The Science of Flipping - Unveiling the Profit Potential of Self Storage Investments | Aj Osborne

Starting point is 00:00:00 Yo, yo, welcome back to the Science Flipping Podcast. I am your host, Justin Colby. And before I get to my special guest, he is special. I have to give a big shout out to our main sponsor, MinutePages.com. They're your one-stop shop if you're an investor or an agent for a professional website that gives you credibility, influence,

Starting point is 00:00:19 and authority in your marketplace. And if you go to them, make sure you ask about Lead Detector as it is a feature that lays over the website and captures leads from people just stalking your website. Never seen anything like it. It is incredible. Go to minutepages.com. Now that that is out of the way, I have a new friend here. Someone who funny enough has been mentioned to me several times in my recent past. And out of nowhere, I get an invitation to have him speak with me on my podcast.

Starting point is 00:00:50 And so I have Mr. A.J. Osborne in the house. How are you, brother? Doing good. How you doing, man? Thanks for having me on here. Yeah, no, I'm excited to have you on. For those that don't know how I know you is I myself have just jumped into the storage facility space in Tulsa. Bought one for two point four with a mutual friend, my business partner, mutual friend.

Starting point is 00:01:13 And I love it already. Right. Because there's there's no toilets and there's no tenants. Right. And there's tenants, but different type. Right. And so the fact that I was able to get you on my podcast for those that love storage, they love commercial. This is your expertise. And I know they're going to have a lot of engagement. This could be one of the bigger shows here that people are just going to love. So I just want you to light it up, dude. We're going to have an awesome conversation. versus let's just say residential real estate, not commercial residential, straight up single family homes, right? That is my expertise. I want you to have a conversation the same way I do with Grant Cardone, right? He just tried to disprove me over and over and over again on why he liked the apartment complexes and I liked single family homes. What is your love about storage? Wow. That's a big question because yeah unpack that no so um you know i think first of all it's uh your deal um that you did it was actually my team that uh um underwrote that looked

Starting point is 00:02:13 at that everything else so uh yeah we're in tulsa in a big way and so yeah i know know your deal um uh intimately so good was it a good deal did i I make a good decision? It was, it was, um, a deal that, uh, was too small for us. Cause we do really large deals. Um,

Starting point is 00:02:31 so we, we, we want to place huge amounts of capital and we need a lot of space, especially for our machine to work. But it was the reason why I know it so well is because we were like, we want to do it, even though it's in our buy box. And we're like,

Starting point is 00:02:44 no, we got to stick to what we do, but we want to do it. So it's a good deal. Yeah, that's great. Yeah, there's a lot of things that I love about storage. Okay. And a lot of people we hit on the basics, no toilets, right? But I think there's a lot of misnomers about storage.

Starting point is 00:03:03 It's hands down the most misunderstood commercial real estate asset class out there. And I hear this all the time. And the reason why I love it is actually, I think, one of the misnomers where people are like, storage is really passive because there's no toilets. And that's actually totally the opposite. I love storage because there is so much operational power and efficiency. We have drivers all over the place. Meaning that we look at storage as an operating business. I do not believe storage is real estate. In fact, I wrote my first book and I got big in the industry because I wrote exactly that. I started speaking a long time ago saying, storage isn't real estate, it's a business. And what I did was I bought real estate and I turned it into a business. And that was extraordinarily profitable. Now, that model, since I've written the book, since all that stuff has gone on, especially after 2008, which we can get into history and everything that is now mainstream, meaning that that's like how

Starting point is 00:04:09 you have to work to even compete. So there's lots of levers that we can do because there's different types of units, which I look as products, and then we're doing product customer fit. So I'm analyzing every single unit type, its usage, who's using it, where they live, how much they make. We look at all of this. We do dynamic pricing, revenue management, like hotels and airlines do. So our rates are fluctuating and changing every day. And every tenant is paying different for a different door. We're doing specialized advertising, right? We're competing and we're competing heavily. But what we found was that I could buy this real estate asset that was relatively stagnant. And then I could implement these things into something very

Starting point is 00:05:00 dynamic and I could easily extract what I call money on the table. And that was money that was just sitting there, but the former owner wasn't, or maybe didn't even know how to take it off the table. That to me, I loved because I came from a business world and we got started in it. And that was measurable and scalable. So I could measure exactly what I was going to get. I could build a system to get it, and then I could repeat it and I could scale it. That is the biggest difference between storage and a single family homes is your scalability is just not on units. Most people think, oh, I can scale single family homes because I can buy lots of them, right? And that's true. I can scale storage because I can buy lots of them, but I can also buy one that has 50 doors and 2000 doors. So I can scale both in magnitude and volume.

Starting point is 00:05:58 Those two things make scalability way more, where you are very limited on single family homes on, first of all, what you can even make. The market is the market, right? And the market isn't even decided necessarily on profit. That's not the driving factor. Now, that's actually can be a really good thing because you can take advantage of it, right? So there's actually a little bit about that. So we don't have that storage. It's actually what it makes. It's an investment. But we have all the stuff that we can do to change that revenue. So although the market may not be quite as inefficient at times as you can get with single family homes, there's way more control. So the scalability to me is really predicated on that control metric. If I'm going

Starting point is 00:06:45 to get from here to here, what am I going to do to this revenue? And how can we change it? How can we measure that? Then we have a very distinct buy box with a known rate of return and a known rate runway and improvement method. So we can be very active in it. And then we can build a company around scaling that and executing on that strategy. And so that's what we did. And storage is really popular now. A lot of people know about it and everything. When we got started though, banks didn't even want to loan it. So I'm talking early 2000s. And at that time, storage was borderline a junkyard. It was not considered a major investment group. It was considered very risky. Banks didn't like it. Investors didn't like it. There was no expertise. 90% of the entire market was mom and pops. And that's changed wildly. So it's an

Starting point is 00:07:42 incredible asset class. I think by far the best one of all commercial real estate assets. But why I love it in comparison to single family homes is it's known money on the table, my ability to measure a set profit, take it out, and my ability to scale it both on magnitude and volume. And so those two things allow me to create a very dynamic business plan and do it in a very condensed short period of time. You can essentially retire on one. Yeah. So the deal that, let's use my deal as an example, right?

Starting point is 00:08:23 So when we bought the deal there were improvements that we wanted to make mostly out of um what's the word i'm looking for like they were unnecessary but we realized to your point those improvements will allow us to create more revenue by charging more right like such like a gated a gate right security gate a remote security gate uh cameras um paint right obviously you know to your point like it looked like a dump yard like it just hasn't been painted in probably over a decade right um and these three simple things that were not very difficult got us from our projected profit in month one by month four we 3x that number and it wasn't i mean that is not life-altering type of stuff that we had to do

Starting point is 00:09:13 right we bought security cameras we bought a security gate we painted it and we we literally 4x our projected revenue from month one to month four. That's right. Which was, and it's going to continue to go because as people come in now, our rates are higher. Exactly. And so it definitely was an easier,

Starting point is 00:09:36 I guess, stabilization, if that's going to be the right word in that space. Right. Yeah. But let's just say we didn't do that. The asset performed in and of itself. I mean, that was, that was the kind of the kicker. It's almost like you look at it, like, do we even have to spend the extra a hundred grand? Cause they don't really have to.

Starting point is 00:09:57 No. Right. It's an investment. You're buying it as an investment. So the moment you buy it, it should be profitable and giving you money or you shouldn't be buying it. That's right. And so it's like, that's the thing that I loved about it because what we were doing is I was looking at ways to improve it, but our downside, right? As in, well, all right, if all else fails, this is a good investment. That's right. And over time we make more money and pay down debt and all the benefits of the real estate, regardless of the other stuff. How many properties do you own?

Starting point is 00:10:35 So I own over 3 million net rentable square feet across 11 states. And I own a software company in the space. I own a construction management company, an architecture firm. I own a debt brokerage firm in the space, the property management. We do everything in-house on that end. I also have the largest podcast in the space and the number one bestselling book. So I'm a super nerd when it comes to storage. Yeah. But you're vertically integrated, which is very, very important, right? In my opinion, right? And so what's your exit strategy of it? What are you going to do long-term with this? So we don't necessarily have a defined exit strategy. And that is actually one of the things that makes us very, very different because we don't need to. So what we learned was very early on when we didn't take investors. So we built our company to 150 million plus in assets

Starting point is 00:11:34 with no investors. It was me, my father, and my brother-in-law. And we worked, we put our money into it. We did all these other things for 10 years and we built a real estate company around it. And a lot of it we had to do out of necessity. It wasn't because we wanted to do it at the time, which you don't have to do now. It's way easier to do storage than it used to be. Now, when you look though at our overarching portfolio, when you look at where we've gone and how we've achieved these things, the main driver was the fact that when we started out, we didn't have excess capital. So there wasn't a situation where we could say, oh yeah, we'll just buy this, lock it down, and then move on. I needed my capital back. So I had to get that money back because I needed something that

Starting point is 00:12:26 was really important to me, which was compounding. And I could not compound unless I could get my capital back and reallocate it. What that meant then was we had to figure out how to do this without selling it because I had to have the cashflow to pay for the operations for that company that I built. There was no management company that could manage our storage facilities at the time, so we had to build it. So now if I sold it, I lost the cash flow to pay the bills. Well, then how do I get compounding? So instead, what we did is we looked and said, we have a buy box where we're going to find severely underperforming properties. We're going to buy them. We're going to turn them around. We're going to refinance. We're going to take all our money and profits back out tax-free.

Starting point is 00:13:09 And then we're going to take that money, reallocate it. And I still have the original source paying my bills. That was the answer to our problems. So that's what we did. And we just compounded and built and built and built. And now we have, I mean, well over 300 million in assets. How many properties is that in 300 or- 30 right now. 30 properties. 30 large facilities. I was going to say, those are larger, right? Because my 15,000 square foot

Starting point is 00:13:34 wasn't even big enough for you. What's your venture square foot wise? Minimum 400 plus thousand in gross revenue. And that usually leads to 65,000 plus net rentable square feet. Our average is probably 120. We have 200,000 plus square foot facilities. We've got everything from bankrupt super K-marts to office buildings. We've turned into facilities, ground up to acquisitions, to expansions and everything in between. Now, that was one thing as you came into my world and people were mentioning your name. And again, this, it was this auspicious moment, right? It was my friends and some of your students were saying, Hey, do you know AJ and this, that, and the other. And then, uh, simultaneously Ryan and you had a episode that went on to

Starting point is 00:14:22 Instagram and I saw that I'm like, dude, and then your team emails me about, Hey, have them on your podcast. Right. So the thing that you were presenting on Ryan's was like a Kmart build out. And I thought that was really impressive. Um, and I'm going to stop here because my audience really tends to be more the newer investor. This Kmart build-out is nowhere near a newbie type of thing, right? But very interesting nonetheless. I want to talk about it. But let me revert back to the question I really wanted to pose was,

Starting point is 00:15:03 do you coach or teach newbies this, or is this a little too advanced? Just in general storage. I'm not saying the Kmart build out, because that's pretty aggressive. Let me show you how basic it is. And so, and we do, we teach, we have people in our groups, everything else. But the thing that to understand how basic this was, when we got started, our entire business model was this. We bought in really small towns, small assets that did not cost a lot of money. And our business model was we would make sure people paid their bills. We would answer the phone and we would let people know that we were there. Yeah. That's it. It's our business model. That business model

Starting point is 00:15:39 still works in most of America. Why? Because most of America are small facilities. And I tell people this all the time. They're like, well, I'm not big enough to get into storage. And I'm like, what is a duplex run in your market? And they're like $400,000, $500,000. And I'm like, well, one of our students actually just bought a deal that we'd brought to them for $250,000 and add 60 doors. And I go, diversification, commercial asset, you get better rent potential. Because I go, how much can you up rents on two doors? And it's like, can you get 10%, 15%, 20%? Answer is no, we cannot increase rents by 20%. And what happens if you do, they move out. And I'm like, well, on this, he's got 60 doors. Some of those rents went up 40%. And that's a huge, massive impact on gross revenue um so right there alone shows how even people that are

Starting point is 00:16:48 beginning i actually think that most of these assets are actually safer than a lot of markets buying duplexes four plexes sure that are super expensive very risky because you have limited tenants not risky as far as felt but i'm talking risk based upon revenue. So 60 doors versus two. And so a lot of people think about these things as these huge commercial deals. Whenever you start talking about commercial, they think like office buildings. And it's like that storage, that's actually not necessarily true. It's not like office, right? It's not even like multifamily. We don't pay that much. So when I'm talking about 200,000 square feet, we're getting into big assets that I'm building at 20, 40 million. And that's in big cities. But when you start to get into most

Starting point is 00:17:37 third, fourth tier markets, small facilities, you're not over 2 million bucks. Lots of them are under a million and they're very mom and pop. Well, what you described, the reason why I ask it is what you described in the residential space is the Burr method. Buy it, rehab it, rent it, refi, do it again, rent and repeat. So it's the Burr method. I do that. We're buying 21 doors right now in Raleigh, North Carolina, all fully rented. Well, no, I'm sorry. Two out of the 21 aren't. We're either going to liquidate them or remodel them and then stabilize them and have higher rents. But the model is the same. We got it at such a good discount. The little amount of work that we're going to be able to do, we're essentially going to pull out all of the down payment that we need to do, acquire it with the long-term loan.

Starting point is 00:18:27 The model is the same. So we're buying this for 2.4. Funny, that seems to be the number of these days for me. It's going to be worth 3.4, 180 days later. And that same thing to your point, a newer person could do that the same way a newer person could go into Tulsa, Oklahoma and find a $500,000 storage facility somewhere and clean it up, make it nicer, raise rents, refi out with a commercial loan. It doesn't, there's no real difference there. Now I actually think given my 15 years in residential, storage is easier, right? I know you say there's a lot of levers. Yeah, those are typically levers in a good way, meaning you don't have the toilets and the people and the dramatics. I had a car

Starting point is 00:19:17 drive through one of my rentals. I had a tornado hit one of my rentals. Now, tornadoes still exist and so do drunk drivers, but you might have a security fence around it and they run into your security fence, which is a whole lot different than running directly into someone's living room. So I say, I would encourage people to look into this space. This is why I had anything on. This is the guide to know. Once again, I think it offers the best opportunity for normal people to be into real estate with the most upside and the least downside. What about lending right now? Let's talk about that really quick. Is that a little tough right now? Yeah. Yeah. Lending sucks. And two, I want to make sure that... No, I am not a cheerleader, which is funny considering I have the largest platform in the space,

Starting point is 00:20:05 but I'm not. I'm very transparent with the good and the bad, and there is bad. So what you were just mentioning with every investment, you have two sides, okay? And it's always a trade-off, like I tell people, all right? You don't have toilets, but then you have month-to-month leases and your occupancy fluctuates like this throughout the year. And if you mess some things up, it can fluctuate quickly, right? And so then you have to actually be actively engaged in the bringing people in. So it's a different kind of operations.

Starting point is 00:20:38 So I don't want anyone to be like, oh, you're a cheerleader making this sound either, because I'm not. I want to be like, oh, you're a cheerleader making this sound either, because I'm not. I want to be very realistic here. And when I look at that and you compare that to other asset classes though, that's where I come to my conclusion that it offers the best opportunity. And that's divided up into two things, the asset itself. So the benefits and the operating of it, because those operational things that we're talking about, once you get into the small facilities and particularly in small markets, it is not rocket science. Now that changes dramatically when you move up, right? Then it kind of is rocket science and a lot of

Starting point is 00:21:19 this stuff. We pay huge expensive software systems to operate these things. We internalize our own tech stack so we can get data. It operates more like hotels and on that revenue management side and everything else like that. But when you look at the comparison to, first of all, other asset classes, it's the lowest defaulting asset class in 26 years. And it also is the best performing. And once you get into these third, fourth tier markets, you're not competing at levels with these big boys that you are otherwise. So everything rolls to a very basic thing on the business and operations side that everyone can get. Make people pay their bills, answer your phones, customer service, right? And make sure people

Starting point is 00:22:05 know where you're at. And that's what I'm talking about operationally with a lot of these assets. And you can really, really change the revenue with those things. So that is the first part. The asset itself, I think, is far superior for somebody starting out and then other commercial real estate assets. But the second is the industry. And what I mean by that is if you look at multifamily, so if you're trying to scale up in multifamily, you are quickly in a space where it is dominated by institutions, vastly dominated. 80% off of ownership and operator are some sort of institutionalized fund syndications capital, big boys, right? Well, self-storage, we're at about 50% right now that is mom and pops. And the big thing about this

Starting point is 00:22:55 is that's changing. So when I got started, it was 90% for single owner, mom and pop, 90%. Now we have consolidated in the last probably five years by roughly 15%. Now that is driven by ease of operations because we now have third-party vendors that can service and ability and capital, meaning banks now understand the assets they're willing to lend. So now why would that be a good thing for anybody else? That means you have a buyer's market. Prior, if you owned a storage facility in a third or fourth tier town, you may never have a buyer, right? And I've been through that. And I went and we'd buy facilities and we were paying 12 caps and we would never have one person competing with us. There was no other buyers, right? That is not a great thing when you're an investor. So now that market doesn't exist.

Starting point is 00:23:56 So now you have the inventory to go out, actually out and buy without competing against the big guys. So now you have runway on the actual investment vehicle, and then you have a great one that functions, but then you have resources like property management systems, third parties that do marketing, all of this. So now third parties that can help you operate that facility. Those things didn't literally exist in any way, shape or form like they do 10 years ago. So the market itself to buy assets is superior than most assets because of the volume and the quality for you to buy. Now, the individual asset then is usually superior just on the side of its upside potential when dealing in those markets. When we're in first tier markets, everybody, it is not like that.

Starting point is 00:24:41 So if you are in first tier markets, it is 90% institutional owned. And these are buying and being built at like four caps. These are thin. If you make this, you're done. And so it's like, we got to make sure we're also categorizing this clearly. Somebody goes out to build 150,000 square foot storage facility and then is wondering why they're 50% occupied and nobody's going to be it. Right. So, um, but that's what I mean when I, I tell people, I'm like, it's

Starting point is 00:25:09 actually better for newbies. Yeah. And that's not true in most asset classes. So where would you tell, let's just speak to a newbie, someone sitting in there and they're like, man, this is way cool. AJ, how do they find them? Where do they market to them? You know? So I'll, I'll put perspective on it. You know this, but you can cold call, direct mail, door knock, text message, PPC, right? Google, pay-per-click, Facebook. You can do all this stuff in the single family space. Yeah. Is it all transferable in the storage space or is there a better marketing method to find them?

Starting point is 00:25:41 No, most of it, yes. But I think this is what makes residential the best investment, period, for anyone starting out. And it's what you just hit on. There is so much of it. That's not true with storage. And that's not true with commercial assets in general. So if you're starting out in storage, or if you're starting out in commercial assets in general, there's a certain amount that you can even buy. So when you walk into a city, you may have a city that has obviously hundreds and thousands of single family homes, but those thousands of single family homes does not transfer to thousands of storage facilities. It may only be two. So now you're looking at a city where your pipeline is two, right? Or three or four. Now, big cities and

Starting point is 00:26:41 institutional ones, that's when you get into lots more, but you're not competing in that anyways. So the biggest challenge I think for anyone starting out is saying, where should I go? What are the cities that I should look at? And how should I get that? That is just far superior and easier in single family homes. So you're saying that in single family storage, because of the lack of assets relative to single family, there's a model that may be different for the newbie. Yeah. So because of this lack of inventory in comparison to that, now, as far as acquisition opportunities, it may be a lot for commercial real estate, but it's not a lot. I mean, once again, in comparison, a town that has a thousand homes or 5,000 homes

Starting point is 00:27:28 may have one or three facilities, which those owners may not sell. So that's not even an option. So generally speaking, I tell people that you need to start out with and look at a wider geographical area, but be specific on locations, meaning the city sizes, right? So, okay, if you're starting out, that's what I did. I picked small towns and I'm in Idaho. And so I literally, we sit in the Rocky Mountains and I just did a highway loop around the Northern Rockies. And I said, all the small towns within this ring. And then I looked at all the small towns in that ring. And then I tried to find the best small towns, meaning ones that were good and growing. Then from there, I listed out all the small facilities in all those small towns. And then I listed out the best ones on their location

Starting point is 00:28:21 and how poorly they were run. From there, I figured out who they were, and then I started to try to directly contact them. And so I think that it can be very beneficial to have a much more long tail acquisition process and a much more defined specific one because you're going to be targeted. So, um, this is, this is hunting, right? And, um, you're going to be working with those owners and there's just more that goes into it, right? Yeah. And you know, that's what I was going to say. One of the major differences, there's plenty, but one that I see and recognize just by what you're saying is the simple fact of there's probably not a lot of motivation from the actual owner. So you are playing the long game. You're nurturing the relationship. You're trying to see how you can provide value to the transaction for them. Because as we just already

Starting point is 00:29:14 discussed in the first 20 minutes, most of these are performing out of the gate. I mean, yes, there are some ones that are totally terribly run down and the person doesn't care and whatever, but very, very probably few and far between. So you need to understand how to do it, to create the offer that provides value. Um, that I'll, you know, use the one I bought as an example, initially, we're going to have to buy it. And they kept restructuring it, restructuring it, restructuring it. And then finally it turned into a seller finance deal for us. Yep. Um, which obviously is a lifesaver in today's lending economy. And so I think that is-

Starting point is 00:29:49 We're doing a lot of seller finance deals. And two, guys, we're doing seller finance deals on 85 plus thousand square foot facilities in markets with 2 million people. I mean, like, that's cool, right? Yeah. So that is, we're talking about interest rates, non-recourse locked in at 3% on a commercial asset and highly- But it's the long game, dude.

Starting point is 00:30:12 You're not calling with some motivated- Nine months. Nine months is how long you took. To get that deal done. To negotiate. And we previously knew the owner. And that has to be known because I want people to be in storage. I want them to know

Starting point is 00:30:26 AJ and the sexiness, but they also have to understand this is again, kind of that there's their pros and cons to all of this, right? Real estate. A lot of times people lose their job. They can't pay the mortgage. They need to sell their home. You can go in and get a deal done. First call, right? It happens all the time. That is not happening. That is not. No, that is not how it is. If it does, you were lucky. Yeah. And two, you can get lucky and that happens, but that is not a business model you could build off of, right? So we're talking magnitude, not volume. Just like you said, so what you're doing right now, you had, how many was it? houses 21 houses in charlotte or uh raleigh so 29 houses so the difference is right you have 29 houses where you're buying one with 200 doors so like

Starting point is 00:31:14 and like you got to look at it like all right yeah people that it's like well this takes way longer it's going to be harder and it's like, but you're getting 300 doors in nine months. So you got to look at it because you're right. It's totally different. And for people that need transactions volume, they need to get their feet. You just, it's longer. It takes longer. It takes longer to close the deal. It takes longer to get financing. It takes longer to underwrite. You have to get certain types of documents and things done. Banks want to look at it. Everything is longer when you're dealing in commercial real estate. I want to be clear about this to my audience. AJ is here because I find the model sexy. I want you guys to know we're not trying to be... Listen, AJ does this on a full-time scale.

Starting point is 00:32:02 There's a massive upside, is you got to decide what you want right so my five pillars of success is decide what you want who you get it take commit to it take action be uncomfortable and then remove your time result expectation that's what we're talking about now the time result expectation you need to have proper time results meaning it can take you nine months maybe it takes you 12 months to get the deal. The day you grow the owner of that storage facility, it may take 12 more months before that becomes your storage facility. So if you think you're going to go out there and do it in 90 days or six months or even nine months, because you heard this podcast and it takes you 12, you're

Starting point is 00:32:38 going to be all disappointed. You might give up, you might just blow the deal up, whatever. Again, remember that is really imperative to understand here but to just point you did one transaction you got 200 doors right so it took you 12 months to get 200 doors it's a lot of freaking doors everybody right so just for the sake of time because i believe my listeners don't have a huge bandwidth and you and i can do this for a long time and maybe we should where where can i have everyone go find aj osborne yeah so um fairly easy to find uh you can go check out um obviously the podcast self-storage income go to the site unlimited free resources the book uh growing wealth and self-storage my instagram aj osborne and i i'm i'm showing everybody we we

Starting point is 00:33:26 believe in extreme transparency so like i show data we show numbers like for us it's like you know and that was really built off the fact that at the time i i had no ask ever so i was i was doing book and content it was all our own money i was already dependently financially successful i hadn't anything to gain with it. And so we kept doing that. It was only until the last four years that we even started letting investors in on our deals. So it was a big shift. And that only happened because I became a quadriplegic.

Starting point is 00:33:59 I was paralyzed and put on life support. And so after that, yeah, I got out. And as I had to relearn how to eat, breathe, walk, everything, I decided that I was going to share with others and let other people come on the journey because it saved me financially. So then from there, we started allowing other people to invest. So we're very transparent. I want everybody to learn. And just like you said, I'm not a cheerleader. I'm going to be very, very clear about the pros and the cons because that's what serious people need.

Starting point is 00:34:31 So AJ, I'm going to have one big takeaway. If I have an acquisition guy, now you got my brain turning. Yeah. And you say, Justin, telling me to do these five things to go find the deal, get ahold of the seller. What is that five kind of step process? Where do we find it? How do we get ahold of them? How do we market to them? Is it the typical, you just go find the LLC, go to open corporates, give Trace the owner of the open corp, the LLC,

Starting point is 00:34:56 give them a call and say, hey, are you looking to sell? Are you interested in an offer? So I'm going to give you the strategy that works for us. Okay. Perfect. First step, your geographic area that you believe in. Let's say that that's the Southeast. All right. You're going to say, all right, I want to be in the Carolinas or whatever. Then you're going to list out all those properties like I described first, every single storage facility in there, realizing not all of them may be on the internet. Go to Google Earth and look. It's either chicken coops or a storage facility.

Starting point is 00:35:25 It's going to be one of the two. You're going to know. And then from there, you want to look at the number. And it's not as easy to find listings and things like that. What you don't do, though, is you don't call and ask them if they want to sell. Okay. That leads to a yes, no answer. Because you're playing a long game, that is a death sentence.

Starting point is 00:35:46 You do this. You're in storage. I would like to be in storage. I would love if I could talk to you about your success and about what you did to get this asset class and how it works and what you think. Would you mind talking to me? I mean, I'd either take you out to lunch or dinner, but if we could jump on a call or Zoom, I'd just love to talk to you. And then you go and you talk, you're being genuine. They're going to share all the information, everything with you. And then as you do that, and as you either build that relationship or start talking to them, you may say, okay, do you know anybody that would be willing to sell their facility to me so I can get in it like you? If they are a seller, guess what they're going to say? I might be open.

Starting point is 00:36:33 I might be open. Then it wasn't a yes, no answer. You're not saying either open the door or shut it because when I get a call, which I don't give those calls anymore, but when any owner gets those types of calls, guess what? It's a knee-jerk reaction. It's just a no. Why? Because it's so long, it's not a question I can even answer to you that quickly. So it's an automatic no, even if they're sellers. Don't give that opportunity. I love that. I'm trying to reconfigure that for residential real estate, but even if it was a landlord of one single home, it's hard to kind of, but there might be a play that I love that AJ, everyone needs to rewind that. If you're not watching this on YouTube, you need to. So you can see my man's face. Uh, go to justincolby.tv. Watch this episode. AJ is a stud. Dude, I had no idea you were paraplegic. Dude, that is,

Starting point is 00:37:26 that makes you even cooler in my book. You already had a great reputation. Now you're the fucking man. Appreciate you, dude. Thank you for spending some time with my, uh, my tribe at the science of flipping. And if there's ever anything you ever would want to do in the residential space, you just let me know, but I'm sure one of these days I'll be paying it for something. Um, see how we can do some more. Let me know. I'm happy to help you. And let's have you get into storage too and grow even more, man. Right on brother. Appreciate you.

Starting point is 00:37:51 Thanks. You too.

The Science of Flipping - Unveiling the Profit Potential of Self Storage Investments | Aj Osborne

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