Why I Stopped Buying Storage Facilities 2 Years Ago

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  TIMESTAMPS: 0:00 - Introduction to Self Storage Investing Reality Check 1:09 - Nick Huber's Journey: From Moving Company to 63 Storage Facilities 5:47 - The Self Storage Market Crash Nobody's Talking About 9:47 - How We Survived Floating Rate Debt Through Rising Interest Rates 12:37 - The South African Sales Team Secret That Increased Conversions 40% 16:02 - How We Get 110 Five-Star Google Reviews Every Month 19:17 - Why We Bought Industrial Real Estate (And Why It's Hard to Scale) 23:36 - The #1 Rule for Surviving Real Estate Downturns 27:52 - The Two Deals I Walked Away From That Saved My Business 31:22 - How We Use AI to Monitor Every Customer Interaction  THE BRUTAL TRUTH ABOUT SELF STORAGE INVESTING RIGHT NOW 🏚️  If you've been thinking about getting into self storage investing, you need to watch this episode first. Nick Huber, founder of Bolt Storage with 63 self storage facilities under management, reveals why he hasn't bought a single storage facility in nearly two years and what's really happening in the commercial real estate storage market right now.  THE SELF STORAGE RECESSION NOBODY WARNED YOU ABOUT 📉  For the first time in self storage history, every major REIT including Public Storage, Extra Space, and CubeSmart reported declining net operating income for six consecutive quarters. Interest rates skyrocketed from four percent to seven point five percent on commercial loans while overdevelopment in markets like Texas, Florida, and Georgia created massive oversupply. Nick shares how his portfolio weathered this perfect storm and why half his properties are performing below initial projections despite his team's revenue management expertise.  WHAT ACTUALLY WORKS IN TODAY'S STORAGE MARKET 💡  Despite the challenging environment, Nick's team has increased revenue by forty percent across their portfolio through aggressive leasing strategies and operational improvements. Learn how they use South African sales teams to achieve forty-two percent conversion rates on inbound calls, their Google review strategy that generates over one hundred five-star reviews monthly, and why they focus on markets in the Northeast where development is difficult rather than chasing yield in overbuilt Southern markets.  #selfstorage #realestateinvesting #commercialrealestate #storageunits #realestatebusiness Want to learn more about our guest? Connect here: boltstorage.com Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:00All right, we are back with another episode of the Real Estate Investing Club. I hope you guys

00:14are having a great day, whatever day it is for you and wherever you are. Usually it is Friday

00:20on the podcast, but today is Wednesday. We're coming out with one of those rare Wednesday

00:24episodes. It's going to be a good episode for all you guys who are interested in storage.

00:29I've talked up that asset class so much on the podcast because I love it. We got a specialist

00:34in the storage field, in the storage asset class, Nick Huber, with us from Bolt Storage.

00:40They own quite a few storage facilities, and so I'm sure he has a lot of wisdom to impart

00:45to us. Nick, thanks for hopping on.

00:48Thanks for having me. It's going to be a mixed bag of good and bad here when we discuss storage.

00:54That is always the interesting part. I'm sure we both have horror stories, so don't hold

00:58back on that part. All right, man. Well, I told you before we got on here, we always

01:02like to start with stories. We like to hear how you got to where you are. So why don't

01:06you take us to the beginning before you got into real estate? Tell us how you got started

01:10and then how's the trajectory been going since then?

01:14Yeah, I went to college in upstate New York at Cornell, right out of college, started a

01:17moving and storage company. So pickup and delivery storage. It was a very difficult business,

01:22learned the ropes about operations. Built that business to about $2 million a year of revenue,

01:26a little above that, and a lot of part-time employees during the busy season when the students

01:30were moving in and out. 2015, we started our first development project, acquired the land

01:36and started construction, opened the doors in early 2017 on a $2.9 million development

01:41in upstate New York.

01:44That deal went...

01:44Self-storage?

01:45Yeah, self-storage up from ground up. It was 39,000 rentable square feet and then we bought

01:49another 12,000 rentable square feet across the street as part of the same project. That one

01:54deal went phenomenally well. It's worth $8 to $10 million today and we still own it. We refinanced

01:59it a couple of times. Took that traction, bought three or four more buildings leading

02:04up to 2020. 2020 got access to some outside capital. And then over the following three

02:09years, raised $40 million of outside capital, bought $100 million worth of storage. And now

02:14we operate 63 self-storage facilities, two industrial buildings, team of about 50 people across our

02:22investment PE side and our management company.

02:25Nice, man. So, you know, it sounds so succinct when you tell such a long story in such a small

02:31amount of time, but I know there's been ups and downs. You know, I'm sure you've bit the

02:36bullet with a couple of facilities after buying so many.

02:39Yeah.

02:39So let's...

02:40You want to start with the bad? I mean, I think...

02:42No, no, no. Let's just start with that development because it's interesting that you

02:45chose development as the... You didn't buy before you developed.

02:48You started developing, which is not a path that a lot of people take. Why did you guys

02:53choose development? And yeah, tell us a little bit of context about that.

02:56Yeah. My dad was VP of construction for a developer in Indiana. He didn't have equity

03:01in the business, but he was kind of the right-hand man and was a VP of development across 30 nursing

03:07homes through Southern Indiana, Ohio. He learned a lot about development. And so he was mentoring

03:14me. We're having a beer one day. And he's like, you guys got to go build one. You don't

03:17need to buy one. Build one, build one, build one. And boy, oh boy, did we learn the ropes

03:20about how hard development is. Just entitling the land, which I did myself, PM the job, which

03:25I did myself, and then answer the phones and rent those storage units once it's open.

03:30So learned the whole business as a team of one. And then we hired a construction project

03:36manager to help us with what we thought was going to be the second and third buildings

03:39that never came to fruition because the county shut us down on zoning meetings. And then two

03:45years later, late 2018, we started buying, bought our first building. And man, I wish

03:51I would have done that from the beginning because we would have grown much, much faster. But

03:54I can't complain at all because that first deal, they say one deal can change your life

03:59and that one deal changed my whole life.

04:02Yeah. Yeah. And it is crazy, especially on the commercial side, how really it just does take

04:06one deal to completely change what you're capable of and the trajectory of your career.

04:11And so for everybody listening, that one deal is just around the corner. Just keep going

04:15out there, getting it done. So like you said, you like buying more than you like developing.

04:21Developing gives you gray hairs, buying a little bit easier. So tell us, you know, from that

04:25development deal, you guys got it, you got it finished, you started leasing, and then you

04:29turned your eyes towards purchasing. Yeah. We bought transition. Yeah, we bought, well,

04:36you know, two years after we built the building in 2019, it was worth almost $6 million. And

04:40we did refinance. A lot of our investors stayed in, spit out a lot of cash to them and us.

04:45Me and my partner had seven figures to go, you know, put his down payments on what ended

04:49up being four more storage facilities, a $650,000 deal in Erie, Pennsylvania, a 450K deal

04:55in Pittsburgh, a little deal. Number three was in Ohio. So yeah, little deals. And then

05:022020, we had the opportunity to buy a pretty big portfolio and an upstate New York market

05:07raised $7 million. So yeah, it kind of got accelerated. And then we built out our PE

05:14division where we have our acquisitions team and our cold callers and our underwriters and

05:19our finance folks. And then all the way over to property management where we have our customer

05:22service sales collections, you know, property management team, you know, we're managing 200,

05:29200 plus vendors across our 65 properties now. So yeah, it kind of built a life of its own by 2023.

05:37Nice. So yeah, there's a lot of ways since I do have experience in storage, there's a lot of

05:43questions that kind of come up and directions that we can take this. I'm going to give you a kind of

05:46an outline. I've been taking notes while you're talking. So I'm going to give you a kind of an

05:49outline of where I want to take this conversation. And then how about what if I just kind of what if

05:54I just tell you like, how it's changed how the landscape has changed? 2021, you know, interest

06:00rates were 4% on commercial loans. And you could find eight cap storage facilities that were 99%

06:07occupancy that hadn't raised their rent in five years could find that. And we went and found a lot

06:11of it. Nice. Yeah, we went and found a lot of those and bought a lot of those. Since then,

06:17interest rates have went from 4% to 7.5% on commercial loans that are outside of multifamily

06:21where there's a little bit of subsidy. And self storage development went nuts. They built

06:28everybody, everybody and anybody built a massive amount of self storage. Yeah, small towns, big

06:34towns, you name it, a ton of construction. And interest rates went up and housing transaction

06:39volume went down. So the demand for storage actually dropped like move ins year over year.

06:442022 was the high. 2023 was a little lower. 2024 was a little lower. 2025 was a little lower.

06:50While interest rates double. It's it's sheer chaos in the business today. Okay, I'm not gonna

06:55not gonna lie with my I'm gonna lie to you. Yeah, that's what I've been experiencing too.

07:02So let's talk about, let's see, let's talk about specifically your acquisition strategy. And

07:08I guess I'm kind of coming from a perspective of deals that I don't like. And I'm gonna I'm curious

07:13what your perspective on them is. I've, I've purchased a number of rural deals, and then a

07:19number of deals that are in like literally in the city center, like downtown city center. They're still

07:25drive up, but they're downtown. And I have when I buy those city center deals, I just get destroyed by

07:31property crime, people breaking in people trying to live in the units, all that kind of stuff.

07:35And I've kind of realized that I enjoy buying the deals that are way out in the middle of nowhere.

07:40And there's not a ton of you know, the NRSF for capital is kind of low.

07:45So what farmers but the farmers can throw, you know, a building on their property for 30 bucks a

07:51foot always. Exactly. And that's what also what I've kind of realized is like the rural deals.

07:57There might not be a lot of competition right now, but somebody can throw another one up for

08:01some more rural deals are doing really well. And some of our rural

08:05deals have gotten demolished because somebody just keeps building, you know, they built 30 40,000

08:09square feet of storage in a town of 5000 people. So I think so my acquisition strategy has been find

08:15yield, find yield. So we bought some of the city centers, we bought some in Florida, we bought some

08:20in Mississippi, we bought some in Indiana, Illinois, all the way up to Connecticut and New York.

08:26My best performing deals are in areas where development's hard.

08:29Northeast. Okay. Yeah. All the money, all the money flew to the south. Everybody was after yield

08:38developers went nuts in the south, even in small towns, like LJ, Georgia, Milledgeville, Georgia,

08:44Pensacola, Florida has just gotten hammered by development. We bought a $1.5 million deal in

08:48Pensacola, Florida, luckily, with only about 800k of debt, very luckily, because right across the street,

08:55public storage built, bought a facility and built a 50,000 square foot climate controlled building

09:01right across the street. And they rented 10 by 10s for 19 bucks, right after they built it. So

09:06like, look, man, like, I haven't bought a single deal in two years, except small properties that

09:13are already on or near our one of our current portfolios we did. That's why three months ago,

09:20we closed on a deal in Kokomo, Indiana, a pretty big deal. I think we raised over 3 million bucks.

09:25So yeah, there's, there's yield few and far between. But I mean, now from an acquisition

09:28standpoint, we're, we're underwriting a ton of deals every single week. All of them are at 60,

09:3470, 75% occupancy. All of them have declining revenue year over year. For the first time in the

09:42history of self storage, all the REITs, all the real estate investment trusts reported declining

09:47NOI six quarters in a row. No way. Six quarters in a row, six quarters in a row, public storage,

09:55extra space, cube smart, all of them declining net operating income six quarters in a row.

10:02So you tell me like we got, we bought a ton of buildings on floating rate debt in 2020, 2021.

10:08I'm blessed and very lucky to say that we were wise when we acquired and we got through every

10:13single refinance without any cash in from our investors. That's good.

10:17Yeah. And we're holding, we're, we're not going to lose any of our buildings,

10:20but I'll tell you half of them are below projections.

10:24Yeah.

10:25Luckily all but one of our properties are actually sending cash to our investors, but

10:29not at the level we'd hoped on half of them, like I said.

10:32So if anybody's hoping that this was going to be a big pump up session on how to get into self

10:36storage and, and why self storage is a beautiful business. I think coming out of this self storage

10:42recession that we've been in for the past two years, and I think may continue for another two years,

10:45there will be massive opportunity, of course, because prices are already starting to reset.

10:50People are getting out of the game. Many of the people who bought it came in and bought one,

10:54two properties are trying to offload them and get out of the self storage business. I don't blame

10:56them. Um, yeah, madness, my man.

11:00Hey man, but that, that is what happens in any asset class that gets as pumped as self storage

11:07was. I mean, there was a lot of hype around it. Um, and people got really excited about it. And so,

11:11you know, it's going to be inflated, but that, that type of stuff always resets. Um, you know,

11:17you're going to have the up and then there's going to be the, the, the downside to that as well,

11:21where people, um, stop building self storage. They start, stop adding, you know, square footage,

11:25square footage to every property or every metro out there. Um, and then things start to stabilize

11:30a little bit. So our plan, our plan all along was buy a building that's under, under managed.

11:35Like they hadn't done the work to really drive leasing, really have digital marketing,

11:38um, have a good sales team that answers the phone, have a clean property, and then

11:41raise rents like Duke standard revenue management inside the business.

11:45So that's, that's generally worked for us. We bought a lot of properties that were full.

11:49We bought them, we cleaned them up, we raised rents, we brought in technology.

11:52Um, we started digital marketing. We take a really leasing forward approach on average

11:57across our portfolio. We've raised rents 40% since acquisition raised revenue. Yeah.

12:02Revenue is revenue has increased on an asset that we bought on average 40% since we acquired it.

12:07Um, but it's just a boring time in the business right now. We're, we're, we're fine tuning on

12:11our digital marketing, on our sales approach, on our revenue management. We're working on a lot

12:14of things inside the company, kind of waiting for the ball to drop on the acquisitions and kind

12:19of what we think will be a pretty busy couple of years once it opens back up.

12:22Nice. Um, so yeah, let's talk about lease up. Uh, so I, you know, I do Google ads now. I used to,

12:28I started out doing store, uh, you know, storable and that kind of stuff, but they just charge

12:32out the ass for that for, for, for their, uh, their three months right now. And so I'm focusing

12:38a hundred percent on Google ads. Um, what are you guys doing? Like, what's your lease up strategy?

12:43Yeah. A lot of Google ads, we do meta retargeting. We have a full-time digital marketer

12:46from South Africa on our team, um, and a web developer as well on our team. So we're tracking

12:52transitions. We actually track, um, website visitors. We retarget them across, you know,

12:56our sales, our sales outreach campaigns within five minutes of when they leave our site. Um,

13:02Google ads, meta retargeting, um, and then a lot of focus on SEO and Google reviews. We,

13:08one of the, for, for all the self-storage operators listening out there, we, we have a South African

13:12sales team, which I highly recommend over the Philippines because it's just so much more approachable

13:16accent for us consumers. We've seen conversion rates on a, on a phone inbound phone call go up

13:22from 30% to 42% on our inbound leasing team by switching from South Africa to, um, I mean,

13:28switching from the Philippines to South Africa. We also hired a head of sales. We also really got

13:32the talk script down. We really, you know, got the upsells and downsells and like discounting down

13:37on the phone to like secure lease. So like we got very serious about renting units on the phone.

13:43If you get a call, we're listening to your call. We're training our reps. We're like going through

13:48a very sales oriented approach to lease a storage unit. That's helped a ton, but, um, it's still

13:54slow. Like we were looking at data today, November, October and November are pacing actually higher

14:00than last year and the year before, as far as total rental inbound. But the summer, June, July,

14:05and August was the slowest summer in three years for storage rentals.

14:08Wow. That's interesting. That's funny. Cause that's also been the case with my, uh, my properties

14:13too. I know that, you know, we expected a really huge lease up season and it didn't really happen.

14:17You know, we had a bit of lease up, but not as much as we expected. And we're just like,

14:21interesting. I wonder what happens.

14:22It's overall, it's overall market softness, um, that we just got to weather, we got to weather

14:27the storm until the next bull market.

14:28Yeah. Makes sense. Yeah. And it's interesting that you said South Africa. I've also switched

14:33from the Philippines. Uh, actually I went to Egypt and so I've, I've got a lot of Egypt. They,

14:38they have similar accents. Um, and so we've had some success with there and I've, I've heard people

14:43say a lot of good things about South Africa and also Belize. Um, I don't know why Belize. Uh,

14:48I haven't hired people from there.

14:49Have you hired any finance in Egypt? Egypt are one of our, one of our analysts and underwriters

14:54is Egyptian and phenomenal on power behind Excel and helping us with our underwriting is just

15:00unbelievable. It's a finance hub. Yeah. I did not know that. I know the person, um, you know,

15:05we hire callers and, uh, uh, mostly callers out of Egypt. Um, but yeah, that's a good point for the,

15:12for the finance part. One thing that we do is we, we put all of our sales reps on a variable comp plan.

15:18So when they rent a unit, every rental that they make, they get either 10 or $20. They start at 10.

15:23And if, after they get 30 rentals in a month per rep, everything jumps to 20, all of it jumps to 20.

15:29So they're very, very motivated to make sales. We also, we also motivate them by, um, or no,

15:35sorry, it's two and $4 for rental and of Google review is $10 for Google review. So at the end of

15:43every conversation with a tenant, they say, Hey, Gabe, like, thanks for renting with, with bolt storage.

15:48I have a internal competition going on by the way. And if I get a review with mentioning my name,

15:54I get a tip of $10 from my team. I get a $10 bonus. And if you leave a photo, a Google review with a

16:01photo of our facility, I get a $20 bonus. Um, and we give that directly to our reps. So it's in our

16:08talk track where every single interaction with a client, they're asking for a Google review.

16:11We got 110 five-star Google reviews last month. Wow. Nice. Yeah. Google, you cannot pay or solicit

16:21reviews from clients, from, from customers with any kind of compensation, whether it's gift cards

16:26or payments or discounts or anything, it's illegal. It's against their terms, but you can motivate your

16:29team to solicit reviews. Yeah. Yeah. I'm a Google reviews have a huge impact. Um, in fact, we bought

16:36a facility and the Google reviews were like 3.4, 3.5. And we got it above four.

16:41And just that, you know, nothing really changed with the facility. We didn't do a huge facelift

16:46or anything like that, but just the Google reviews, pop them up a little bit. Um, it made,

16:50you know, it makes a huge impact. So that, that does matter for sure. Um, and I love, I love that

16:55you guys do compensation or a performance-based compensation. I'm a huge fan of that across

17:00the board. If somebody brings us a deal, we pay them. If somebody, you know, gets, it does anything

17:05that's, that positively affects the business. I, we try to associate that with the dollar amount. And so

17:10that there's incentive across the board for people to actually, um, do things that matter,

17:14you know, move the dial, get those KPIs going up. And I like that you guys.

17:17Yeah. I think any, any amazing business leader would agree that you just follow incentives and

17:21that's how all businesses function. So why would you not incentivize certain behavior?

17:26Yep, absolutely. Um, so I also noticed, uh, I took a peek of the clock where we're running

17:31down the time, but I want to talk about, um, industrial cause you mentioned, I think, I don't

17:35know if you mentioned that at the beginning of this recording, but, um, you guys have bought

17:39industrial. Is that something that you're kind of pointing your attention to as well? Or, um,

17:43why'd you guys buy those ones?

17:44They kind of fell into our lap here in our local market. Industrial is a really funny thing.

17:48Like self-storage. One of the reasons why self-storage is getting tough in my opinion is

17:52that you or I, you give us a pen and a napkin in 10 minutes. We can come up with a rough value

17:56of a self-storage facility anywhere in the country, especially if we know the rent rule,

18:00but you can give me a Google map location, drop me a pen and give me five minutes. And I can tell

18:04you about what a storage facility is worth by measuring the building on Google. That's a

18:08massive disadvantage when you're competing with people all over the country to acquire assets.

18:12Industrial, totally different ballgame. Like you really have to understand that local market.

18:16You got to really understand the building and the desirability of a building for a tenant.

18:20Um, you got to understand the leasing market in a certain town. So we, we acquired two

18:26properties, one single tenant and one multi-tenant in Athens, Georgia,

18:30uh, in our town. We rented one to a brewery. We're renting the other. It's kind of small

18:34bay average, 2000 square feet per unit. So both those deals are going really well.

18:38Love the market. Love the asset class. Very hard to scale. Um, I wouldn't, I wouldn't feel

18:44comfortable even buying a deal in Atlanta. For example, I live in Athens an hour and a half from

18:47there. Definitely wouldn't want to buy a deal in DC or Philly or one of these small towns that we buy

18:52self-storage in. Yeah. So the, the only reason that you guys kind of focused on that is it,

18:57it came, you know, fell in your lap and it was in a market that you already knew. And so, um,

19:01it was just kind of a happenstance. It's not an actual strategy that you guys are trying to employ.

19:06We, I would love to employ it long-term and I think we're going to try to find a way to get

19:09comfortable with some other markets, but, but yeah, it's not, it's not something that we're

19:13going to, we're not going to take the eye off the ball with storage because we've kind of built a

19:16pretty big machine there. Yeah. Yeah. Yeah, absolutely. I do. I like industrial. I haven't bought one yet,

19:21but I've been looking at them for on and off for like two years now. Yeah. Um,

19:25I haven't bought the sugar. I've had a number of them come across my, my desk, but, um, but yeah,

19:29I like the idea of it and I like, uh, the, the niche it serves, but you're right. There's a lot

19:33to it. Um, and there's a lot of specifics about built the building itself that you need to understand,

19:38like clearance height and all that stuff and what's actually needed in that location.

19:42Parking, turnaround trucks, like loading docks, uh, cold storage, ceiling heights, office ratio.

19:48There's a lot, there's a lot going on. It's not just a steel box that's 10 by whatever. And

19:52you let's lease it for 50 bucks a month. It's very, it's very easy to understand storage. It's

19:57just a door in some empty space that you need. No toilets and bathrooms either. Yeah, exactly.

20:03All right, man. Well, it is a 20 minutes on the dot right now. So I got to push us into the quick

20:07question round. Are you ready? All right. Starts with education. It could be any form. I need two

20:12recommendations, one for general life wisdom, and then one for real estate. And this could be a book,

20:17a conference you've been to a mentorship program. You've been a part of anything like that.

20:21I wrote a book called The Sway Startup. Um, it's probably half real estate, half operations,

20:27which I think people confuse those two. Like they're the same thing. Real estate

20:31is an operating company. You have to know how to lead, hire, lease, like sell all those things.

20:36Um, so yeah, that book would help folks quite a bit. It's called The Sway Startup. Um, I'm also

20:41a member, I'm a member of a mentor group called Hampton. Sam Parr founded it. Okay. Phenomenal,

20:47phenomenal people in there and highly recommend it. Ham is just Hampton, H-O-M-H. Yeah. Like

20:52for her. So yeah. Okay, cool. And then, uh, your book, I'm assuming they can go on Amazon

20:58sweaty startup and look for it. Yep. The sweaty startup. Perfect. All right. Next question is

21:03for your younger self. Let's go back to the Nick who was, uh, just thinking about developing

21:09that first deal back in, I can't remember the year you said, but back in the day, go back

21:13to him, look him in the eye, give him one piece of advice moving forward. I would say

21:18life is sales. Um, when you're getting started in a, in a, any new endeavor, especially real

21:24estate, you have to get people to trust you from all angles. People won't sell to you

21:28unless they trust you. Vendors won't do business with you unless they trust you. People won't

21:32come to work for you because you're not reputable. You haven't been making payroll for 20 years.

21:36You have a disadvantage in almost every area. And if you're not good at sales, selling yourself

21:40and your ideas, getting investor capital, finding deals to buy, building relationships

21:45with owners, all of it gets way, way harder. Nice. That is good advice. And something that

21:50has not been said, you know, we've been over 600 episodes now and, uh, kind of keep track

21:55of all the pieces of advice that people give. And that's one that has not been said yet on

21:59this, uh, on the show. So, and it's not just real estate life is sales, man. Like you want

22:03to do anything in life. You got to sell people, whether it's your kid getting in the car this

22:07morning or your wife going to the restaurant you want to go to for dinner. Yep. Yep. And sales is

22:12communication. So that is a super important part of, uh, yeah, not only real estate, but also just

22:17life in general. Um, moving us on to the next question. This is about the U S there is a ton

22:22of opportunity out there. Give me the single Metro you're most excited about investing in today.

22:28Oh gosh, it's a double-edged sword, man. The South is growing in the South has, you know, a,

22:35a better government to do business in, but that in turn has attracted a ton of competition,

22:41a ton of capital. So you're way more likely to have development competition in the South.

22:45So I'm going to go with a dying town in the North called Elmira Corning Horseheads, New York.

22:55Definitely. Definitely. The first time that's been mentioned.

22:58No, I mean, there's, there's negatives up there as well, like property tax assessment risk and

23:02declining population. So there's way like way less likely to have a developer pop a 70,000 square

23:08foot property across the street. Yeah, absolutely. That's funny. Cause my, one of my, um, you know,

23:13I have underwriting criteria and one of the ones that I absolutely will not back off of is, uh,

23:18a negative net net migration. So if they, the population is going down, I just won't look at

23:23it. That's 99% of investors and it's a wise way to invest. I'm not saying that there's anything

23:26wrong with that at all, but the capital, the capital is all searching for deals and these

23:32growing markets. Yeah. And that's what I was going to say is I feel like a lot of people have

23:35that same criteria in those dying, dying tabs. There's really not a lot of competition. So

23:41yeah, it's a, it's a good point. My, my main piece of advice right now is going to be sticking

23:46and stick in the game. Like in the real estate business right now, if you can ride out this storm,

23:49if you can find a way to make money and find a way to stay in the game for the next three to five

23:54years, there's going to be one fifth, the amount of people competing with you as there was in 2022.

24:00Yep. Yeah. Um, I've had a number of guys on the show who've, you know, been doing it since

24:05the eighties and they, they, they just talk about how real estate is cyclical and you just have to,

24:11the bad times are going to come. You just have to stick through it and then, uh, ride the wave

24:15as it goes up. And that's, you know, my buddy, my buddy says he's, he's an older gentleman and he

24:20says, you know, there's many, many times in the real estate business where you have to sit

24:24on your hands for years. So rule number one, rule number one, rule number one is never do these

24:31deals and have, find a way to have enough money to where you don't have to use, do deals to pay

24:34your bills. And number two, pick up golf. That's funny. I've, uh, I, we've, um, kind of taken a

24:44different approach. We started a second company. Um, we're doing digital marketing for other,

24:47other companies now, you know, digital marketing is something that I've been doing all my life and

24:51we're pretty good at it. And so we're starting to market for, uh, for, for other companies as a

24:56digital marketing company to kind of bide the time as we wait for the real estate market to tick back

25:00up. Um, I'm like you, I haven't, I haven't closed a self-storage deal. I haven't closed in

25:05probably over two years. We've been buying mobile home parks and RV parks. Um, but yeah, it's,

25:11it's definitely slowed down there. There's not a ton of activity going on.

25:15Yep. Yeah. And that's okay. You can make your business better.

25:17Yep. Absolutely. All right. Uh, next question is about finding deals. It all starts with getting

25:24in contact with the seller and pen in that purchase agreement. So what is your favorite

25:27way to generate leads and find new deals? We have a cold calling operation of South Africans that make,

25:33you know, 400 combined phone calls a day across three reps or two reps. Um, and I'm not the guy to

25:42ask because we've only bought one deal in the past two years. Hey, that's okay.

25:46People, people want, people want too much money right now. So our, we're in the relationship

25:51building game right now, trust building game. We are meeting owners. We are talking to them.

25:55We are making sure that we're front of radar. We are, you know, operating our business well,

26:00and it'll come around when, when the buying opportunities open back up,

26:03like we are going to be ready. We're going to be capitalized and we're going to have those

26:07relationships. Yep. Yeah. Strategically positioning yourself for the opportunity is the wise thing to

26:13do for sure. Um, it is hard though, because when you haven't closed the deal in a while,

26:17you start to get, you know, get the itch and you're, you look at deals and you're like, man,

26:21can I make this work? But the second that that thought pops into your head, you got to realize

26:26that's the wrong thought. Making something work is not, that's not the way to go. It has to work.

26:31It has to work on paper, you know, without any, any magic, any like mental jumps, you know? So yeah,

26:38you gotta, you gotta watch out for that. Um, all right. Next question is about lessons learned.

26:43I'm sure you got a lot of these, uh, not every deal goes the way we expect it. In fact, pretty

26:47much every time something's going to go wrong and that's when we get to learn a lesson. So what was

26:52a deal that went a little bit sideways for you? And then what was the lesson you pulled from it?

26:56Um, actually the, the best lesson I had was a deal I didn't do. Um, my, my CFO is very wise and he is

27:03amazed. He's, he's very risk averse. I'm risk on, I'm very ambitious. He's ambitious as well, but he

27:08also is, is a little bit wiser with risk. He went on vacation for two weeks and he was out of the

27:13office and I put two deals under contract while he's gone. Um, he gets back and he looks at the

27:18deals and the purchase prices, analyzes the deals and he calls me and he's like, Nick, these deals are

27:23shit. We can't do these deals. And I'm like, Whoa, Whoa, Whoa. Like I'm the boss here, man.

27:28It was kind of what I want to say. But of course I didn't say that. Of course I was like, Whoa,

27:30okay. Like why, why, why I didn't, why do you think that? And you know, over the next day he

27:36talked to me out of it and I'm the one who made the call to these brokers. They're the only two

27:39contracts we've dropped since our, since we started and we dropped the deals. And I think dropping

27:46those two deals saved us an insurmountable amount of stress and headache over the past two

27:50years because we were indeed going to overpay. Well, Oh, so what, what was the specifics about

27:55the deal? It was just the cap rate or. Yeah. I, I was just too ambitious with our lease up,

28:00too ambitious with our rent increases and underestimating a little bit of expenses,

28:03like hitting it from a couple of different angles to where, you know, I thought it was

28:06going to stabilize at a nine cap and he knew it was going to stabilize at a seven. Yeah. And when you,

28:11when you stabilize at a seven cap and your interest expense is 7.5%, you have a negative,

28:15you know, debt constant and you're not, you're not making any money on a, your cashflow gets major hit.

28:19So our investors wouldn't have been thrilled. Nice. Yeah. That is a, that is a bullet dodged

28:25right there. Yep. Um, all right. On the obverse of that, sometimes things go right and they kind

28:30of stick out in our mind as those special deals that we really enjoyed doing. So what was your

28:35highlight reel? Give me the single deal that is a, one of your favorites. Yes. It got to be that

28:40first development, um, that just changed everything for us. We, we built it from the ground up for,

28:44you know, 2.4, bought the building across the street for 500 grand. So we're all in for,

28:48you know, 2.9 million on this deal. And, um, yeah, it's worth, it's worth 8 million today doing

28:54over north of a hundred grand a month of revenue. It's just incredible. So that one deal, um, I could

29:01have never done another real estate deal and it would have kind of paid me a salary for the rest of

29:05my life, which is pretty unbelievable. It's crazy. Yeah, no, that's awesome. Um, all right. Next question

29:11is about raising money. It takes money to make money in real estate. So what is your favorite

29:17way to raise capital? Yeah, I, I take a different approach. I think a lot of people who are raising

29:22capital, they come into these meetings and it's all the positives, you know, this is why it's going

29:26to work. This is why we're amazing. This is why, you know, our track record's unbelievable. This is

29:30why the market's great. This is why this town is perfect. This is why this deal is going to be a home

29:34run. I sat down with a lot of investors in 2022, 2023 and said, Hey, look, um, this is a good deal.

29:41Like I like this deal. I'm going to put some, my own capital into this deal, but you got to

29:44understand that there's some things out of our control in this deal. Interest rates. Number one,

29:49construction risk and development risk is number two and storage demand is number three. Like I can't

29:53impact how many, how many, you know, I can only have so much influence on how much our phone is going

29:56to ring people who want storage. I don't have any influence on who builds across the street or down

30:00around the corner. And then there's interest rates, which, you know, if we could predict that

30:04we'd be rich, so we wouldn't be in this business anyway. So those three things take a swing in the

30:08wrong way. And our five-year time horizon becomes a 10-year time horizon. Now I'm committed to you

30:13that I'm not going to lose this deal. We're not going to lose this property, but we could be

30:17riding out a slow real estate market for years. Are you okay with that? What makes you want to invest

30:23in storage? And when I shut up and you know, they, they either run away and scared with their tail

30:29between their legs. And that's good because they're not a great fit for real estate in general,

30:33or they kind of appreciate that I'm worried about those risks and I'm thinking about them

30:37and I'm, and I'm real. And, you know, it's, it's worked really well to me to kind of

30:42manage and set expectations with investors and show them that I am worried about the things I

30:47should be worried about and how to mitigate those risks. Yeah. Yeah. And on that, I will say,

30:52if anybody only talks about the positives, then, uh, just run away. It's not a good deal.

30:56If it sounds too good to be true, it likely is. Yeah, exactly. Um, all right. And this is,

31:04I know this is the second to last question. And this one, we actually just recently added to the,

31:09to the list of questions, um, that we ask, but I like to, I like to ask because I'm super big on AI.

31:14I'm trying to implement it in as many responsible places as I can in my business. So, um, do you guys

31:21use AI in your, yeah, as part of your tech stack and what ways are you using it, um, to the most

31:26advantage to your business? Yeah, we have a lot. We use it a lot for quality control. It's in the

31:32inboxes and it's listening to all of the phones of my people. Um, Zapier is in my email inboxes,

31:37connected Gmail, and I can get negative client sentiment across all my companies delivered to me

31:42and my management team. That's phenomenally valuable. I love Fathom. Um, and again, Zapier APIs is

31:49really good for AI. I'm a bear though. I don't like, I don't like AI. I think the bubble is going

31:55to bust and I don't think it's going to keep advancing as people think it is. Um, the energy

32:00use is just phenomenally out of whack. It's being subsidized from every level of the chain and the

32:06bubble is unfortunately going to pop in my opinion on AI. Uh, I, I am, I'm kind of on the fence about

32:12that one. I don't know. Um, I'm just, I'm curious about that sentiment because people say the bubble is

32:17going to burst. Uh, it's like the internet. I think long-term it is going to be an unbelievable

32:21change. Like everything is going to be different because of AI. I'm not doubting the long-term

32:26value of AI. I just think the near term, all these companies using all these energy, using all this

32:32energy. Um, I think the data coming out of these companies like open AI and, and X, they're drastically

32:41under us under reporting how much energy they're actually using. It's not sustainable. And,

32:46um, it's going to get really expensive. And then only certain amount of people are going to be

32:51able to use chat GPT. It's not like every person with $29 a month is going to be able to ask chat

32:57GPT questions all day about how to cook or how to think about a historic event. Those are just,

33:01it's just not realistic. Interesting. So you're really coming at it from an energy use perspective.

33:06Yeah. Um, huh. I don't know enough. My energy bill, my energy bill in Athens, my energy bill in

33:11Athens has went up six times since 2023. It's up 60%. Um, that long-term I fear that AI is going to

33:21separate the people with serious money who are going to use AI and everybody else is going to have a

33:26lower quality of life because they're not going to be able to run things like their heater, their

33:29air conditioning, their dishwasher, the things that actually make their lives better because

33:33there's, there's 17, um, data centers under construction right now in Georgia.

33:38They've all, they've all negotiated power. That's unsustainable. They've all negotiated power

33:43deals with local municipalities that are, that are not sustainable. Huh? So like what is, uh,

33:50is things like nuclear energy or it is more 30. If we started right now on a full all out billions

33:56of billions of dollars energy sprint to build nuclear, it would take 30 years to get the first plant up

34:01and operational. Damn, that's crazy. Yeah. Big problems. This could be a whole other podcast.

34:06I got a lot of, a lot of thoughts about that one, but, uh, we're, we're closing in on 35 minutes

34:10here. So I'm going to shut it down, um, and lead us to the very last question. This is for the

34:14listeners. You've given us a lot to think about. I'm sure people want to reach out, get in contact

34:18with you. Um, this is a two-parter where can they find you and then what can they expect when they

34:22reach out? Um, yeah, I checked my email, Nick at swaystart.com. Uh, me, my executive assistant,

34:28my head of media are in there reading every single message. I can't guarantee that I'll

34:32respond to every single one, but if you want to get in touch with me, um, I have a social media

34:36presence on X at sweaty startup, Instagram at sweaty startup. And yeah, I got a, got a podcast

34:41on real estate podcast on small business. And then the best way to get a look into my story

34:45and my mind is, is my book, the sweaty startup, which I read the audio book and it's a good way

34:49to get in touch. You read it. That's awesome. You read the audio book. That's, that's pretty

34:54cool. All right. I'll put those links in the show notes. So if y'all want to reach out to

34:57Nick, all you got to do is click the little more in the description. It's going to pull

35:00down that full description and in there you can find his links. All right, man, that wraps

35:05it up. Thank you very much for helping on the show. Thanks for having me. Absolutely.

35:10For everybody who's with us today, thank you guys for showing up. You are the reason we

35:14do this. So if you guys have any questions, reach out to me, Gabe with the real estate

35:17investing club.com. If you guys want to support the show, just leave us a review or a comment

35:22or anything like that. Other than that, I hope you guys have a great week. Keep rocking

35:26real estate. And I look forward to seeing you on the next episode.

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