TGCI 27: Boxes as tenants? What is Self Storage investing?

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Episode 27 – Boxes as Tenants? What is Self Storage Investing?

Show #27 - Ryan Gibson - Episode Art

Summary

In today’s show, we are joined by Ryan Gibson, Chief Investment Officer, Spartan Investment Group. Ryan shares some excellent information about self-storage investing that will be particularly interesting to those who are looking for some good, alternative investing strategies. 

We start this show with Ryan revealing the basics of self-storage investing. What is self-storage investing? And who are their target customers? Interestingly, Ryan reveals that 70% of his customers are women. 

Ryan goes on to explain his due diligence process which is quite different from a typical real estate investment. What are some red flags that you should watch out for? And, how can you discover lucrative markets where competition is low?

Other topics discussed include different classifications of self-storage facilities, expected returns, and some practical tips for passive investors. 

PanchamHeadshotTGCI
Pancham Gupta
Ryan Gibson

Tune in for some excellent insights!

Show 27 - quote art

Timestamped Shownotes:

  • 02:10 – Pancham welcomes Ryan to the show
  • 02:55– How did Ryan get started in self-storage investing?
  • 04:02– Ryan explains his market selection process for self-storage investing
  • 05:54– Ryan shares his background information
  • 07:04 – What is self-storage investing, and how do you many money from this asset class? Ryan explains in simple terms
  • 08:03 – Why does a self-storage investment perform well during a recession?
  • 10:12 – What kind of businesses required conditioned storage?
  • 12:17 – Some red flags that you need to watch out for before investing in a self-storage unit
  • 13:13 – Ryan explains how they at Spartan Investment conducts market feasibility studies
  • 14:24– Expert tips for passive investors who are considering the self-storage route
  • 16:27 – Ryan explains how he analyzes rent/square foot while vetting a market opportunity
  • 17:54 – Understanding the different classifications of self-storage facilities
  • 17:54– What is a Gen-One self-storage facility?
  • 19:27– Ryan reveals that 70% of his customers are women
  • 20:23 – Gen – Two and Gen – Three self-storage facilities – Understanding the difference
  • 21:22 – Is the self-storage industry on an upswing?
  • 22:18 – Should you avoid entering over-saturated markets?
  • 23:08 – Ryan explains how a high entry barrier can help you earn lucrative returns in certain markets
  • 23:48 – What kind of returns can you earn from self-storage investing?
  • 26:00 – Taking the Leap Round
  • 26:11 – When was the first time you investing outside of the Wall Street?
  • 26:56 – What fears did you have to overcome when you first invested outside of the Wall Street?
  • 27:49 – Can you shared one investment that did not go as expected?
  • 30:24 – What is one piece of advice that you would give to people who are thinking of investing on the Main Street?
  • 32:15– Ryan shares his contact information

3 Key Points:

  1. Understanding the basics of self-storage investing
  2. Different classification of self-storage facilities
  3. Why does a self-storage facility perform well during a recession?

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Read Full Transcript

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.

Pancham: Thank you for joining me today. And I really appreciate you being here with me. I hope you’re enjoying the podcast and also learning at the same time. Nothing will make me happier if you use or implement one of the ideas that you get from the podcast. Also, I added a brand new functionality to the website where you can leave me a voice message if you have a question. I would be doing these ask Pancham series much more often with every three to four episodes. And I haven’t actually played the clip right into the show and you know, you can introduce yourself and I’ll try to answer that question. The website address is thegoldcollarinvestor.com. I repeat the website is thegoldcollarinvestor.com. Now let’s get into the show. When I used to take my commuter train every day to New York City for work, I used to see this self-storage facility next to the train station, right where I used to take the train, then I would pass one more station or two more stations and at the second or third station, I used to see this brand new facility coming up. And right there right in front of my eyes over the period of two years. I saw this amazing new class-A kind self-storage facility next to the train station. Now I always used to wonder who really uses these self-storage facilities. I have personally have never used one. But little did I know they are one very profitable, niche asset class. Today my guest, Ryan Gibson is here to discuss just that. Ryan is the chief investment officer and co-founder of Spartan Investment Group. He has organized over $18 million of private equity for Spartan’s projects. Ryan has experience managing the development of Spartan investment group projects in challenging markets. Ryan, welcome to the show.

Ryan: Thanks for having me. So great.

Pancham: No, it’s great to have you on. Are you ready to fire up my listeners break out of Wall Street investments? 

Ryan: Let’s do it.

Pancham: Yes, great. So before we begin, do you want to give a quick overview of how you got started in this business of self-storage, investing?

Ryan: Absolutely. So we used to flip residential property and build condos and subdivide and sell off lots and residential. We kind of saw the end of the market in 2016. We thought that there was going to be a recession or some type of downturn. And my partner, Scott Lewis, and I decided to look at the asset classes that did the best during the last two recessions. And if you look, statistically, the last two recessions, medical office and self-storage are the best performers. So there’s a lot of chat about recession resistant and investing and you know, multifamily is great and mobile home parks are great, but if you look at the numbers, storage and medical office are the two higher performing assets during recession. So we also looked at scalability. So at our company, we do everything in house. We do all the property management. We do all the construction management. We wanted to be vertically integrated. 100%. So we looked at what asset classes are the easiest to manage, operate and evict tenants, you know. We didn’t want to be in the worst markets out there. And we wanted to be in markets like Seattle. We wanted to be in markets that maybe had unfavorable landlord laws, but the Self-storage laws are favorable, you know. It’s still in our favor. So, you know, most facilities, we can get a tenant out, you know, in 30 to 60 days, and we can make money on the eviction. So no other asset class provided that. No cabinets, countertops, appliances when a tenant moves out. We sweep out the unit, and it’s ready to rent, you know. We don’t have to repaint and refinish and, and things like that. So, you know, when we looked at self-storage and realized this is a performer during a downturn. It’s also exploding right now. We looked at the performance of the self-storage REIT’s, and we noticed that the REIT’s were way outperforming the other S & P and the market in general, at the time, and we were in an expanding economy. Here you are, you have an asset class that does really well in an expanding economy and a really well in a recession. So that’s easy to operate. So that’s kind of what brought us to it and then what we were immediately up against a brick wall with finding a good one. Finding the right ones to buy. Right? So that has been the kind of the biggest challenge. I think for us. That’s why we’ve scaled up our acquisition staff to about two and a half full time people to just scour the internet and as you know, Pancham, being a multifamily syndicator, the value that you bring your investors is that you look through hundreds if not thousands of these deals, and only bring a few to the table. And I think that’s what has really been the struggle. But that’s been the struggle of every real estate asset class in within the last five years. Right? You know, self-storage, is this space that just because nobody’s talking about it on the multifamily circuit or in forums or things like that, that there’s nobody in it. It’s extremely competitive. 

Pancham: So what’s your background? 

Ryan: Yeah, so my background is actually as an airline pilot and flight operations manager. I used to fly for Alaska Airlines. I flew for a US Airways provider and I used to fly for a little carrier that used to fly for Northwest. And when I was a pilot in those airlines, I got into management flight operations management. I worked as a chief pilot and an airman and instructor and also did some work for the FAA, as a consultant and Regulatory Affairs, and just kind of got familiar with, you know, working through projects and working through operations management. The real estate background, I used to provide pilot housing actually around airports. So I’d rent out apartments to pilots that needed housing. And then you know, when I met my business partner, Scott. We were just neighbors and we started flipping houses in Washington, DC.

Pancham: Wow, that’s quite a shift from flying planes to building and managing self-storage. Pretty awesome. All right, yeah. Let’s get into it a little bit of more detail. The self-storage, you know, for my listeners, can you break it down from the very basic level? Explain what that really is. And how do you make money in this business?

Ryan: Sure. So we offer individual units. There’s 5×5, 5×10, 10×10, 10×15, and 10×20. Kind of make up what you call your unit mix. So if you look at a schematic and you see a building, that’s a square. We subdivide little partition walls and make individual storage lockers. Sometimes they’re outside, sometimes they’re inside. Sometimes they’re conditioned, sometimes they’re not conditioned. We have a mix of both.

Pancham: I see. So just even going more basic. So these storage lockers is for people to store their extra stuff. Right?

Ryan: Absolutely. Yep. So our breakdowns…About 20 to 30% businesses and everybody else, okay. You know, it’s a sheet-metal guy or a dog walker or an Amazon business or it’s a newspaper distribution company or a few food distributors or salesmen or somebody who can’t park their truck in their driveway. So they park it in our facility, and then its people with too much stuff. It’s people that are moving storage. The reason why it’s one of the best recession resistant asset classes it because it relies on life events. So when you move, you use storage. When you downsize, you move storage. When you expand, you move storage. When people die, get married, relocate go to college, that’s when people use storage. So that’s why the industry has grown so much is because it’s dependent on life events. That’s what people are using storage for. So, you know, I always say I’ve never used storage. Actually I did this summer when I moved. Right? My family is growing. And I was going from one house on the side of town to another, but I needed a temporary place to put my belongings when we transition from selling one house to buying another. So I moved all my stuff out of my house and put it in storage while we were transitioning property. So that’s a life of that, you know. I recently had a son, and we were getting ready to expand and grow our family. Right? So there was a need for storage. But a lot of people might say, well, I think it’s just an industry with people with too much stuff that’s partially true. I mean, they do have a whole TV series about Americans inability to part with their belongings. So it is a factor in our business. But there’s a bunch of other uses for storage that that people have. So you know, when I always talk about storage in front of a room, you know, there might be 100 people in a room and I always say, raise your hand, if you’ve ever used storage. There’s usually about five to eight people that raise their hand out of 100 which is about the national statistic. So the national statistic in this changes everyone, you know. Who knows what it is today? It’s usually about seven square feet per person. So if there’s 100 people in a room, there’s about 700 square feet of demand, right? So that’s, that’s a real quick and dirty way of just kind of…So in summary, people raise their hand. You know, they’re renting probably a 10×10. It’s usually meeting the metric of what the utilization in the room is. 

Pancham: Got it, got it. So you mentioned something like you have internal and external storage with something with conditioning and some without conditioning. So can you break down? What kind of people use inside storage? What kind of people need outside storage and you know, the conditioning and, and no conditioning? 

Ryan: Yeah. So we operate storage in the Pacific Northwest where, you know, it’s a very mild climate. So sometimes having storage with conditioned is not necessarily pumping a bunch of air conditioning units on the property into the facility. It’s, you know, sometimes it’s just circulation or ventilation, but what people really want it for is documents storage, or perishables. Or just you know, other type of belongings that could get damaged if it’s, you know, susceptible to moisture or extreme temperatures. Those are the things that you know, valuables and belongings you know. They want to be stored in temperature controlled and you know, sometimes people have to interact with their storage unit on a daily basis. So, you know, we have, you know, businesses that want to have outside storage so they can just pull up right next to their unit, roll, open the door, get their stuff, drop off stuff. Pick up stuff and leave. And you know, that might not be the type of person that wants climate control because they want to pull up their truck, you know. Maybe they are in a sales business. They need to make some quick exchanges and be on their way, you know. They don’t have time to pull up the side of a building, go up an elevator, go down the hall, get a car, move it, you know. That that might not be the most ideal storage for that person. But that indoor storage definitely serves a market. And now we operate in Texas quite a bit, and it’s hot. And people really, really want that conditioned storage. It is becoming really, really popular. And as the industry becomes more sophisticated, that’s kind of the expectation to have climate controlled in your facility. Sometimes it demands a much, much higher price point. Sometimes it’s about the difference of regular non-climate controlled. 

Pancham: Oh, okay. So it depends on the location. 

Ryan: It does. Yeah. So, you know, like I said, in the northwest, it’s not that much more of a premium. Right? But like in states with more extreme temperatures like Texas, you’re going to get that premium for self-storage, or the at least the higher demand for having climate or non-climate controlled.

Pancham: Got it? Got it correct. All right. So what are some of the things that as an investor, you need to be careful about before investing in self-storage demand? 

Ryan: That’s the number one thing I see when you have a property and you say, oh, wow, its zoned commercial or zone storage. And I’ve got a contractor and the rent is perfect for building and then I can put 500 units here. Demand is the only thing that matters, because you could put self-storage anywhere theoretically, but will you have the demand? So you have to get a feasibility study that shows you what the unmet demand is and what the saturation is and pricing and really understand your competition, population growth, and all the things in the market that make a good facility? That’s really at the crux of every deal that we do. If a deal comes in and it kind of looks like the numbers make sense, usually within about five or 10 minutes, we can give it a call,  quick once over and in demand and decide if we want to continue pursuing it or not.

Pancham: And how do you do that? Do you have data that you parlay on top of that and see?

Ryan: Yeah, we have several different data sources. We also have a person on our staff that’s committed to it full time. So then Peter says…You know, our Director of Acquisitions, he can do a kind of a quick and dirty scrub of the data. And if it looks good, he will be pursuing but eventually it ends up in the hands of Lindsay. She’s our Director of Business Intelligence. She does all of our feasibility studies, to really understand what the market is really doing. And we actually publish all the markets that we look in, at Spartanmap.com. That’s a website that shows you the markets that we’ve found to be the best ingredients for self-storage, based on pricing per square foot based on population growth and trends. And we’re only looking in those really strong markets where we can compete.

Pancham: Got it, got it. So that’s from being you as a Spartan Investment Group trying to pursue a particular opportunity or, you know, for investing, but as a limited partner, a person who is passively investing in self-storage, what are some of the things that person need to be careful about before investing in that deal? Assuming the sponsors are, you know, good sponsors. They vetted out responses and you know, team is good. What are some of the things that they have to be careful about?

Ryan: Yeah, so I would look at the demand study that’s been done for the property. And in particular, I’d look at unmet demand. I would look at facilities that are being built in the pipeline, and how those have been factored in. So I’d ask the sponsor of the operator pitching you the deal. Say, hey, how many deals are in the pipeline being built? Awesome.

Pancham: Okay. So it’s mainly the demand. It comes back to the same thing. Demand and supply in that particular market. Right? 

Ryan: Yep. And not just theoretical, because, you know, you could go to a market like Austin and say, oh, wow, housing population is exploding here. Millennial are moving here. It’s a hot market. They’re building houses everywhere. You could probably build a house and sell it there. It’s a terrible market for self-storage. There was a ton of overbuilding. There was a lot of projects that hit the line at the same time. It’s the highest market for foreclosures for self-storage. 

Pancham: Oh, really? 

Ryan: Yeah. So it’s not just this gut feeling of like, oh, I think this would be a good market for storage, because I think, you know, some of it is gut but most of it’s backed up with data, you know. It’s an occupancy levels, has that operator gone to every single competitor in that market and studied the demand. We physically go to every single competitor, knock on the door, and assess their occupancy. We also have that data available to us online. So we’re pulling a report on that property. And then we’re making verifying it with an on-site visit and data is absolutely critical and analysing. I would say any investment like that even as we would make sure that we are going to every single competitor during the market. And looking at the data, even at a macro level, like you mentioned. For us, multifamily, the same thing. Right demand and supply applies to every market. It’s the same thing in multifamily, where how many units are coming up? Or how many, like at a market level? What’s the occupancy? Like, overall? So that is very, very important. I would look at also rent per square foot. So, yeah, so like, you know, we just bought a property where the rent per square foot, I think, when that market, I don’t know, the top of my head is like $17. To say it was $17 per square foot. Right? And so what is the operator putting in their business plan? Right? So are they forecasting $19 a foot because if they are, they’re being really aggressive? Right? So I would look at what the market rate is for non-climate, climate controlled, and then kind of see where your facility is at the subject facility to understand what the opportunity is, you know. Great example. We bought a facility back In March. 750 units just south of Dallas, and we analyzed the rent roll and found that there was $160,000 a year of potential just in rental increases to bring our facility up to market. And then that was, that was just one part of the opportunity. The other part of the opportunity was that a demand study said that we could build additional 40,000 square feet. And we had two acres, which was sufficient to build another 40,000. So we’re going to raise rents, and we’re going to add on to the facility. So you got to understand what the opportunity is, and you got to understand that the demand would allow you to achieve your business plan. And if that’s not clear, then I wouldn’t I would be skeptical of the opportunity.

Pancham: Makes sense. Makes sense. Okay, so instead of storage, do you have classification of different kinds of self-storage facilities just like we have in mobile home parks or multifamily?

Ryan:  Absolutely, yeah. So there’s different generations. So like a Gen-One facility could be or like a Class-A like. We are just like multifamily, you know. You’re driving by it, you know. Three or four levels glass, beautiful signage on the side. All interior all enclosed. Elevator loading dock. That’s your Class-A facility.

Pancham: I see and that you call it Class-A or you call it Gen-One.

Ryan: Typically, yeah, okay. Yeah, I’m sorry, I got to flip. So Gen-One would be, you know, an older one where it’s, I mean, I was just at a Gen-One facility, or a Class-D or Class-C facility in Georgia. And it’s just, you know, it was built back in the 70s. It was back when there was no market standard for the property. They have swing doors instead of roll up doors. The unit mix is just weird, you know. It’s not optimized. But if there’s demand, it’s the facility is, you know got opportunity. It just been kind of let go and not really marketed very well. But you know, those are the types of facilities that again, it’s not like multifamily, because you guys are kind of…Okay, this is a Class B apartment and a Class A market that if we, you know, do a refresh, unit by unit, we will get the rents up. Right? Storage, it’s not as complicated as that. It’s, hey, here’s a Class C facility that I might be able to make a B plus or B minus. But it’s really about the demand in the market. Because at the end of the day, like that is what they’re looking for. Our target customer is women. Women books 70% of storage business. 

Pancham: Oh, wow. 

Ryan: Yep. And then when they show up, they want to feel safe. And they want their facility to feel secure. Right? And if those two things can be met, you know, and their belongings aren’t going to get stolen. They’re not going to feel like they’re going to get mugged when they go into the property. Right? So we retrofit with cameras. When you walk into the office, you see our screens all up monitoring every square inch of the facility. There’s a good fence, good painting. There’s somebody there. The office is neat and tidy. The gate opens and closes and secure, you know, to the property. So, you know, if you’ve met those market standards, you know, you really can drive a lot of a lot of business that way versus sinking a lot into the project and going that way. Sometimes you need callbacks, but you know.

Pancham: Yeah. So going back to that, you have, Ryan, Gen-Two after that.

Ryan:  Yeah, that’s kind of like a mix. You know, it’s kind of like a mix of like, kind of outside-inside storage. You know, it’s kind of like a) it’s more secure. There might be some architectural design features to it. You know, maybe paved and maybe chipped, you know. Might be a little bit well built. Think of genuine is like, I don’t know, you’re in the middle of nowhere. And there’s like a facility that has some shacks and some shed and some metal buildings maybe. And it’s not secure. It’s gravel, you know. It’s just kind of out the middle of nowhere. Gen Two is kind of like, it’s safe. It’s clean, secure. It’s a good solid building, maybe. There’s an office, but you know, it’s not perfect. You know, Gen Three is kind of like, you know, you’re like you said, you know, you’re going on the interstate. You see a brand new cube, or a brand new extra space. Right? Kind of what we’re looking at.

Pancham: All right, great. So you said that they’re building a lot more self-storage across the nation. Is that right? 

Ryan:  Like in terms of the demand, nationally speaking, there’s been more storage built in the last decade in the entire asset class’s history. So, yeah, yeah. So you know, you see a lot of storage is being built, you’re not…It’s not just you. There’s a lot being built. So that’s why the number one thing, demand and what’s in the pipeline. Because, you know, we’re building 120,000 square-foot facility right now. There’s no other facilities in the pipeline. And that market, we’re the only business in that market. Our demand study says that we have a 200,000 square foot on demand and our actual net is going to deliver it like just shy of 100,000. So we’re delivering half of what the market says to build in a market where no one else is building around us. And it takes three years to get permits. So very, very safe place to be in the market. It doesn’t guarantee you anything, but just it’s kind of like, okay, you’ll be okay.

Pancham: You do your homework and yeah, everything is pointing towards that. So that’s great.

Ryan: Right. Parts of Denver, you can drive parts of Denver. Well, you’ll find a million square feet of oversaturation where people are still building. Yeah. So I mean, that’s great. You’ve got a good parcel and a good deal. And you’re going to build a set cost or whatever. It’s really bad if you can’t fill it up. So really did the number one thing and when we looked for that, that facility to build with 120,000 gross. We said, what’s the one area within this region that has the most demand and we’re able to study where that demand is based on the data that we have? And then start looking for property within that space? Because we have our development experience. We were able to develop land in pretty much any market. We stay out of California, but you know, pretty much in market and take it soup to nuts. And then you got to be realistic with your barriers to entry. Is it really hard to build something? Or is it really easy to build something, you know. You may be buying a great facility, but then there, you know, it could be easy to walk into the permit office and grab your permits and be building the next day. Right. So you got to weigh those measures. So, you know, really hard to build area. Really high rent per square foot, you know. Good feasibility study. Probably be a deal that you should be doing.

Pancham: Okay. So, you know, without going into any specific deal, but very generally speaking, what kind of returns have you been, you know, seeing in the last, let’s say, six to 12 months on a deal?

Ryan: Yeah, sure. So I would say that we don’t do a return of capital or anything. Everything’s just return on capital. So this is just your raw profit from the deal. We see facilities, we buy anywhere from a 6-8% cap rate capitalization rate. So if the facility was bought with all cash, you know, we would able, you know, we would be able to do the whole project at you know, six to 8% just like multifamily. Right? But for our opportunities, we’re going in and buying these at, you know, maybe an eight cap, but then we convert, you know. Reverting the cap rates up until the 11-12% range, and that is getting our investors, usually a 7%-8% cash on cash, you know. Free cash flow distributions every quarter, and then an overall IRR in the high teens, you know. 18, 19, 20% for the project. The way we evaluate deals is we look at total project return minimum of 30% based on disposition, and if it’s that low, we usually look for some type of cash flow along the way to help the IRR for investors.

Pancham: That’s great. That’s great. Cool. I guess that kind of covers all of my questions for self-storage. Thanks for sharing your knowledge. Anything you want to add before we move on to the next section of the show.

Ryan:  No, that sounds great.

Pancham: Yeah. All right. We will be back after this message. Have you ever wondered why the rich keep getting richer? What is the secret that they know? But you do not. What if I told you that well, the people make their money work for them in two different places. Yes, the same dollars invested into different places and working hard for them while they sleep. They utilize these special accounts that have been in existence for more than hundred years. Do you want to learn more about these accounts? Then you are in the right place? Listen to the episode number five by going to thegoldcollarinvestorbanking.com/bankingshow. I repeat. thegoldcollarinvestorbanking.com/bankingshow. Or visit thegoldcollarinvestorbanking.com. Alright, so let’s move on. On to the next section of the show, which I call Taking the Leap round. Now, I ask these four questions to every guest on my show. My first question for you, Ryan is when was the first time you invested outside of Wall Street?

Ryan:  I didn’t know it was my investment at the time. But I invested in my house. And I know that this is a very, very debated topic, but I bought my I bought my own primary residence that I know some of the guru’s say that not an investment, but it absolutely turned into one of the biggest investments and the best investments that I’ve ever made. I bought my own house in 2009 in Washington, DC. I gutted it down to the studs, and I sold it for a very nice profit. It was a rental property for almost seven years. And I sold it for very, very nice profit just last year.

Pancham: That’s great. Good for you. So what fears did you have to overcome when you first invested outside of Wall Street. Did you have any for getting this home?

Ryan: Um, I think my biggest fear in that project was, at the time, it seemed like a lot of money. It was a $300,000 house, which in DC, you can’t even find a condo for that much anymore. And then the very next day, having the whole place completely gutted. You know, spending that much money on a house and then and then seeing it completely destroyed. The next day made me a little uneasy. But you know, you when you have a plan, and you know what you’re going to do, and you’ve got the resources and the time and the team and everybody lined up to move forward. That really gave me comfort and the confidence to know that everything was going to be alright,

Pancham: No, that’s cool, man. If you’re tearing down the entire place. I can totally imagine how scary it can be. Alright, so my third question is can you share with us one investment that did not go as expected?

Ryan: Yeah, sure. So I thought that I was going to be this single family rental property portfolio builder and I got this bug in my ear that I thought, I’m going to buy a couple of single family rental properties every year and they’re going to cash flow and I’m going to replace my income at my, you know, and it’s going to be great. Live happily ever after. Well, Pancham, it didn’t really quite work out that way. It turns out that owning single families and renting them out is a big gigantic waste of time and a big pain in my rear end. So I bought a rental property from a turnkey provider, pro forma. These great numbers and you know, nice returns, and let’s just say it didn’t work out that way. There was a lot more maintenance on the property for being “turnkey”. There was six months of vacancy even though the operators showed me that their portfolio was 98% occupied, and it sat for six months during the winner. Completely vacant in Cleveland, Ohio, and Cleveland. Ohio is a great cash flow market. Everybody says, right, so it’s going to be great. Yeah, you don’t have to do any of the work. It’s totally turnkey. So it sat for six months’ vacation. I had a really hard time getting tenants in there. I got below pro forma rent. The turnkey provider said it was supposed to be a higher number. I got a much lower number. And then the surprise of CFO inspections. The county now has a CFO inspector. So every time you turn the property over, you got to do a CFO inspection. Well, he found that I had to spend on the property in repairs, though, even after it was purchased as a turnkey rental property. So definitely, it’s been a loser in my portfolio, but I am selling it and I will sell it for a profit so it’ll end up making money at the end, but that was just saved by the market. I just happened to buy in a market that appreciated a little bit. That’s why I held the property.

Pancham: So I had a very similar experience in Cleveland, Ohio where I did cash flow, but not that much. But I did make money just because of the market really. 

Ryan: I have one more single-family rental property to sell. So if any of your listeners want to get into the turnkey cash flow game, I’ve got one for sale in Cleveland, Ohio. Let me know.

Pancham: That’s, that’s great. 

Ryan: You know, anyone whose listening and they want that, let me know. And I will definitely get referrals fee.

Pancham: All right, great. So my final question is, what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

Ryan: So there’s a famous saying, I know my wife’s grandfather says it’s the money makes the blind man see. And I think when people are presented with a deal, they see what they want to see. You know. If you don’t know somebody and they put a really nice deal in front of you, they put a nice offering memorandum in front of you for a multifamily apartment building, you start focusing on the deal. And you don’t focus on the team and you don’t look for opportunities to innovate. Look for companies that you want to invest with. Right? So look for a track record, look for performance, meet your operator. Come up with your own checklist of due diligence and questions that you ask your operator and get really comfortable. And in baseball, you know, my coach always told me, don’t ever swing at the first pitch, you know. You’ve got a lot of opportunities here. Right? Let the first one go by right and see. And maybe follow up with that operator and see how that deals going. Right? And I think just really taking the time to vet an operator. You will be very prosperous in your investing career because when they finally do have a deal, you know that that person is trusted. You’ve maybe called on some referrals. You’ve had conversations with them. You’ve met them. You’ve walked through other projects. You’ve seen examples of how they communicate to other their investors. Now it’s time to, you know, learn about this opportunity that they have. But I think too often, you know, all these really, really nice marketing companies can put together these deals, but there’s no backbone and operations. 

Pancham: Wow. That’s, that’s great advice. Thank you for sharing that. So thanks for your time Ryan here. How can listeners reach you? 

Ryan: Yeah, our website is spartan-investors.com, or my email is ryan@spartan- investors.com.

Pancham: Great. Make sure that it’s in the show notes. And thank you for sharing all the knowledge about self-storage investing here and your time with our listeners.

Ryan:  That was great. 

Pancham:  Thank you. I really appreciate you joining me today to learn a bit about self-storage industry. I hope that you got some value from it. If you have questions, you can actually now leave me a voicemail on the website, thegoldcollarinvestor.com, and I will play directly for my Ask Pancham episodes or you can email me the questions at p@thegoldcollarinvestor.com. That’s p@the goldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

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 at the Gold Collar Investor. The information on this podcast are opinions as always, please consult your own financial team before investing



Show #27 - Ryan Gibson - Episode Art

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