Self Storage Investing Expert - Stacy Rossetti
Investor Cheat Code Podcast with Mike Simmons
English - April 19, 2021 07:30 - 44 minutes - 34.1 MB - ★★★★★ - 241 ratingsInvesting Business Entrepreneurship airbnb business cashflow education entrepreneur estate flips investing real rentals Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
My guest today is self-storage expert, Stacy Rossetti. Stacy is a real estate investing expert, speaker, and coach, who is focusing on self-storage properties and renovations. She owns and operates the REI USA, an online education and networking platform, and StorageNerds, a self-storage investing mastermind, and group coaching mentorship. Together with her husband Pete, she currently owns and operates eight storage facilities. Stacy has overcome many trials and tribulations and today runs several successful small businesses.
We start today’s episode, as we usually do, with Stacy sharing her background story. After her college graduation, Stacy started her career working for a company that built wind turbines. She loved her job but felt burned out from all the traveling she had to do. So, after eight years she decided to quit her job. During that time, her husband started his own home inspection company and encouraged her to get into real estate investing.
We then moved on to discussing how and why Stacy got into self-storage investing. She explains how at one point after she began investing, she found herself working on fifteen rehabs at the same time. She decided that it was time to stop buying properties and she started convincing her lenders to switch to something else. That is when her realtor found a storage facility that was just twenty minutes away from her house and had been on the market for five years. She drove up, saw it, and decided that this was the perfect path to passive income.
We then dive into discussing how Stacy figured out the entire process with storage facilities. She first explains how the storage investing world is a very small niche and there are only about 15,000 units in the country. She also explains how managing storage facilities can be totally virtual, and if you learn how to run one of them, you’ll know how to run them all and you are not bound by their location. She goes on to tell us how she has delegated her acquisitions process and that employee is the one who is trying to find new storage facilities for her to buy.
Our next topic of conversation is four things to look at when you are buying a storage facility. Those four things are purchase price, annual income, vacancy rate, and annual expenses. When you have those four things you can calculate your cap rate, and your cap rate is really based on your location. The way that cap rate works is you're going to have a 5%-7% cap rate when you're inside a major city and as you go out of that primary area to your secondary market, the cap rate is 8%-9%. The further that you go out from a primary market, your cap rate gets higher. When you get into what's called tertiary markets, that's when you can have a 10+% cap rate.
We then discussed how Stacy funds her storage facilities. She shares that there are three ways to fund a storage facility deal: private money, hard money, and bank or SBA loans. The funding essentially depends on what kind of property you want to get. If it's a mismanaged property, a bank is not going to fund that, so you'd have to get a private lender or a hard money lender to fund that deal. When you want to buy an income-producing property, you can go to a bank or get an SBA loan.
Lastly, we talk about five ways that people can make money in self-storage. According to Stacy, those five ways are mismanaged facilities, cash-flowing properties, new construction, conversions, and wholesaling. She explains that conversions are retail buildings that are now being converted into storage facilities. Stacy also tells us how wholesaling storage facilities is nothing like wholesaling residential properties. In the storage investing world, you need to prepare a package, a whole presentation with all the details and all of the numbers.
Don’t miss this episode of the Just Start Real Estate Podcast, which is all about an amazing segment of our industry, self-storage investing, and get some valuable lessons from Stacy Rossetti!
Notable Quotes:
“I just became more and more confident in just telling my lenders what my terms are.”
Stacy Rossetti
“As a mother, what I wanted was security.”
Stacy Rossetti
“The storage investing world is a very small niche. There are only 15,000 storage facilities in the country.”
Stacy Rossetti
“Don't be afraid to run your business and make a profit, because that's the whole point of buying these properties.”
Stacy Rossetti
“If you learn how to run storage facilities, they are totally virtual. They're totally electronic, totally passive, so you can really be anywhere in the country and run them.”
Stacy Rossetti
“You have to really look at the bigger picture and run the numbers. That's the hardest part of the whole thing.”
Stacy Rossetti
“The higher the cap rate, the riskier the property.”
Stacy Rossetti
“Start educating yourself on the population of your towns, and then what you do is you reverse engineer how much money do you have or you can come up with.”
Stacy Rossetti
“Storage facilities are considered recession-resistant.”
Stacy Rossetti
“If you want to do new construction, you can triple your investment. New construction is the way to go right now, especially for storage facilities.”
Stacy Rossetti
Links:
Level Jumping: How I Grew My Business to Over $1 Million in Profits in 12 Months