Self Storage- New Investor Focus

Wrote this for a Single Family/Multi Family new investor, who was having trouble focusing after three weeks entering Real Estate investing. Adapt to fit Self Storage.

Lets see where your at:

Step 1: "Financial FOCUS"- What are you financing capabilities? Determine this so you can narrow your search field down. If you have $100,000 to invest and are working with a Banker offering you 40% LTV, then your max deal is $250,000. Use that to limit your search. No point wasting efforts on $400,000 flips, BRRR's, etc. Determine your LTV 10%, 15%, 20%, 25%, 40%. Changes the numbers as you see fit. Have you met your banker? Go say hello. Let them get to know you in their way: Supply last three tax returns. Fill out their Personal financial statement. Credit scores. Investment background, Open up an account with them. Might be the difference between 40% and 35% LTV. Pick a banker who knows your business. Show them your business model and numbers. Etc. If your Financial number is not enough for SFH/MFH, re-focus to mobile homes or RV's. Build your capital.

Step 2: "Build your team". Make a list of all of the functions you will need. Surveyor, landscaping, financing, legal, plumbing, electrician, drywall, insurance, city/county zoning, inspectors, title search or insurance, etc. As you are researching/talking/meeting/etc. Start to develop a "list" by category. Start finding out who you want to work with. Don't go looking for them. Find them along the way. Even if you had a great property right now, you probably couldn't act on it. Build your team.

Step 3: "Focus your time"- Start reducing what your reading, who you are listening to, etc. I love a good "NO". You need to go back and thank those initial investors who told you now is not a good time to invest. They gave you a good solid "NO". Stop talking with them, don't add them to your team. Why do I like a good "NO". I did door to door sales for three weeks when I was 17 years old, right out of high school. First week I made $25, carrying a 25 pound case door to door in 95 degrees and 80% humidity in Louisiana. This was going to be my money to go to college in 3 months. Second Week, made $300. Third week, made $700. Went back to construction week 4.

Lessons I Learned:

Week 1- they don't like/love me.

Week 2- they don't care about me either way, I just don't know how to sell or know my product.

Week 3- I learned how to sell my product and more importantly I knew it was a numbers game. 1 out of 10 doors was now going to buy from me. At that point, "no" meant nothing to me. I actually grew to dislike people who were nice or polite to me. I wanted a solid "NO". Not, till my spouse comes home. Not, come back later. Not, can I afford it? Not, I was just leaving. etc, etc. Unless I got a solid "NO" I kept on selling to them.

Step 4: "Stay in your Lane": Pick a business model and stay in that lane. All the things above that you know to ask; and then all the things that you don't know, until you do some deals. Its a huge learning experience. Don't learn two business models at once.

Step 5: "Get out of your Lane": Find other people that are in your lane, but also out of your Lane. Talk deals with them. There is a lot of cross learning that can occur, that you can take and apply to your model. Might not even be in REI.

Step 6: Zoning: For your business model get to know the details of your particular type of business. Setbacks, drainage, add ons, Minimum square footage, etc.

Step 7: How Smart are you?: a. Dumb- keep making the same mistake over and over., b. Smart- learn from your own mistakes., c. Brilliant- learn from other peoples mistakes. Yes, you want to find a way to learn from other peoples mistakes. Most of this, you can bypass by picking good team members and sticking with them. Don't keep switching each time a new contractor says they can save you 5%. I love my contractors. Can turn my back on them and know when something is up, they will catch it for me, while a decision can still be made. There are cheaper contractors. My contractors I can call them on a Sunday or 8 at night for some input and they are happy to talk with me.

Step 8: Lets make a Deal: First of all, the above steps are in no order. Let me go with your a SFH or MFH model person. 1. You want "that Deal". The one where you can tell everyone you put $20,000 down on a $400,000 house. Re-did the carpet and netted $50,000; 2 weeks later. Don't look for that deal. You want to minimize your risk. Know your exit strategy is realistic. Learn a little bit, not everything at once. Pick something that is easy, one or two of the following: Landscaping. New Roof. Pet stained carpets, New kitchen, Outside face lift, etc. So you make only $5,000. You learn $20,000 of lessons and you finally jumped off the "Cliff". Making the deal- earnest money, due diligence period, inspections, etc. Make a closing list. A 35 unit Self Storage location or cargo containers is a great place to start.

Determine your financial and personal objectives ahead of time. COC, NOI, Payback, sweat equity, etc.

Step 9: Lets find a Deal: Build your network, but for now lets look at properties that are actually for sale. Forget whether they are out of your price range or not in the correct location. Start doing deal analysis, to the nth degree. Self Storage, go out on Loopnet and pick some Self Storage in your area or near you. Analyze them, run the numbers.


Get signed up with the national Self Storage Brokers, talk with your local Commercial brokers, look on loopnet, get to know and keep in contact with all Mom/Pop storage locations within 40 minutes of you. The Baby Boomer is aging and their kids moved away. Give them an exit strategy.

Do two thorough Deal analysis in the next 4 weeks. You want to get so good at Deal analysis, without having bought one, that when the right deal comes along and you have only 1 week to analyze, your not mired down in information collection. I'll put a separate post out on Deal analysis. Keep analyzing deals.

Step 10: Join a group: If you go down this path, you will find no one wants to discuss with you or can relate to you. Find a Real Estate group to have these conversations with. My buddy has a Laundry Mat and a car wash. Totally different businesses, but we can relate.

As always Zoning/Zoning first.


"Start small and Make Your Big Mistakes Early"