like, okay, you know, are you. You know, what. Did you have a price in mind? And then, you know, are you open to seller financing? And he actually said, yes, you know, to that. And so with that, yes, we were like, hey, you know, if you're open to being the bank, we can give you a little bit more money. And so we ended up purchasing this facility. It's about. Yeah, 30 minutes away from. We call it our mothership, our bigger facility that we first, you know, purchased. And he was Very much open to, you know, what the deal ended up being. We put three offers right in front of him. One was the bank, right? We always like, say, here's the bank is the lowest offer, you know, 400k because the bank said we can only pay you that. And then the other two were seller financing and the one was, you know, $500,000. The one that he actually picked was $500,000 with a 15 down. And so that was ended, ended up being $75,000 with a 5.5% interest rate for a seven year balloon. And that is incredible because what he wanted, right, was he wanted his fishing money. Every month he gets $2,200 a month, literally, you know, clockwork from our bank account. And that was he, he called it his, his fishing, his fishing charter money that he was going to use with his grandkids. And that was his big motivation, was I was open to doing seller financing because A, I wasn't going to pay Uncle Sam and B, you know, I had fishing money every single month. And so what's awesome about this facility is that, you know, we also like increased the rates. They had no website. People were paying, literally dropping off, dropping off their payments on the first of the month. And so we were able to increase the prices, add some portable units to it and a website tech stack and some cameras. And our goal is to sell this facility next year in the spring for about 1.2 million at like a, an 8 cap. So nothing too crazy, but that's something that's beautiful as you buy it for, right? Half million five hundred thousand and you're able to, you know, cash flow, increase the prices, force appreciation over time, see the value, and then sell it, right, for 1.2. And then our goal is a 1031 to go buy and play the Monopoly game, to go buy another facility that you can go do that again, right, and snowball that effect.
- [19:54]
B
Incredible. And I have so many questions about the, the, the cold calling approach and some details on seller financing. But we're, we're gonna take a quick break and then we come back. We're gonna hear more from Bri about how she put this deal together.
- [20:04]
A
When you buy your first rental property, there's usually a moment right before you pull the trigger where your brain starts spiraling a little. What if I'm making a mistake? What if I can't figure this out? What if this whole thing becomes way more complicated than I expected? Honestly, building any business feels like that at first. And for a lot of investors, that next step is creating a brand, a website, or even a business around what they're building. And I've learned this myself. Whether it's real estate, building a brand, launching a side business, or creating something online, the hardest part is usually just getting started before you feel free. Fully ready As a consumer, I use Shopify powered stores all the time. Chances are you do too. Some of the brands I buy from regularly run on Shopify and you probably wouldn't even know it because everything just works. The checkout is smooth, the experience is easy, and that's exactly what you want if you're building a business and trying to earn customers trust. That's why Shopify makes so much sense. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in the US from brands just getting started to household names. You can build a professional online store with ready to use templates that actually look good even if you're not tech savvy. Shopify also has AI tools that help write product descriptions, page headlines, and even improve product photography. And instead of juggling five different platforms, Shopify puts everything in one place, from payments to inventory to analytics. Plus, Shopify helps you market your business with easy email and social media campaigns so you can actually reach customers. It's time to turn those what ifs into with Shopify today. Sign up for your $1 per month trial today at shopify.com/Rookie. Go to shopify.com/Rookie that shopify.com/Rookie vacation is expensive.
- [21:59]
D
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- [23:17]
B
All right, we're back at Rubrie and Bree, before the break, you just share with us about how you were cold calling homeowners. And I think the part that a lot of people glossed over was that you said you would spend two hours a day cold calling property owners, like self storage owners, for. I think you said, like, three months before you actually found the deal that panned out. And I think that's the part that a lot of people are going to overlook. Right. Is, you know, that's a lot of time over. Over quite a few months. If you're okay with that. I just want to, like, role play a little bit, like, if I can put you on the spot. So let's say that I'm. I'm one of these maybe slightly cantankerous, you know, self storage owners that you're calling and just kind of let me know how you. How you'd. How you'd handle that situation. So let's. Let's jump in for a role play and see how it goes.
- [24:02]
A
I'll be the phone. Ring, ring, ring.
- [24:10]
C
I love it. I love it. So much fun. I love this so much. Wait, am I. Am I role played? Am I the caller?
- [24:20]
B
Yeah, you're. You're. You're. You're Brie.
- [24:24]
C
Okay, that was like, wait, I'm totally thrown off now. This is just the freaking love, actually.
- [24:29]
A
Okay. Since Tony forgot his line of saying hello and answering the phone, we'll start again. Ring, ring, ring.
- [24:38]
B
Uh, yeah. Hello.
- [24:38]
C
Hi, is this. Oh, God. Jesus. I'm the one that's actually doing. I'm like, laughing. Okay, let's do that one more time.
- [24:45]
B
You can pick up, pick up, pick up from your spot.
- [24:47]
A
Okay.
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C
Okay. Yeah. So. Hi. Hey, is this Greg at XYZ Main Street?
- [24:52]
B
Uh, yeah, it is. Who's this?
- [24:53]
C
Hi, my name's Bri, and I know this call might be out of the blue, but I actually. I drive by your storage facility all the time, and I'm just curious if you would ever be open to considering an offer on your storage facility.
- [25:06]
B
I mean, we get a lot of these calls, and honestly, I'm not really interested in selling this right now.
- [25:11]
C
No, absolutely. Totally understand. So I'M just curious. I just want to see. So getting into self storage, how did you actually, like, buy this facility or did you build it?
- [25:19]
B
You know, honestly, we inherited this from my dad, who bought this a while ago, and, you know, once he passed on, he left it to us, and we've just been kind of running it for him as a small family business ever since.
- [25:29]
C
No, that makes a lot of sense. So I'm just curious, like, how are you guys doing with occupancy? Are you guys filled up? Because I'm trying to just purchase one in the area. I just wanted to see, like, how the market is doing.
- [25:39]
B
Yeah, I mean, we, you know, we do okay. It's a pretty easy facility. You know, it doesn't take a lot of time, and I think that's why, you know, we're. We're okay holding on to it.
- [25:46]
C
Yeah, no, absolutely. Well, I'm just curious, like, if you ever, you know, consider selling or even just want an offer, definitely what I can do is just send you over just a little bio, just who we are and what we own, and I'd love to just keep in touch with you.
- [26:00]
B
Yeah. Just out of curiosity, what would your offer be?
- [26:02]
C
Yeah, so I can definitely, you know, give you an offer. So I have a couple questions for you. So just curious, you know, like, I guess can you give me just, like, the gross revenue that you're actually producing each month?
- [26:12]
B
Okay. All right, we can pause there. That was a good brie.
- [26:14]
C
Yeah, no, I can do. I can literally do the revenue right now.
- [26:17]
A
Let's do it.
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B
Yeah, I know. I was just curious, like, what does that. What does that language look like? Right? Because, like, I know when we talk to wholesalers, like, the things they're looking for, they want, like, you know, motivation, they want timeline, they want condition of the property, they want the price the person is looking for. Are you.
- [26:30]
E
Are you.
- [26:31]
B
It sounds like you're kind of looking for those same elements as well, right?
- [26:34]
C
It's like, oh, look at that. I just. Can I just blow your mind just for, like, two seconds? I'm like, let me just share my screen. I know you're like, so this. So we kind of do it a little bit similar. Let me open. Actually, hold on. Let me show you this one. So this is literally. We have a. A, A chart that we keep open on our computer, and you can walk people through what that facility is worth, like, within two, like, two minutes. So share. So here, wait. Play with me, too. Come on. Keep going. I was like, so ask me. So I I'll ask you. Okay. How much? Just curious, like, you know, how much are you guys actually gross in each month?
- [27:16]
B
The facility brings in? Maybe five grand a month.
- [27:18]
C
About five grand. Okay, so, yeah, that makes sense. And so that's about, you know, you know, from last year in 2025, you guys probably collected over like $60,000. Is that right?
- [27:28]
B
Somewhere in that ballpark.
- [27:29]
A
Okay.
- [27:30]
C
Yeah. So I'm just, you know, based on just a really quick, you know, this is not anything, you know, set in stone, but just real fast, just to kind of give you a gauge just to see, you know, if this would possibly work. You know, I'm coming in at, you know, possibly 420,000, all the way up to, you know, 550,000. That's just my range. Just like Kelly Blue Books, you know, like cars like, this is just my range without too much information. Is that even something that you might be interested in?
- [28:00]
B
I mean, possibly, you know, I guess it depends on how close to 550 we are.
- [28:05]
C
Yeah, no, and I know. So I definitely think, like, I'm really interested in your facility and I would like to put some more numbers in front of you. Can I just get a couple more pieces of information and then what I can do is send over three offers. And I think you might be really happy with this offer that we put together.
- [28:21]
B
Yeah, sure.
- [28:22]
C
Awesome. And so all what I. All what you need, and so, you know, just to go forward is like, all what you need, you know, from an owner, especially in storage, is we don't care about, you know, how they're really operating it. It's more about, you know, what is your unit mix? Right? Like, what is you? And when you say that to an owner, sometimes they don't know it. But what's your unit mix? Like, how many 10 by tens do you have? At what price? And then what's your occupancy feel? And we keep it super simple because just like Kelly Blue Books, it's like we'd rather get them talking numbers because that excites them. Like, that's a business owner. They get excited about, you know, like, hey, you know, they always think about when they are going to sell and what they're going to do. And so if we can kind of share, like, hey, this is not set in stone. This is a Kelly Blue Books. We can get more if you give me more information. But this is our range. And so what this does is actually it weeds out the people that I call air in unicorn unrealistic land, you know, where they want like, you know, ridiculous recap rates and versus, you know, where they're like, hey, he wants 550. Okay. Like, that's in the middle ground. I can see, you know, if there's more value to be had. Like, this could be a really good deal and there might be a spread that we can actually double down and buy and go buy more. So it gets them talking, is like the starting place, you know, for us in commercial. And from the talking point, you can then build a relationship because now they take you seriously. And that's a big thing, I think, is. I think being a female in commercial. Yeah, being like a female in commercial real estate, it. It has been very, I think, helpful, actually. And so I laughed because I was like, I'm a mom with a phone. And I was like, dangerous as a mom and a phone and calling them. A lot of owners that are mostly men, right? Mom and pop owners, baby boomers, it's a pattern interrupt from a lot of these young brokers that are calling them and just wanting to, you know, they don't know very much about storage. And so it's very much about, like, how do we build a real relationship and then from there, how do you transition? Like, you also know the talk, right? And that you can actually deliver. And so storage owners want to talk to us like they want to talk to everyday W2 employees, right? Because that is who they are. Like this business gave them the best benefit for, you know, their family and they want to pass it on to someone like that versus a broker. Right. Or a. Maybe a REIT that has to go up the chain five times and it goes back and forth. Like a deal gets done in mom and pop land, I call it, with seller financing, like so much faster. Like, you know, two months, three months faster, versus having to deal with a lot of these syndicators that have to go to committees and get things approved. So I really think that we have an advantage right now. Like, there is a. It's a buy time where, you know, people are restless right now. Rates are refixing. There's mom and pop owners that have been sitting on the sidelines kind of irritated because they're like, they know their facility. You know, interest rates are really high. And so right now it's a sweet spot for doing a lot of seller financing deals and putting offers in front of owners and saying, hey, I can actually make you money and save you. The big part is save you from paying Uncle Sam, right? And capital gains right now. So that's how I like to structure Some of these offers and present them is how do you make it clear and concise, take away friction. Right? Make them know you're the real deal and can actually, you know, follow through and are excited because excitement, like I call it, smile and dial because people can hear your excitement on the phone and they want, they want that, they want excitement. They want someone to buy their facility that they know is going to buy it and pass it on and do very well to their community and their business.
- [31:59]
A
Bri, now when you actually dive into the numbers and you've got somebody that actually wants an official offer, what are some of the important things that you look at? Maybe some of the expenses that you normally wouldn't see in other asset classes like a single family home that somebody who's just getting into self storage needs to be aware of that these are something you need to calculate into your numbers.
- [32:22]
D
Yeah.
- [32:23]
C
And so first off, just to take it from like a high level, you know, self storage gets to be a simple business. You guys, we're in the business of renting space like it's a concrete floor roll up door, you know, and cinder block on all sides. And so, you know, with no toilets and no lights very much. And so the expense ratio is also very low, which is nice. That's our sweet spot between, I always say, you guys, 35% to about 42% is what we're underwriting right now for our expense ratio, which is actually one of the lowest in the commercial world. Like multifamily is I think 50, 55. And then you know, is, you know that 60 to 68%. And so you have a lot more room to actually, you know, profit. Right. And also a little bit of air on your side too. And so the expenses that we normally see, the two things that are the big deal breakers are right now, real estate taxes, right? So if you buy it for the new price, real estate taxes will actually kill a deal. And then insurance, like in Louisiana, in the south, you guys, like, like Florida, I won't even touch because our insurance has, for a piece of paper that we pray we never have to use, went up about 20%, you know, and so those are the big, I think like the deal killers that we really have to look at from an underwriting perspective. And then you know, we button it down, right? It's little things like tech stacks and like a website in lawn care and snow removal if you're in, you know, snowy areas. But we really don't have a whole lot of turnover. And that's what makes Me, I think, just excited and bullish in self storage is buying, you know, facilities. My whole goal, you guys, is after having nine lives and being a W2 for fish and wildlife and then owning a gym. Owning a gym will really make you smart because it's a hard business. But I think it's coming back to storage gets to be simple, you know, and that is the biggest thing is, like, I love simple, boring businesses with no toilets and with operations with AI you know, coming into this world, I look at, I looked at, I passed on a glamping resort. This is my shiny object that I was, like dangling, you know, around me. It looked beautiful, but I passed on it because I, my, my goal, my reverse engineer goal is with my baby girl is to be able to run, you know, 15 storage facilities remotely from my house. And so just to tell this, you know, like, story is, you know, how can we get to have things simple with operations, with the boots on the ground? And so that's why we get to stay lean is we have a boots on the ground that does 1099 work for 15 hours a week. And then we also have a call center, because normally your boots on the ground is really good and handy and your call center is good at sales. And then you very much just manage, right, those two pieces. And so that's where it gets to be easy, is that you don't need someone on site at all, you know, to manage or to get people in. And so I can walk you guys through how easy it gets to be, but it really is a, you know, a gate code that's produced and a lock code that's produced, and you drive up with your stuff and you drive into your unit and you open up your universal lock and you move your stuff in and you put your lock on top, drop ours off, or you get paid an upcharge. And you, you know, there's QR codes along the whole entire premise. So there's still customer service. It's just based on when you need it. And self storage is. This is like Millennials. Like, I don't really want to talk to a lot of people either. I know Ashley, doesn't we both laugh about that because, you know, Amazon drops it at my door. And so this is the new, you know, this new Gen X and Millennials is that we want to, you know, be able to rent a unit, storage unit, and pull up, take care of it without having to talk to someone at whatever time we want to do it at. And so that is the new operations and the Ability to have remote management and self storage.
- [36:10]
B
Yeah. You know, so like I own assets in the hospitality class. Right. We have short term rentals, we have, you know, we have a small hotel. And you know, my, my, my shiny objects object syndrome is kind of being piqued in this conversation because I, I love the idea of having maybe an asset that complements the hospitality in that way where it's just like the exact opposite, you know, where we don't have to worry about those kind of things.
- [36:33]
C
So we laugh. You're going to la. This, we call it a party in the front, hotel in the front, stabilize in the back. Party in the front, stabilize with storage in the back.
- [36:42]
A
That technically is your hotel, right?
- [36:43]
B
That actually is my hotel. I literally have the hotels in the front and we, we have a small self storage. It's like I think 13 self storage units behind.
- [36:52]
C
The best model ever. So I would be down for that model because it's like reducing your risk right. At the same time as like getting the hospitality revenue. Like brilliant. Absolutely brilliant.
- [37:03]
B
Yeah. And we didn't, that wasn't planned that way. Just the hotel happened to come with, you know, self storage units. We're going to take one final break, but when we get back, we. I just want to learn more about how you're choosing markets because you mentioned this before, but there's some nuance here that I want to pick out. So we'll be right back after a quick word from our show sponsors.
- [37:23]
F
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- [38:03]
D
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- [40:26]
B
All right, we're back here with Brie. Now Brie, you said you focus on third and fourth tier markets. So first, how do you define a third or fourth tier market? Like what is the definition of that? And then how do you ensure that as you go into these third and fourth tier markets that there's actually enough demand to support a self storage facility?
- [40:45]
C
I love it. Yeah. So I call it the five point market blueprint. And so what this is is like keeping it simple, right? We can overcomplicate as humans like everything but in self storage we have to answer the simple question of like supply and demand, right. And is there you Know, is this market doing well or is this market oversupplied? And so what I like to look for is like, you know, I, I specialize in teaching others too about buying storage facilities that are in third and fourth tier markets. And I don't want to compete with rates. Right. And so a lot of people say like there's this myth that storage is, you know, oversupplied. And I see storage on every corner and I'm like, yeah, it's because you live in, you know, New York, right? Or you live in some of these large places that have cube smart and public storage. And so we don't want to compete with them. So we are looking you guys in markets that are third and fourth tier. So think about 5,000 people. Like the first point of the star is 5,000 people all the way up to 150,000. Like that's a great little measurement there. And then the second point to this blueprint is, okay, we need to find markets with a population that's growing just a little bit, like even 0.01%. Right? And that's because people are moving there, right? There's jobs to be had, people are making money and there's a reason why that market is going to grow, which is very much security for three to five years. And then the fourth part to that is, you know, I like to look at, it does not always enforce that like medium household income, like can people actually afford self storage? And so not normally is, you know, I always like to look at like a medium household income, about 50,000, you know, give and break. It could be different but I had a lot of people buy facilities in, I would just say like Mississippi, right. That they can't afford like to, you know, even rent. And so that makes it harder is when you have to go to collections. And then the fourth, you know, thing to hear is being able to, you know, find these facilities that are unsophisticated. And in that market you want to find your, is that market sophisticated or unsophisticated based on, you know, their website or even increasing prices and using a little bit of that dynamic pricing index. And then like the, the fifth thing is that supply and demand, right? So how many facilities are there? And then are they full, right? Or are they actually doing promotions like they can't give away? Like I've seen markets where they have right now three months for 50 off and $1, you know, so those are, you know, we don't want to touch those. So those are the five different things that I really really look for. And if you kind of stay very simple and you ask yourself those questions and you find markets that are doing well in all five of those categories, you're going to crush it, you know, in the sense of like actually buying in a market that has demand, that's going to last not only just one year, but you know, three to five years when you buy and hold it for that position. So those are a little bit where I like to kind of look just to make it super simple.
- [43:36]
B
That's incredible advice. And we hear a lot from folks on this podcast who invest in self storage that they, they kind of have a similar approach of targeting these, these, you know, secondary or tertiary markets because they don't want to compete with the, you know, the big massive kind of public storage type type businesses. But I also just want to give you credit because like your, your concept of just going into Google Maps and searching for businesses that don't have the, the proper, like digital footprint. So again, we're looking to buy another hotel hopefully soon. And I just opened up Google Maps while you were talking. And you know, I'm in California, so I'm looking just like along the California coast because I have this idea of, you know, I'd love to get a, a small hotel near the coast somewhere. And I'm like in the, the Pismo beach area, Grover beach. And I just like typed in hotel and there, you know, there's a bunch that pop up and there's all these little hotels that, you know, it says like two star hotel that looks a lot like what our hotel looked like before we bought it. And one of them, like you click on the website and it just doesn't take you anywhere. Like, like it just doesn't even exist.
- [44:37]
C
It's, it's wild, right? And that's like the best PR mechanism. Like 80% of our storage, you know, tenants use Google Maps to find or some type of online like phone, right? To find, you know, that facility. And so if you are not there, not even popping up, you know, on Google Maps, which does happen. And then number two, if you're not actually putting a website that leads somewhere with some decent reviews, like you're really positioning, you're shooting yourself in the foot, you know, as a, you know, an owner even from like storage to hotels. But these are the ones that if we can prioritize those first and go after those in the sense of like, these are these baby boomers that are tired. And so we had a student that bought a. So this is super cool on Facebook, literally there's a Facebook strategy that we use to find these mom and pop owners and their website was a Facebook thing. And so he bought a 10,000 square foot facility for $90,000 with seller financing and he put $9,000 down. And what's so cool about this is that it started at 70% occupancy. And so he lives in Virginia, this was in Alabama. And so he runs it all remotely. But he was able to not just see this as an opportunity, but he's like, how can I make it better? So he added four billboards along the road. And so he's making 400amonth more off these billboards from that town that they put up. And then he also partnered with U Haul and so he does a, he gets a 30 rev share here. And so not only was he 15 under market rates, he increased occupation, he's at 90% now. He added billboards and then he also added U Haul. He has like three trucks out there. And so he's going to be able to in three years. I always say like be if he's slow operator in three years, right, he could probably do it faster. But his facility will be worth, you know, $300,000. Right. And so he has two options is where he can either exit and refinance, right? Don't kill the pig, keep the storage facility, let it run, take 150 out and go do it again. Or you know, hopefully buy it close to that facility or he can sell it for 300k and then go and buy another one in 1031 and go buy something bigger. And so I think that's what's the opportunity here is that not a lot of people think that they need all this money and you really don't. If you're going to, you either have two things. You either have money or you have time, right? And so if you have time, becoming a really good deal finder is only going to help you because you can actually be someone who people want to talk to, right? And bring deals and you can carve off a little bit of your equity, right? And say, hey Mr. Dennis, that is, has a really awesome W2. That's 200K. Do you want to partner together and take this down, you know, with little to none of your own money? I always say there's always skin in the game. It costs money to buy real estate, commercial real estate. But you know, how can we think outside the box? And I really think this is, I'm going to get passionate about this because people try to Find this home run deal, you know, and they spend so like two years, they're like, I want to buy storage and buy this home run deal and they don't do anything versus like let's call these mom and pop owners and get just, you know, let's get a good deal right, let's get in and let's structure it right and let's find, let's make it an awesome deal. And the reason why this guy made this an awesome deal is that he saw 15% below and he added more revenue. He was creative. Like he added that. So I just, I think this is the biggest part is people are searching for this home run versus like let's go out there and let's find a good deal that cash flows and then let's make it a 10x. So.
- [48:06]
A
Well, Bri, thank you so much for joining us today to give us this breakdown of what self storage is and how to actually get in it as a rookie investor. Especially the deal breakdown and you know, the cold calling example was wonderful scripting it out. So thank you so much. Where can people reach out to you and find out more information about your investing journey?
- [48:29]
C
Yeah, so I love, I'm over on Instagram. So you guys, that's me. I love when people come over and say hi, so just send me a dm. But it's over on Instagram at Bree B r e e the investor. And then I also just wanted to, you know, I have an awesome storage calculator and so if you guys want, I'd love to give that to your listeners just for like learning about storage. And so if they want that they can actually send me this, my business phone number. They can send me a DM just to 916-579-7209 and just say storage and then just say bigger pockets and then I'll send that directly to you. But this is super awesome. It can help you really figure out what that facility is worth. And then that's what I want you guys to do is go out there, buy these facilities. Like my goal is to have more cash flowing storage owners in this world that are the true underdogs because I think that's an awesome, not only awesome story, but you get to show your kids what's possible too.
- [49:23]
A
Well, Bri, thank you so much and we always love a good freebie. So thank you so much. I'm Ashley. He's Tony. And we'll see you guys on the next episode of Real Estate. Rookie.
- [49:35]
B
Hey, rookies. If you're watching this we want you to apply to be a guest on the Real Estate Rookie Podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real Estate Rookie Podcast. Now look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener
- [49:53]
A
as a rookie investor. Especially if you just got your first deal. It is all fresh in your minds and you are the best person to tell your story. Give your experience on how you got it done to help someone else get their first deal.
- [50:06]
B
So head over to biggerpockets.com guest if you want to be a part of our show again. That's biggerpockets.com guest and we'd love to
- [50:15]
E
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