Table of Contents - Investing in Self Storage Facilities with Scott Meyers
Dave Debeau [00:00:08] Hey there, everyone, that's David Debeau. Welcome to another episode of the Property Profits Real Estate podcast. Today, it is my pleasure to be interviewing Scott Myers, who is an absolute expert when it comes to all things self-storage. So really looking forward to this, because this is something I haven't had direct experience in, but I've had indirect experience in working with a couple of my most successful clients. We're in this realm as well. So, Scott, welcome to the podcast.
Scott Meyers [00:00:40] Hi, Dave. Thanks and glad to be here.
Dave Debeau [00:00:42] Well, I'm glad to have you here, my friend. So where are you calling in from today? Where's your home base for you?
Scott Meyers [00:00:47] How is Fishers Indiana, which is a suburb of Indianapolis, up on the northeast side of Indianapolis.
Dave Debeau [00:00:52] Fantastic. So, Scott, I know you didn't get started in real estate with self-storage, so why don't you tell us a little bit about your background and how you got into this whole crazy thing that's real estate investing and then how that morphed into self-storage?
Scott Meyers [00:01:10] Sure. Well, once I got a job and actually had some money left over after paying all my expenses out of college, they had said, you need to start investing in the stock market, investing for retirement. And so I looked at everything I could get my hands on and talk to as many people as possible about how to plan for retirement. And, of course, all all roads lead to stocks, bonds, mutual funds for one case. But then the more I read, the more books that I read and the more people I talked to, I found that the wealthiest people around the world and here also in Indianapolis had made their wealth in the stock market. It was in real estate. And there was always at least one chapter of those general investment books that talked about real estate. And then I just felt that kind of resonated. I've always been a junker. I like to fix up bikes and sell them to kids in my neighborhood and then did it with cars. I worked at a hardware store, so I walk through all kinds of home projects with people and I thought, I can do this. So yeah, when I bought my first rental Carlton Sheets to Style and followed him and it was on that path of buying, rehabbing, refinancing and then keeping rentals and was heading down that path until I found that there wasn't the freedom of the cash flow that I thought there was on that side of the business. So I got into apartments and I thought I would fix this, and it did to a degree. But once again, I just compounded the amount of attendance and toilets and property managers and property management companies. They don't wave a magic wand and just pay everything and handle all the issues. You know, the buck stops with me. And and at the end of the day, I just realized that this was a little more than that I wanted to handle. And cash flow was decent at times. But at the end of the day, I thought there was a better way in real estate. I didn't want to get out. And so I began at other forms of real estate and without tenants and toilets and trash, which were the three things that I didn't like about real estate business, as we all don't, rather than those parking lots and their self-storage. And you can't create value in parking lots like you can't do multifamily and houses. You can turn around houses and increase the value apartments and cash flow generating assets, office buildings, you know, you increase the Y and you increase the value. I just didn't want the tenants in toilets. And so so story to really fit that that mold. There's no tenants, no toilets yet. I can do things to increase the value by increasing the NY. So increasing income, decreasing expenses. So I began looking into it. But my first self storage facility and a partnership and never look back at that point I saw the light. People don't pay. I get to lock them out and then auction their stuff off and I get paid back if there's nothing to tear up, because first of all, nobody's living in there. It's a metal box on a concrete slab. And it's again, I can I can raise rents any time I like. I can do it every three months if I want it every seven months. Of course, we're not going to do that because our folks would leave. But just over and over again, all the things that I didn't like about houses and apartments weren't present in in self-storage, only the benefits of appreciation, depreciation, forcing the value and so on. I sold my houses and apartments and we've continued to grow ever since. And just acquiring facilities as well as now developing and converting buildings. And so that's stuff. That's the short end of it.
Dave Debeau [00:04:10] So that's very, very sassing. That's for sure. So how long ago was it when you first got involved in your first self-storage facility?
Scott Meyers [00:04:19] At twenty five was I bought an office building, a big old industrial office building, which we had. We converted about twenty five thousand square foot into storage inside the building. And we set up immediately. And then my first facility, that was just completely self storage. We purchased in two thousand.
Dave Debeau [00:04:35] That's very, very cool. All right. So besides getting into self-storage, after knowing what you know now, what might you have done differently back in the day?
Scott Meyers [00:04:47] Yeah, I think like anything else and this is probably more just in the general business sense, whether it be real estate or small business, I think maybe biting off a little more than I can chew in the beginning. And I'm just a hunter by nature, not a farmer. I just thankfully, my wife at the time when all throughout our real estate career up until really probably. Five years ago, my role was to create the messes and she would follow behind with the pooper scooper, cleaning up and putting operations and standard operating procedures and best business practices in place. Thank God for that. But probably grew a little too fast without having those in place. And even even when I started in real estate, I think we jumped into going full time when I quit my job. We had only had 20 rentals and we're going to ramp things up and refinance and pull cash out. But I think we probably started a little too early and then got ourselves into over leveraged too much. Nineteen ninety nine and two thousand in that recession where we weren't sure when the Community Reinvestment Act was implemented by that administration at the time. And all of our tenants were buying houses because anybody could forgive me or I could buy a house at that time. It left us without a plan B, so I think a combination of thinking we could do no wrong over leveraging and not keeping cash reserves and operations. The back office in place in every way possible, I think was probably that. And that's probably as an educator, myself, an investor and an educator. One of the the drums that we're beating right now is, hey, guys, we've had we've had a long bull run here in the stock market and in real estate. And there's a whole lot of folks out there that think they're a lot better than they truly are because they've had a huge wind in their sale of this economy behind them and that they be prepared. We're we're heading into a place right now where we will be in a recession soon and that we need to have a plan B and make sure you have your ducks in a row. So I think some of the lessons that we've learned, we're trying to get out in front of folks right now that are investing either for the first time or the first go around. And have it been through an economic cycle?
Dave Debeau [00:06:45] Yeah, well, that was another question, because you're also an educator. You're showing people how to get into the self-storage business, you know, without getting too into it. What are some of the mistakes you see newbies making when they get involved in self-storage?
Scott Meyers [00:07:01] Yeah, I think we when we cover all realms, I mean, we've got homestudy systems and all the way up to mentoring and working with folks close to one on one. But in the in the stages where I think people maybe pride gets in the way or they think they're still again too. This is an easier business than houses, apartments or anything else they've done and so do diligence. Just going in and investigating an existing facility, looking at the numbers historically, looking backwards and then being realistic with where they think they can take the facility. And also relying on experts that we have available in our industry from doing feasibility studies that they're going to look to convert a building or build on a piece of ground that they either own or inherited. There's lots of parameters and lots of industry standards that we can look at that we check the boxes to determine whether a project is successful or not. And I think a lot of folks just I think they feel a little too confident or that they can sidestep some of that and that they're a little bit better than than what they're seeing out there and just doing it on their own, but even ignoring some of the parameters of the standards that are out there thinking that they can make this work or I'll get this one under my belt and I'll make up the cash on the next one just to get into the business. I think we see a lot of that as well. So I think it's just not bringing in consultants. And in our country, they're available. And then ignoring some of the reasons why they shouldn't invest in a project is probably probably some of the biggest.
Dave Debeau [00:08:22] Yeah. So, I mean, I guess people have come in, especially if they've got a little bit of real estate investing experience under their belt at the model, they say, hey, guess what, no tenants, no toilets to deal with. How tough are going to be? Jump in and think they could figure it out.
Scott Meyers [00:08:38] I mean I mean, there's a whole lot of things we can unpack inside of that, but that's essentially.
Dave Debeau [00:08:42] All right. All right. Very good. So if people are kind of interested in, you know, you can really stick your toe in the water in this in this business. But let's say they're interested in finding out more about self storage investing. And again, I know you've got lots of resources about that, but what would you suggest to people as far as, like, checking it out in their own area and seeing if it makes sense for them?
Scott Meyers [00:09:10] So going back to when I got involved or looking into and exploring isn't much out there. And there wasn't an organization like ours that educates. So I went to the self-storage trade shows and you can go to the big ones out in Vegas, there's two per year, the SS and the SSA, one in spring and one in fall. And yes, you'll learn some from those educational sessions. But it is really in the networking and talking with other folks and asking the questions, hey, how did you get started in the business and what you like best about it? What don't you like about it? And building that team and that network? There's a few books out there that you can read on the topic. That's a good way of getting comfortable with the asset class. But really, there is a way to dip your toe in. I mean, you're right. Before you sign on the note, for a multimillion dollar facility, it's a little more difficult. But we have passive equity partners that invest in our projects with us. We do syndications and CPMs. And so I'm sure you're used to with your folks as well and best with you on the passive side, you don't get to come along for the ride and they can invest a small amount. And then look at the reports and be on our webinars where we're talking about objects and kind of vicariously, but also as a partial owner, as an equity partner, you'll get to understand the nuances of these projects because they're involved in it, not actively, but they do get an understanding for what this looks like by going through it that way. So that is one way of doing it. Outside of that industry trade shows some books and talking with other folks. And on the local market level, there are some local self-storage associations statewide as well. So that's that's another way for people to get plugged in and meet others that are in the industry. Probably the best ways to do it.
Dave Debeau [00:10:40] Sounds good. Now, you're down in the States. A lot of the folks that are listening this are up here in Canada. Yeah. Have you worked with clients and students up in Canada as well as a fairly similar up here?
Scott Meyers [00:10:53] Yeah, we have. I'll tell you the similarities and the differences. So I have partners that invest in facilities here in the United States that are from Canada. And we also have our silent partner, some equity partners and folks have come through and gone through our academies, our three day live events, and invested both in the US as well as in Canada. So differences between the two countries in terms of self-storage is United States is still the the massive consumers of the world. And so we like our stuff. We are hyper consumers and we are pack rats. And so when you look at the there is a Canadian self-storage association and then the US self-storage association and they both do studies and we have those those benchmarks that I mentioned and the amount of self-storage per square foot in a market in the US to reach equilibrium is far higher than it is in Canada, meaning Canadians are still more minimalist, a little more, I guess, like Europeans, if you will, and not a mass of consumers like here in the United States. So there aren't as many facilities. There aren't as many units of square footage. However, again, with a booming economy that we've seen here in North America and in Canada, there's a lot of facilities being developed in those numbers up the middle class become greater really all around the world, especially in developing areas. But also Canadians are now seeing a rise in that as well. And so that the demographics then just continue to change. So it is becoming more acceptable, prevalent and much higher demand in Canada than we've seen in the past.
Dave Debeau [00:12:22] Interesting. Very, very interesting. Obviously, you haven't seen my house. We got a lot of junkier treasures.
Scott Meyers [00:12:30] They've not treasures.
Dave Debeau [00:12:32] Treasures. That's right. Which need to be stored. That's right. By my wife has a phenomenal amount of treasures.
Scott Meyers [00:12:39] Yes.
Dave Debeau [00:12:40] I would love to see Stort, but so far, with all your experience, because you've been doing this for a long time, you're training people about this for a long time as well. What would you say are the key criteria that make a successful self-storage investor who who does this work best for? Because we like to say everything for everybody, but that's not necessarily the case. What are the qualities that people bring to the table, your most successful students or poor people?
Scott Meyers [00:13:09] I think people that, again, have a general understanding of real estate, if they've got some understanding of commercial real estate, that is certainly helpful. We have people that come to us or want to get into the game and maybe they've been in business or they've been involved in single family. And that's very transaction oriented. That's pretty quick. You can go out and find a house, do some, learn about it, find a house, do some homework, purchase it, turn it around and flip it or refinance it, sell it, rent it, whatever. And it's a pretty quick transaction time, if you will, whereas with commercial real estate and self-storage takes a little bit more to learn to understand how to underwrite it and put a value on it to determine if something is good. And again, you can hire feasibility study consultants and appraisers to help along the way. But on the front end, just to be able to identify opportunities, it's a little more education to know and understand what that looks like, but I think so. Patience along the way. And which also leads to my next point, which is that takes a longer I mean, from anybody that's going out from scratch to our students when they from the get go to find a facility that meets their investment criteria. Makes sense is a value and opportunity. It may take six to 12 months before they identify and or close on a project. Some folks that are looking for just a turnkey investment that they don't have to put a lot of work into one of those and get that thing up and down. And ninety days, one hundred, twenty days to usually six months if you decide to hit the Goba and go for it. But again, true, true value and facilities existing six to 12 months before you find one that works. And then the development side. What that looks like, I mean, if you have a piece of dirt, whether it's entitled or zoned or for storage or not, you know, there's a long process that goes that's involved in that and interviewing contractors. And it could be eighteen to twenty four by the time that thing is out of the ground and renting units. So patients all the way along the way playing the long game and I think not the other qualities is a is that there are a lot of lone wolf. Out there, they can do smaller deals on their own, but when you get into the size, you may be able to do one commercial transaction on your own or self-storage facility, and then you run out of cash to put on top of a loan. And then at that point, you need to be open to partners. And so accepting of and understanding what partnerships look like and what your risk tolerance is and your threshold and whether you want to be the driver or bring in somebody that will also help in those decisions to compliment you. And then working with private equity investors that are the true silent money is just being prepared to give up a piece of the pie in exchange for growth because it just won't happen or it happened really, really slowly if you think you're just going to do it all on your own.
Dave Debeau [00:15:46] Yeah, that definitely makes sense. Scott, there's been a lot of fun. I really appreciate it. Time flies when we're having fun. Yeah. I want to find out more about Scott Myers and how you can help them get into investing in self-storage facilities. What should they do?
Scott Meyers [00:16:02] Go to self storage, investing, dotcom? It's as simple as that. That's our that's our main website. And we have lots of free resources to get your feet wet, if you will, without actually jumping in and understanding a little bit about the business. And and again, all kinds of tools and resources to help the investor and developer who's looking to embark upon this incredible journey of investing in self-storage.
Dave Debeau [00:16:22] Scott, thank you very much for being on the show. I really appreciate
Scott Meyers [00:16:25] it. My pleasure, Dave. Thanks for the opportunity.
Dave Debeau [00:16:27] All right, everybody, stay tuned. See you on the next episode. Take care. Thanks very much for checking out the property profits podcast. And we like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.