How Scott Meyers Operates 2.4 Million sq. ft. & Over 14,000 Self-Storage Units Nationwide!

Steve Trang: Everybody. Thank you for joining us for today's episode of Real Estate Disruptors. Today, we have Scott Myers with Self Storage Investing and Scott Flynn from Fishers, Indiana to talk about how he's acquired 14,000 doors and 2,400,000 square feet of storage space. If this is your first time tuning in, I'm Steve Trang, sales trainer for some of the top wholesalers in the country, and I'm on a mission to create 100 millionaires. Question I get all the time is how to become a millionaire.

And the information on this podcast alone is enough for you to become a millionaire in the next five to seven years. If you will take consistent action, you will become one. If you wanna get there faster, send me a message on Instagram, and we'll see if we can help you get there just a little bit faster. If you get value out of the show, please tag us from below or share this episode right now. That way, we can all grow together.

And we do have a Black Friday special, so do tune in tomorrow and Friday. Check out what we have in place for you guys. This is a live show, so please ask your questions for Scott to answer. You ready?

Scott Myers: I am ready, Steve.

Steve: Alright. Oh, so first question is, what got you into real estate?

Scott: You know, I think, probably like many folks, they wanted to own their own business. Mine in the beginning was really just kind of a hedge against, retirement in through Wall Street. I think everybody tells you when you are planning for retirement, you buy stocks and bonds, and, you you play through Wall Street. And, after reading Rich Dad Poor Dad, I realized that was probably not the the best way to go. So

Steve: Yeah. I don't know if that's a scam. That might be too strong of a word, but I think there's some improperly set expectations for

Scott: that. Absolutely. Yeah. Because it is not passive like buying stocks or bonds. But, I started buying single family houses and then got into apartments and then, eventually into, self storage.

But, along the way, I always felt that, yeah, I I did not want to be, beholden to Wall Street and their returns and not being able to meet the person who was making those decisions on behalf of my investments. Whereas with self storages, as we know in real estate, you know, you get to meet the manager. You know, you walk down the stairs and you have a meeting with them, and you know exactly where your money's going and the decisions that are being made.

Steve: Right. So let's talk about your very first real estate deal. Mhmm. Mhmm. When was that?

Scott: So this was 1993, and it was a single family house. And, so this was back in the day. Steve, you may not remember or you may not have run across this, but it was a VA assumable loan that we had. There's I think there's hardly any of those left out there.

Steve: Right.

Scott: So I assumed the loan. I didn't have to worry about my credit, because I just took over the loan. And I had enough money that I I did a, I took out a a refinance on my own home, took out a home equity loan that provided the down payment. And then I followed the Carlton Sheets program of Mhmm. Rehabbing it, refinancing it, taking money out and then renting it out and then move down to the next and the next after that.

Steve: So when you say Carlton Sheets, are we saying that in jest or in reality that that's who you were learning from?

Scott: In reality. Yeah. That's who I was. But it always gets a laugh out of people because, everybody kinda goes back to the old grainy, video days when he was on the beach talking to his successful folks. But, if you follow the practice, you know If

Steve: you do the work.

Scott: If you do the work, it's a good foundation.

Steve: Yeah. Okay. So do you do you start with Carlton Sheets and then you find your first property or you find your first property and then you looked out for Yeah. I think I was,

Scott: learning about real estate through Carlton Sheets and reading a few other other

Steve: So then you was it like you saw him on an infomercial? Or

Scott: I think I did. I saw him on an infomercial, and then I bought his home study system. So I went online and I ordered probably not online. I probably called the phone, called on the phone and, and had the system ordered and shipped to the house. Mhmm.

Steve: Yeah. Because I I looked today, like, social media on Instagram, on Facebook, and whatever is kinda like today's version of the 2AM, 3AM infomercials.

Scott: Absolutely. Absolutely. Without a doubt, Dylan. When people are looking, you know, hopefully, the teacher will appear, and that's how that's what happened in my case.

Steve: Yep. Okay. So you did your first deals

Scott: Mhmm.

Steve: With houses. Mhmm. Clearly, you didn't finish only doing single family Right. Residential. So what so what was after single family?

Mhmm.

Scott: So we did, we had about 70 single family houses and then, didn't really have the the freedom and the cash flow that we well, that Carlton had talked about. So we

Steve: had a lot

Scott: of tenants and toilets. So I thought, well, okay. Better way to skin this cat is to get economies of scale and started buying apartment complexes. And then assuming managers and management management companies, would, handle that and spread the risk and and diversify a bit, only to find that we had more tenants in toilets. And, even though we had management companies, you know, the the bug stops here, and and we were still writing the checks and making those, decisions.

Steve: So So So you had managers, but it was not hands off.

Scott: It was not hands off. It never is. It's not mailbox money by any stretch. And so we had about 400 apartments, and 70 houses at that point and then, realized well, that was really about the time that, the, 1999 to 2000, the .com crash, that recession.

Steve: Mhmm.

Scott: Really what happened after that, the Community Reinvestment Act that the administration put in place, which allowed everybody to buy a house. Right. Whether they could fog a mirror and, you know, walk through the bank and, roll all their debt in, they could buy a house. Well, all our tenants were leaving in droves, and who could blame them? It was the first time in history that they could buy a house.

Steve: So because of the massive adjustments

Scott: Mhmm.

Steve: In financing Mhmm. A lot of the tenants they had in place are no longer your tenants.

Scott: Correct. They were leaving and buying houses. And so we were we were making that switch of selling the apartments. And then but really now, after doing, you know, a rehab on the houses, not as nice as you would for a retail sale, But now we had to redo it again and do, you know, do another a second rehab on these homes, get to get ready for a retail sale since the market had shifted. So we were selling those off.

Steve: Oh, so not only were your tenants in your apartments leaving, but all the people that were renting the houses, you needed to

Scott: Mhmm.

Steve: Rehab again to sell. Correct. Correct. Got it.

Scott: And that puts a little strain on the cash flow and on our our, capital. And so at this point, I realized that, probably best that I don't wanna be beholden to those cycles in real estate and the challenges of tenants and toilets. So we looked around the landscape, and it's either parking lots or self storage if we wanna be in real estate without tenants.

Steve: Mhmm.

Scott: And, there's not a lot of value to be created in parking lots, and that's how we landed in self storage.

Steve: Can't really

Scott: force depreciation. No. Not much.

Steve: You can force other people to build around you, but that's about it.

Scott: Correct. That's it. Yep.

Steve: Yeah. Mhmm. Okay. So when did you start self storage?

Scott: Mhmm. 2005 is, when we bought our first self storage, facility, and that was that was actually a a a an industrial building. It was a a flex building that we added storage to it and saw how the model began to work. And then I really did a deep dive into, you know, learning about the business and then bought my first true 100% self storage facility in 2006, with a partner.

Steve: Got it. So right now, you know, you look at self storage. There's only a handful of people out there, but it seems like a lot of arrows point to you. Mhmm. Were you the pioneer, or you just did more than it?

Yeah. Well, I think it was

Scott: a best kept secret. I don't think anybody wanted to let it out. And so I was looking for, you know, somebody to really walk us down that path. And there there, you know, there really wasn't a, dare I say, Scott Myers or there wasn't a, you know, anybody teaching associations and their annual meetings. But there wasn't anybody who was a, you know, a guru per se or or somebody that was teaching people how to do it walking down the path from a to z.

So I had to learn that on my own.

Steve: So how did you learn on your own?

Scott: Going to those shows and then talking to the people and just, you know, they were in the business and saying asking them, what did you like best about the business? What don't you like about the business? How did you get started? And then, finally, when we were getting ready to pull the trigger, you know, there are there's more commas than zeros in commercial real estate. So I did hire a consultant and, spent a day with him, making sure my business plan was solid and and looking at my pipeline and the deals that I had.

And then, still was reaching out to him and contacting him from time to time to make sure that I crossed my t's and dotted all my i's.

Steve: Right. So you started doing your first deals Mhmm. In self storage.

Scott: Mhmm.

Steve: What were some things you learned that you did not know going into it?

Scott: Yeah. So, you know, in in commercial real estate and apartments, self storage is very, very similar. You know, working with the in terms of underwriting and getting down to drilling down to an NOI and a cap rate. So the valuation piece was very similar. What I didn't understand or know was, all of the income streams and then all of the expense items.

So if a broker were to present something to me in the beginning, I assume that all the expense items, were accounted for. And so only to find out that there was a few that were hidden. And, you know, fortunately, we didn't make any grave mistakes before we actually bought anything, but, it is a little different animal. And then I think some disclosure challenges. There were disclosure challenges, yes, so to speak.

And that that that goes for any form of real estate Yeah. Just knowing to dig in. But then really the operation side, it is a different animal. It it operates more like retail, than renting out units where somebody is looking in habitation real estate, for a neighborhood, you know, or, you know, what is around it, proximity to, you know, anything and everything. Whereas with storage, it's really more of a commodity and it's needs based.

You need to

Steve: answer the phone. It needs to be clean.

Scott: It needs to be secured. It needs to be priced right. And then, you know, if it checks those boxes and, you make it accessible and easy for someone to rent a unit online or by the phone, you're gonna get the business. Okay.

Steve: So let's take a step back here.

Scott: You're talking

Steve: about operation. You said it's more like retail, is what we said?

Scott: Well, you know, many folks in the industry call it a store, you know, at the store because there is a an office that, is in the the front of the store.

Steve: Retail, it's like going in and, like, buying a laptop.

Scott: Yeah. It is. The the process is is so simple and because it is more like a commodity

Steve: Mhmm.

Scott: You know, that we have kiosks in our facility. Movie at a red box rental, you can now go rent a unit at a storage facility in that

Steve: same manner. Mhmm.

Scott: It's that easy.

Steve: Got it. Okay. So operational challenges. Mhmm. So what were what did you not know, and what did you do to fix those challenges?

Scott: Yeah. I think, understanding that from a marketing standpoint that you gotta win the the game online. When somebody is looking for storage, this is a commodity. And so

Steve: 2006 you figured this out?

Scott: Yeah. This is 2006, and then understood the importance more as I got into, the business and that, what it takes to win the game. And so it's needs based. It's demand based. When, businesses downsize, people downsize.

There's trauma. There's transition in people's lives. That's when they begin looking for storage. Mhmm. You know, we don't advertise in a Vowel pack where there's a coupon and somebody thinks, oh, well, I'll save that coupon for when I need storage like a haircut or dry cleaning.

It's it doesn't happen until, somebody actually needs it. So we spend money on the back end understanding, how it works with regards to ads and being found so that when somebody is looking at a search that we beat our competition, because we have to answer it. It is they're checking the box to go to take care of this. It it's more of a a to do or a chore for somebody in the house to do this than it is to make a decision of school systems, neighborhoods, things that I need to do.

Steve: Something where the wife tells the husband, hey. Go figure this out.

Scott: Usually, it's a wife saying, I'm gonna get your stuff out of here. And, she wants to save, secure, and very quick and check it off her list of busy things to do. Got it. And she tells her husband to put her stuff in it, and here's the key. Here's

Steve: it is. Oh, so she's the one that's going out there. So you know

Scott: the avatar. We do know the avatar. Yep. It's mom who gets stuck with it or, that role in the household, if you will.

Steve: Got it. Okay. So, it sounds like then this industry is more marketing based than it is sales based or service based.

Scott: That's correct. Because it is needs based and it's so, yeah, we just need to be found. And now, you know, when people do walk into the office or the store, you know, there is an up sell. Or if they do happen to call the call center, you know, the sell is, to reserve unit or to make an appointment to go in and take a look or to just go into the, to the facility and then upsells along the way for the renter's insurance or tenant insurance, if they needed any locks, boxes, moving supplies, and things of that nature. Yeah.

But that's that's really the extent of the sale. But, you know, as we tell our folks, you know, I mean, they came in there for a reason. You know? They should never leave. You know?

You you need to pry them on my cold feet. There's a need. You know?

Steve: Got it. No one's just like, hey. One day, I'm gonna get a storage unit.

Scott: Right. Or I'm just shopping around. They wanna check it off of the list. So if you guys have those needs, you know, they just wanna be done with it. Okay.

Steve: So let's talk about your journey. So you had your first one, which you added to, and second one in 2006 where you it was a complete

Scott: full search.

Steve: Mhmm. Well well, your next few units.

Scott: Yeah. So the next were we we're value added in anything that we do, which I think most of real estate investors are. And so, value add comes in two forms. Usually, in an existing facility, we're raising rates, we're raising occupancy, you know, adding the marketing where the mom and pop owners didn't have it in place. And then if there is additional land on those sites, we always want to be able to expand and add more square footage.

So that's one way. With, development, you know, you start with a piece of dirt or a piece of land, and you build value by building the buildings and adding an income stream. So we the model in the beginning was, looking at, existing facilities, mom and pop traditional sites where they had fallen behind, didn't have the marketing in place, didn't have a website. Site. They were a 100% full because, you know, we just wanna stay full.

We've never raised rates in ten years, which is always music to our ears. Yeah. And, we yep. Exactly. So we come in and turn around the management raise rates, add occupancy where there's low occupancy, the marketing, and then if we can add additional units, we do that as well.

And then box boxes moving supplies, renter's insurance, and, any of those those other ancillary, income streams that we can add. So that was the model for a number of years. And then we started, yes, looking into development. And, that's when we got really good at syndication and bringing in private equity so that we could take on those some of those larger projects that were coming across our desk in our marketing efforts for for facilities.

Steve: Got it. So how did you find your very first deal? Mhmm.

Scott: Yeah. Very first deal was sent through a mailer. You know, direct mail still works. You know, number, 10 envelope, hand stamped, handed to us, looks like a letter from mom, and, a letter in it that's very succinct that says, when you're ready to sell, give us a call. You know, we can save you commissions.

And whether it's now or in the future, we're flexible, whatever that looks like, but give us a call. And, we would send those out over and over and over again in our market, you know, once a quarter until we bought the facility or till they told us to stop or until they died. You know, one one of the three.

Steve: So one thing is always fascinating, and this is, like, totally, like, limiting belief on my part, you know, because we buy houses all the time. Mhmm. Right? But it's curious to me because I think in commercial real estate, all the agents have to be cold callers. Right?

They cut their teeth cold calling.

Scott: Correct.

Steve: And so your competition

Scott: Mhmm.

Steve: Is probably another commercial agent that wants to list that self storage. Mhmm. So how are you winning versus that guy?

Scott: Mhmm. We're both out there doing the exact same things. You're right. So, the brokers are our competitors, and they are also a funnel for us. They fill our funnel.

So we want our letter to land on the desk of somebody who's considering selling that, may not want to or can't pay the commission, and they feel that they can do this, on their own. And that's our our letter says as such. If you wanna save yourself commissions and, give us a call. Mhmm. The the brokers out there doing the exact same thing.

I am the king and queen of this city, and I sell more self storage facilities than anybody else, and I will get you top dollar more than anybody else. And I will get the people sending you letters. I mean, their story is is, you know, anti Us, and ours is anti brokers. So, it really depends upon the seller, you know, to say, I don't want a bunch of looky loos and answer these letters with

Steve: a bunch of unqualified folks that

Scott: I have no idea, who they are, if they have the wherewithal or go under contract, you know, if they can't perform. I'll I'm only gonna go with an agent. And the other folks are, as I mentioned, you know, they don't wanna spend the money for commissions. They'll they'll give it a try. They have time.

They're in no hurry. I got this letter. Maybe he'll give me a million dollars more than what I think the facility is worth, and so they'll call us.

Steve: Right. So So at the

Scott: same time, we're always talking to the brokers and saying, hey. For the stuff that's really difficult and that can't pencil out from an underwriting or can't it's not bankable and you won't get commission, then give us a call, and and we'll talk about a reduced commission or a flat fee. And, they funnel those deals our way as well.

Steve: Got it. So what percentage of your deals would you say is coming from your own marketing, and what percentage of your deals are coming from, commercial agents?

Scott: Yeah. Probably three buckets to be safe. Our own marketing is about 20% now. It used to be 80% in the past. But since we started our education company now, a lot of joint ventures come our way.

So people bring deals to us. Got it. You know, I speak at the trade shows, and we write for Forbes magazine. And so we have a lot of people that know who we are now. And I'd say maybe 10%, 10 to 15% or so are coming from, the brokerage, community, but they know that we can close it.

So we do get first crack.

Steve: So majority of your business is just because you are the guy.

Scott: Yeah. It's It's a great place

Steve: to be.

Scott: We're in a good position. Yeah. Yeah. And I don't take that for granted.

Steve: Yeah. That's awesome. Alright. So what were some other challenges moving up? I mean, so you sourced your first deal, direct mail piece, second deal also direct mail piece?

Scott: Yeah. It was. You know, in that point, then we began, a lot of the brokers are bringing us, deals at at that point, but we were still, finding, projects, on our own from our own direct marketing efforts. And then it was about that time when we began to teach. I used to run a real estate investment group in Indianapolis and, teaching people about the business.

And then at that point, you know, they were going out to finding deals and that were either too big for them to take down or they had too many deals. And then they brought them to us, which is simultaneously, we we we knew that we had to begin learning how to raise private equity or Yeah. Those opportunities would, you know, fall off the desk. And so

Steve: Well, I was gonna go my next question. So maybe this is it. Like, you know, what are some major challenges in starting Mhmm. Self storage? Because, like, could someone today never done a real estate transaction yet tomorrow start doing self storage?

Scott: Mhmm. The answer is yes. I don't ever wanna deter anybody, but, also, you you need to begin thinking about building your team. And and one of those folks on your team is, most likely somebody, a good rich uncle or somebody that, a partner that has some some funds behind them or can raise private equity. Because with any form of commercial real estate, you know, there's more commas and zeros to be able to purchase it.

And so usually people are either one and done or they may not have enough available, their own funds. So their own equity to put into a project where they have to bring on somebody from the beginning. Yeah.

Steve: Okay. So, your challenges then. So you said you had to start seeking private equity. So what was that like?

Scott: Yeah. So necessity. Otherwise, those deals would fall off our desk. And and so at that point to him, you know, if the the time when you need money is, you know, usually when people start looking for it and you need to be building your your private equity list or your treasure chest of, those folks, long before that. And so the biggest challenge was, when we had these opportunities coming our way, our list wasn't, big enough.

You know? There it was truly friends and family. It was saying, hey. Would you like to be a part of this? And then, navigating through that, world with the help of an SEC attorney and, and a consultant to, you know, learn what that looks like to make sure that we're safe, and then also what are the norms?

You know? What does this look like and how to do splits and all the other things that are involved in the art and science behind raising private equity?

Steve: So let's just put this in perspective. You're saying com more commas than zeros. Like, you know, what is a typical self storage deal look like financially?

Scott: Yeah. I I'd say for people that are starting out and and including ourselves, the projects that we're looking at were anywhere between, you know, 600,000 to right about 1.2. That seemed to be kind of our sweet spot landing there, and and same thing with a lot of our students that we were teaching. So, again, we've got, you know, the REITs, the big guys, you know, the public storage U Haul, extra space. You know, they're multimillion dollar gleaming class a self storage facilities.

And then down here, the rural facilities, you know, ten, fifteen, 20 units out in the middle of nowhere without a lot of activity and a lot of growth or opportunity to create value. Our sweet spot's right in the middle. We we play in that sandbox in between the two where it's still the mom and pop owners that aren't very sophisticated that we're going after. And so that's in that, you know, 600 to $1,200,000, you know, project size. So from that standpoint, we're getting 75, 80% LTV loans.

You know, the the balances, is the down payment and then bringing in our private equity and doing the math equation to make sure that they were getting the returns that are, commensurate to, you know, the risk that they're taking and what's favorable in the market.

Steve: So, typically, you're looking for someone to put 20 to 25% down Correct. Of 600,000 to, 1.2. Correct. So just rough numbers if we're seeing a million dollars, you're looking for someone that is a private equity partner that has 200,000 to 250,000 available to help you as a down payment.

Scott: Yep. In an ideal world, it would be one person stroking the check. But in our syndications, it's a multiple people, with a $50,000 minimum. So we're setting up a a private placement memorandum, a reg d, five zero six b, or five zero six c, and our minimums are typically 50,000 for people to come in. So it's a multiple partners that were coming into these projects.

Steve: And syndication is a whole another world. That's a whole different episode.

Scott: Is. Yes.

Steve: So let's talk about then. What are some other major challenges along the way to get I mean, 14,000 doors is not a or 14,000 units is not a small fee.

Scott: Yeah. Well, probably the biggest is, and, you know, outside of growth is then how to manage this. You know? I'm I'm in Indianapolis, and and we're buying facilities now all around the country, and that started happening pretty quickly. People were bringing projects to us, and, you know, our mantra has always been, well, you know, we go anywhere because every facility is just as close as our local airport.

Steve: Mhmm.

Scott: But in reality, you know, you can't walk the four corners of your business when it's all across the country. So you have to have, you know, good lieutenants that are the GCs that are building these, the folks that are turning them around or transitioning the management, but then the ongoing management. So it was really picking good management companies, and that's not very easy to do. At the end of the day, you're giving up management to a third party property management company. And you and I both know nobody cares 1% as much about your property no matter what it is as you do.

So those management companies, they're, they're in it to for fees. They're not doing it, you know

Steve: Not because they love you.

Scott: Not because they love us. And, so that is, it's not their first and foremost. I mean, they they do have a reputation, but it's not a maximizing revenue for the owner like it is on ours. So we we've had to go through a few some that we trust that we can take nationwide or we know in a certain part of the country, you know, who we can bring in to manage those facilities. But we still have to add a a a layer of management on top of that or asset managers that are driving those management companies to make sure they're hitting their numbers for our investors and for us.

Steve: So, potentially Mhmm. Different property management companies in different areas. So not necessarily one nationwide company

Scott: No.

Steve: And then one internal Mhmm. Management company to manage all the property management Mhmm.

Scott: Companies. Yep. So that's that's the challenge in getting everybody on board and understanding it, awesome, maximizing revenue.

Steve: And there's still enough juice in there?

Scott: There is if we buy the right deals. But, again, the the position that we're in, we get a a chance to look at some of the sweetest deals out there.

Steve: So what does the right deal look like?

Scott: You know, we need to going into a project, we need to see that there's at least a two x, return on our money within four to five years. That's, we know going into it. If we buy something for 500,000 and and we have to put 200,000 into it, I need to be selling it for 1.4. That has enough juice in it to be able to get, enough you know, the the pot of money at the end after that is big enough to give enough to my equity partners to get them the internal rate of return that they want, and it has to be worth my time for the for what we're putting into it in in the time to get it up to that place in four or five years.

Steve: So internal rate of return.

Scott: Mhmm.

Steve: Let's elaborate on what that means.

Scott: Sure. So, a return is a return is a return. So a two x equity multiple, a two times return, means I'm doubling my money. Mhmm. The internal rate of return is tied to time.

So if I get a two x, multiple or I double my money in two years, that's fantastic. You know? An IRR of 40%. It takes five to seven years to get that. My internal rate of return is thirteen, fourteen, 15%.

It's less. So the quicker that I can return money to my investors and they can redeploy into another project, the more the higher you know, the more money that their money is actually making for them. If it takes longer to do so, they still get their two x multiple, but they could have been in another project where they could have been continuing to multiply.

Steve: Yeah. So they could have done their two x multiple somewhere else faster if you're not properly managing That is correct. Or or not necessarily buying correctly. That is correct. Got it.

Any other major struggles or or or points where you're like, what the heck am I doing when you're doing the self storage journey?

Scott: Oh, I I guess, again, probably revolves around hiring period, just internal staff. I, I, I I like to think that I'm a good judge of character only to find out I'm not. And so I Well,

Steve: you're an entrepreneur.

Scott: Yeah. Correct. So,

Steve: I think We're generally lousy judges of character.

Scott: I think so as well.

Steve: I

Scott: think so as well. So finding somebody to do the hiring for us in that process, you know, we, you know, we learned a lot by going through, traction and, you know, deploying the entrepreneur operating system in our business. And, still doing that for a number of years before we were introduced to traction, but at the end of the day, hiring on core values, you know, and as Jim Collins puts it, put you know, getting the right person in the right seat on on the bus. And so many times, you know, I've deviated away from that thinking, well, that person's a rock star. Don't bring them in, and they'll just they'll they'll catch what we're doing here in our culture wanted to find out that they're a cancer, and my other folks are ready to leave.

And and it's just a broken machine, and ninety days down the road, we're making that hire again. So I think that's probably been the biggest challenge is, staying true to it and and, you know, the times I've deviated away from our core values and knowing, that I need to hire on that first and will teach the rest.

Steve: It's amazing how many times we have to learn that lesson sometimes.

Scott: Yes. It is. Alright.

Steve: So I this this time, we're gonna make an exception. Uh-huh. This time, this exception will be okay.

Scott: And I have to say, it was a I mean, I've been at this for a while, in real estate since '93 and storage since o five, and it was really up till just this last year where I feel that we've got a solid core team where everybody is you know, we're we're in sync.

Steve: Yeah. And it's it's it feels great when you finally get there.

Scott: Yes. It does.

Steve: So if I were to today, right, I say, Scott, you know what? Hold my hand. I wanna get into self storage. Mhmm. What's the first thing you would tell me?

Scott: You know, there's there's a lot of folks that can do this on their own, but they're usually buying a smaller facility, which means it's difficult to manage as we mentioned. So

Steve: Because of economies of scale or

Scott: Economies of scale. They're gonna be self managing because these management companies, they won't take on a self storage facility unless they're getting, five to 6% of the revenue coming in or either 2,000 to 2,500 roughly, a month in management fees. Well, so many smaller fee, facilities, that's just over payroll and put those management companies in place. And so finding a a facility in that size where you can, have a management company in place, otherwise, trying to do all of that on your own, that's where many people stumble and fall. So, smaller facilities, very difficult to do, but getting into the larger facilities then, that's more commas than zeros, and, you know, that limits people to get into the business.

And then, the banks, you know, they they these days, they wanna see that you've got some experience, not just real estate, but they wanna see storage experience. If not, then they want you to bring in a partner. So it can be a true partner. It could be somebody like myself. I I take a small piece of equity in some of these projects in the LLCs to be on the board or part of the general partnership, in these facilities, and so we do that for our students and some of our other joint venture partners.

So, I think in the beginning, finding a facility that's large enough to be able to hire a third party property management company, being able to get into one that size, having the money, and then a partner or the ability to get the banks to say yes to you. So those are, I think, the challenges facing folks that are looking to get into it in the beginning.

Steve: And if I didn't have money Mhmm. Or I'm sorry. If I didn't have, the private equity partners Mhmm. How much would I need to get started?

Scott: You know, I'd say you probably should be in that a $100,000 range to to $200,000 range if you wanna do it on your own. But then again, your first deal can be a joint venture. You know, you bring the deal and you bring some equity and you divvy up the responsibilities. And then again, it's all a math equation and putting together the operating agreements. Here's the roles and responsibilities of a person getting in to begin with versus somebody experienced and and what they bring to the table as well.

Steve: So what would that look like as far as a joint venture? Because I think that's one one of the best ways to learn is to have someone mentor you and is like, hey. Don't do this. This is dumb. Do this, whatever.

Like, hey. You're not thinking about this. Yeah. So what does a joint venture look like if someone if I had a deal, I was like, Scott, you know, let's work on this together. What does that look like?

Scott: I I would say somebody starting out, you know, you're a pretty savvy guy, obviously, Steve. And, other folks that come to us many times, they'll say, hey, Scott. I found this fantastic deal. Well, first of all, opportunities aren't always deals. And so we'll look at this opportunity, and they'll say, well, I'm I'm broke.

My credit is shot. I can't do the due diligence because it's two states away, and I've never done a deal before. So can we do this deal and and then, you know, in a partnership and split it fifty fifty, and you bring all the cash and and the lending and the property management and everything else? And to which we say no. That's that's more of a

Steve: That's brokering.

Scott: That's brokering. That's a wholesale deal. You know, we'll give you a finder's fee for that. Yeah. But understanding if, you know, you bring money, but your credit may be a little dinged or the the bank wants somebody else to come in, we bring some money in.

You know, in a true fifty fifty partnership, I bring the management. You can manage the construction and because you're located in that town to oversee that, you know, that we'd give you up the responsibilities and the capital, and then we understand what the splits are on that end. Mhmm. And then, all the way to the other end, some people bring me in, you know, when just the all the bank needs is somebody in with a little bit of experience that I can provide, and that's how I step in at that point. So somebody looking to come in in the beginning, most likely, if they can do it on their own, fantastic.

And always try to, until you can't, and then look for somebody to come in. We also have some folks that that invest with us, in our syndications as a passive investor, and they'll invest $50,000 to not only come along for the ride, but they learn while they earn in it as well. And they they watch our webinars. They get our reports. They understand, exactly what we're doing in the beginning.

They can ask any and every question. They're owners, so they get to go out and fly out and drive out, and they get to see it, touch it, feel it. Talk to the management companies, and they understand. And then as as an equity owner, have even if it's a small amount, then when it comes time for them to do their own, you know, they can they can, you know, stand tall, put their shoulders back and their head up high and talking to bankers and brokers and private equity partners and say, yeah. I'm in the business already.

Right. And they are. And then that opens doors and allows them to then get into the first facility on their own without the use of somebody else.

Steve: So, I heard you mention earlier, you know, you you come in as a general partner. So I think before we before I ask my question, can you explain what a general partner is versus also a limited partner? Mhmm.

Scott: So in syndication terms, you know, when we create the operating agreement, you know, the the limited partner are our equity investors. And so, limited in that they're not making any decisions. They're writing the check. They have shares of ownership, and they get to, you know basically, they get to attend the webinars and and receive the money, and that's it. You know, they can certainly put input, you know, give input, but they don't have any right or, you know, ability to influence,

Steve: Yeah. They get to say Mhmm. But they don't have weight.

Scott: That is correct. That is correct. Now if things go awry, then they can all get together and there's, you know, a mechanism to remove somebody. But, by and large, the general partners then, that's the management team. That's the executive level team.

Those are the the person or the people that are then calling the shots and driving the direction. And, they are giving carte blanche, you know, the ability to to drive the the entire project.

Steve: Got it. Okay. So then, and you are the general partner side.

Scott: That is correct.

Steve: And the reason you're the general partner versus limited partner is

Scott: Because that's the only way I'll have it. I don't need anybody else's input. Yeah. And then what would the experience? And, if you money things up, if there's somebody that comes in on the general partner side, like we said, if there's somebody that's new to the business and they bring me in, you know, we're making decisions jointly.

If there's three of us, you know, there's a way to be able to, you know, a quorum for all decisions. Or if there's two of us, you know, there's a way to be able to make decisions. But understanding our rules and responsibilities, but we're the ones driving it. And the limited partners, again, are just along for the ride. That make sense?

Steve: Yeah. It makes sense. Mhmm. So if I wanted to have my team, right, because you mentioned that the team is really crucial here.

Scott: Mhmm.

Steve: What does a team look like if you're running a self storage ownership company?

Scott: Mhmm. Yeah. So pure ownership, on that end. It's a it's an asset manager, you know, who is making sure that, that we're hitting our marks. They're overseeing the property management company, making sure that, leasing, the velocity is as we expected and meeting our projections, that we're raising rates at the right amount of time.

You know, we have KPIs all across the board for our tenant insurance penetration, our retail sales, and then always keeping an eye on disposition and interest rates and cap rates as to, you know, when we need to, exit. So that's that's the asset manager's role. In our syndications, there's the the fund manager. And so the bookkeepers and, our investor relations, so they're keeping an eye on all the money that comes in, disbursements, distributions going out, doing the bookkeeping on a regular basis, k ones at the end of the year, and then, tax returns. And so they're handling, that piece.

You know, assistance slash assistance, along the way that assist as well. And then, you know, there's some folks that are internal, but mostly external that, are going out and sourcing deals, for us. I have a person that we send, all underwriting to on our staff. He bets all deals, runs it through our software because we know the formulas are good. And, because we've, we've tested them over and over again.

And then, outside of that, HR, you know, the piece that, that we, offload as well. Right. You know, certainly hands hands

Steve: So someone to manage the assets Mhmm. Someone to go hunt and find more assets Mhmm. And someone to take care of the money. Essentially. Yep.

Got it. Alright. Why self storage?

Scott: Wow. How much more time do we have? At least half an hour. My, you know, I have a a top 10 that we've used in our, you know, education side of the business. But really, if if comparing asset classes, it it does extremely well during a a recession.

You know, it's very recession resistant. It's very inflation resistant. Nothing is recession proof. But as, as I got into looking into the business, that's what came up over and over again for the folks that I talked to is that, when, the economy goes to return and and and downturn, businesses downsize, individuals downsize if they've lost their job, and, if they've given up a housing payment of whatever type for $151,600 dollars and they move back home, or they're splitting rent with a friend, there's still some goods that are gonna go in storage until things turn back around for them again. Well, they can afford a 100 to 125 a month if their, you know, total housing number has gone down.

Right. Businesses, we saw during the pandemic and also during, the a recession where they lose their lease or they lose a building. They've got inventory. They've got, office furniture, you know, very similar to individuals. They they put it in storage until things turn back around again.

Death, divorce, bankruptcy. I mean, we're in the trauma and transition business. Yeah. Baby boomers that are, aging. They downsize their homes.

They go into assisted living. They downsize again. And then when they pass on, we settle the estate. Several things go into storage again because the kids don't want it in their own house, but they can't get rid of it. So it goes in into storage.

So there's a number of drivers, but it's very it's solid. It's up and to the right, and then during a recession, in a pandemic, it's a hockey stick effect. You know? During the pandemic, people were sent home from work, so they had to clear out the kitchen, a portion of the dining room or a bedroom to work, and then the kids came home from school. Same thing.

So and and then the businesses that shut down, you know, all of this happened at the same time. It created a huge demand for self storage. We're a an essential business. We're running these with kiosks as we, talked about earlier, and so we never skip the beat. You know, along the way, we're able to service our customers.

And so from that standpoint, it continues to do very well. It's very solid, and and it's not affected by the economic, cycles.

Steve: It sounds kinda like, people that run, mortuaries. It's like Yeah.

Scott: Yeah. Mhmm.

Steve: There will always be a need. There

Scott: will always be a need. Yeah. It is a very recession resistant. Yeah. Mortuaries and, and and liquor industry in our country, you know, are always solid throughout.

And then, self storage are right up there in the

Steve: top five. Well, they're saying there might

Scott: be a shortage of liquor. And that could be a problem.

Steve: There can be some problems. Yes. There's a shortage of liquor. Yeah. Yeah.

Here's supply chain issues. They might rank running two months behind on liquor. So let's talk about avatars. Like, who Yeah. Who are you finding for self storage?

Like, how do, how do you find a person that would be a good candidate or that you just mail everybody all the time?

Scott: To to buy a facility from? Yeah. We, we will we have a mailing list that we buy and we continue to scrub than our internal database. And so there's certain markets that we're we're targeting. And then also as soon as we buy a facility one one in one market, then we're really hammering that, that same market so we can get more economies of scale, getting more facilities in that location.

So when we buy a list or when we have a list, what we scrub out are the REITs. So the public storage, U Haul, extra space. We're not gonna buy the facilities. Yeah. And they're not gonna entertain a letter from us.

They're always selling through a broker, so that's that's wasted.

Steve: Well, not only that. I learned that REITs don't need to make money. So it's a really different business model.

Scott: It truly is. Yeah. The cap rates that they're buying at is nutty, but Yeah. Yeah. But it works.

But the cost of capital is lower than mine as well. So so, yeah, we continue to send over and over again. And and even still, some of these facilities are, you know, the the regional companies or the, you know, national companies that aren't a a REIT. You know, they're buying in bulk. They're buying portfolios.

And every once in a while, they'll have a dog that they have to take on Mhmm. That doesn't match their business model, or something they just agreed to, you know, to scoop up and take because the seller had it. And, if we are, you know, in that place where we can dispose of that for them and take it off their hands, then, you know, we we may take that on because that's a business that we're in. We're not we're not buying turnkey. We're providing the turnkey to somebody else that wants to buy it along the way.

And if it's something that we internally my company doesn't want, then we've got this entire student database that, you know, we'll pass it down to them. And and so that's the benefit they have of working with us is that we provide opportunities to them that fall off our plate.

Steve: Now you said that you're you're buying lists, but is there like a I mean, you know, what I can say if, you know, if I was looking for a distressed homeowner. Right? It's possibly someone that's widowed or, you know, has faced recent financial distress.

Scott: Mhmm.

Steve: If you're talking about self storage, are you looking someone that's, like, looking to retire, looking to pass off to their kids? Like, who is that?

Scott: Not not really because it that's a little tougher data to get. You know? That's the data that we gather after contacting those folks. So that's kind of our internal database. At the beginning, it's it's truly just a list of self storage facilities of this size, but we don't know the owner because half the time we don't know.

It's an LLC, and so we're having to go through and try to pierce the LLC. Pierce is a bad word, but trying to find the person who owns the LLC and, and send letters to them. If not, you know, then it lands at the facility, but we just continue to do that over and over again until we get ahold of somebody by phone, because a mailer is only as good as a follow-up phone call and then, try to find out the owner and then, hey. Are you looking to sell? If so, when?

And, continue that conversation. But that's how we find out that data that really isn't out there in any other database other than our own.

Steve: Yeah. So there's a couple other things I wanna talk about before we open up the questions.

Scott: Sure.

Steve: So you and I met through Collective Genius. Mhmm. What why are you in Collective Genius?

Scott: Mhmm.

Steve: And then after that, what's talk let's talk about the power of Masterminds.

Scott: Sure. Sure. So I've been in CG for about five years now. And, and I think, again, speaking to many entrepreneurs out there, you know, my staff, I have no staff that's in my city. I don't have an office.

Everybody is virtual, and they're all around the country. And so somebody to sit back and and talk about, you know, how do I work on the business? And, talking with other folks that are in real estate were affected by the same trends in self storage. Mhmm. But just seeing how other people built their businesses and what they're looking at.

So it's more for data gathering, and then also just building a business that is in real estate. I don't learn a lot per se in the actual, you know, art and science behind, you know, rental houses anymore or apartments or wholesaling or or wholetailing, you know, that per se. But I can learn an awful lot from folks like yourself and others in there that are doing a lot of transactions and building a business from a hiring standpoint, from business models, from KPIs. You know, all those things are all the same, and that's just really business in general. Mhmm.

So, there's a few sessions I might skip over, but at the end of the day, the relationships and the things I'm learning from are just a pure business standpoint from the individuals in that room is is key.

Steve: Has it helped at all with the syndication?

Scott: It truly has. Yep. Yep. In more ways than I had anticipated. So there's some other folks, syndicators, some other folks, that are running hedge funds that I can run ideas past instead of having to always, pay for that to maybe not get a a 100% truthful answer.

Yeah. Or the 99%, you know, that everybody gives with the 1% they keep. And and, you know, in in Collective Genius, it's a little bit different, you know. We sit down and talk with somebody and, everybody will divulge, you know, because we're all friendly competitors.

Steve: Right.

Scott: So that stand point. Some folks that have invested in our projects, which I never would have anticipated as well, but really just how to drill down and, you know, learning from what others have done, other syndicators, everything else that they've tried and that we try. You know, we can come together and just, you know, collectively get together and see what the pulse of the market is so we can all be better.

Steve: Yeah. And you run your own mastermind?

Scott: Correct.

Steve: Mhmm. Okay. Why should someone join your mastermind? Well, ours, you

Scott: know, of course, everybody's mastermind is different. Ours is strictly self storage. And, although we're we're sharing best business practices, from the beginning, it was really all about deal flow. So, you know, our mantra is is is deal flow community capital and deal flow. And so we do a lot of joint ventures in there.

We share a lot of our equity partners, and, and we do learn from each other. But like any mastermind, you know, we're going through life together, business life and personal life. Yeah. And and, again, sharing business practices, on how to get better. But at the end of the day, there's a whole lot of folks doing what we do.

And, if there's if if everybody out there is finding too many deals or too big a deal, then we can pull our resources together and do a lot of joint ventures, a lot of wholesaling, a lot of business with each other. But then also having a a group of folks together in the self storage industry that is, you know, under one umbrella, allows me to it it opens a lot of doors for myself and my business to say I represent this group of folks, and so we get discounts in different areas. Yeah. We can talk to lenders. You know, it just opens a lot of doors in in the community when we represent, when we go forth as a representative of the of the mastermind.

Steve: Got it. And then what I'm also really fascinated by is the fact that you love traveling to build houses.

Scott: Yeah. We do. Let's talk about that. Well, as a matter of fact, I just got back from Mexico. Our family did.

We took took, 45 people down to Ensenada, Mexico. It's about an hour and a half south of Tijuana. And, we partner with, an organization called, YWAM, Youth with a Mission, and their Homes of Hope organization. And, for the past well, since 2013, we've been, building houses and, giving them away and taking, those 45 people. Those are all friends, family, coworkers, staff folks, our students, joint venture partners.

Basically, anybody that wants to go on one of these short term family friendly four day mission trips with us and build a house in in two of those four days, we'll we'll pay for it. All you need to do is get to San Diego.

Steve: But there's gotta be a purpose behind it. I mean, you didn't just one day decide, I'm gonna start building houses in Mexico.

Scott: Well, there's a I think, hopefully, a a greater purpose in, in all of us. I get into real estate because we wanted to have some free time and some available cash to go do fun things. And then when I got married and we had kids, we wanted real estate to be the vehicle that allowed us to raise our kids and to be able to homeschool and travel and be on the mission field. And so it was a combination of that and just, being obedient and and then tiding 10% of our profits in our in our real estate businesses that allowed us, to be able to to give back and take people on and just leverage, that by having these entrepreneurs come down, get a sense of it, and then they can go forth and and do the same.

Steve: But, you mean, you're going the extra mile, though. Right? I mean, like, a lot of people, the shortcut Mhmm. Is I'll just donate money, and I feel good about it. Yeah.

Right? Then there's, like, I'm gonna go donate my time. Mhmm. And then there's, I'm gonna lead a group of people to go do this. There has to be some other additional thing behind it.

Scott: I think we recognize as a a a good friend of, both of ours, has mentioned with God's, blessing comes responsibility. And, he has had his favor on our business, and we have a responsibility. And it's not to, you know, crush it and buy an island or have a Ferrari or anything else. But Yeah. We measure things in terms of houses, and we know how much it takes to to build a house.

And when we have that, we can take on more people to give them that experience, to end generational poverty one family at a time. But then also, we recognize the influence that we have Yeah. Doing this. Right. Speaking from stages and and teaching and and having a voice and writing and doing those things that, that, you know, we can change the world just a little bit.

Yeah. And, and so with that, that that excites me more than, anything else. And, having that open hand, God allows more to flow through it, and our businesses, flourish as a result so long as we keep giving, a a a good portion of it back and showing others how to do it as well. There's a ripple effect, and it's multiplying.

Steve: That's awesome. So on Reddit Mhmm. Can you ask him how you can find viable deals in today in tremendously compressed cap rate markets?

Scott: Yeah. Well, I think, you you know that it's a tremendously, compressed cap rate because you're looking at listings

Steve: Mhmm.

Scott: By brokers, and and we don't. Our brokers bring projects to us, but they know what, we're looking for and what not to. And that comes from, again, beating them to the punch, and it's it's the mailers. It's sending out mailers. It's pulling on doors, opening up the doors to these facilities, talking to the person behind the desk.

Sometimes it's the owner. Sometimes it's the property manager, that can give you access to the owner and having a discussion with them to say, hey. We'd like to buy your facility when it's time to do so and working out a price between them, between you and and the seller, directly versus something that has a bunch of eyeballs on it in a crazy market where they know that they can get a a lower cap rate.

Steve: So what is a typical cap rate? I mean, it's kind of a weird answer because it's nationwide.

Scott: It differs. Yeah.

Steve: Yeah. But generally speaking Mhmm. What is a typical cap rate you see from a broker, and what's the typical cap rate that you buy at?

Scott: Yeah. And and, layer on top of that class a, class b, class c. You know? So the class a facilities, as we mentioned, you know, crazy compressed cap rates. You know, their cost of capital is zero.

Steve: You know,

Scott: it's cash or 2% from their credit lines, and so they can buy in a four or five cap. We're seeing a lot of these, you know, class a facilities. You know, all things being equal, saying stabilized 75, 80%, 85%, you know, say right around a five cap or below that if it's stabilized. We're we're selling, and we've seen, these facilities trade. You know, we develop these facilities, and and some of ours have been trading when they sell at at certificate of occupancy, meaning it's been built.

We haven't rented one unit rented one unit yet, and a REIT will come by and buy that facility, based upon the future cash flow and give us a a six to six and a half cap on the future NOI.

Steve: A 100% pro form a.

Scott: 100% pro form a. Yeah. Because they know I mean, they've got our feasibility study and everything else.

Steve: Well, they got the data. Looking at it.

Scott: And they got the debt on it. Yep. Yeah. So all that aside, let's say it's a stabilized facility, you know, in a in a top MSA, class a, you know, five, sub five in some cases, whereas, a class b facility. So it's outside of the MSA a little bit.

Single story, maybe some climate control, maybe not climate control, not the savviest manager, a little older facility, a little bit of maintenance, you know, that's trading in that, probably 6% range, 7% range, and then 7% and above. If it's a rural, you know, the further out you go, deferred maintenance, first generation property maybe has a lot of five by fives, which aren't really in favor much anymore. No website. You know, no no temperature control. Maybe no gravel, no fence, no, you know, no nothing.

You know? And you're kinda starting from scratch.

Steve: Man, it sounds like these are better returns than apartments.

Scott: Yeah. It is. Yeah, we've seen this

Steve: And less headache. Over the

Scott: past, twenty five years, self storage, average annual returns has been right around 16.85% in you know, percent return. Multifamily is about 12.9, offices just a little over 12, and retail's just a little over 12, and the S and P is 7%. So, you know, we would rather be, you know, that fish in the pond, which, you know, it's a smaller pond, a smaller amount of people fishing in it and, in this unsexy, unglamorous, self storage business of 10 by 10 metal boxes on concrete slabs. But, you know, it's out outperforming the rest of the market by multiple, basis points.

Steve: The math works really well.

Scott: The math works really well.

Steve: Yeah. Tony York sexy part. Yeah. There has to be. No one's taking pictures on Instagram of their stores.

Scott: Except me.

Steve: What are the core Tony York is asking what are your core values?

Scott: Oh, gosh, Tony. I think, first and foremost, I'll send a call to a core value, but, you know, we really just don't know how to do it any other way, and it's just having integrity and making sure that everybody on our our staff is operating from that standpoint as well, going back to that. And that's tough to snuff out, again in in an interview process. But, first, you know, if we ever catch wind of that, and that's it. This is a marathon for us.

It's not a sprint. And, if I were to do anything that is, improper, somebody's gonna find it eventually. And in today's world of social media transparency, that's it. My education business goes away. My investment business goes away.

My syndication business certainly goes away, and that's the fuel for anything and everything. So, ignorance is not an excuse, by saying, well, I just didn't know. You know, if you're doing something unscrupulous, and not operating from a place of integrity, then that's one of them. We put customers' profits, our clients' profits at all levels in our education business, certainly our investor business and anybody that we deal with, over profit. So their profits come first before ours.

You know, leaders eat last. Mhmm. You know, we we just we live and breathe that. So at the end of the day, we are in it, for the long haul and to do good by everybody that we serve.

Steve: Got it. And then, Eddie, on Facebook wants to know, do you focus more on building brand new storage units on rail land or on investing in value add opportunities? Yeah.

Scott: We'll we'll take them all, to be honest with you. But, you know, in the in the past two or three years, it's been difficult. You know, the word is out. You know, Wall Street is, attracted to self storage because of the the stats that I just shared with you. Hedge funds, are are are after self storage and being created to go after self storage, as well.

And, so for that reason, we've had a lot of folks, that are, getting into the business, looking for existing facilities, and and driving some prices up. It's a little more difficult at the development level for lenders, private equity partners, and all those, you know, to put together a development project. So we've shifted. And because literally for the past three to four years, we've still been behind in terms of development of some storage facilities and units across the country. There's been pent up demand since the last recession.

So we shifted into you know, once we continue to grow our our syndication database, then we begin going after development projects. But we just started a fund, a $25,000,000 fund that's, targeting nothing but existing facilities and acquisitions. And, you know, we saw we learned, the lessons from the past two recessions, and, I wish I had more equity from the last recession because there's a lot of folks that did get into it early on that, weren't able to refinance when things turn during that recession. Yeah. And, they didn't create value when they had to give their keys back to the bank.

Well, this time around, we wanna buy them before they go back to the bank. So that's that's our focus now along with development.

Steve: Gotcha. And, as someone starting out, what should my first major purpose or move be after I make my first wholesale deal?

Scott: After you make your first wholesale deal? Well, I think that we kinda mentioned that, m, and that is, to look to either bring in a in a partner, do a joint venture with somebody, or perhaps, if you have need enough money from that first wholesale deal to get into a syndication, invest passively in, somebody's, either a REIT or a syndication and learn about the business, before you dive in. Either way, it's probably a partnership or a syndication or something along those lines before you, dive in a 100%.

Steve: And it sounded like, if someone invested in your syndication

Scott: Mhmm.

Steve: They get to look at all the numbers and learn the process.

Scott: Correct. Yeah. We we set up a we have a portal and, everything goes in all our due diligence. They have access to all of the folders. They can pull down a number of documents.

Some of them are read only, but then we kinda go the extra mile. And then we we do webinars on a regular basis because we come from an education standpoint. And so on a quarterly basis, we're doing webinars to to teach our folks about the business well.

Steve: So it sounds like, you know, I could take a large chunk of cash and invest it in a course. Mhmm. Or I can just invest it in your syndication and get a return on that money while learning.

Scott: Mhmm.

Steve: And I would say both.

Scott: And I'm and I'm not trying to get everybody's money on both sides. But, you know, in order to do business with us, you probably should do business with us. Meaning, if you're gonna invest with us on the syndication side, you should educate yourself on the industry. So whether you get my course or learn from our website or the free resources and tools, it's great to to attend one of our webinars, and see the figures the facts of the figures and the upside. But if you don't know what that means or if you can't really grasp it, you don't really know if it's a good thing or not.

You know? Just by judging my face on a webinar and and how excited I get, you you might think that's the case, but is it really? Mhmm. So you really should understand the asset class. And, you know, our investors I mean, we we stress, you know, put these deals to the test.

Put us to the test. Follow us for four or five, six months, a year, and look at the deals that come out. Look at our track record, how we're not only, I mean, there's a whole lot of folks out there, Steve, you know, right now with, wind in their sails. They've had a good economy, and they're really good at raising private capital, but they haven't been around many as long as us where we we've bought, we've developed, we've created value, and we've exited, and we've made those returns. We've meet or beat our projections.

You know, that's that's a small group, at the at the top, that has had had that type of success that you can point to.

Steve: I haven't done this as long as you have, but I did make it through, you know, the 2007, 2009 recession. So I can't say that I know everything.

Scott: Mhmm.

Steve: But I can tell you that I got to see That

Scott: is one heck of an education for those of us that survived through it.

Steve: Yeah. How things go down Mhmm. In the in the bad times. Mhmm. And then Jeremy wants to well, first, he says happy Thanksgiving.

Scott: Happy Thanksgiving.

Steve: If you had to start over, what will you do differently to fast track to where you are now?

Scott: Yeah. I think early on, I don't know if everybody else suffers from this like I do as an entrepreneur. I just wanted to do it all myself. You know? I I kinda wanted the limelight a little bit.

I guess, a little bit of pride, a little bit of ego, and didn't wanna I I that's kind of the way I operated my whole life, and I just wanted to do it on my own, not bring in partners. And so I probably hesitated, waited too long. I had a mentor of mine many, many years ago with gray hair who said, I don't know why you wouldn't do everything with a partner. He said, I never would have gotten to the place that I was if I hadn't began partnering from my very first deal and from the capitals, the spreading of risk.

Steve: Mhmm.

Scott: You know, the intellectual capital of having, partners come in. There's no way that I ever would have had the success I had had I not brought, partners in. And so that was right about the time when I realized that, okay. And after having one small partnership, it just didn't go very well. You know?

Yeah. We were friends, when we started. You know, and it was just a small little deal on a house and realizing, I don't think I wanna, you know, risk that anymore. But then understanding, you know, when we get into the syndication side or even in joint ventures that just, again, picking the right person, sticking to your core values. It is a marriage.

And then for your limited partners, that doesn't have to be a marriage. You know? We just limit their voices, and they can come along and write a check and and come along with us. I don't have to like them to to do business with them at that standpoint, but they just have to understand who we are and what we're all about and and get on board with what we're doing. And so recognizing that, picking the right people as, as partners on the GP side, but then having limited partners that are at arms length, that freed me up just knowing that freed me up to then just, open the floodgates and and go into more joint ventures and other partnerships.

Steve: Yeah. I mean, I think one of the things that I look back on Mhmm. Is I always operated initially on a scarcity mindset. Yep. Like, if I tell Scott this

Scott: Mhmm.

Steve: He's gonna beat me in this game. And then I learned, took way too long to figure this out. If I compare notes with Scott, we both learn faster. Right.

Scott: Yeah. And most of those people aren't gonna go out and do it either. Right. You're you're screwed.

Steve: As well. Mhmm. Yeah. So great point. So I don't see any other questions at the moment, so we'll, keep tuning into that.

Mhmm. So what, I guess, what is your purpose? I know we kinda talk about for building houses. Mhmm. But what keeps you going?

There there are days where we get punched in the mouth. Right? There I mean, there was that whole, you know, toilet paper crisis last year. Mhmm. Like Mhmm.

What keeps you going Mhmm. When things get tough?

Scott: Yeah. I I think it is that we recognize our purpose and, we recognize our responsibility. And, our goals now are more measured in the the amount of houses that we build and the lives impacted and the people that we bring on our trips. And we're doing two trips a year now, building three houses each. And, the goal at some point is probably to, flip the, you know, the the script and spend, 80% of my time on the mission field and taking people doing that and 20% in the business just kinda, you know, overseeing it, at this point.

I don't know when that's gonna happen, but I have a feeling learning what I did in the last two recessions that, this next one, when it ever happens, that'll be our our last land grab.

Steve: Mhmm.

Scott: And so for that five to six year period, you know, we'll be buying a lot, developing a lot, and then exiting on the upside again on on the on the bottom of the bell curve on that one and then, sail off into the sunset, so they speak, but sail off onto the mission field. So knowing now, you know, the grind, as long as I got air in my lungs and I have the ability to do this, we'll continue to do so because now, you know, there's there's, I have staff, that are supporting their families, and we have people that are waiting for houses. And, the better that we do, you know, our our success is somebody else's miracle.

Steve: Yeah. That was a big one of the best lines I heard from the last

Scott: senior. Jeff Hoffman.

Steve: Yeah. Miss Jeff Hoffman is crazy. What is your biggest struggle right now? We talked about, you know, there's the human capital component. Sure.

It sounds like you've got that mostly figured out. Mhmm. So what's your biggest struggle today?

Scott: Yeah. I think still playing traffic cop. You know, I have a yes Tourette's syndrome. And, no offense to anybody who has Tourette's Tourette's syndrome, but I say yes to everything. So a deal comes across my desk, and I just wanna do it.

Mhmm. You know, if it is a deal, I mean, we vet it, and, you know, my underwriter comes back. And I I still have to recognize that, there are limitations. There's limitations to the amount of time that I have. And, even though I've got good lieutenants, you know, there's there's still I mean, you're the face of the business and there's stuff you have to do.

There's stuff at the top of the business that I have to do. And, and

Steve: and We're still bottlenecking one way or another.

Scott: Yep. And I am the bottleneck, and that's, you know, we're getting crowded up there. And so just understanding what that looks like and, being able to being just saying no and recognizing that, you know, that that time. I you know, we we just got back from Mexico. We were on the mission field there, and I was in California and Seattle before that.

And I slept in my bed, two nights, over the past thirty days, which is uncommon, but that's, even though I love what I do and for the purpose that we have, probably can't keep, continuing to do that at my age. And so, just, needing to slow down and and say no to some projects even if they are good.

Steve: Yeah. It's tough. Right? Because Mhmm. The opportunities.

Scott: Right. And

Steve: we're just like, man, if we could just get one transaction, one deal, one property Mhmm. And you get to a point where, like, there's so much opportunity, how do you properly filter? How do you say no to keep your sanity? Yeah. So what are you doing Yeah.

Well to say no to keep your sanity?

Scott: And and that pain from not having opportunities or even, you know, struggling financially in the beginning of, starting your own business is still there. And so I think there's a piece of that that that has me tethered to to do that. So, I think right now, it's it's my wife speaking into one of my ears saying, okay. This is enough. But Yeah.

You know, I I, it was almost an intervention, many, many years ago. I went through Dan Sullivan's strategic coach. And Great program. Oh, my gosh. Incredible program.

And, you know, you you outline you you start baby steps, you know. When you when you check out at five or 06:00 at night, you check out. You're done. Nothing going back to you. And then your weekends, and then you schedule your vacations ahead of time.

Otherwise, you know, 247, 365.

Steve: It won't fit in anywhere.

Scott: It won't fit in. So, I I think it's just having that mindset. And I and I did put those, those, you know, those parameters in place, those boundaries and those guardrails, and and I stick to that. There's emails that pile up, and there's things that that that, you know, begin to pile up and people that are upset with me because, I'm not getting back to them. But, I'm thankful, that I put those in.

Otherwise, it wouldn't be back to $24.07 $3.06

Steve: I do know that pain. There are people that are upset that I haven't got back to anything else. Yeah. When did you go through as your strategic coach?

Scott: Oh, gosh. That was probably back in 2007 and I think. Yeah. About 2007. Around that time.

Yeah.

Steve: Yeah. I went through it, I wanna say, in 2017 through '18.

Scott: Mhmm. Mhmm.

Steve: And that was when I was going through it because it's four times a year. I don't know if it's the

Scott: way it is. I I don't know if it is either,

Steve: but that's what I was doing. Four times a

Scott: year driving to Chicago and meeting. Yeah.

Steve: And I was like, okay. I'm done traveling. I'm not traveling anymore. And then, you know, whatever you say, it doesn't matter if you say I'm gonna travel less. You say the word travel.

Scott: Mhmm.

Steve: Travel's gone up.

Scott: Yep. Yeah. Mhmm.

Steve: What is your superpower?

Scott: Oh, gosh. I would I would have to say it it probably is, the ability now, believe it or not, you know, to to say no and be okay with it. Mhmm. And with that comes preparation and building a team around me. So we got the team in place, and, just staying staying true to that, knowing that I do have limitations.

My family comes first. Our mission comes first. And, having put that in place, I guess, it's the most fresh in my mind because this again, as we mentioned at the top of this, you know, within this past year, you know, we got to the place where we built a rock solid team now. And, and now we're teaching and showing other people how to do that within our mastermind and our education businesses, and, I think we got it figured out.

Steve: Awesome. What's the greatest lesson you've learned?

Scott: I I think, not overleveraging. If I go back to the very beginning stages, you know, even though everything was going well, nobody ever thought Lehman Brothers would, you know, fall, and then we would head into the recession. And we thought, well, that'll never happen again like that.

Steve: And all of a sudden, you

Scott: know, the pandemic hits, and we have a lockdown.

Steve: And all

Scott: of a sudden, we went off of the cliff again. But this time, I wasn't over leveraged. And so that was probably the greatest lesson is, not to get in that place again where I am susceptible to anything out of my power occurring in the economy.

Steve: Yeah. You know, it's interesting because at that time, every book I read was leverage, leverage, leverage. Right? If you put 10% down, but the property doubles in value. Right?

It's a 20 x return

Scott: or whatever. Yep.

Steve: And, what I got to learn during the recession was how real wealth operated.

Scott: Mhmm.

Steve: And I'm not saying it's the right way, but getting these proof of funds of millions of dollars. Right? I have one client with 18,000,000. I'm getting stuff from Blackstone for 865,000,000, and the proof of funds is like Mhmm. Oh.

Yeah. This is how really wealthy people operate.

Scott: Correct.

Steve: It's not the maximize your leverage.

Scott: Mhmm. Yeah. No. It's not. Yeah.

All we need to do is follow the model. The playbook's out there from the big guys as you just mentioned.

Steve: Right. And that's kinda what Warren Buffett says. Are you guys are distracted by this and that? Like Mhmm. Here's what works, and that's how you built his entire Yeah.

Scott: Yep. He says, if I don't understand it, I won't invest in it. And, I think more people should do their due diligence before they do so.

Steve: Yep. And is there a book you've gifted more than any other?

Scott: I'd have to say right now, it's Traction. We've given given that out to to more business owners and, budding entrepreneurs than anything else. You know, if it isn't traction, they need to figure out that they need to have a system to run their business. Otherwise, the business is gonna run them.

Steve: Yeah. And, I'm actually sending Jaden on my team to Empire. Yeah. Yeah. So it's actually gonna be in a couple of weeks in Atlanta.

Mhmm. So I'm excited because we run everything on traction now. Yep. But I'm really excited to see what Eddie Wilson and and Gary Harper have in

Scott: for us. Yeah. Those guys got it down.

Steve: They do know what they're talking about. So, let's see here. Sorry. You think eventually I figure out how to do this? Alright.

So I don't see any more questions. So I want you to think about some what do you wanna leave the listeners with? What do you want them to walk away with? Mhmm. Alright.

Some last thoughts. I'm gonna make a couple of quick announcements. Sure. Guys, if you get value today, please like, subscribe, share, or comment. You know?

The more we tell the algorithms that this is quality content, the more people can actually reach. So please help us reach other people. And then we do have our all day sales training coming up on December 10 where we talk about our sales process from the first time we talked to the homeowner until we actually closed the contract, how we were able to buy more houses. You know, hundreds of people have entrusted us to help them. Love to help you as well.

And we do have our Black Friday special coming up. We'll be announcing it tomorrow. Do stay tuned. And next week, we got Robert Wensley with InvestorLift. He's gonna be talking about his adventure and how he was able to, launch that, amazing program.

So what are the last thoughts you'd like to leave everyone with?

Scott: Yeah. I think, ultimately, I find myself as an encourager, only because I think there's so much negativity out there, and there's a whole lot of folks. I've learned from Jim Rohn many, many years ago. He talked about, you know, if you've got a whole bunch of people that are dragging you down and they don't want you to succeed, then you need to you need to, you know, weed the garden and, you know, get rid of those, friends, that aren't lifting you up and encouraging you and cheering you on because all they wanna do is make feel better about themselves by tearing you down and, not Subconsciously.

Steve: Mhmm. Not intentionally. But they are doing it.

Scott: Yep. And and putting those seeds of doubt in to make you think twice about going out and doing that because then what would happen with them if you're here and they're still down here? So I I would just encourage you, you know, if you're looking to go out and and get started in real estate in the business and continue to plug along, you know, flex that wrist muscle and understand that there's gonna be you're gonna be told no a lot. I mean, entrepreneurs and real estate investors, we get told no a lot. And so get used to that, but, every no is closer to a yes.

That's just not a cliche. Mhmm. But get the help. You know? Get, if there's if there is a roadblock, there's probably somebody that has an answer.

And if you continue to get the hit those roadblocks, then, you know, for me and just, where I come from in my faith, and I realize that there's somebody on the other side of that door pushing back, and I probably shouldn't, you know, bowl or or run through that door. It's probably I'm I'm being saved from, probably a mess. And so it's knowing how how hard to push, you know, how far to take something before saying no, but not giving up too soon and and and succumbing to your own insecurities or doubt or the doubt that other people are putting in your mind.

Steve: It's that serenity prayer.

Scott: That's the serenity prayer, 100. Yeah.

Steve: How can someone get a hold of you?

Scott: Best way is, All Things Self Storage is at, selfstorageinvesting.com. That's got my contact information. And for those that are looking to learn more about the business, we have lots of free resources and white papers, data on the industry, enough to get you excited, enough to get you started, and then certainly, the other resources if you wanna dig in a little bit further.

Steve: Yeah. And I'm excited because my team wants to talk to you about some opportunities. So I'm excited to just kinda be a fly on the wall to see how this goes with our team.

Scott: I'm excited to learn about more opportunities that your team has.

Steve: Alright. Awesome. Thank you very much.

Scott: Thanks, Steve. Appreciate it. My pleasure.

Steve: Thank you guys for watching.