Business Innovators Radio - Joe Evangelisti: How to Invest in Real Estate’s Hidden Gold Mine

Episode Date: November 28, 2023

Joe Evangelisti was once known as “the flip king” of real estate before he discovered the overlooked profits hiding in the self-storage industry. He’s gone from flipping over 100 homes per year to making 10x more in profits from only doing 5-10 storage deals per year. In addition to self-storage investing, Joe is also an author, host of his own podcast titled The Legacy Blueprint and CEO of two other 7- and 8-figure businesses.Learn more at: investwithlegacy.comRebelpreneur Radio with Ralph Brogdenhttps://businessinnovatorsradio.com/rebelpreneur-radio-with-ralph-brogden/Source: https://businessinnovatorsradio.com/joe-evangelisti-how-to-invest-in-real-estates-hidden-gold-mine

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Rebelpreneur Radio Helping you break the rules and build the business you need for the life you want And now Broadcasting his pirate signal From somewhere beyond the status glow Here's your host

Best Selling Author Marketing and Media Strategist Ralph Brogden Hello and welcome to Rebelpreneur Radio. It's the show that helps you build the business you need so you can live the life you want. I'm Ralph Brogden. We talk to a lot of people who are coaches, consultants that are doing some interesting things online. And it's easy to forget that there are real business opportunities in the real world that don't have anything to do with being online.

And so it's really refreshing to come across people who are crushing it out there in the real world. And today's guess is a great example. I'm here with Joe Evangelistee. He was once known as the Flip King of real estate before he discovered the overlooked profits hiding in the self-storage industry. And, you know, I hadn't thought about it until I started looking into this. You know, that makes sense because I've got more stuff. that I can store in my home. I mean, and then I go to places and I see what they're charging.

And it's like a Chick-fil-A. It's like, boy, I wish I had a piece of one of these Chick-fil-A restaurants. I could be making millions and millions a year. And I got to thinking, if I had a little piece of a storage place, I could really be crushing it. But I would even know how to go about doing that. Well, Joe is an expert in doing this. He was once known as the Flip King in real estate.

Now he is finding profits that have been hiding in the self-storage industry. He's gone from flipping over 100 homes per year to making 10 times more in profits from only doing 5 to 10 storage deals per year. So that's pretty smart because you're working a lot less and you're making 10 times more. So in addition to self-storage investing, Joe is also an author. He's a host of his own podcast titled The Legacy Blueprint, and he is CEO of two other businesses that are doing seven and eight figures a year. Can we learn something from Joe? I think we can. Joe Evangelistee, welcome to Rebel Burnoo Radio.

Thanks for having me, Ralph. I appreciate it. Absolutely. Man, tell us how in the world you got started doing this. What got you turned on to real estate, and then where and when did you see the opportunity to get into storage? Yeah, I mean, it really all started when I was younger. My father was the first entrepreneur in our family, and my parents were divorced at a really young age. And so, you know, when I was about two years old, from that point on, you know, nights and weekends were spent with my dad.

And, you know, he was in construction. So we'd drive around job sites, you know, so I grew up, I grew up in construction on job sites, walking around, checking on things. And, you know, either with a broom in my hand or a hammer in my hand or. a drywall trial on my hand. And so it's been in my blood from a really young age. And I just always loved construction. I always loved seeing things being built and, you know, kind of created from something, you know, turning something into nothing from nothing to something. And, you know, whether it was a kitchen or an addition or, you know, whatever, all the way up to now we'll build 100,000 square foot self-storage sites. But I always love the process of creation, you know. And so I've

always kind of been addicted to that. And out of high school, I did a little break and did six years in the military and actually got to do construction in the military in the U.S. Navy C-Bs. So it's actually a builder in the Navy, which most people don't even know that existed, but did that for a little bit, got to do construction. And right after that got right into real estate and started doing houses. Wow. So how long, how many years were you in real estate? I've been in real estate now for 16, 17 years, starting to date myself a little bit. But I got in in 2007. Okay.

All right. O seven. So that was just before the big collapse. Was that the opportunity? Absolute best time ever to get into real estate right before it's, you know, now, you know, I really thought that I was going to take my life savings and turn it into a million bucks overnight. And, you know, I called a really lucky opportunity, Ralph. that I got in at the time because I learned so many lessons in the first three years

that probably would have taken me decades to learn had I got in at a different time. But it taught me a lot. You know, we flipped our first three houses. And before I could even sell the first one, you know, the market really softened. And then it took a massive turn. And then it just, you know, the rug came, got pulled out from underneath the bus. But, you know, it taught me to pivot and course correct. And, you know, I thought I was going to be a flipper.

just buy, fix and flip and resell for a profit. And, you know, I woke up 18 months later and I was a landlord. And I had tenants and I had to stabilize the asset, go back to the bank and ask for long-term loans. And, you know, I say I learned a lot because I didn't get any of my initial capital back. So I had to figure out ways to continue to do the business creatively with no cash. And so it led me to working with private lenders and buying properties more creatively through creative financing and some other methodologies that we learned to use for over a decade.

And ultimately, we did hundreds and hundreds of deals from that point with those methods that, you know, otherwise, I might not have learned if I kept doing it traditionally, you know? Sure, sure. So along the way, you did very well for yourself. You were flipping over 100 homes per year. And then were you looking for a way to make, you? looking for a way to make more money and not work as hard, or did you just kind of stumble into the self-storage opportunity?

Yeah, I mean, first of all, I think our best year was 88 houses. We got close to 100, right? But it just, it sounds a lot more. That's pretty amazing. I mean, that's, yeah, yeah. If I were to contemplate two or three of those, but 88, that's really amazing. I wouldn't recommend it to anybody, right? It was, you know, the way we made the transition, at the end of the year, and this is about five or six years ago, the end of that year, my business partner and I sat and we were evaluating like, what do you want to do next year? I think we're going to do 90, 90 some this year. You know, do you want to do 110, 120 next year? And he looked at me and goes, I never want to do this again. And I was like, thank God. Thank God you said that, right? Because, you know, I feel the same way. This was the most stressful year of my life.

You know, I had some takeaways from that. I realized it's a very transactional business. First of all, it's not a bad business. It's a great way to learn how to run a business and how to understand real estate and understand transactions. And, you know, I don't tell people not to do it. I just, I would have transitioned earlier had I known the magic of commercial and the scalability and that type of thing. But, you know, the transactional, the chasing of deals, the constant. There's a lot of things you can't control in residential, you know, mortgage, you know, approvals and appraisals and home inspections and just a lot of things, a lot of moving pieces.

And, you know, when you're running a business with 40-some employees and a huge payroll and you're constantly trying to get to Friday and you have massive closings that, that, you know, are pending your cash flow, it's just a churn and burn, man. The money goes in as fast as it comes out and vice versa. it was just a very, very high stress, high anxiety type of business. And, you know, my tax returns always said I made a ton of money, but I never could put my hands on any money. Like I just never seemed to have any money. So, you know, it was a high burnout type of atmosphere. And, you know, when we made the transition, I knew I wanted something more scalable, more efficient, a much smaller team, but something that was more legacy wealth creation, you know, the transaction of real estate and buying and selling is never a long-term wealth vehicle.

You know, you can sell and flip houses, make a bunch of cash, but you're not creating wealth over time. Really, you're just, it's just a cash register. And so I knew I wanted to the transition that was something that helped us keep more real estate over a course of a long period of time. And that's really what we got into with self-storage. So like McDonald's, for example, I've heard people say McDonald's is in the real estate investment business and they just happen to be selling hamburgers. Absolutely. You're in the real estate investment business, but you just happen to be building self-storage units and selling off little pieces of it or renting out little pieces of it. It's almost, I guess the analogy is kind of like having an apartment complex.

but instead of renting out apartments, you're running out storage units. And it's kind of a microcosm of that. What turned you on to that? How did you run across that? Well, I got turned on through a myriad of different conversations, but I'm glad you brought up the apartment analogy because a lot of my friends to this day are still in apartments. And, you know, one of the comparisons that we made was, you know, let's do apartments. And one of my mentors at the time said, look, you know, self-storage is concrete, steel, and asphalt, right? There's just no maintenance.

There's no update. Very little, right? I mean, you're going to have maintenance every 10 or 20 years updating some different, you know, wearable, you know, steel products and doors and things like that. But, you know, when you do a turnover with an apartment, you know, you could spend $3,000, $4,000, new kitchens, new flooring, new tile, new bathrooms, new bathrooms, new toilets, new vanities. You know, when you do a turnover with a self-storage unit, what are you doing? You're sweeping it out. You're sweeping it out.

You're taking a blower. You're blowing out the dust and it's ready to rent. And instead of taking maybe three, four, five weeks to make ready sometimes, it's taking three, four, five hours. And so the difference is very, very noticeable. It costs a lot less to build. The rents are not comparable, but, you know, in proportion, the cost basis is is a lot better in self-storage. And, you know, for me, the management, the maintenance,

and the overhead is just so much more sustainable and the profit margins are better. So, you know, it's a very much of boring business. You know, nobody takes pictures of self-storage and says, look at this amazing pool or this amazing bathroom, you know, because they're just metal boxes. But, you know, and, you know, I've heard it said, like, it's not a sexy business, but the numbers are sexy, right? And so that's the part that excites me about it. Well, 10, 10 times the profits and only doing 5 to 10 storage deals per year. So the numbers speak very well for themselves. So your approach is it to build and then promote or are you looking for existing things to take over or a combination? Yeah, we're really pure developers. So very much kind of like your McDonald's model, you had mentioned earlier.

You know, again, good analogy. We're going to buy that real estate. We're always building class A sites, meaning they're the big ones, you know, 80,000 to 100,000 net rentable or bigger. Your Cube Smart's, your extra space, your public storage type facilities. And the little known fact that most people don't realize is a lot of those companies, short of public storage owns most of their stuff. But like your Cube Smart only owns about 50 to 60 percent of their assets. So when you see a sign that says QSmart, 40, 50% of those signs are owned by people like me. So it's very much the McDonald's model where they own it and they get a QSmart to manage it. They control the real estate.

They own the real estate with partners, of course. I have fellow investors that come along to do it with us. But we're just putting tenants in place, getting management to take care of it and, you know, kind of sit back and let the asset manage itself and cash flow. It sounds like a nice bull. boring cash flow machine, which is what you want. If you want something exciting, try a franchise. Because, yeah, you've got lots of excitement, but you've got a ton of work. When you get to a place where you want predictability,

sustainability, reliability, and you're willing to try. a little bit of quote unquote boring for that. I think the tradeoff is well worth it. If it's so profitable, how come everybody is not doing this? Yeah, I would agree with everything you just said. And, you know, I think for a lot of folks, A, they don't know about it. You know, I think it's not been popular until the last few years. You know, it's actually gotten quite a bit more popular in the last two or three years, it's become more of that, like, first class A type of commercial asset to look at. You know, pre-COVID, retail and office were huge.

Apartment buildings were the thing. You know, that was the sexiest asset class to be in before COVID. Still very competitive. But luckily, through COVID and post-COVID, everyone's talking about self-storage. So if you're in the commercial sector, it's what everyone's talking about right now. And, you know, it is kind of competitive. There are a lot of people getting into it, a lot of people transitioning into it. A lot of developers that used to do multifamily or do office projects or retail projects

are now looking at self-storage as an alternative. And so, you know, it's great on one hand because it's shined a lot of light on the industry. But it's challenging in that it's much harder to find sites. And you've got to be really good about underwriting and finding the right. right locations to build so that your model and your success rates go up. Yeah, I'm glad you mentioned that because that brings me to the next question I had in mind. It seems like, at least in my area, that every time you look, there's a new self-storage place going up, and these places are huge.

What is the growth potential here? I mean, how much opportunity is out there to find a place? buy the real estate, put it in a central location where the demographics and the population and the growth that all matches. Is it kind of like the Wild West or is it more limited than that now? There's still an absolute ton of opportunity, but you've got to be really smart about where you're going to go. You know, when I started four or five years ago, one of my mentors said to me, Joe, like,

you could take a dart and throw it at a map in the United States and build a self-storage there and be successful. It's not quite like that anymore. And nor have we ever wanted to do that. Our goal has always been being the top 15% of MSAs, the best locations, the best sites. That's always what we're striving for. But it's not quite like that anymore. The challenge today and today's market is if you build a self-storage in most places, now there are some places that are over-saturated. Most major MSAs have pockets of areas that need self-storage. Your biggest challenge, your biggest challenge is not is it going to be successful, it's when it's going to be successful, right? So can you sustain the time it's going to take to fill that location with tenants?

And so, you know, with rates and with terms, with financing, with the way you're structuring your partnership, can you hold that asset long enough for the tenants to be filled? And so it's this race, right? If it takes you three or four years, to fill with tenants, can you pay the debt, you know, for that time period until you get to that point? Or if you're in a really good market and you ramp up in 12 months, there's a massive difference in cost, obviously, between those two types of markets. And so 12 months would be an extremely fast ramp up in today's market, almost impossible, unless you're in just an absolute crazy area. And we do have one of those right now that we're about 30% occupied in, two months, which is just unheard of.

Wow. Whereas some places are taken three to four years. And so, you know, when you're holding 10 or 12 million dollars in debt for three years, and it takes you, say, you know, two and a half of those years to break even, it's a lot of holding costs that when you're paying eight, nine, ten percent interest only to the bank. So it's just a matter of can you sustain it? And is it a good play? Yeah, yeah.

Lots of things to be considered. So you're not just the self-storage expert. You're also an entrepreneur, obviously, but a coach. So what is your coaching? What are you helping people to be able to do with the knowledge and skill set that you've obtained? Yeah, really, most of my coaching is helping folks unlock what's already inside them, right? So many of us have the ability. We have the drive.

you know, we have the knowledge. We have a lot of the tools that we need to be successful. And really, this comes from years of myself being in coaching and being in masterminds and surrounding myself with great coaches and, you know, really taking years myself to unlock my true potential and understand that what's holding me back from being successful. And a lot of it is mindset. A lot of it is who I'm surrounding myself with. A lot of it is what I'm listening to, what I'm feeding my brain, you know, how I'm positioning myself for success, the, you know, the people I'm surrounding myself, the conversation, the podcasts I'm listening to, all those type of great things, right? And so my coaching is really designed around that. It's unlocking the

potential that's already within people. And so it's five core principles that I get into that help them really unlock those things that are within them. And then, you know, a small percentage of that is helping them make good connections, helping them figure out who they need to to know. And a big piece of it is helping them get into real estate. So, you know, I'll help a lot of folks that are doctors, attorneys, or, you know, insurance brokers. And, you know, they're, they're not only trying to become better at what they do, but they're also looking for resources to invest and try to find ways to become involved in real estate. And it might not be my deal specifically, but I can help them figure out, well, how do I get involved in real estate as a byproduct

of, hey, I make really good money, but I'm not building the net worth that I deserve. I'm not building the legacy wealth that I want. I'm not building generational wealth the way I think I should be. And so it's kind of a two-part approach with the coaching. It's a part mindset and unlocking potential, and it's part legacy wealth building as well. Well, and that's a powerful combination. And if you don't have the mindset, and that's why one of the sections on our website is devoted to conversations about mindset.

And what I've learned about mindset is, and I say this over and over again, especially the clients, I'd love just to give you a mindset module and say, okay, here you are. Here's the three steps to get your mind right. But what I've learned is it's an ongoing thing. It's like a garden that you have to constantly weed and you have to constantly take care of. So it's not, that's where the coaching really helps is because, those mindset things keep coming up over and over again. Just when you deal with one aspect of something, here comes something else.

But I like how you're taking that and you're applying it in a practical way, wealth building. I mean, that's a powerful combination. If you can get your head right and then get your finances right, there's no stopping you. Could you, would you mind sharing? You probably don't have time to share all five, nor should you, but can you give us one core, principle there that it seems to be foundational with the folks that you're working with. Yeah, I mean, aside from mindset, I think the second most impactful core principle is what we call controlling the clock, right? So just kind of a good example is one of my clients,

and he just kind of gave me this testimonial recently. I've been working with them for about three and a half years. And when I started with him, you know, a lot of us, you know, we let ego drive us, right? And this is a guy that was in his mid-50s, and when he started working with me, he had had five different companies. And in our first nine months working together, what we actually did, you know, a lot of times subtraction is addition, right? Yeah. So we actually got rid of three out of five companies that were really weighing him down. And so by the end of year one, he had actually doubled his revenue, his take-home pay, what he was paying, like bringing himself for his family by subtracting three out of five companies.

companies. Right. And so he had spent nearly a decade building up these five different, you know, revenue streams to eliminate three out of five in nine months and double his income. And by the end of that year gave me this testimony, well, he just recently gave me the testimonial, but he had told me like, Joe, I didn't realize what I didn't know when I first met you, that I was absolutely miserable. And eliminating those three changed my entire outlook on life. And so that was a really impactful testimonial. You know, controlling the clock is not just being more effective and efficient, but it's making more time for family. It's making more time for your wife. It's making more time to be, you know, he enjoys a great cigar. So, you know, now he has

Wednesday's cigar afternoon every single way. He's like, I haven't missed a cigar Wednesday in two years, man. And he's like, I have you to thank for that. And so, you know, that's the kind of stuff I love is like, man, it's not just about making more money. It's about enjoying the time we have because it goes by so fast. Yeah, yeah. And every time I, and that's such a powerful testimonial. Every time I hear a testimonial like that, it reminds me of Michael Gerber, who really inspired my, you know Michael, he really inspired the whole rebelpreneur philosophy in my mind when he said that the purpose of a business is to give me more life. But if your business is not designed to give you more life, it will always do the opposite.

It'll take the life that you've got. And what a wonderful revelation to wake up one day and realize you can accomplish more by doing less. Eliminate three-fifths of your stress and worry and just focus on the one or two streams of income that's enjoyable. You do it better. So innovation is not about adding. It's about subtracting. And then as you said, subtracting is adding. And wow, that's that's rebelpreneur right there.

That's the whole mindset. That's what we're all about. Joe, what are you working on right now that's got you really excited that you can share with our listeners? Yeah, I mean, we're really working on ways to scale the development side. You know, we're working with a couple different, I would call them more like joint venture partners that can help us. You know, my goal is to build 20 self-storages a year, which, you know, know, the big picture, that's like $400 million a year in self-storage, which, you know, I'm not using that number to, like, impress anybody. It's just internally, it's a lot of development, right?

It's a lot of construction. And so, you know, getting the right partners in hand to do that, our team is built to build those. It's just a capital bottleneck. So we're very close to having two or three of those partners in line. And I'm just really, really excited right now to do that, almost in the face of this, you know, whatever they want to call recession or, you know, because it almost doesn't matter what happens in the economy that these sites where they're at and being selected properly will make sense with the right capital partners. So it's kind of like we're in the face of doing that while everyone else is kind of restricting. We're on we're on the go button right now.

So I'm kind of excited about it. Yeah. Another, another, another maverick mindset, another revelpreneur approach. I love it. So, Joe, how can people reach out? to you if they want to find out more about your coaching or your your your financial consulting and mentorship and how that all works together what's the best way to to reach out to you yeah our website is simple it's invest with legacy dot com and all of our stuff's on their own legacy deals and

you know all of our projects and everything else is on that site wonderful invest with legacy com and we will have that website address, a link from the rebelpreneur website as well. So, Joe, I really appreciate you being on the show today. Any final thoughts or words of wisdom you'd like to leave our listeners with? No, listen, just go out there and take action in the face of diversity. I think it's a great show and I really appreciate you having me on and I love what it stands for. So I appreciate it.

My pleasure. Thanks so much, Joe Evangelistee. It's Invest with Legacy.com and appreciate you sharing your wisdom with today on Rebelpreneur. You've been listening to Rebelpreneur Radio with Ralph Brogden. Download the show notes and much more at Rebelpreneur.com.