Scott Meyers is joining us in this episode of Raising Private Money to discuss the opportunities in the self-storage niche.
Scott started his journey into real estate by rehabbing and renting out a property, eventually growing his business into the sizeable portfolio that it is today. He and his affiliated companies now focus on self-storage, owning and operating over 2,000,100 square feet nationwide.
Scott is also dedicated to educating on the many benefits of self-storage investing. Jump in as he shares his knowledge with us!
Key Takeaways:
- The benefits of real estate: appreciation, borrowing to invest, and more.
- Laws on self-storage give owners more free reign when handling problematic renters.
- Self-storage units have fewer problems to address once a renter leaves.
- Do self-storage sellers entertain seller financing and carry a note?
- What are the ways to find self-storage deals?
- Is self-storage a great opportunity for a new investor?
- The biggest difference in Scott’s self-storage business between before and after COVID-19.
Check out my book: 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You Build Incredible Wealth!
Get it here for FREE: www.jayconner.com/moneyguide
Sign up for the Private Money Academy and get 4-weeks free: https://jay-conner.mykajabi.com/offers/AMM4hCPW/checkout
Connect with Scott:
Website: www.selfstorageinvesting.com
Free Training: The Seven Mistakes That New Self-Storage Investors Make and How to Avoid Them
Timestamps:
0:01 – Raising Private Money with Jay Conner
0:50 – Today’s Guest: Scott Meyers
5:00 – Creative Financing In Self-Storage Investing
6:25 – Best Ways To Find Self-Storage Deals
9:22 – Self-Storage Investments & New RE Investors
10:42 – The Self-Storage Investing Business Today
13:00 – Connect With Scott Meyers: https://www.SelfStorageInvesting.com
Self Storage With Scott Meyers
[00:00:00] Scott Meyers:
For all the benefits that real estate has, appreciation. Appreciation, you can borrow money to buy it. It’s one of the few investments you can do that, and then move somebody into pay down your basis. And it’s a beautiful business if it just worked for the tenants until it’s in the trash. If your real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, Then you are in the right place on raising private money.
[00:00:23] Narrator:
We’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now, here’s your host, Jay Conner.
[00:00:49] Jay Conner:
And I’m so thankful to have this opportunity to bring my good friend, Scott Myers, right outta the green room and right here to the front and center stage. So welcome
[00:00:58] Scott Meyers:
Scott. Hi Jay. And hello everyone, and good to see you, Jay.
[00:01:02] Jay Conner:
Before we dive in if you would take a moment and share with folks your background and how you got into this self-storage thing, your story, and why, and how are you qualified to talk about self-storage?
[00:01:15] Scott Meyers:
Sure. I think most folks got into real estate starting with single-family houses. I bought the Carlton Sheets home study system God rest of my soul now. And that was my first foray into real estate. I bought a. Rehabbed rented it out and refinanced it. Then after we had a renter in it and enjoyed about somewhere around hundred $75 to $200 a month in positive cash flow, three bedrooms, one bath working back, working class, a house, and a working-class neighborhood just Carlton had mentioned.
[00:01:43] Scott Meyers:
And then we continued to replicate that. And then we bought two, and then we bought four. And Then we continued and we had not a sizable portfolio, but we had about 80 houses. And then, Realize that there was still a lot of work. Every time those went vacant, we had to re-rent them. We were chasing tenants for cash and just, it was, it was a hobby until it became a business I was still working a full-time job and couldn’t spend the time on it that I needed to.
[00:02:06] Scott Meyers:
So quit my job, and went full-time. As a real estate investor. And then we started buying apartments and started buying 36 units and then a 70-unit facility or complex and others around central Indiana. Cause we thought economies of scale would fix this and the catch flow would catch up. And I’d have that free time, that Carl had always talked about in real estate and all they did was compound my problems.
[00:02:26] Scott Meyers:
And I realized at this point I didn’t want to get out of reality. For all the benefits real estate has an appreciation. You can borrow money to buy it. It’s one of few investments. You can do that and then loop somebody into paying down your basis. And it’s a beautiful business if it just weren’t for the tenants and toilets and trash.
[00:02:40] Scott Meyers:
So as I looked around the landscape, it was either parking lots or self-storage that would get rid of the tenants and toilets and trash and you can’t build value in a parking lot. So I started looking at myself. Bought my first one and realized that we have lien laws that protect us instead of eviction laws.
[00:02:54] Scott Meyers:
And so when somebody doesn’t pay, we lock them out and then we sell their stuff off and get paid. And then when they leave, I’m left with an empty metal box on a concrete slab. So no drywall, no plumbing to fix no H V C, none of that stuff. It’s a metal box on a concrete slab. And so I thought, this is, I’ve seen the light.
[00:03:10] Scott Meyers:
So we sold all our. Sold all our apartment complexes and then went full bore into self-storage. And so that was back in 2005. And to pass forward to today, 48 hours before this event, as Jay mentioned, we have now surpassed 2,000,100 square feet of self-storage. We’ve got 13,000 units.
[00:03:30] Scott Meyers:
Nationwide. And we also, along the way, created an investment education business as well where we teach people how to do business, consult with them and then we partner with a lot of our students on our projects. And that’s really how we’ve been able to grow to this to place that we are, that and syndicate we private capital and we’re doing.
[00:03:46] Scott Meyers:
Five to 11 million class self-storage projects that are now competing with the big guys in the markets whose names you would know if I shared those. So that, I think that’s the hundred-22nd version of it, Jay.
[00:03:56] Jay Conner:
That’s a fantastic story. And you know what’s amazing? Have you started doing self-storage or did you say you started in single-family in 2005 or still storage?
[00:04:06] Scott Meyers:
Two five storage in oh five. I got into single-family and the first one I bought was in 1993.
[00:04:12] Jay Conner:
Oh wow. You do go back. Yeah. I bought my first single-family house for flipping and real estate investing back in 2003. And folks, you’ve got right here on the panel.
[00:04:23] Jay Conner:
You’ve got another fantastic, very successful expert when it comes to raising private capital. Very similar to how I do, and as he just said, he uses private money, private capital. For, funding a lot of his projects. This triggers a question in my mind, Scott. I would imagine some of your, or a good portion of your self-storage sellers when you find a property or a self-storage existing facility to buy, do you find that, or have you found that a lot of the sellers will entertain, will do seller financing and carry a.
[00:05:01] Scott Meyers:
Yeah, they, they will more so than when we were in apartments and houses, when it, on housing the apartment side, most of the times they were backward, they were upside down on their, in their equity and there, that was the only way they could sell is to offer some seller financing, where we found it’s just the opposite in storage.
[00:05:15] Scott Meyers:
And that, it, it does so well, it performs so well that these owners they’ve know had ’em for several years. They’ve paid him off. They’ve paid them down, so they have a very low loan basis. And so therefore, when it comes time to sell, what they’re faced with. And. High capital gains Texas.
[00:05:29] Scott Meyers:
And so unless you’ve been living under a rocker or there’s something wrong with you, most people don’t like to pay capital gains taxes pretty myself. And so for that reason, these folks are offering seller financing on their properties. And so if they’re not already even talking to us about it, Jay, then obviously we have our elevator speech as to the reasons why they should, because they should, they can defer those taxes.
[00:05:51] Scott Meyers:
And getting more money for their properties. And so yeah, we found it’s even more pertinent and self-storage than it was in the other asset classes we were investing in.
[00:05:59] Jay Conner:
Excellent. So let’s talk now about, what everybody wants to know, very, very few real estate investors out there are dialed in on the self-storage opportunity.
[00:06:11] Jay Conner:
So let’s first talk about. Before Covid-19. And I know things are always gonna be different, but when we don’t have to be virtual all the time. So before Covid-19, what are your favorite ways to find the best deals on existing self-storage facilities? Out.
[00:06:33] Scott Meyers:
Yeah. We’ve had the luxury over several years now since we have had a pretty large education and consulting business where we do have a lot of folks that bring deals to us to do joint ventures.
[00:06:41] Scott Meyers:
But aside from that, it is, there, there are 11 approaches that we take to finding deals, but my favorite by far is still direct mail. We send mailers out. Number 10 envelope, hand stamped, hand addressed. The letter’s been the same for about the past 10 years with a couple of tweaks here.
[00:06:55] Scott Meyers:
And we get somewhere between a four to 6% response rate on average, sometimes a little bit higher, sometimes a little bit lower. Whereas when we were sending ’em out for houses and apartments, we’re in that two to 3% range. So, that is again, by far the best because it’s a before, and no offense to any brokers that may be out there or on the line.
[00:07:12] Scott Meyers:
A broker’s gonna assess it and give them a price to either meet where. Sell or try to get them a little bit more and list it for a little bit higher maybe than what it’s worth. Whereas we can come in and we can truly get it to, get something under the contract that is at today’s value of that facility and without having to pay fees on the seller side, which means we can negotiate a little bit better price.
[00:07:32] Scott Meyers:
But that being said, our second best. The way of finding deals is to partner with our brokers. We have great relationships with a lot of commercial and silk storage brokers that bring us deals because they know that I don’t have a license, we don’t have anybody on our staff who has a license, and so they’re gonna get either full commission or a flat fee that is more than greater than 3% and just a little less than 6%.
[00:07:51] Scott Meyers:
And they know that we can transact and close. If we put something in the contract, we can. This means that we don’t tie up their clients’ property and they get their commission paid. And we also go out to business brokers because a lot of these moms and pops, when they are looking to sell their facility, look at their facility as a business instead of commercial real estate.
[00:08:10] Scott Meyers:
And so they will contact business brokers to sell their business for them. So we scour those websites and have great relationships with those folks as well. And then the fact that I speak on the national level at industry trade shows. I write articles for trade magazines and my name is out there, in several places they’re able to, and I posted a lot of forums.
[00:08:27] Scott Meyers:
The different, the bigger real estate forums and the names I’m sure most people know of. I’m all over those places. So when now they search for self-storage my name comes up a lot. And so we get a lot of opportunities that come our way from that standpoint. So it is a shotgun approach to finding deals out there. But those are my three.
[00:08:43] Jay Conner:
Are the self-storage opportunity and strategy a good strategy for a new real estate investor to consider getting into?
[00:08:52] Scott Meyers:
I would say so. Most of the folks that we work with and including myself, say the biggest mistake we’ve ever made in real estate, and to me, it was not getting into self-storage sooner.
[00:09:00] Scott Meyers:
We wouldn’t have had to pay, the licks that we did and the other asset classes and ride the cycles and the valuations where self-storage is very solid during a recession as well as during boom times, and we don’t have the tenants and the toilets and the trash.
[00:09:12] Scott Meyers:
I think the one barrier to that Jay though, to be honest, is that the bigger piece of commercial real estate, the easier it is truly to get it funded and to manage it. Just because you do have economies of scale across the board, that makes it easier. So when you’re looking at commercial real estate or self-storage, even if you’re looking at something that’s, 150, 200, 500,000, it may sound like a lot to some folks.
[00:09:30] Scott Meyers:
That still is somewhat on the small side in terms of being able to manage it. And some people may not be able to put that together until you get good at raising private equity-like you are Jay. And so it’s a little difficult sometimes to start there, but boy, if you can, or if you could partner with somebody that, that sure beats, slugging it out in the lower forms of real estate until you get to that place where you can pull the trigger on something a little larger.
[00:09:54] Jay Conner: Awesome. Final question here for the panel and the audience, Scott, and that. What would you say is the biggest difference in how you are going about your self-storage investing business today since Covid 19?
[00:10:07] Scott Meyers:
We’ve had to change things a little bit, but again, the beauty is one of the beauties of self-storage it’s a low labor-intensive transaction period.
[00:10:14] Scott Meyers:
We’ve been using kiosks since 2005, and so we have touchless rentals. They don’t have to come into the office if they don’t want to. They can rent a unit. From their smartphone. We have websites that are mobile-friendly and give them the ability to rent a unit from their smartphone. And then when they show up at the facility, they’ve already paid for it.
[00:10:34] Scott Meyers:
They’ve chosen from the app, the map of the facility, and the unit that they want. They get a gate code to come in once they’ve paid. And they either bring their lock or several of our facilities and it has a key fob or a code. On the door to be able to get into the site. So the facilities that we weren’t, that wasn’t completely able to be touchless we’ve converted those over and then we’ve reduced our manager’s hours.
[00:10:56] Scott Meyers:
Just a touch. It took a long time before we even did that. We’ve only reduced our payroll by a few hours across our entire portfolio on a few facilities. But since then it’s just a matter of making sure that people knew that we were. And that also our existing tenants, that weren’t afforded some of those luxuries like tenants in apartments and houses where they didn’t have to make their payments and be evicted.
[00:11:17] Scott Meyers:
We, they still have to pay for self-storage because it is an essential business and if they want their stuff, they still have to pay. We’re not. Sending anybody out with auctions. At this time we are being cognizant of that. But the good news is our accounts receivable hasn’t taken a hit either because of the nature of our business.
[00:11:32] Scott Meyers:
People need their stuff and they know that we have the right to sell it if they’re behind. So it’s just educating our folks and letting the rest of the public know that needs storage during this time. Businesses were shutting down and people were moving home and they were having to clean out their houses to create an office like we were open for business.
[00:11:46] Scott Meyers:
So we’ve been moving along at a really good clip and once again, we know yeah, sub storage is extremely well During recession we are in the asset class that shines during a recession.
[00:11:54] Jay Conner:
That is great to know. And Scott, thank you for coming here on the panel and sharing the information.
[00:11:59] Jay Conner: Now we’re gonna put your website back up here one more time at www.SelfStorageInvesting.com. So everybody that’s watching right now here on the virtual event, Make a note and write that down right now. www.SelfStorageInvesting.com
[00:12:22] Scott Meyers:
Everybody’s looking at self-storage during our session cuz they’ve seen all the articles and how well we’re doing our website’s doing extremely well. And what we’ve got to keep people from making mistakes is we’ve got a pdf. It’s an ebook on the seven mistakes that new self-storage investors make and how to avoid them.
[00:12:37] Scott Meyers:
So we wanna make sure that people don’t blow off half cotton making mistakes as they rush into self-storage right now. And so it’s a little tool to keep them on the straight and narrow.
[00:12:45] Jay Conner:
That’s wonderful. So there you have it folks. Get on over right after the virtual event, to www.SelfStorageInvesting.com and take advantage of Scott’s very nice offer there on the free report.
[00:12:56] Jay Conner:
Scott, again, thank you so much, man. I appreciate you coming on. My pleasure,
[00:13:00] Scott Meyers:
Jay. Thanks
[00:13:01] Jay Conner:
I helped real estate investors raise a lot of private money for their real estate deals. You may not know that I have an. Private Money Academy membership. That’s right. A monthly membership where we spend time together twice a month on Zoom.
[00:13:19] Jay Conner:
That’s the second and fourth Wednesdays of each month, and I invite you to come to check it out. We have hundreds and hundreds of members. They always share their deals, how they’re finding deals, and of course how we get all of our deals funded. I wanna give you a four-week trial to just come to check it out free, and you can do that in the description below.
[00:13:40] Jay Conner:
Go check out the U R L, the website below, right here. In the description and I’ll see you at the Private Money Academy membership.
[00:13:50] Narrator:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising Private Money with Jay Conner.