(intro)

Welcome to The Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high-paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host Pancham Gupta.

Russell Gray

Hi. This is Russell Gray, co-host of the Real Estate Guys Radio Show. And you are listening to The Gold Collar Investor Podcast.

Pancham Gupta

Welcome to The Gold Collar Investor Podcast. This is your host Pancham. I really appreciate you for tuning in today. My guest is Andrew Leedom on the show. He is the CEO and Founder of Self Storage Stewardship. He earned his Master’s degree in Civil Engineering from Virginia Tech, and practiced as a structural engineer for 12 years before stepping away from engineering to focus on commercial real estate investing full time. He began investing in residential multi-family in 2015, and has now transitioned to acquiring and managing self-storage properties and investing passively in multi-family and self-storage syndications.

(interview)

Pancham Gupta

Hey, Andrew. Welcome to the show.

Andrew Leedom

Hi, Pancham. It’s great to be here.

Pancham Gupta

Thanks for your time here. Before we get started, are you ready to fire up my listeners break out of Wall Street investments?

Andrew Leedom

Absolutely. Challenge the status quo.

Pancham Gupta

Yeah, let’s do this. Why don’t we start with your background, how you got into self-storage? I see that big sign — people who are watching on YouTube — Self Storage Stewardship is your company. How did you get into this business?

Andrew Leedom

So, a little bit of my background. I was a structural engineer for 12 years. Along the way, back in 2015, when my daughter was five years old, we had started a 529 plan for her, saving for college. By the age of five, it was pretty clear that that plan wasn’t going to work. So, that was my start of evaluating other investment vehicles to save and pretty quickly landed on real estate just through BiggerPockets, through some folks that I knew that were flipping and did rentals. So, that was my intro into real estate. I got a few residential multi-family, duplex, and triplex properties.

Anyway, along the way, just that plan was working. It just was taking a little longer than I would have liked. So, that was when I made the shift to commercial real estate, just with how properties, they’re valued and the ability to really leverage your time and resources more fully to affect the value of a property. Once I had made that decision, I evaluated between self-storage, mobile home parks, and multi-family.

I was an engineer at the time, full time, and looking to make that shift. And so, I felt like self-storage fit that model pretty nicely, the ability to have a — it’s a fairly simple business. It’s not easy but it’s simple. I’m able to run things remotely, and yet it’s still behind multifamily in terms of the commercialization of the asset class. There are still a lot of mom-and-pop owners out there. I felt like I would be able to still get my foot in in the door while working a full-time job. So, that was how I narrowed it down to self-storage. I hired a mentor. I joined some mastermind groups along the way. I was able to get my first two properties under contract a little over a year ago and had been running those since then.

Pancham Gupta

Wow. That’s quite a story. So, I assume that you’re full time into this now.

Andrew Leedom

I am, yeah. I stepped away from engineering a little over a year ago. I did join another investment group that was primarily multi-family to help them with some storage deals, as well as some of their multi-family asset management. But at the beginning of the year, I just stepped away to fully focus on my own business and the self-storage.

Pancham Gupta

Wow. To repeat, kind of summarize, you went to school. You went to Virginia Tech. I see. My wife went there in grade school, by the way. You did your structural engineering, and you were working full time. It was in structural, was an engineer. You realized, when your daughter was five years old, that 529 is not working. You started looking around and started with small properties and went into commercial real estate and picked self-storage.

So, let me ask you this. During this journey, how hard was it for you to actually quit your job? Given that you were working 12 years, that’s not a short time. That’s a pretty long time. Was it the same company you were working for? If yes, then it’s even more difficult to quit. My question is that, what was the mindset struggle that you went through? Was there any struggle at all for you to be able to quit?

Andrew Leedom

Yeah, it definitely was a struggle. I would say that I’m naturally not an entrepreneur. I’m naturally go with the flow, do what the next step is. I did it. I went to school. I got my Bachelor’s in mechanical engineering. I did my Master’s in structural engineering. I got the job, was progressing through the corporate ladder. Really, I was at two companies. I was at one company and then I shifted to the last company I was at. It was a great company. I was assistant regional manager.

Just looking at my life and just the stress level and the hours that I was putting in, I have four kids, I just really didn’t saw the path and where it was heading. I wanted something different for myself, for my family. For even just the Self Storage Stewardship, that stewardship mentality of we’ve been given gifts, resources, talents, and wanting to make the best use of that.

I felt like I needed to step away in order to make that happen. But it was definitely a very difficult thing that I would not have even considered if I didn’t have my wife’s full support. Her is my biggest cheerleader. So, I think that just evaluating where am I putting my time and effort and what’s the return on that.

Pancham Gupta

Got it. When you quit, did you have a certain goal in mind? Okay, I want to reach this particular number of passive income, or I want to have this much in savings. Was there any milestone that you were trying to target before you put in your papers, or you just went with the flow? One day you wake up and you’re like, “Okay, you know what? Today I’m resigning.”

Andrew Leedom

Yeah, that was pretty interesting. It was actually an opportunity. I was building the self storage stuff. But an opportunity arose to join the local investment group near me, called Community Investment Group. They’re a quickly growing multi-family investment group. They were interested in self storage. So, they knew what I was doing. They knew that the properties that I bought were pretty heavy lifts and were going to be a while before the cash flow got me to where I needed to go. They offered for me to join their team and help them out so I could be doing my stuff, as well, on the side, give me a little bit more flexibility but also work within the space — just the real estate, things that I enjoyed. And so, I was able to do that — to plug the cash flow gap.

I did have cashflow number that I was shooting for. At the beginning of this year, I wasn’t quite there with my properties. But I was comfortable enough with the trajectory and where we’re going to make that step into focusing fully on my properties, in my own business, just in the sense that it’s that chicken and egg thing. My stuff was taking back burner, and I wasn’t able to give it the time that I wanted. So, I’m still a few months out from being where I wanted to be when I took that step. But I also am aware that now I’ve got a lot more time and ability to throw into that.

Pancham Gupta

Great. Thanks for sharing that, Andrew. Let’s switch gears and talk about self storage. You said that you picked self storage because it was not institutionalized or more commercialized like multi-family. You felt that it was easier to manage, if I heard you right, or more difficult to manage. I’m not sure what your take was. You picked this. How’s that going so far? What was your first deal like? When you picked self storage, what was your first step?

Andrew Leedom

Like you said, yeah, I picked it for a lot of different reasons. Just the recession resistant nature of it. When times are great, people are buying stuff and needed it to store. But when things take a dip, dip and people are downsizing, they’re still wanting to hold on to that stuff and moving into self storage. It’s performed well for a long time.

As far as managing, it’s been going pretty well just being able to — my properties are about six hours away from me. So, I’ve got some boots on the ground, facility managers that work part time at the facilities. I’m able to run them remotely with that piece, with a call center, and with my website. So, customers are able to get what they need from the call center and the website, able to rent units online, and have access to them instantaneously. In that sense, it is able to be done remotely, I think, pretty efficiently.

Pancham Gupta

Got it. How did you find your first deal? How big was it? If you can share numbers, that’d be great.

Andrew Leedom

Yeah, my first deal, I found — it was actually on LoopNet. I was starting out, just evaluating listed properties, reaching out to brokers, just trying to hone my underwriting skills initially. Even if 99% of them never worked number wise, it at least got me familiar with the underwriting process, reaching out to brokers, talking to them. And so, this one had been listed for a while, I think two years on LoopNet.

Pancham Gupta

Wow.

Andrew Leedom

It had a gas station, a carwash, and self storage. So, I think that’s probably a big reason why. Most people that are looking for self storage just want self storage. I saw it initially. For that same reason, I rode it off. Three months later, when it’s still sitting there, I decided to reach out to the broker. I just asked him what was going on. I asked him, “Is this something that the seller is really trying to sell, or is it just sitting out there to see what he can get?”

He said, “Well, it started out as seeing what he could get, but now they want to sell.” So, we were able to negotiate a price. We got it down to — it was listed at 1.5. We got it down to 1.27 million. Then during due diligence, we found some structural issues with few of the buildings. So, we were able to get it down again to 1.07 million.

Pancham Gupta

Oh, wow. Pretty much 33% approximately lower than what they listed for. Were you able to get just the self storage, or did you have to buy the gas station and the carwash also?

Andrew Leedom

Yeah, I bought the whole lot. It was all together. I’m currently in the process of dividing that up. We had some issues with the city with actually subdividing it. So, we’re creating condo units — a unit for the gas station, a unit for the carwash, and a unit for the self storage. So, we’ll be able to sell them individually, moving forward.

Pancham Gupta

Got it. That 1.07 price was for all three?

Andrew Leedom

Yeah.

Pancham Gupta

Okay. Wow. That’s awesome. Are you operating those two right now with your facility manager, or they’re totally shut down at this point?

Andrew Leedom

Yeah, I am operating the carwash. The gas station, I lease out to an operator. So, he’s running it. Actually, he’s the one I’m looking to sell it to. He wants to be there and wants to make some investments in the property but would rather do it as an owner. So, we’re looking on selling it to him. Then it’ll be mutually beneficial to both of us.

Pancham Gupta

Got it. And he is the guy who you found after you bought the property, or was he on before that too?

Andrew Leedom

Yeah, he had been leasing the space for a number of years and running the gas station.

Pancham Gupta

Oh, okay.

Andrew Leedom

It’s pretty much like a triple net. He’s responsible for the pumps and the inspections and keeping everything up. Then I’d pretty much just get the monthly rent for the gas station.

Pancham Gupta

Got it. So, that’s quite interesting that the seller actually didn’t go through the pain or didn’t want to go through the pain of subdividing it and selling it to this guy. Probably, he was interested even before that, before you bought it. But the seller probably didn’t want to do it, to take that pain.

Andrew Leedom

Right.

Pancham Gupta

Okay. So, that’s great. How big is the self storage side of things? How many storage units do you have? Do you have any plan on expanding that?

Andrew Leedom

Yeah, that site has 17,000 square feet of storage, about 154 units. Right now, there’s a little bit of space to expand but not too much. But my goal would be, once we get that stabilized, to potentially convert the carwash into an indoor climate-controlled storage, moving forward. When we bought it, it was — the storage part of it was less than 40% occupied. In our first year, we were able to go from about 40% to 60% occupied. Looking to hopefully go from 60% to 75% or 80% through this spring lease up season.

Pancham Gupta

That’s awesome, man. That’s awesome. So, have you bought anything else since then?

Andrew Leedom

Yeah, I bought another self storage that’s about a couple miles away from that one, a much smaller facility. Well, the storage itself was about 15,000 square feet, but the site itself is much smaller. We actually got that, which is really just like another duplex or a residential property. And so, that one was a much heavier lift as far as the occupancy. When we bought it, it was about 20%. It had a lot of issues with it. We’ve got most of the CapEx done. We’ve put about 120,000 in since purchasing. And so now we’re, again, looking to up that occupancy once we hit this spring lease up season.

Pancham Gupta

Got it. How did you find that deal? Did you finance both of these, or did you buy them cash?

Andrew Leedom

That one was listed as well.

Pancham Gupta

Okay. Got it.

Andrew Leedom

No, I financed both of them. One of them, I was looking at doing an SBA loan, but that fell through due to some issues with the carwash and gas station and the appraisal. We ended up just financing through a local bank and financed both properties through the same bank. We’re actually working with that bank to hopefully re-collateralize one of the loans and allow us to keep the loan in place while selling the gas station.

Pancham Gupta

Nice. Awesome. Given that you’ve done these two deals, have you done any other deals after these two, or these are the two deals that you’re working through right now, to stabilize them?

Andrew Leedom

I’m looking to acquire some additional properties this year, I’ve got a number of passive investments in both self storage and multi-family. There’s one I’m partnered with down in Mississippi, a self storage facility down there. But yeah, that’s what we’ve got going on right now. Hoping to add a few to the portfolio this coming year.

Pancham Gupta

That’s awesome, man. Congrats on your success. This sounds quite interesting, that the deal was listed for two years and no one wants to buy it. You step in and are willing to do the hard work of subdividing it and selling it. Actually, you have one buyer already for the gas station, and converting the other thing into the climate-controlled self storage. So, good luck with that. Good luck with the sale.

Andrew Leedom

Yes, thank you.

Pancham Gupta

So, let’s talk about this business. If someone who’s listening to you and is really interested in this business, what advice would you give to them?

Andrew Leedom

Well, first, I’d just say that there’s a number of free resources out there, a number of folks has some good self-storage books. AJ Osborne has self storage book. Mark Helm is another one. I’m a part of a group called The Storage Rebellion. It’s just a community of folks that are in self storage. They’ve got forums. You can type in a question and see all the different responses. And so, that would be a great way to just connect with people in the industry, and then just find out if it’s something that you’re interested in. It’s definitely not for everyone.

People like to think of investing in real estate as a passive thing. But self storage, it’s definitely a business. It’s running a business, owning a small business, which is why I’m involved both on the active and the passive side because it does take some time. But I think it’s a great asset and a great way for people to get started.

You can drive for dollars just around, even on Google, just looking for those small mom-and-pop operators that have been built in the ’70s or ’80s and are looking to move on. There’s opportunity there. Yeah, I think just getting started with networking and meeting folks and learning. Education is key. But it can’t stop with education. You got to take that first step of actually picking up the phone and calling brokers or finding folks that you can learn from.

Pancham Gupta

Yeah, great. Thanks, Andrew, for that. Do you want to add anything before we move on to the second part of the show?

Andrew Leedom

Only that I think that it’s possible to do more than you give yourself credit for. I think, for the longest time, I saw commercial real estate is just out of reach as something for those guys that have their stuff together, that have been doing it forever, that I’m content with my duplex. Just as I’ve walked through this process of stepping away from being an engineer to focus on this, that if it is something that you desire to do, you can do it.

There’s roadmaps that plenty of people have done it before. You don’t have to reinvent the wheel. You don’t have to do it perfect. Done is better than perfect, right? If active running the business isn’t something, there’s always passive opportunities to be involved in various asset classes.

Pancham Gupta

Yeah, awesome. Thanks, Andrew. We’ll be back after this short message.

(break)

Pancham Gupta

Do you ever feel overwhelmed by the thought that you have no time after work and find no time to learn about investing? Do you feel left behind that you are not putting your money to work for you? Do you want to create passive income, but you do not know where to start? If so, I have good news for you. I have created an investor club which I call the Gold Collar Investor Club for Accredited Investors. I will be putting together investing opportunities exclusively for this group. These are the opportunities where I have done my part of the due diligence for you and will be investing my own money alongside you.

If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat, thegoldcollarinvestor.com/club. I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow.

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(interview)

Pancham Gupta

Andrew, let’s move on to the second part of the show which I call Taking the Leap Round. I ask these four questions to every guest on the show. My first question for you is, when was the first time you invested outside of Wall Street?

Andrew Leedom

The first investment I made was that duplex back in 2016. I purchased my first duplex.

Pancham Gupta

Got it. Did you have any fears that you had to overcome when you first invested in that duplex?

Andrew Leedom

Yeah, I had a lot of fears. It was definitely the most money that I’ve had invested in anything other than my primary residence up to that point. We saved probably 50% of our income for years. And so, it was one of those things where even just the day of purchase, I’m sitting there asking myself, “Is this the right decision?” But being analytical and very conservative in nature, I was convinced that it was. I was convinced of the benefits of investing in real estate and taking that step.

Pancham Gupta

That’s awesome. Thanks. My third question, can you share with us one investment that did not go as expected so far?

Andrew Leedom

Yeah, there was another duplex that I bought that really didn’t go as expected. The numbers were there. It should have cash flowed great, but the area that it was in wasn’t great. And so there was a lot of turnover, a lot of tenants not paying. Even going into COVID, I had one of the tenants tell my property manager, “Well, I’m not paying because I don’t have to.”

So, that was a difficult one. Fortunately, we were able to sell that one and not at a loss just because fortunately the market was doing crazy things in 2020, 2021. But that one, I definitely didn’t make much on that one. It came with a lot of headaches.

Pancham Gupta

Yeah, I get it. A lot of crazy things happened during COVID. We all know. My last question for you is, what is one piece of advice you would give to people who are thinking of investing in Main Street that is outside of Wall Street?

Andrew Leedom

My piece of advice would just be to find people who are doing it and talk to them. When you initially start pondering the thought of breaking away from the Wall Street investments that we’ve all been told, that this is what you do, you put your money in your 401k and wait 30 years. Then hopefully you’ve got enough to retire.

When you begin changing your mindset and see that there’s other options out there, that that’s not the only path, that there’s other investment vehicles as well as just ways of thinking about money and cash flow, that just as you begin to find those people who are doing it. It becomes much less of an extra ordinary thing that seems so counter what what we’ve been taught, to being more of a normal thing that’s done because of reasons that makes sense.

You should never invest in something that doesn’t make sense to you that you don’t understand, which is what investing in Wall Street is. You’re putting your money in companies that you have no idea what’s going on behind closed doors in those boardrooms, and what’s driving those companies. In the same way, investing in Main Street, you shouldn’t invest in something unless you understand it. But when you do understand it, it gives you that confidence to take that step and to make those investments.

Pancham Gupta

Thanks, Andrew, for sharing your advice there. How can people connect with you if they want to connect, find out what you’re up to, and want to pick your brain?

Andrew Leedom

Yeah, absolutely. I’m more than happy to connect with anybody. My email is andrew@selfstoragestewardship.com. My website is www.selfstoragestewardship.com. I’m more than happy to reach out. I’d love to connect with any of your listeners.

Pancham Gupta

Awesome, Andrew. Thank you for your time here.

Andrew Leedom

Absolutely. Thank you.

Pancham Gupta

Thank you for tuning in today and listening to Andrew’s story. If you have questions, do not hesitate to reach out to me at p@thegoldcollarinvestor.com. That’s p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

(outro)

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.