Join us for this episode of Larry Goins Brain-Pick-A-Pro. Learn from leading experts in real estate investing and business. Get the latest information of what is working right now and their predictions for the future. Get ahead of the pack and take advantage of this insider information. Success leaves clues! See first hand what works from them, the lessons they have learned and how to avoid the mistakes they have made. Don’t miss a single episode of Larry Goins Brain-Pick-A-Pro.

Ready To Take Your Real Estate Investing To The Next Level? Click Here to Apply To Work Personally With Larry and His Team!

  • Or Listen To Our Podcast:

Creating a Massive Passive Income with Self Storage with Mike Wagner

SHOW SUMMARY:

On this week's show, Larry invited Mike Wagner of The Storage Rebellion. Mike bought his first house in February of 2007. Mike has systematically purchased twelve additional houses and one commercial apartment building along with two self storage facilities.

More importantly, he learned that life is far better when you master your money instead of unconsciously letting your money master you. Their mission is to lead others toward a life of freedom that comes with re-learning some important things about money, redefining what success looks like, and implementing a proven plan to help people achieve success.

In this episode, Mike shared different ways to do self storage, different ways to look at it, and different ways to structure the deals.

SHOW HIGHLIGHTS:

  • Who Mike Wagner is
  • How he got into real estate
  • How he discovered self storage
  • Different ways to do real estate
  • What his business looks like now
  • On buying self storage facilities
  • On selling their property
  • New IRS regulation regarding opportunities
  • His criteria for self storage
  • Analyzing self storage by the numbers
  • His remote management structure
  • On having a fence and a gate
  • On funding the deal
  • Determining the geographic location you want to focus on
  • On finding deals
  • His advice to those who want to get into self storage

Quotes:

  • "The better questions you ask, the better answers you're going to get and the more successful you are."
  • "If we don't define success for ourselves, we'll end up chasing somebody else's definition."
  • "Our success as individuals will depend on how much we help other people succeed."

RESOURCES AND LINKS FROM THIS SHOW:

SHOW TRANSCRIPT:

Larry: Welcome to the Brain Pick-A-Pro show live from Lake Wylie, South Carolina, and straight up north is my good friend, Mike Wagner. Today, we’re gonna talk about creating a life vision and we’re also gonna talk about creating passive income, massive passive income with self-storage. Now, I know, there’s other people out there who teaches self-storage, that sort of thing, but we’re gonna talk about some different ways to do it, different ways to look at it, and different ways to structure the deals, so, please give a warm welcome to Mike Wagner. What’s going on, buddy?


Mike: Not a whole lot, man. Thanks for having me, Larry.


Larry: Hey, I appreciate you being on. So, why don’t you start out and tell our listeners and viewers a little bit about yourself. Who is Mike Wagner?


Mike: Yeah, absolutely. I lived in Clay since 2007. I started like a lot of folks do with the, you know, the midnight special guru where I bought rental properties in the nearest city, Rochester, New York, and my first was a duplex in 2007 and I did your stereotypical, you know, buy, fix it up, I had $5,000 to my name. I was actually living in New York City at the time, so I drove five hours every weekend to rehab it myself, six consecutive weekends.


Larry: Wow.


Mike: Yeah, it was ridiculous, but, you know, I knew that real estate was the answer to – and I don’t wanna get too deep on you, but what was missing. I had done, you know, that whole go to school, get good grades, get a degree, get a good job, that thing that society tells us success is and I kinda got – I don’t wanna say I got to the top of the ladder, but I got to a very comfortable position on the ladder and I kinda looked around and then, well, crap, this isn’t what I was hoping for, and I kinda realized that I wasn’t cut out to work for somebody else. I was stuck in kind of that middle management position as a physical therapist at a local hospital.


Larry: Right.


Mike: And so I used real estate as my way out of that and between 2007-2011, I bought – I got up to about thirty-one apartments. My goal that I had set was a hundred apartments making me a hundred bucks a month, you know, and, to me, that would have been great money and it would have set me free and that’s what I was after, so I dug in and tried to do that and really I did okay with it. It wasn’t broken, but it just wasn’t getting me to where I wanted to go fast enough.


Larry: Right.


Mike: And the pivotal moment that will kind of segue us into the storage thing that I do now is, in 2011, my wife and I went in Costa Rica. We were having an incredible vacation, you know, your stereotypical waves crashing on your ankles, beer in the hands, sunshine on the shoulders, and then it was just – it was phenomenal. We had been hiking over volcanoes and like zip lining and it was just incredible and I remember it like it was yesterday. In that moment, I went from this pure bliss to this realization that in forty-eight hours I was gonna be back at work and, you know, without being overly dramatic, that was – it was just traumatic, right? It was a terrible feeling to go from being completely free and on the beach in Costa Rica to this feeling of trapped. That’s when I figured out that what I had done wrong – and it wasn’t my fault per se, I think it happens to a lot of us, it’s just is what it is, where I had allowed society’s definition of success to guide me in making my decisions and, in doing so, I had set up my life so that in order to be my happiest, I had to vacate it, right? That’s where the word vacation comes from, and I just decided that that wasn’t good enough. I didn’t wanna have to leave my ordinary everyday life in order to be my happiest. I wanted to experience that kind of happiness and freedom every day, and, so, long story short, I got home from Costa Rica and basically went nuts. I looked into everything and anything I could that would get me where I wanted to go to that sense of freedom faster and that’s when I stumbled on storage.


Larry: That’s awesome, and you had already been doing the apartments, right?


Mike: Yeah, I’ve been doing that for about three or four years at that point.


Larry: Right, that’s good. Don’t you find – and I’m really glad you brought that up, because don’t you find that the more you get into real estate and the longer you’re in real estate, you see other things that you would like better or better fits your needs or the more you learn about it, the more you realize there’s different ways to do things, so that’s one of the things that real estate gives you so many options. There’s so many different kinds of real estate and then there’s so many different ways to do real estate, wouldn’t you agree?


Mike: Absolutely, 100 percent, and that’s one of the things I would lean on when, you know, people sometimes they see others make a pivot of some sort. For me, initially, it was from physical therapy into real estate and the question was why did you waste all that time getting all those degrees and I was in school for six years, three degrees, but the bottom line is, you know, I’m not one who believes much in regret. I think that everything I learned, well, for one, I’ll say that college was just a really expensive party, right? We had a lot of fun. But there were a whole lot of things that I learned that I apply into what I do now, and the same is true for real estate. The apartments, man, that’s a school of hard knocks compared to storage. You know, storage when it comes to the day-to-day operations, I still feel like someone needs to pinch me and I might wake up from this dream because it’s – I make so much more money than I ever did in apartments with far less work, which is incredible. That being said, I wouldn’t trade those four years of learning that I got through the residential real estate that I had done.


Larry: It was a learning experience.


Mike: Absolutely, yeah.


Larry: That’s great, that is great. So, tell us a little bit about what does your business look like now. What type of self-storage do you do and what does your business look like?


Mike: Yeah, absolutely, so back in 2011, after that Costa Rican epiphany, I pivoted hard, I quit my job as a therapist, and, believe it or not, I bought a storage facility that was losing $2,000 a month so, it was – I’ll put it this way. It was $100,000 annual swing in the wrong direction when I made that move and, again, people ask me, “Hey, Mike, was that the right move?” in the months following my transition and I knew it was ’cause I can look ’em dead in the eye and say absolutely, and the reason I know is because I’m broke and I’ve never been happy.


Larry: Selling your wife on that kind of deal was a little bit more of a challenge, right?


Mike: God only knows why she allowed me to do that. We were fortunate to be in a position where we weren’t keeping up with the Joneses and we had set ourselves up to where that risk was manageable. It was chill. I don’t know that I’d recommend it, you know, for my students. I don’t tell them that they should do it quite that way if they can avoid it.


Larry: Right.


Mike: But it was – looking back, it was a phenomenal decision and essentially what I did is there was a property that was about 10,000 square feet of storage, it was an outdoor capability as well for boats and RVs and that sort of thing and it was 50 percent full, so I just got to work. It was an hour from my house and I literally drove there every day, five days a week for a year and half. Primarily, some of that is because, to your point, if your wife allows you to quit a job to buy a storage facility that’s losing money, even if there’s nothing to do, you drive there, right?


Larry: You better be busy.


Mike: Exactly. And, you know, that’s – I didn’t know anything. I was pretty green in the industry, so I just assumed that’s what it took. As time went by, we filled up, actually it only took about nine months and we were over 90 percent full. So that property, to give you a quick rundown, we bought it for $330,000. It was about $20,000 in closing costs so we’re talking a project cost of $350,000.


Larry: Right.


Mike: No real work needed to happen right off the bat, it was mostly a managerial or operational overhaul.


Larry: Right.


Mike: And within nine months, we had it appraised at $750,000.


Larry: Wow, that’s huge.


Mike: Yeah, it was great. Now, the cash flow with the debt service still hadn’t replaced my income, but, on paper, we were doing well and essentially we kind of moved pretty quickly into stage 2 of our plan which was to refinance and expand, and so we did that, we pulled a loan, added a couple buildings, and then we rinsed and repeated. Long story short, we increased it from 10,000 square feet to 30,000 and actually I just sold it this past August for $1.8 million.


Larry: That’s huge.


Mike: Yeah. It worked out really well and, more than anything, you know, the money is great, don’t get me wrong, I’m not a guy who’s gonna pretend I don’t like spending some money sometimes, but the freedom that it’s brought to myself and my family allowing us to do the things that bring us the most joy have the greatest impact, the people we love, those types of things, it just, I mean, I know, it sounds a little bit cheesy but I can’t overstate how incredible that has been.


Larry: That’s sweet, man. I love that, I love that. Now, when you sold it, did you do a 1031 or did you just cash out?


Mike: Good question. I looked into a 1031 but for my particular strategy right now, we’re in a de-leveraging phase trying to get out of that. The 1031 didn’t make a whole lot of sense because, as you probably know, I would have had to reinvest the boot meaning the debt as well as all of the proceeds and part of my reason to sell was to take some chips off the table and stabilize our personal financial situation.


Larry: Right.


Mike: With the house fully paid off, those types of things. So, I decided when I sold it that I was just gonna bite the bullet and pay the taxes.


Larry: Yeah, ’cause it wasn’t that much anyway, it’s 15 percent, right?


Mike: Correct. Now, that being said, very recently there has been some new IRS regulations regarding opportunity zones. I don’t know if you’ve heard of those yet.


Larry: Yes.


Mike: So, as the time got closer to where I was about to cut this $300,000 check to Uncle Sam, I started to change my mind on how willing I was to pay that money and so what we’ve done is actually transition those funds into an opportunity zone and now I’m on a nationwide search to find a project to put that, it’s gonna be about $750,000 or $800, 000 in diverted income opportunity zone somewhere around the country.


Larry: Right. How long do you have to redeploy that money versus paying taxes on it?


Mike: Yeah, that’s an excellent question, and so, because the regulations are so new, there’s a little bit of nuance to it. Generally speaking, we have six months from the time of the gain to put it into a fund and then six months to deploy it. Now, there is some talk that – and, again, I want everybody to talk to their professionals ’cause I am not one when it comes to taxation and IRS regulations, but my understanding is that in this first year, we’ve actually got until June 1st to set up the fund and just a little bit of extra leeway the IRS has given us because they haven’t even published all the regulations yet.


Larry: Right, that’s what I understand as well.


Mike: And then the other part of it is you don’t have to deploy all of the money as long as – especially for us real estate investors, the IRS understands that it’s hard to deploy all of the capital especially in some sort of redevelopment project. So, you need to have a written plan to fully spend the fund within thirty months. So, if you’re buying an existing property, you just have a written plan saying, “Alright, we bought it for $300,000 and now we’re gonna spend $300,000 fixing it up, here’s how we’re gonna do that and here’s the approximate timeline.”


Larry: Right, ’cause with the opportunity zone, don’t you have to spend equal to or greater than what you spent on the initial investment?


Mike: That’s correct. Exclusive of land, so you can back out the portion of the purchase price you allocate for land and that’s – there’s also some nuances to that. It’s if the property wasn’t, in my case, operating as a storage facility before, then there’s some structuring things that you can do where maybe that doesn’t have to be the case, but, again, it’s very nuanced and the truth be told, some of this is just conjecture because we don’t know exactly what the IRS is going to hammer us on and what they’re not so all the advice I’ve gotten recently has been toe the line, play it safe, be conservative so that you know you’re going to, you know, be able to tap into these benefits long term ’cause it’s not just differing gain, it’s also with the money that you buy into the new opportunity zone fund, any gain you experience, as long as you hold that fund for ten years, is completely tax free.


Larry: That’s huge, that’s huge. Now, you can create your own fund or invest in another fund, correct?


Mike: Exactly right, yup.


Larry: Yeah, you’re probably gonna start your own, I would assume.


Mike: I am, and that’s just because I’m kind of a mom and pop investor. I like to do my own thing. I like to be at the helm, if you will. That is not to say I don’t bring in private money and partner with investors or my students more often, but, generally speaking, I like to be in control of the money. That’s why I’m not a stock market guy, you know?


Larry: I hear you, me either. Anymore. I used to be a stock broker in the ’80s but not anymore.


Mike: Yeah.


Larry: So, let’s jump back in to the self-storage. Tell us a little bit about your criteria. What are you looking for in a self-storage? You and I talked a little bit offline before we started recording but tell our listeners and viewers a little bit about that.


Mike: Yeah, absolutely. What I look for primarily are value-add properties. You know, I don’t get too excited about the turnkey churning along kicking out, you know, cash flow 90 percent full.


Larry: Right.


Mike: That’s not to say that’s not a good strategy for some people, but my personal objective when I’m looking at a storage facility, if we’re gonna look at it from a 10,000-foot view is I’m trying to create a very asymmetrical risk-reward curve so I want my downside to be very, very small and my upside to be clearly as high as it can be and there’s ways to structure deals and specific properties that you look for that are going to lend themselves to that type of asymmetrical risk-reward curve, so generally speaking, for me, it’s looking for properties that are underperforming. Whether they’re, you know, high vacancy, I’m buying one right now that’s actually 0 percent occupied down in North Carolina so not too far from you. You know, generally speaking, when I look at the property, I wanna be able to double it in value just by fixing what’s there and then, if demand allows, clearly expansion beyond the current buildings is always welcome and I just look at that as icing on the cake.


Larry: That’s really good, that’s really good. So, you wanna be able to double the value by just fixing what’s there, improving the management, leasing it up, or whatever, and that doesn’t include adding more square footage.


Mike: That’s exactly right, and in doing so, primarily, what the questions that I – you know, I’m huge on questions. I think the better questions that you ask, the better answers you’re gonna get and the more successful you are, and so the questions that went through my brain and I know this sounds a little bit of an oversimplification but when I’m looking at properties, I basically am just trying to, one, find the property that’s underperforming and once I found it, I simply ask, “Okay, why is it underperforming?” and I try to ascertain the contributing factors to that and then, assuming I can answer with a relative degree of confidence why it’s underperforming, I ask myself for a very honest assessment of whether or not I have the ability to fix that particular problem.


Larry: Right.


Mike: ’Cause there are some things we can fix, right? Core management is clearly what we’re hoping for every time because that’s a pretty darn easy fix. If we have to do a little bit of curb appeal enhancement, we’ll do that as well, but if there’s just, you know, twice as much storage as there are people who need storage, that’s not something I’m gonna pretend that I can fix and I’m gonna move on.


Larry: That’s good. So, how do you analyze self-storage by the numbers?


Mike: Sure, and I think the best thing for me to do is give you my back-of-the-napkin number crunching. I will disclaim that by saying this is a very generic formula, but it’s a great one to start with and then if it pans out, you can move into a more detailed analysis. But generally speaking, I’m gonna look at a storage property and I’m gonna value it two ways right off the bat. I’m gonna value it as is and then I’m gonna value its potential if I run it properly, and the way I do that is I use the same formula, kind of a before and after picture. We’re gonna take the gross income, again, back-of-the-napkin math so take it with a grain of salt. But we’re gonna take the gross income and then we’re gonna – if it were 100 percent full, we’re gonna use that number and we’re gonna immediately strike off the top – I use a third. Generally speaking, our expenses in this industry run from 30 to 35 percent, so, easy math, I’m gonna bang out a third of that. So, let’s say property is generating – it’s half full and it’s generating $50,000 a year. Well, a third of that is gonna go to expenses, that brings us down to around $34,000. I’m gonna multiply that net operating income by ten. Again, for easy math. Storage properties, generally speaking, are valued somewhere between eight and twelve and a half times their net operating income. Now, I will say that’s true for me in the secondary and tertiary class B and C properties that I invest in. If you’re looking at a class A property in downtown Manhattan, you might be paying a multiple of twelve. Rates are gonna differ in those types of markets.


Larry: Right.


Mike: So, in that example, we’ve got a property that’s worth about $340,000 as it sits. Now, I’m gonna then do the after picture and let’s say since that property, if it were 100 percent full, it would generate $100,000, we’re gonna take off a third of that which brings us down to $67,000, thereabouts, times ten again, $670,000, so we’ve gone from $340,000 to $670,000. Back-of-the-napkin math tells me, “Hey, there’s potential here, let’s go take a look.” And then we pull out the spreadsheets and get into the dirty math.


Larry: That’s really good. Do you manage all of yours by yourself or do you hire management or have ’em self-managed?


Mike: That’s an excellent question and my particular strategy involves, because I deal with these smaller properties, you know, 15,000 to 30,000 square feet, they don’t – at the top end, they get to the point where you could afford a part-time manager, but what I found is it’s not even necessary, and so what I have developed is this three-pronged remote management strategy, and essentially it’s an online portal where customers can go rent a unit, pay for units, all that sort of things, full service. It’s also embedded into that software company that I use as a call center, that answers the phones six days a week for me, so I don’t do any of that anymore. I did it for far too long, I promise you that. I had two phones in my pocket and one of ’em was always ringing. And then the third critical component is what I call boots on the ground. It’s not an office manager, per se, but it’s someone to walk with to the facility, sometimes living on site or working on site if there’s not living quarters but they run, for example, at one of my properties, there’s a can and bottle redemption center that runs out of the front office building and that gentleman, in exchange for some bartering with storage space and rent for his business, handles the boots on the ground thing, and those are just the physical task that need to be done. They’re surprisingly not that frequent or involved. Occasionally showing units, occasionally cutting locks, those types of things, but those are the three prongs, if you will, of my remote management structure and to give you an idea of what that means for me on a day-to-day basis is up until we sold our last facility, I was managing three facilities, you know, and, again, I’m a small operation, we’re roughly 80,000 square feet total between the three properties, generating about half a million dollars in revenue, and I would spend anywhere from five to ten hours a week “managing” those assets. Most of my day-to-day involvement is just forwarding e-mails, leads from online lead generation sites to my call center so they could follow up, doing bookkeeping, accounting, some strategizing, those types of things, but, by and large, in these secondary, tertiary market, the self-service model is one that’s well accepted by those markets.


Larry: That’s really good. I like that. It sounds like there’s a lot less expenses in self-storage than there are, say, in multifamily or office or something like that.


Mike: Yeah, absolutely. I mean, the industry standard is, like I said, 30 to 35 percent in storage compared to, you know, I’ve been out of the game for a little bit but if I remember correctly, 50 to 55 percent in multifamily when you’re talking about the income-to-expense ratio.


Larry: Right.


Mike: And we – I’ve just been doing a lot of my year-end math and we’re running our properties closer to 25 to 28 percent just because of how lean our management structure is.


Larry: Sweet. That’s really good. Do you have any of your facilities that you have the fence around it where if they don’t pay, it locks ’em out, they can pay with the credit card to get back in?


Mike: Absolutely. That is – that’s kind – I’ll say this. Rules are meant to be broken, but generally speaking, the rule I share with most of my students is if you can’t afford to put a fence and a gate around it, you don’t wanna own it.


Larry: There you go. That’s good.


Mike: You know, a fence and a gate is only gonna cost you $20,000 to $30,000 depending on the size that you’re trying to enclose and if that makes it not a deal, then it wasn’t a deal to begin with. That’s why we’re so aggressive with our wanting to double the value of the property within, you know, twenty-four to thirty-six months so that we can afford to do those things. One of the things that comes up is, and my argument is that fence is gonna pay for itself.


Larry: Right.


Mike: If you don’t have a fence, you’ve gotta have someone manually overlock and then remove overlocks every time someone’s five days late on a payment. With the fence and the gate, it does that automatically for you. The computer system says, Mr. Goins, I’m sorry, you haven’t paid, you’re not coming in today, and then you call us, our call center, or you just, on their phone with a smartphone, make a payment, within minutes, that gate opens for you again.


Larry: That’s sweet. That’s really, really simplifying the management.


Mike: Absolutely.


Larry: So, you’ve talked a little bit about your criteria about analyzing the deal, the value add, tells us a little bit about funding the deal.


Mike: Sure. There’s a lot of ways to go about it. My first several properties I bought with conventional loans, usually a little bit of my own money for the down payment. Sometimes I would borrow the down payment from a private equity investor as long as they own less than 19 percent of the property, I could still get a conventional loan using the SBAs, Small Business Administration, is what I was doing back then. More recently, I’ve transitioned to private money, both lending and equity, depending on the deal to get ’em done. That’s because these properties I’m buying are 0 to 50 percent full, so the banks don’t love them. Because I’ve got a bit of a track record where I can show them kind of a few turnarounds, I can usually get them financed but it’s, to me, time is money and the two to three months it takes to put that funding together, I might be better off to borrow short term. I’m doing this right now. Borrow short term privately at 10 to 12 percent and then six to twelve months later, once I’ve stabilized the property, then move in to more of a permanent financing structure than a conventional loan. Of course, I also am always open to seller financing. The deal I’m doing right now in North Carolina will be all seller financed.


Larry: Sweet.


Mike: Yeah.


Larry: That’s good. That is good. What kind of loan-to-values do conventional lenders make on self-storage?


Mike: It is really easy to come by. You can get, with the SBA, up to 90 percent. I don’t think you’re gonna get a 90 percent LTV approved at a property that’s 50 percent full, right? So, if you’ve got some other challenges with the property, you might be in the 70 to 80 percent range.


Larry: Yeah, okay. That makes sense. That makes sense. So, what is your territory? How do you determine what geographic location you wanna be buying in? I know you’re in – you said western New York. Actually, my wife has relatives in Rochester and my wife is from Corning Elmiraarea.


Mike: Okay, very nice. Not far from us at all.


Larry: Yeah, cool. So, what geographic area do you focus on or determine, you know, “No, I wouldn’t buy anything there but I will buy over here.”


Mike: Yeah, that’s an excellent question and my answer might surprise you, but it’s gonna be a two-part answer. The first, which I think is pretty self-explanatory, is I go where the deals are, right? But there’s a big caveat to that. I got into this whole storage thing to regain my freedom.


Larry: Right.


Mike: I’m very aware of if you don’t define success for ourselves, we’ll end up chasing somebody else’s definition and then we’ll get to where we’re going and not be happy.


Larry: Right.


Mike: I’ve lived that life once and I didn’t wanna do it again so my strategy when it comes to storage is to prioritize my search in such a way where I’m buying properties that will be least disruptive to my lifestyle. So, as a very generic example, we own a property in Florida. It’s about ninety minutes from Disney World. Now, I’ve got two kids, five and three, and we go to Disney, live there for a month out of the twelve, so it makes sense for me to have a property close to Disney.


Larry: Yeah, absolutely –


Mike: My North Carolina – yes. My North Carolina property is an hour from, you know, basically half of my high school friends moved to Charlotte and so I’d like to see them more often, so I looked around Charlotte and, lo and behold, I found one. You know, I’m not gonna buy one in California unless it’s a killer deal because, one, I still get jet lagged, and I can’t get a direct flight out of Rochester to LA so –


Larry: Right.


Mike: You know, there and back is three days, whereas if I’m staying on the East Coast, either I can get a direct flight or a short layover, I try to be out and back when I visit my properties in under thirty-six hours, and so when I’m talking with students about how they should strategize, we always start locally because that offers you the cheapest education, right? I’ve been doing this long enough where I can assess a property in Florida with enough confidence to be willing to invest $1,000 in a day and a half to fly down there and check it out.


Larry: Sure.


Mike: When folks are just getting started, I want them to get that education in their backyard, ’cause it’s a whole lot cheaper to drive thirty minutes than fly halfway across the country, right?


Larry: Exactly.


Mike: As they expand, if they don’t find – and who knows, maybe they find something in that area and that’s great. If they don’t and they need to expand their search, I always challenge them to make sure they’re designing their life first and then making the storage business fit that life and serve that life as opposed to vice versa, and so we talk about where they have family, where do they go frequently, a couple times a year. I only need to visit my storage facilities three to four times a year.


Larry: Right.


Mike: And so, if I’m already going there two or three, you can see how that would be a whole lot less disruptive to my normal everyday life, and so those are the things we look at and if that doesn’t work, we talk about, well, where can you at least get to cheap and easy direct flights that aren’t six times on delay, all those sorts of things.


Larry: Exactly. That’s really good. That’s good, I love it. So, let’s talk about, I mean, there’s a lot of people out there, I mean, there’s more people being aware of self-storage just like you coming on the podcast and there’s other people out there teaching it as well, so where do you go about finding these deals that are what I would call distressed-type property where there’s 0 to 50 percent full and they have a good value-add turnaround?


Mike: Yeah, that’s a good question, and, you know, the truth is, we look everywhere. You know, we look at the listings. Two of my best properties have come off LoopNet.


Larry: Seriously?


Mike: Yep, and I still have no idea how either of them were on there and not picked over because they were literally homerun deals. The first one I told you about earlier, we took from a $350,000 purchase price to a $1.8 million sale. The second one, we just bought this past April for $465,000 and it’s worth $865,000 today, what, eight months later. So, the deals can be found there. Now, as storage becomes a little bit more trendy, right, as it is right now, it’s a little bit of a buzzword, we do get picked over and so I do direct mail, I bought off Craigslist, if you can believe that, our North Carolina property came off Craigslist. We do direct mail nationwide, and one of the big points I try to hammer home to my students when they’re talking about where to look for deals is I believe very firmly that our success as individuals is dependent on how much we help other people succeed and what I mean by that is we wanna dig and find the listing that has no business being sold because it’s a residential agent who’s only listed it ’cause her brother-in-law made her. She doesn’t wanna sell it. She doesn’t know anything about storage, and it’s not even listed anywhere where everyone can find it, it’s listed on her own personal page and that’s it, so digging through Google, the third, fourth, fifth page of Google, is a place where, by helping an agent who, if we’re being honest, doesn’t deserve to sell her property, by helping them succeed by buying it from them, our success is going to be that much greater.


Larry: That’s awesome. So, Craigslist, LoopNet, agents, Facebook, digging –


Mike: Direct mail, for sure.


Larry: I’m sorry?


Mike: Direct mail.


Larry: Direct mail, okay.


Mike: Yep, so –


Larry: Is there like an association or directory that you find or you just hire a VA to go out and find every mini storage in a –


Mike: So, yeah, all of the above. When I started out, I literally started on Google. My wife and I, this was, you know, six, seven years ago, and we went to a six-county area and we just searched “Self-storage Alma, New York,” “Self-storage Lima, New York,” and we created our own list.


Larry: Wow.


Mike: Since then, we’ve transitioned. I now buy lists and then I scrub them down based on very specific criteria. You know, there’s 50,000 to 60,000 of these storage facilities in the country, thinking about a thousand of ’em, so we really get down targeted. The list is more expensive when we do it that way but we’re not wasting our time mailing to and then fielding calls from facilities where we really don’t have an interest in buying.


Larry: Yeah, ’cause you’re not gonna buy any public storage or whatever, some of the big ones, Kodiak and some of those, you’re looking for the mom and pop, I’m assuming.


Mike: That’s exactly right.


Larry: That’s good, man. That is good. This has been really, really, really good stuff. I really appreciate you opening up and sharing all the details. Man, you’ve answered all the questions, gave a lot of good content and info. If somebody wanted to find out more or connect with you, how would they do that, Mike?


Mike: Yeah, well, I wanna thank you for letting me come on here. It’s been enjoyable. I always, you know, I love talking shop and so I appreciate that. Folks can find me at – I’ve got a company called The Storage Rebellion, so it’s thestoragerebellion.com and there’s not a whole lot on the website. We do most of our content on the Facebook and YouTube. You can just search @storagerebellion on either of those sites and I’ve put out – YouTube is primarily longer format, ten- to twenty-minute straight content. My goal with this company is to share what I feel very fortunate to have learned over the last seven years. I believe very strongly in stewardship and so those outlets allow me to help people without asking for anything in return.


Larry: That’s awesome. That’s really good. I love it. I’m looking you up right now.


Mike: And we do have some exciting things happening in the first quarter of this year. My hope is to get – right now, I do a high-level coaching program where I work one on one with students, but because of the family-life balance, I capped it at six people and I’m there so I’m not taking more students right now but I’m hopeful to be putting out some sort of video training series that might allow other people who I wouldn’t be able to connect with to kind of explore and figure out if storage is a good path for them.


Larry: There you go. That’s good. I love it, man. I love it. I really, really appreciate you taking the time to share. This is good stuff. Is that the best place for people to reach you if they wanted to follow up with you? The Storage Rebellion or on Facebook?


Mike: Yeah, either on the website, there’s a webinar there and there’s a form after the webinar if folks wanna connect with me, I’m happy to do that by telephone and whatnot, or they can buzz me on Facebook and I’m pretty responsive there as well.


Larry: Awesome. Sounds good, man. I’ve already liked you, followed you, I’m there.


Mike: Right on, very good.


Larry: Cool, man. Hey, I really, really appreciate you taking the time, and do you have any parting words of wisdom for people who may be interested in getting started in self-storage?


Mike: You know, my biggest thing that I can say, it might not sound too industry-specific ’cause it applies to anything, but I would just wanna make sure that people hammer home their own definition of success, really crystalize the vision that they have for their life so that they can keep whether it’s storage or other real estate investing in its rightful place and that is as a vehicle toward an end. Too often, I think we get things mixed up and we turn the means into the end and then our life is revolving around dingy garages and that’s not what any of us want.


Larry: You know, it’s funny you said that because I got a friend who is also in the real estate business and he said something the other week that really hit home to me. He said, “A lot of people say real estate is my passion.” He’s like, “Real estate is not my passion. Real estate is a vehicle. It’s just a tool. My family is my passion. You know, helping other people is my passion. But the real estate is not a passion. Real estate is just a tool.”


Mike: Absolutely, and we’re passionate about what it can do for us but –


Larry: There you go.


Mike: If I ever tell you that I’m passionate about garages, you gotta refer me to a shrink or something because that is not much to get excited about. What gets me excited is where they take me, where they’ve taken me so far and, where I see them taking me in the future.


Larry: Huge, man. I love it. I love it. I really appreciate you taking the time. Thank you so much for being on. I really appreciate.


Mike: Yes, sir. Thank you.

Larry: Thanks a lot, everybody. Be sure and leave us some feedback, leave us some comments, and make sure and share this with your other followers, friends, and everything, and thank you so much for watching, everybody. Take care.