September 28, 2024 • 41 mins
Welcome to another episode of Multifamily Strategy! In this episode, host Christian is joined by real estate expert Chris Kirkman, who shares his journey from multifamily properties to the lucrative world of self-storage.
Chris explains how he started his entrepreneurial journey with small businesses and eventually ventured into real estate. He discusses his transition from multifamily to self-storage, highlighting the unique benefits and value-add opportunities in the self-storage sector.
Learn about Chris’s innovative strategies, including his use of technology and design skills to optimize operations and marketing. Discover how you can 3x the value of a property in just a few years, and why self-storage is a recession-resistant asset class.
Chris also shares insights into effective deal sourcing, the importance of strong relationships, and his unique approach to maximizing productivity and efficiency. Whether you're a seasoned investor or just starting out, this episode is packed with valuable lessons and actionable advice.
Don't miss this opportunity to learn from one of the best in the business. Tune in now and take your real estate game to the next level!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
You could literally 3x the value of a property in a matter of years.
We're not talking like 10, 15, 20 years. We're talking three to five years. You could 3x a property.
Hello and welcome to another episode of Multifamily Strategy.
I'm Christian, your channel host today, joined by Chris Kirkman.
Chris, welcome to the pod. Yeah, thanks for having me.
You're doing some great stuff and really happy to be here. I'm super excited to have you here.
(00:24):
This is someone who got their start in multifamily. They're very versed in multifamily.
But has made a bit of transition.
There's a sister class to multifamily, which we call self-storage.
We've had a couple of self-storage people on here. We've had a lot of people
in multifamily strategy actually go out and buy seller finance self-storage.
I am a big fan of the asset class. I think that there is a little bit of a disease
(00:48):
in the US where we need to keep our stuff and I don't think it's going to get cured.
So people will always have stuff and as long as people need to hold on to their
stuff, they will pay to store it somewhere.
I think this is a business model that makes sense. I'm excited to have him on here.
Chris, tell us a little bit about your start. Before the real estate,
before multifamily, self-storage, what have you, what was your actual starting
(01:12):
point? What was ground zero for Chris?
Yeah. So I mean, I was always entrepreneurial. I mean, I think I...
What was my first business?
I had a pressure washing business when I was in my teens.
I worked for this landlord, Lord had a bunch of properties. So I would pressure
wash, you know, the side of houses and stuff like that.
So I did that did I started a skateboard company when I was 17.
(01:34):
Just a bunch of little random businesses. I mean, I've owned a food truck,
I've owned a roofing company.
So I have a lot of these, but my, my w two, my career, my college education was in design.
So I started out as a graphic designer. That's what I went to college for.
I was big into skateboarding, so I started designing for the skateboard industry,
action sports industry. I'm in Southern California, so there's tons of that going on out here.
(01:56):
Surfing, skating, snowboarding, all that stuff.
So we have that going on. And yeah, so did that, got into web design,
got into user experience design, which kind of is the way you kind of morph
into that. Now it's called product design.
So I worked for a lot of big companies. You know, I did that stuff for about
20 years, still dabble with some of that, but only for real estate related things
(02:20):
or my own stuff. It's actually helped me build my own websites and all that.
So, yeah. So that's what I did for a long time. But I always had like my freelance
gig going. So I always had my own side business.
So, you know, nights, weekends, I was designing stuff for clients.
Like my first iPhone app I ever designed, that was for, you know, a client.
Sometimes I would stack, you know, regular jobs on top of each other because,
(02:43):
you know, I believe in living 90 days per month.
We could talk about that a little later. I want to come back to that.
But anyway, yeah, so design career, but really wanted to get into real estate for a long time.
I think when I was a kid, my best friend, we built tree houses and all sorts
of stuff. He was super handy.
Now he's a general contractor. I knew he was going to go into that field.
(03:04):
So I'm like, I could do the business side and we'll flip houses.
You know, you do the, do the work, I'll handle the business.
We didn't end up teaming up, but like when I was, when I was little, I wanted to do that.
So kind of circled back to that, you know, maybe, maybe 20 years later,
but, you know, got into real estate after having a lot of other businesses.
I just thought the barrier to entry was like really, really, it was hard.
(03:26):
I'm like, do I have to raise like a hundred grand to buy a house?
Like what, what is that? I already own my own house here.
And we all know that SoCal houses, you know, Southern California, super expensive.
You know, now like it's, it's in my area, it's hard not to find a house under
a million bucks. It's like, how do people do it?
So, you know, so things that, you know, I just thought it was really expensive.
(03:48):
So and then ended up buying, you know, saved up a lot of money,
bought a single family, used the bird strategy on that, basically took a basement,
turned that into another bedroom and bathroom.
So made a two bedroom, one bath into a three bedroom, two bath,
charge more rent, did a cash out refi, pulled that money out.
So pretty much got the house for free.
I'm actually going to sell that house right now. So yeah, going to do that.
(04:12):
And then, you know, bought a duplex, then got in triplexes and got into apartments.
And I loved apartments. I was all about apartments for the longest time,
but then started falling in love with what I saw with self-storage.
And what I like about storage is it's just, it's like it's everywhere.
It seems, I mean, these are like garages, right? So it's pretty simple.
I had a self-storage unit when I was maybe in my mid-20s and I didn't have a
(04:38):
place in my apartment to put my ocean kayak.
So I just store them in this like five by 10 space.
Dinky little storage unit so did that
and yeah so i you know i i wanted
to get into it learned a lot about it i joined aj osborne's
mastermind i'm still in i'm actually an ambassador
for it right now love aj love that whole
(04:59):
team and yeah just learned a ton of stuff read
a ton of books all that but i wanted to really kind
of get into storage ended up buying my first facility in ohio and i mean really
what i love about storage is there's there's no kitchen fires there's no of
toilets so these are like like i said garages so that's that's kind of how i
how i got into all that but you know i do love multifamily i'm still you know
(05:22):
i'm still looking at apartments,
one of my business partners and i you know we have offers out on multiple apartments
now so we're we're doing that we're also creating a fund right now too that'll
handle that so yeah i'll i love apartments but storage is great awesome now
how far did you go in the apartment game like how How many instances did you scale to?
I don't remember the exact unit count, but I mean, I just had like a couple of buildings.
(05:46):
Yeah. And then I had like, I'd buy like a series of triplexes next to each other
in like a neighborhood or do little things like that. Awesome. Awesome.
Well, it's a great way to get started. And the method that you really fell on
was the BRRRR method, right?
You'd saved up, saved up, bought, pulled out capital, and then you just scaled that.
How many years did that take you in the multifamily space to really get momentum?
(06:08):
Yeah, so the thing that I left out is I learned that you can use OPM.
And when I when I got into that, and I got that from like bigger pockets,
when I learned that it was a game changer.
I'm like, wow, I don't have to use any of my money, really.
So learn how to capital raise, learn how to, you know, turn a good profit for investors.
(06:28):
And then, yeah, just started just started doing that.
And then now, you know, I don't have to use a little to none of my own cash for, for these deals.
And that's a fantastic way to write. Now, when you're, when you are actually
managing equity for other people, this is a question I get a lot.
So you're raising capital, you're doing these deals.
What do you find is the most important piece for raising capital?
(06:50):
Like when people are investing in you or your deals, what are the key pieces
that they want to hear during your capital presentation? Yeah.
So the thing is, I mean, when you're raising capital, you need to be known.
They need to like you. They need to trust you. You need that credibility.
So you've got to have that. You've got to have that rapport with them.
They've got to feel good about it. But it comes down to just having a well put together package.
(07:15):
And that's where my design ability has come into play because I've been able
to put together nice brochures, websites, all that stuff too,
branding, all that. up, but it comes into the presentation and working out the
numbers, the projections and all that.
And with storage, there's a lot of scalability with that. And it's easy to build more.
(07:35):
So I look for facilities with land to expand and all that.
So even with apartments, you just got to put together a good package and show.
I'm a value-add investor. For instance, I've bought apartments where total gut
job, renovated every unit, that sort of thing, common areas, all that stuff.
So I love value-add. So I took that strategy and I brought it into self-storage
(07:58):
and kind of showing that and how it's scalable and how the numbers can increase.
You know, investors, they love that.
You know, some of them want returns right away, but those are more turnkey projects
and those have lower returns.
Whereas mine, you know, you might be not getting any return for a little while,
you know, several months or even a year while you kind of get the property ready.
(08:21):
But after that, it's going to cash flow a lot. And then, I mean,
you could literally 3X the value of a property in a matter of years.
We're not talking like 10, 15, 20 years. We're talking three to five years. You could 3X a property.
Now, you're in the same niche that I am as far as value-add multifamily is what I like to do.
I like to do an entry-level value-add multifamily, stack units,
(08:44):
find places where I can either be a better manager or a better contractor than
the prior owner, which usually isn't that hard to do.
What does that look like in self-storage? Because when I'm thinking multifamily,
I'm thinking, you know, we're going through our tenant mix. We're going through, you know...
Replacing appliances, we're raising rents where they need to be raised,
we're upping quality of life in a storage unit.
(09:06):
What does it actually look like to find a value-add opportunity in that niche?
Yeah, it's great. Like I said, no toilets, you're not renovating that,
you're not putting new kitchens in.
So the kind of value-add is different. I mean, like I said, these are garages,
we're talking paint, we're talking, you know, doing small, small enhancements,
You know, they're cosmetic usually.
(09:26):
But what you could do is you could put a fence around the facility.
You could put up a ton of security cameras.
I mean, I put up 30 in one of mine, just like you can just put up a ton.
You add way more value just by doing that. So better security,
you know, you deploy better lighting, put up fences, put in automated gates,
put in a good website that has online payments,
(09:49):
auto pay, all these different bells and whistles that make it easier and better
for the actual customer.
So that added security, you know, the ease of use, all that stuff increases the value.
But in addition to that, you could pave certain areas or put gravel in and then
do some boat and RV parking there.
So any spare land you have, it's like, wow, you just instantly just gained an
(10:11):
area for boat and RV parking.
And in a lot of markets, that works really, really well.
And then, you know, what you do is you build more.
And by building more, it adds a ton of value. Now, when you're adding spaces
to a lot, because I've run into this where cities have been resistant to this.
What does the process actually look like? So you buy a mobile home parking,
(10:31):
let's go all the way like early transaction in the due diligence phase.
You're like, hey, I found some extra space on this. I think I can create some
boat and RV parking spots.
Is there a city by city basis where you have to get these approved?
What is the process where you know before you close, hey, all of the value add
that I want to do, I'm actually going to be able to pull off? What does that work?
(10:53):
Is that a difficult process to learn? Tell us a little bit about what that looks
like. Yeah. I mean, you want to make sure the place is even zoned for storage.
I've, I've looked at, I've underwritten properties where it's like,
I look at it and I'm like, you have storage here, but the city switched it.
Like it, and it'll do that. But you gotta not just look at the zoning.
You have to, you know, you have to do your due diligence and figure out like,
(11:13):
will the city allow this?
So there's ways of finding that out, but you definitely want to figure that
out before you buy the property.
Because if that's a huge part of your strategy, you've got to understand if
that's something you could do. But in addition to that, you've got to look at
the saturation of the market.
That's a huge thing. So square footage per capita is how you measure it.
And typically that's a three mile radius, but really rural areas,
(11:36):
that's a five mile radius.
And, you know, I look for markets with at least 10,000 people within that radius.
And the threshold is usually about 10 for me.
You know, no more than 10 square feet per capita, but ideally it's about five.
And if you're at five, then you know that you could build a lot more and just
(11:56):
capitalize on the need in that market.
So if you're buying the only facility that has land to expand,
you're going to just grab all the extra need for storage in that area.
But you definitely have to check with the city. You got to look at the zoning.
You got to make sure you can actually do this. You just got to look into a ton of stuff.
(12:16):
And luckily, I have one of my partners, which is he's amazing at that,
really has an engineering and construction background. So he's able to help with that.
So I've kind of put together this dream team of folks that are able to really,
really jump in and different times to make it happen.
One thing I've really enjoyed about multifamily is when you do improvements,
it's really easy to do the marketing through word of mouth and listing because
(12:39):
there's a million listing sites it gets pushed out to.
And if you do a good job, you know, right by building, the first thing I do
is I just, I just get on any sort of basic maintenance thing that was deferred.
Tenants know within the first week, oh, wow, my stoves are getting fixed.
That like new ownership is actually going
to be responsive and it makes the whole rest of the project easier with self-storage
(13:01):
i imagine it's a little bit harder to get the word out when you spend the money
on the 30 cameras and the paving i i imagine your technical skills with the
web design and the marketing is actually a huge portion of the success when you do the value add.
As a business owner what are you doing to get the word out now like you've purchased
this you've You've done the stuff.
(13:21):
How do you actually bring in the new tenants and let them know?
Or I guess not tenants, but the new renters of the space.
How do you let people know, hey, this is a new park. This is new management.
Security has been upped.
How does that work and how important is that to the success of a self-storage project?
Yeah, absolutely. So I typically like to buy facilities that are like right off of a major highway.
(13:43):
And you got to have got to have a sign up like a really good sign.
So, you know, if I'm buying a facility that doesn't have a good sign,
you know, I'll put a new sign in.
But you got to factor that into the cost because signs could be pretty expensive.
And so that's that's one of the things you do. But with the website,
actually, there's a vendor called StoragePug, and they do really good.
(14:05):
They're able to make it so the website connects to your backend system for basically
renting and all that stuff.
Once you mark something as vacant, it automatically goes up to the website, stuff like that.
But SEO plays a big role in this.
And by having that really dialed in on your website, we usually rank at the
(14:29):
top or toward the top, just the people paying for ads are at the top.
But the ones that are usually on top that are ads might not even be for that
area or for something unrelated.
So someone's going to go to Google and be like, self-storage in such and such
town, you're going to be at the top of that list.
There might be other facilities that aren't even on that list a lot of the time.
(14:52):
So the thing is, I live in a very urban area and we have the REITs here with
these giant facilities.
Monster facilities are super nice, really well done.
But a lot of places aren't like that. You have these mom and pops that own these
places. They're really old school.
They don't have these systems. So it's easy to come in and have the best facility in the area.
(15:17):
You know rank they don't have websites maybe if they
do they can rent on it's like call you got to
call them different things like that so you know it's
really just using the web you could put ads out even that's
actually something we're doing a little bit of we we just kicked a bunch of
you know terrible red results tenants that you know hadn't paid in a while and
some people are mia there's like it's cheaper than a dumping fee to just leave
(15:41):
my junk there so it's like all right i'm paid in a while you're out of there
but but anyway yeah so the web is great So, I mean, that's really all you really need.
But it's easy to have like the best facility.
You know, here's like a stat. I mean, if you take like the top five,
you know, fast food joints, you know, you got McDonald's, you got Chick-fil-A,
you know, like all these, you know, Burger King.
(16:01):
You take the top five, all the restaurants combined in the United States.
If you take those, there's actually more self-storage facilities.
Now, I'm not talking units of the facilities. I'm talking to actual facilities
because you can go to these small towns.
There might be a couple storage facilities, but no McDonald's.
And where I'm at, there's fast food everywhere.
(16:23):
So if you live in an urban area, you're used to being fast food on every corner.
But some of these towns, they just won't have anything like that.
So, but they'll have storage, like everywhere there's storage,
there's such a need for it.
So you can go in an area that has a low square footage per capita,
you know, a bunch of mom and pops just owning these other facilities.
(16:43):
You buy from a mom and pop that hasn't done really much with the facility.
You come in, put a nice, you know, fence in a security gate,
automate the heck out of it and just run the place much better security.
You're now appearing on top, you know, on Google, big old sign off the road.
You're looking really sharp, you know, compared to these other ones.
And so, you know, they're going to go to you.
(17:03):
And, you know, that's kind of how I like to buy. And you're hitting on something
that's been a theme through this entire podcast.
Ever since I've run this, the feedback that I get from a lot of owners is you
make the most money being a better operator than the last owner.
And what we see consistently is that is not a hard thing to do.
Generally speaking, in every single market, especially when you're talking,
(17:24):
you know, we're not talking like huge metros.
We're talking, you know, markets with reasonable population, 10,000 plus people.
That still is pretty small. I've invested in a lot of places that have like 30,000, 40,000 people.
These mid-sized towns, there's usually a lot of mom and pop operators.
A lot of them also don't have high amounts of debt on their property.
Oftentimes, they've owned them for a long time. So you have a lot of creative
(17:47):
finance options on this type of stuff in these type of markets.
And it is not a huge challenge to be a better operator than them because they've
owned it for a long time. They don't need to make the same profit on it.
It's made them plenty of money for what they've bought it.
You come in, you optimize the systems, you bring things close to market rent,
you have the highest quality, the best SEO, and you can come in and dominate
(18:09):
these markets. I mean, this is a strategy that I see people do.
And it seems to be the most effective strategy to multiply money.
You come in and buy these misoperated properties at a price where they make
sense on how they're performing, and then you make them perform a lot better
and they're just worth more.
It's a fantastic model it's a simple model and it takes some skill and if you're
(18:29):
a good operator and you have a good deal finding strategy.
You can do a ton of these, and this is a really successful strategy.
How are you finding your deals?
Yeah, so you're totally right about what you said, easy to be a better operator.
And I'd love to get into the systems and how you can do that and how you can
get your expense ratio super low.
(18:50):
But yeah, I'm finding my properties just sourcing them. I mean,
I have a little bit of a background wholesaling.
You know did a little bit of that mostly for single family
but the same the same stuff works for for
for multi-family and other commercial works
for you know self-storage too so you know you're
just basically building a list of you know storage facilities using
tools like prop stream i'm actually an ambassador for prop stream they're amazing
(19:14):
but there's other tools that have you know even more commercial properties listed
on them so you do that you skip trace the list you're You're going to run into
the same issues that you run into with a single family where you get a million phone numbers.
You've got to keep calling them to get the actual owner.
And then you call the owner up. You build rapport with them.
Once they know that you're able to talk shop and you're trying to build that
(19:38):
relationship, you're talking about the area a little bit, you just want to get
into it. You don't just pitch them right away.
Then you usually can kind of get through them, get through to them and get them
loosened up to talk about selling you. And they might not sell to you right away.
But the thing is, if you are the person that they enjoy talking to,
they're going to remember you when they do want to sell. So they might come
back to you a year from now, two years.
(20:00):
So that's one method. I mean, just typical cold calling.
I actually have an AI cold caller that does decently for qualifying.
We built this AI model that's able to... It sounds just like a real person.
You guys can check it out on my social feed. I have some videos of it,
but it's pretty incredible.
So it can actually get through to people, ask the right questions,
(20:23):
you know, it can actually, you know, do transfers to some, you know,
or, you know, take, take down a time to call back, it could do like whatever
I want it to. And it sounds amazing.
So I'll do that. And then because I mean, if you get like a list of a ton of
numbers, you don't have time to necessarily go through all but I still also
cold call when I have time.
So there's that also JV with a lot of folks too, that are able to kind of do
(20:46):
the same thing and source the properties.
Properties so there's that and the brokers are great too
brokers will do all the hard work for you and
they'll bring you deals of course you know you're gonna have to negotiate a
bit but you have to do that with really anything so there's that and then of
course you know stuff that's on the market officially is gonna it's gonna usually
be a little bit more expensive but and more competition so i i you know you
(21:10):
can get deals off of that but i try to stay away from that.
So, you know, mostly it's brokers, other JVs that bring me properties or just
sourcing myself with my own team, you know, the old wholesaling method,
cold calling and all that stuff. So do that.
And then the thing is with these mom and pops, I mean, you mentioned like they
(21:32):
might have so much equity, like owe nothing on it and then bought it decades ago.
The thing is they'll get this magic number in their head that they think it's worth.
They'll see a comp that went for a certain price, but it might be in better
condition actually. So it's not quite a real comp.
And they'll get this number in their head, you know, like 2 million for a property
when maybe it's worth like 1.2 or something like that for a small facility.
(21:55):
So the thing is debt's super expensive right now.
And we see this in every sector where, you know, debt's expensive.
So the sellers, you know, you've got to be kind of desperate right now to be selling.
But sellers, they want, you know, prices from a couple of years ago.
But buyers, I mean, they can't do that because debt's so expensive.
(22:15):
You know, interest rates are way higher.
So it's just this kind of clash where it's hard to meet at the right price.
And that's why, I mean, there's less inventory on the market,
but the inventory on the market, like it's hard to negotiate that.
So not as many deals are being done, but that's where the seller financing comes
in because if you could sell or finance, you can get them the number that they
want, but at a low interest rate that, so the numbers actually work when you
(22:38):
calculate, calculate it.
But interest, like it really eats into a lot of that cost.
I mean, it's crazy. Like when you, when you put it at the calculator,
but speaking calculators actually created one, If you go to underwritingcalculator.com, I own that.
And then you're able to utilize the calculator put together.
And you're able to underwrite deals in like a minute.
(23:00):
And there's these big spreadsheets that are scary. And it's like,
oh my gosh, like the people that I mentor, they're like, how do I,
you know, like, what do I do? Like I teach people how to underwrite.
And, you know, you just got to simplify. I just put a few, you know,
main things in there and just see what pencils out.
But, you know, it's pretty easy to come up with like an offer price.
At least for an LOI, but you're able to quickly see how crazy interest plays into everything.
(23:27):
So seller financing is definitely the way to go, but you're not always able
to get that because people just want to get out and they don't want to deal with it anymore.
Well, that's the simplicity of real estate, right? You have to win on price or terms or both.
But you do have to get one or the other. And I've had people come to me where
they're like, well, they're not willing to sell their finance,
but they want this price. I'm like, well, what you have there is no deal.
(23:50):
You could buy anything with creative finance, but if they're not willing to
be creative and they want more than it's worth, you can't buy every property.
Not everyone can sell it, but it's fine.
You bought and you'd mentioned earlier when you were going through all the different
ways that you could find deals, the first one you mentioned, relationships.
If you have a strong relationship personally with the seller,
(24:10):
that you met with other owners and you treat them as owners,
not just sellers of property, your options to seller finance,
I've found they're going to go through the roof.
People like to work with people who they like, know, and trust.
If they're going to lend you money, which is what they're doing in seller financing,
they're not getting all of their cash out, there's a certain level of trust that comes with that.
And if you have a relationship, your odds of winning that deal and having even
(24:32):
an ability to negotiate on terms, it's huge. It's huge.
I love what you said there, and that is absolutely, especially in asset classes.
I see so many self-storage facilities go on seller finance terms.
Yep. It is a super common way to sell a small business, especially in today's
interest rate environment.
Yeah. They get it. Self-storage owners is not a foreign concept to really any of them.
(24:57):
They do enough business to understand how seller financing works.
You don't have to explain it.
If it helps get your deal work, yeah, you can win on terms. That's fantastic.
Yeah. You mentioned something early, and I wanted to dive into this.
Sure. You mentioned doing 90 days in 30.
Yeah, 90 days per month. And well, it kind of goes into my version of the 80-20
principle as well, which I'll explain. So...
(25:20):
The 80-20 principle is basically like 80% of the results come from 20% of the output.
So it's like if you're 80% of results are as good or at least passable,
you know, as like the top players, you know, anybody else, then it's like,
okay, well, that's 20%. You could stack five 20s to equal 100.
So that means you could actually do like five times as much as normal people do.
(25:42):
You got the nine to fivers that they're like, I'm confining what I can actually accomplish
into this you know this amount of hours and that's
like all i can do they don't think they could do all that stuff and this
mindset came from when i was freelancing and taking on
all this work still when i had a w-2 or any of that stuff
like i've always had like side stuff going side businesses on top of freelancing
(26:04):
and just doing all this stuff and i realized that you could just stack stuff
you can stack w-2s if you wanted to you know remotely there's like all sorts
of stuff you could do so it's like you could do five things and the thing is
it doesn't have to be work related.
It could be, you know, that 20% could be allocated to, you know,
your kids, you know, coaching your kids team or, you know, traveling more or
(26:26):
whatever, but you could basically take 20% of your energy and throw it in,
into a bunch of different things.
And it's just, I just, it's, I like saying live in 90 days per month because
like, you know, I kind of split my days up into, into three different chunks.
You know, I get so much, I wake up at 5am.
It's non-negotiable every day. I get a lot done before anybody else is pretty
(26:48):
much awake, almost like a whole work day's worth of work. Then I got the middle chunk of the day.
And then I got the last chunk of the day, which sometimes bleeds into the evening
and even after the kids are to bed, but able to get, you know,
like three work days worth of, you know, time in.
But I'm still doing the, you know, the, you know, stacking, you know,
five of those 20%, you know, doing a bunch of things.
(27:09):
That's why I could do all these different businesses. and I've had business
partners that are like, oh my gosh, you're just like everywhere.
You're, you know, how are you doing? You know, they get all.
They get very overwhelmed. But the ones that I stick with are the ones that,
you know, have that same mindset.
And they don't get too overwhelmed. It's like, you could do a podcast,
I could have a self storage business, I could have a capital company,
(27:30):
I could have a wholesaling company, I could do apartments, I could do a fund,
I could do courses, I could do coaching, like all these different things.
In addition to being a father of two wonderful children
and a husband to a wonderful wife and a a
dog dad of two uh siberian huskies to
oh wow that's a that's a dog that needs some
attention that is yeah you know we don't walk
(27:52):
them they walk us let's put it that way so but anyway yeah so there's a lot
of stuff going on but that's just how i'm kind of built and you know it's you
know anybody could do it but you know you do get overwhelmed on occasion but
the thing is just having that mindset of like you could accomplish so much more
you could do so much more with your day.
And part of that is being able to delegate to people.
(28:13):
I use virtual assistants and VAs. They're great. They make life easier.
You don't have time to underwrite a bunch of deals. You train a VA to do it.
They could underwrite the stack of properties coming your way.
My first VA I hired was doing that for me for apartments.
I felt bad because all these great brokers were sending me all these deals,
(28:35):
and I just wasn't getting to them in time.
So I was like, oh my gosh, I'm damaging these relationships because they keep
sending me stuff and they're like.
Hey, did you look at that property? It's like I sent you five last week and
it's like, oh my gosh, I feel terrible because I was in so many different markets
looking at all these different properties.
So all these brokers are sent. So I hired a VA, trained her how to underwrite a little bit.
(28:58):
So she would do that plus do like three scenarios to find a price that made sense.
And then I would take a look at the good ones. Basically, she'd bring it to my attention.
And then those are the ones I'd respond to the broker about.
Out. But like a lot of that, a lot of that just takes, took time,
you know, to underwrite those deals.
And, you know, the, they would, they would handle that for me.
(29:19):
And it, you know, going, going into, you know, back into the VA thing,
they could do cold calling for you.
They could do, you know, I did that with my wholesaling. They could,
they could handle pretty much anything.
And for my storage facilities, VAs play a huge role in it because I don't have
to hire, basically people in the US to take incoming and outgoing calls.
(29:40):
All my customers could be called from VAs and they can also take calls to the facility.
And the cool thing is I have a management company. So one VA can handle multiple
facilities, just different numbers coming in.
They know based on the number, like which facility is calling.
So it's like my expense ratio, I could get down to like 15%,
(30:01):
depending on property taxes in the area, where like expense expense ratio is
like 30 or 40%, you know, kind of common.
And of course with apartments, even greater than that on occasion,
but, but yeah, VAs are great and just you could do so much more if you delegate
and just hire people. Like another thing is I.
I don't mow my own lawn because it's not beneath me to do that.
(30:24):
You know, I actually do a lot of fun. But the thing is, like,
I know somebody else could do it better than me.
Plus, I'm not going to take that time to do that. I can use that time to spend with my kids.
And the person mowing my lawn is going to do all the houses in my neighborhood.
I mean, they got the block covered. So, you know, it's their business.
They're efficient at doing that. Whereas me, to take all that stuff out,
(30:44):
I'm not going to do as good of a job. I got to take time away from my family
or take time away from work or whatever.
You know, the same thing goes with other stuff. And I don't frown upon people
that order a lot of food in when they just don't have time to cook or they're
using the time that they would use to cook to, you know, spend with their family.
Like if they're using that time wisely, then it makes sense to hire that out.
(31:07):
So do that with like anything you could do that's taking time.
And I make this board that has a list of stuff that's just like getting in the
way of me getting other stuff done, like stuff I need to delegate.
And, you know, that helps me stay focused, you know, growing my businesses and
focused on stuff that I need to focus on.
And then just having other people that I work with take on certain tasks and
(31:30):
it just frees up a ton of time. Yeah.
No, I love that. And efficiency is the biggest thing, especially someone who
runs multiple companies. I did a similar thing with the property management
company, with the education companies, with the sales company.
I made the mistake of buying a resort thinking I want to be in hospitality,
which I absolutely hate running.
That is hard to run efficiently unless you get a big enough resort.
(31:52):
I got like a four and a half million dollar purchase, 20 cabins with hot tubs.
It's super cool, very unique piece of real estate. Just turned 90 years old. Wow.
And it is the bane of my existence. Even though it makes money, it is so much time.
And it's too small to add enough systems to truly optimize it.
You can make it semi-passive.
(32:14):
But you don't have enough people. So someone leaves too much.
The knowledge leaves with them. You got to get involved with the train. Next person.
You need to build a business that is scalable.
We built a, we started building a business that we're like, Oh,
we have no interest in scaling this. And it's too small to be self-sustaining.
You've done a good job going from multifamily to finding, Hey,
(32:37):
the way I operate, I actually have even more efficiencies in self-storage.
You understood what your business is and you
built systems around that everything you just described to me builds
directly to plug in to the business that you're building they build on each
other and they synergize that is the mark of a skilled entrepreneur you understand
what you're doing why you're doing it and when you do a new venture it's focused
(33:01):
on building the things that you already have in place i mean that's what i'm
hearing from you which is for anyone listening This is how you play the game.
That is exactly how you play the game. Get traction on something and then add
systems and add processes and at times add businesses that all complement each
other and build a bigger engine.
Phenomenal, phenomenal advice. Vice. In your career, this will be the final question.
(33:24):
In your career, we have something that we call the stupid tax.
When you're new and you haven't done it before, it's more expensive the first time you do it.
This entire podcast is dedicated to talking to other owners and doing the owner
meeting for people. And especially if you're busy or in your workday,
you're listening to the pod.
I want you to learn from the most expensive mistakes we all make.
So Chris, what is your highest stupid tax been so far in the learning process
(33:48):
of running real estate? I got a good one. Good.
Yeah. So I talk about this in my, I'm putting a course out on partnerships and
also we're going to touch on what you just talked about with systems and all that stuff too.
But what I learned from partnerships is you've got to, you got to double check stuff.
(34:09):
You can't just take someone's word for it, especially when it comes to like
big rehab stuff. I was, I was,
A big rehab job that we're doing on some apartments, I took someone's word for
how long it's going to take and how it's going to go. Here's the plan.
They were experienced in rehabbing, experienced in doing construction,
(34:29):
stuff like that. So I figured, okay, well, we're good.
I'll believe them. I'll believe the duration. I'll believe the numbers,
how much cash we're going to need, what we have to raise, what we have to borrow.
And we had the opportunity to borrow
you know about three or four hundred thousand dollars
that we needed and then you know i asked him
(34:49):
like you know like this hundred grand we're borrowing
seems a little light are you sure that this is like all we need are you sure
like i asked him three times like oh like man this this doesn't look right you
know and he laughingly was saying oh this is more than we're going to need more
than ever and then ended up having to shell out like around $200,000 of my own cash.
(35:12):
And that's a lot of cash to put out and it could set you back quite a bit by having to shell out.
I mean, who wants to just throw 200 grand into something that they didn't think they had to?
So I had to do that. So the thing is, I don't want to do a capital call because
I take good care of my investors and it wasn't in the business plan for them to have to do that.
So we could have borrowed it from the person we borrowed the
(35:33):
you know 100k from easily but you
know i had to just randomly start putting my own cash into it
and it's like wow i can't believe i did that but you know
the thing is like lessons are learned we go to college we spend money
on college degrees and we also spend money on our stupid tax stuff right so
it's it's like mistakes sometimes are okay with me because you don't have to
(35:56):
pay money because i learn a lesson but i went to college and i paid for that
college degree right so So I'm doing the same with being new at stuff.
Like I'll make a mistake. It's going to cost me. It's like, you know what?
Like I could have gone to real estate school or like somewhere to learn this.
Right. And, or paid, you know, an expensive course or mastermind to learn about this. But, you know.
(36:18):
You know, that would still cost me money anyway. So you need to pay money to
learn usually, or you just listen to great podcasts like this and you could
learn quite a bit, especially with the stupid taxes.
But anyway, that was a really big one. And you could end up having to shell
out a lot of your own money just by not doing the due diligence.
You know, I should have sat down and be like, hey, let's look at this here.
Okay, the duration, how is this 100,000? Okay, what's this going to cost?
(36:40):
What's the holding cost?
How are we managing this? We're going to have vacancies. how's
that going to look are we only going to kick out are we going to do it in waves
or like kick everybody out at once like what is this
going to look like like what's this going to cost you know let's do projections
make a spreadsheet and calculate this and that's what i do with my storage projects
and everything moving forward you've got to highly calculate everything you
(37:03):
know i'll do when i'm buying a property i'll do a three-year month over month so 36 month projection,
of like what the what the numbers are going to look like you know and when we're
going to lease things up, you know, rehab costs, all that stuff.
So you just got to really do your due diligence and double check stuff.
How, you know, if you're partnering with someone, they might be good at doing
something and better than you, but sit down with them and have you like,
(37:26):
show me your work, basically, like prove it to me. Exactly.
Exactly. And that can be massively helpful. And I've had, I
have had over a million dollars of checks that I've written to the
partners to either get rid of them on projects or they're
not doing their job or to where they've been
delegated to do a certain part of the job and they just didn't do
it and it ended up costing you know i think
(37:48):
last time i looked at i think i have written and granted these are all on properties
that did make money but i have had about a million one hundred seventy five
thousand in checks that i didn't expect to have to write that's a pretty that's
a pretty set number do you know the cents attached to that too so i I know.
It was an exact dollar amount. That's the exact dollar amount.
(38:10):
We did all the buyouts and round numbers.
But to either eliminate partners or to have to, I've only once had to go to
a mediation where we were blatantly right,
but we had a partner that wanted to be reimbursed for every month of vacancy
that we had during renovation directly from us. Wow.
(38:32):
Because, yeah, we still don't get the because. It was a four-hour mediation
where I never did get the answer of why we thought that was going to be a thing.
But you have all sorts of things that come up.
And to your point, the most expensive thing for me has not been the debt.
It has not been the properties.
(38:52):
It's not been the unexpected surprise with the building.
It's always been the people. People are typically your largest variable.
I mean, I suppose if you were syndicating back in the day and you got all variable
rate debt, that might have been a pretty big variable.
I got a friend whose debt cost went up about 280 a month from his variable rate debt.
(39:13):
But generally speaking, people are the biggest variable in your business.
And if you do a good job, you need to understand each aspect.
You don't need to be an A player in every aspect of your business,
but you need to have a solid understanding of every piece so that you can check
people's work. You have to have someone in the driver's seat.
And if you are the head of your company, that's you.
And if you take that ownership early, your stupid tax can be a lot lower.
(39:37):
Chris paid a lot of money. I've paid a lot of money to learn that lesson.
If you can learn it from this podcast, that can save you a ton of pain.
Chris, you have a course and you mentor people on how to do this.
Where would someone find you if they want to learn more about self-storage,
more about partnership, more about real estate acquisition? If they want to
learn from you, where would they connect with you? Yeah. So I'm most active on Instagram.
(39:59):
You could just find me Chris Kirkman on there, but you could find me at chriscirkman.com.
I have like a link to all the, a lot of my different businesses,
but all my educational stuff is at stating it real.
It's kind of a play on words like real estate, get it? I was going to say that is a very clever one.
Well done picking up that website. That's good IP.
(40:21):
Yeah, yeah, yeah. So podcast is named after that that's coming out,
we're putting together, but I'm releasing it by the time this podcast is out,
I'll probably have my really good, super robust course.
It started out just being about partnerships and forming LLCs and companies,
but it evolved into this like all encompassing course on just like how to get
(40:43):
started, how to scale, how to grow, you know, how to buy properties,
how to officially manage them.
Um, and then how to exit basically. And you know, it, how do you,
it tells you how to form a company and where to go for that and different entity
structures and different, you know, like different key terminology with,
with, it's just like, it's just, you turn into like,
(41:04):
I'm probably like 70 videos into it. It's like crazy. So this huge thing.
So yeah, have that out and then good community on there too.
But yeah, just check it out.
And I would love to connect with a lot of folks and I'm always open to chat. So hit me up on social.
I would love to talk about self-storage or multifamily or really anything.
(41:28):
Out-of-state investing is another topic I love talking about too.
Awesome. Chris, thank you so much for joining today. If you guys want to learn more from him,
go ahead and follow the links they'll be in the show notes here to uh check
out his instagram his socials his website uh chris thank you so much for joining
us today and everyone else we'll see you on the next episode.
You could literally 3x the value of a property in a matter of years.
We're not talking like 10, 15, 20 years. We're talking three to five years. You could 3x a property.
Hello and welcome to another episode of Multifamily Strategy.
I'm Christian, your channel host today, joined by Chris Kirkman.
Chris, welcome to the pod. Yeah, thanks for having me.
You're doing some great stuff and really happy to be here. I'm super excited to have you here.
(00:24):
This is someone who got their start in multifamily. They're very versed in multifamily.
But has made a bit of transition.
There's a sister class to multifamily, which we call self-storage.
We've had a couple of self-storage people on here. We've had a lot of people
in multifamily strategy actually go out and buy seller finance self-storage.
I am a big fan of the asset class. I think that there is a little bit of a disease
(00:48):
in the US where we need to keep our stuff and I don't think it's going to get cured.
So people will always have stuff and as long as people need to hold on to their
stuff, they will pay to store it somewhere.
I think this is a business model that makes sense. I'm excited to have him on here.
Chris, tell us a little bit about your start. Before the real estate,
before multifamily, self-storage, what have you, what was your actual starting
(01:12):
point? What was ground zero for Chris?
Yeah. So I mean, I was always entrepreneurial. I mean, I think I...
What was my first business?
I had a pressure washing business when I was in my teens.
I worked for this landlord, Lord had a bunch of properties. So I would pressure
wash, you know, the side of houses and stuff like that.
So I did that did I started a skateboard company when I was 17.
(01:34):
Just a bunch of little random businesses. I mean, I've owned a food truck,
I've owned a roofing company.
So I have a lot of these, but my, my w two, my career, my college education was in design.
So I started out as a graphic designer. That's what I went to college for.
I was big into skateboarding, so I started designing for the skateboard industry,
action sports industry. I'm in Southern California, so there's tons of that going on out here.
(01:56):
Surfing, skating, snowboarding, all that stuff.
So we have that going on. And yeah, so did that, got into web design,
got into user experience design, which kind of is the way you kind of morph
into that. Now it's called product design.
So I worked for a lot of big companies. You know, I did that stuff for about
20 years, still dabble with some of that, but only for real estate related things
(02:20):
or my own stuff. It's actually helped me build my own websites and all that.
So, yeah. So that's what I did for a long time. But I always had like my freelance
gig going. So I always had my own side business.
So, you know, nights, weekends, I was designing stuff for clients.
Like my first iPhone app I ever designed, that was for, you know, a client.
Sometimes I would stack, you know, regular jobs on top of each other because,
(02:43):
you know, I believe in living 90 days per month.
We could talk about that a little later. I want to come back to that.
But anyway, yeah, so design career, but really wanted to get into real estate for a long time.
I think when I was a kid, my best friend, we built tree houses and all sorts
of stuff. He was super handy.
Now he's a general contractor. I knew he was going to go into that field.
(03:04):
So I'm like, I could do the business side and we'll flip houses.
You know, you do the, do the work, I'll handle the business.
We didn't end up teaming up, but like when I was, when I was little, I wanted to do that.
So kind of circled back to that, you know, maybe, maybe 20 years later,
but, you know, got into real estate after having a lot of other businesses.
I just thought the barrier to entry was like really, really, it was hard.
(03:26):
I'm like, do I have to raise like a hundred grand to buy a house?
Like what, what is that? I already own my own house here.
And we all know that SoCal houses, you know, Southern California, super expensive.
You know, now like it's, it's in my area, it's hard not to find a house under
a million bucks. It's like, how do people do it?
So, you know, so things that, you know, I just thought it was really expensive.
(03:48):
So and then ended up buying, you know, saved up a lot of money,
bought a single family, used the bird strategy on that, basically took a basement,
turned that into another bedroom and bathroom.
So made a two bedroom, one bath into a three bedroom, two bath,
charge more rent, did a cash out refi, pulled that money out.
So pretty much got the house for free.
I'm actually going to sell that house right now. So yeah, going to do that.
(04:12):
And then, you know, bought a duplex, then got in triplexes and got into apartments.
And I loved apartments. I was all about apartments for the longest time,
but then started falling in love with what I saw with self-storage.
And what I like about storage is it's just, it's like it's everywhere.
It seems, I mean, these are like garages, right? So it's pretty simple.
I had a self-storage unit when I was maybe in my mid-20s and I didn't have a
(04:38):
place in my apartment to put my ocean kayak.
So I just store them in this like five by 10 space.
Dinky little storage unit so did that
and yeah so i you know i i wanted
to get into it learned a lot about it i joined aj osborne's
mastermind i'm still in i'm actually an ambassador
for it right now love aj love that whole
(04:59):
team and yeah just learned a ton of stuff read
a ton of books all that but i wanted to really kind
of get into storage ended up buying my first facility in ohio and i mean really
what i love about storage is there's there's no kitchen fires there's no of
toilets so these are like like i said garages so that's that's kind of how i
how i got into all that but you know i do love multifamily i'm still you know
(05:22):
i'm still looking at apartments,
one of my business partners and i you know we have offers out on multiple apartments
now so we're we're doing that we're also creating a fund right now too that'll
handle that so yeah i'll i love apartments but storage is great awesome now
how far did you go in the apartment game like how How many instances did you scale to?
I don't remember the exact unit count, but I mean, I just had like a couple of buildings.
(05:46):
Yeah. And then I had like, I'd buy like a series of triplexes next to each other
in like a neighborhood or do little things like that. Awesome. Awesome.
Well, it's a great way to get started. And the method that you really fell on
was the BRRRR method, right?
You'd saved up, saved up, bought, pulled out capital, and then you just scaled that.
How many years did that take you in the multifamily space to really get momentum?
(06:08):
Yeah, so the thing that I left out is I learned that you can use OPM.
And when I when I got into that, and I got that from like bigger pockets,
when I learned that it was a game changer.
I'm like, wow, I don't have to use any of my money, really.
So learn how to capital raise, learn how to, you know, turn a good profit for investors.
(06:28):
And then, yeah, just started just started doing that.
And then now, you know, I don't have to use a little to none of my own cash for, for these deals.
And that's a fantastic way to write. Now, when you're, when you are actually
managing equity for other people, this is a question I get a lot.
So you're raising capital, you're doing these deals.
What do you find is the most important piece for raising capital?
(06:50):
Like when people are investing in you or your deals, what are the key pieces
that they want to hear during your capital presentation? Yeah.
So the thing is, I mean, when you're raising capital, you need to be known.
They need to like you. They need to trust you. You need that credibility.
So you've got to have that. You've got to have that rapport with them.
They've got to feel good about it. But it comes down to just having a well put together package.
(07:15):
And that's where my design ability has come into play because I've been able
to put together nice brochures, websites, all that stuff too,
branding, all that. up, but it comes into the presentation and working out the
numbers, the projections and all that.
And with storage, there's a lot of scalability with that. And it's easy to build more.
(07:35):
So I look for facilities with land to expand and all that.
So even with apartments, you just got to put together a good package and show.
I'm a value-add investor. For instance, I've bought apartments where total gut
job, renovated every unit, that sort of thing, common areas, all that stuff.
So I love value-add. So I took that strategy and I brought it into self-storage
(07:58):
and kind of showing that and how it's scalable and how the numbers can increase.
You know, investors, they love that.
You know, some of them want returns right away, but those are more turnkey projects
and those have lower returns.
Whereas mine, you know, you might be not getting any return for a little while,
you know, several months or even a year while you kind of get the property ready.
(08:21):
But after that, it's going to cash flow a lot. And then, I mean,
you could literally 3X the value of a property in a matter of years.
We're not talking like 10, 15, 20 years. We're talking three to five years. You could 3X a property.
Now, you're in the same niche that I am as far as value-add multifamily is what I like to do.
I like to do an entry-level value-add multifamily, stack units,
(08:44):
find places where I can either be a better manager or a better contractor than
the prior owner, which usually isn't that hard to do.
What does that look like in self-storage? Because when I'm thinking multifamily,
I'm thinking, you know, we're going through our tenant mix. We're going through, you know...
Replacing appliances, we're raising rents where they need to be raised,
we're upping quality of life in a storage unit.
(09:06):
What does it actually look like to find a value-add opportunity in that niche?
Yeah, it's great. Like I said, no toilets, you're not renovating that,
you're not putting new kitchens in.
So the kind of value-add is different. I mean, like I said, these are garages,
we're talking paint, we're talking, you know, doing small, small enhancements,
You know, they're cosmetic usually.
(09:26):
But what you could do is you could put a fence around the facility.
You could put up a ton of security cameras.
I mean, I put up 30 in one of mine, just like you can just put up a ton.
You add way more value just by doing that. So better security,
you know, you deploy better lighting, put up fences, put in automated gates,
put in a good website that has online payments,
(09:49):
auto pay, all these different bells and whistles that make it easier and better
for the actual customer.
So that added security, you know, the ease of use, all that stuff increases the value.
But in addition to that, you could pave certain areas or put gravel in and then
do some boat and RV parking there.
So any spare land you have, it's like, wow, you just instantly just gained an
(10:11):
area for boat and RV parking.
And in a lot of markets, that works really, really well.
And then, you know, what you do is you build more.
And by building more, it adds a ton of value. Now, when you're adding spaces
to a lot, because I've run into this where cities have been resistant to this.
What does the process actually look like? So you buy a mobile home parking,
(10:31):
let's go all the way like early transaction in the due diligence phase.
You're like, hey, I found some extra space on this. I think I can create some
boat and RV parking spots.
Is there a city by city basis where you have to get these approved?
What is the process where you know before you close, hey, all of the value add
that I want to do, I'm actually going to be able to pull off? What does that work?
(10:53):
Is that a difficult process to learn? Tell us a little bit about what that looks
like. Yeah. I mean, you want to make sure the place is even zoned for storage.
I've, I've looked at, I've underwritten properties where it's like,
I look at it and I'm like, you have storage here, but the city switched it.
Like it, and it'll do that. But you gotta not just look at the zoning.
You have to, you know, you have to do your due diligence and figure out like,
(11:13):
will the city allow this?
So there's ways of finding that out, but you definitely want to figure that
out before you buy the property.
Because if that's a huge part of your strategy, you've got to understand if
that's something you could do. But in addition to that, you've got to look at
the saturation of the market.
That's a huge thing. So square footage per capita is how you measure it.
And typically that's a three mile radius, but really rural areas,
(11:36):
that's a five mile radius.
And, you know, I look for markets with at least 10,000 people within that radius.
And the threshold is usually about 10 for me.
You know, no more than 10 square feet per capita, but ideally it's about five.
And if you're at five, then you know that you could build a lot more and just
(11:56):
capitalize on the need in that market.
So if you're buying the only facility that has land to expand,
you're going to just grab all the extra need for storage in that area.
But you definitely have to check with the city. You got to look at the zoning.
You got to make sure you can actually do this. You just got to look into a ton of stuff.
(12:16):
And luckily, I have one of my partners, which is he's amazing at that,
really has an engineering and construction background. So he's able to help with that.
So I've kind of put together this dream team of folks that are able to really,
really jump in and different times to make it happen.
One thing I've really enjoyed about multifamily is when you do improvements,
it's really easy to do the marketing through word of mouth and listing because
(12:39):
there's a million listing sites it gets pushed out to.
And if you do a good job, you know, right by building, the first thing I do
is I just, I just get on any sort of basic maintenance thing that was deferred.
Tenants know within the first week, oh, wow, my stoves are getting fixed.
That like new ownership is actually going
to be responsive and it makes the whole rest of the project easier with self-storage
(13:01):
i imagine it's a little bit harder to get the word out when you spend the money
on the 30 cameras and the paving i i imagine your technical skills with the
web design and the marketing is actually a huge portion of the success when you do the value add.
As a business owner what are you doing to get the word out now like you've purchased
this you've You've done the stuff.
(13:21):
How do you actually bring in the new tenants and let them know?
Or I guess not tenants, but the new renters of the space.
How do you let people know, hey, this is a new park. This is new management.
Security has been upped.
How does that work and how important is that to the success of a self-storage project?
Yeah, absolutely. So I typically like to buy facilities that are like right off of a major highway.
(13:43):
And you got to have got to have a sign up like a really good sign.
So, you know, if I'm buying a facility that doesn't have a good sign,
you know, I'll put a new sign in.
But you got to factor that into the cost because signs could be pretty expensive.
And so that's that's one of the things you do. But with the website,
actually, there's a vendor called StoragePug, and they do really good.
(14:05):
They're able to make it so the website connects to your backend system for basically
renting and all that stuff.
Once you mark something as vacant, it automatically goes up to the website, stuff like that.
But SEO plays a big role in this.
And by having that really dialed in on your website, we usually rank at the
(14:29):
top or toward the top, just the people paying for ads are at the top.
But the ones that are usually on top that are ads might not even be for that
area or for something unrelated.
So someone's going to go to Google and be like, self-storage in such and such
town, you're going to be at the top of that list.
There might be other facilities that aren't even on that list a lot of the time.
(14:52):
So the thing is, I live in a very urban area and we have the REITs here with
these giant facilities.
Monster facilities are super nice, really well done.
But a lot of places aren't like that. You have these mom and pops that own these
places. They're really old school.
They don't have these systems. So it's easy to come in and have the best facility in the area.
(15:17):
You know rank they don't have websites maybe if they
do they can rent on it's like call you got to
call them different things like that so you know it's
really just using the web you could put ads out even that's
actually something we're doing a little bit of we we just kicked a bunch of
you know terrible red results tenants that you know hadn't paid in a while and
some people are mia there's like it's cheaper than a dumping fee to just leave
(15:41):
my junk there so it's like all right i'm paid in a while you're out of there
but but anyway yeah so the web is great So, I mean, that's really all you really need.
But it's easy to have like the best facility.
You know, here's like a stat. I mean, if you take like the top five,
you know, fast food joints, you know, you got McDonald's, you got Chick-fil-A,
you know, like all these, you know, Burger King.
(16:01):
You take the top five, all the restaurants combined in the United States.
If you take those, there's actually more self-storage facilities.
Now, I'm not talking units of the facilities. I'm talking to actual facilities
because you can go to these small towns.
There might be a couple storage facilities, but no McDonald's.
And where I'm at, there's fast food everywhere.
(16:23):
So if you live in an urban area, you're used to being fast food on every corner.
But some of these towns, they just won't have anything like that.
So, but they'll have storage, like everywhere there's storage,
there's such a need for it.
So you can go in an area that has a low square footage per capita,
you know, a bunch of mom and pops just owning these other facilities.
(16:43):
You buy from a mom and pop that hasn't done really much with the facility.
You come in, put a nice, you know, fence in a security gate,
automate the heck out of it and just run the place much better security.
You're now appearing on top, you know, on Google, big old sign off the road.
You're looking really sharp, you know, compared to these other ones.
And so, you know, they're going to go to you.
(17:03):
And, you know, that's kind of how I like to buy. And you're hitting on something
that's been a theme through this entire podcast.
Ever since I've run this, the feedback that I get from a lot of owners is you
make the most money being a better operator than the last owner.
And what we see consistently is that is not a hard thing to do.
Generally speaking, in every single market, especially when you're talking,
(17:24):
you know, we're not talking like huge metros.
We're talking, you know, markets with reasonable population, 10,000 plus people.
That still is pretty small. I've invested in a lot of places that have like 30,000, 40,000 people.
These mid-sized towns, there's usually a lot of mom and pop operators.
A lot of them also don't have high amounts of debt on their property.
Oftentimes, they've owned them for a long time. So you have a lot of creative
(17:47):
finance options on this type of stuff in these type of markets.
And it is not a huge challenge to be a better operator than them because they've
owned it for a long time. They don't need to make the same profit on it.
It's made them plenty of money for what they've bought it.
You come in, you optimize the systems, you bring things close to market rent,
you have the highest quality, the best SEO, and you can come in and dominate
(18:09):
these markets. I mean, this is a strategy that I see people do.
And it seems to be the most effective strategy to multiply money.
You come in and buy these misoperated properties at a price where they make
sense on how they're performing, and then you make them perform a lot better
and they're just worth more.
It's a fantastic model it's a simple model and it takes some skill and if you're
(18:29):
a good operator and you have a good deal finding strategy.
You can do a ton of these, and this is a really successful strategy.
How are you finding your deals?
Yeah, so you're totally right about what you said, easy to be a better operator.
And I'd love to get into the systems and how you can do that and how you can
get your expense ratio super low.
(18:50):
But yeah, I'm finding my properties just sourcing them. I mean,
I have a little bit of a background wholesaling.
You know did a little bit of that mostly for single family
but the same the same stuff works for for
for multi-family and other commercial works
for you know self-storage too so you know you're
just basically building a list of you know storage facilities using
tools like prop stream i'm actually an ambassador for prop stream they're amazing
(19:14):
but there's other tools that have you know even more commercial properties listed
on them so you do that you skip trace the list you're You're going to run into
the same issues that you run into with a single family where you get a million phone numbers.
You've got to keep calling them to get the actual owner.
And then you call the owner up. You build rapport with them.
Once they know that you're able to talk shop and you're trying to build that
(19:38):
relationship, you're talking about the area a little bit, you just want to get
into it. You don't just pitch them right away.
Then you usually can kind of get through them, get through to them and get them
loosened up to talk about selling you. And they might not sell to you right away.
But the thing is, if you are the person that they enjoy talking to,
they're going to remember you when they do want to sell. So they might come
back to you a year from now, two years.
(20:00):
So that's one method. I mean, just typical cold calling.
I actually have an AI cold caller that does decently for qualifying.
We built this AI model that's able to... It sounds just like a real person.
You guys can check it out on my social feed. I have some videos of it,
but it's pretty incredible.
So it can actually get through to people, ask the right questions,
(20:23):
you know, it can actually, you know, do transfers to some, you know,
or, you know, take, take down a time to call back, it could do like whatever
I want it to. And it sounds amazing.
So I'll do that. And then because I mean, if you get like a list of a ton of
numbers, you don't have time to necessarily go through all but I still also
cold call when I have time.
So there's that also JV with a lot of folks too, that are able to kind of do
(20:46):
the same thing and source the properties.
Properties so there's that and the brokers are great too
brokers will do all the hard work for you and
they'll bring you deals of course you know you're gonna have to negotiate a
bit but you have to do that with really anything so there's that and then of
course you know stuff that's on the market officially is gonna it's gonna usually
be a little bit more expensive but and more competition so i i you know you
(21:10):
can get deals off of that but i try to stay away from that.
So, you know, mostly it's brokers, other JVs that bring me properties or just
sourcing myself with my own team, you know, the old wholesaling method,
cold calling and all that stuff. So do that.
And then the thing is with these mom and pops, I mean, you mentioned like they
(21:32):
might have so much equity, like owe nothing on it and then bought it decades ago.
The thing is they'll get this magic number in their head that they think it's worth.
They'll see a comp that went for a certain price, but it might be in better
condition actually. So it's not quite a real comp.
And they'll get this number in their head, you know, like 2 million for a property
when maybe it's worth like 1.2 or something like that for a small facility.
(21:55):
So the thing is debt's super expensive right now.
And we see this in every sector where, you know, debt's expensive.
So the sellers, you know, you've got to be kind of desperate right now to be selling.
But sellers, they want, you know, prices from a couple of years ago.
But buyers, I mean, they can't do that because debt's so expensive.
(22:15):
You know, interest rates are way higher.
So it's just this kind of clash where it's hard to meet at the right price.
And that's why, I mean, there's less inventory on the market,
but the inventory on the market, like it's hard to negotiate that.
So not as many deals are being done, but that's where the seller financing comes
in because if you could sell or finance, you can get them the number that they
want, but at a low interest rate that, so the numbers actually work when you
(22:38):
calculate, calculate it.
But interest, like it really eats into a lot of that cost.
I mean, it's crazy. Like when you, when you put it at the calculator,
but speaking calculators actually created one, If you go to underwritingcalculator.com, I own that.
And then you're able to utilize the calculator put together.
And you're able to underwrite deals in like a minute.
(23:00):
And there's these big spreadsheets that are scary. And it's like,
oh my gosh, like the people that I mentor, they're like, how do I,
you know, like, what do I do? Like I teach people how to underwrite.
And, you know, you just got to simplify. I just put a few, you know,
main things in there and just see what pencils out.
But, you know, it's pretty easy to come up with like an offer price.
At least for an LOI, but you're able to quickly see how crazy interest plays into everything.
(23:27):
So seller financing is definitely the way to go, but you're not always able
to get that because people just want to get out and they don't want to deal with it anymore.
Well, that's the simplicity of real estate, right? You have to win on price or terms or both.
But you do have to get one or the other. And I've had people come to me where
they're like, well, they're not willing to sell their finance,
but they want this price. I'm like, well, what you have there is no deal.
(23:50):
You could buy anything with creative finance, but if they're not willing to
be creative and they want more than it's worth, you can't buy every property.
Not everyone can sell it, but it's fine.
You bought and you'd mentioned earlier when you were going through all the different
ways that you could find deals, the first one you mentioned, relationships.
If you have a strong relationship personally with the seller,
(24:10):
that you met with other owners and you treat them as owners,
not just sellers of property, your options to seller finance,
I've found they're going to go through the roof.
People like to work with people who they like, know, and trust.
If they're going to lend you money, which is what they're doing in seller financing,
they're not getting all of their cash out, there's a certain level of trust that comes with that.
And if you have a relationship, your odds of winning that deal and having even
(24:32):
an ability to negotiate on terms, it's huge. It's huge.
I love what you said there, and that is absolutely, especially in asset classes.
I see so many self-storage facilities go on seller finance terms.
Yep. It is a super common way to sell a small business, especially in today's
interest rate environment.
Yeah. They get it. Self-storage owners is not a foreign concept to really any of them.
(24:57):
They do enough business to understand how seller financing works.
You don't have to explain it.
If it helps get your deal work, yeah, you can win on terms. That's fantastic.
Yeah. You mentioned something early, and I wanted to dive into this.
Sure. You mentioned doing 90 days in 30.
Yeah, 90 days per month. And well, it kind of goes into my version of the 80-20
principle as well, which I'll explain. So...
(25:20):
The 80-20 principle is basically like 80% of the results come from 20% of the output.
So it's like if you're 80% of results are as good or at least passable,
you know, as like the top players, you know, anybody else, then it's like,
okay, well, that's 20%. You could stack five 20s to equal 100.
So that means you could actually do like five times as much as normal people do.
(25:42):
You got the nine to fivers that they're like, I'm confining what I can actually accomplish
into this you know this amount of hours and that's
like all i can do they don't think they could do all that stuff and this
mindset came from when i was freelancing and taking on
all this work still when i had a w-2 or any of that stuff
like i've always had like side stuff going side businesses on top of freelancing
(26:04):
and just doing all this stuff and i realized that you could just stack stuff
you can stack w-2s if you wanted to you know remotely there's like all sorts
of stuff you could do so it's like you could do five things and the thing is
it doesn't have to be work related.
It could be, you know, that 20% could be allocated to, you know,
your kids, you know, coaching your kids team or, you know, traveling more or
(26:26):
whatever, but you could basically take 20% of your energy and throw it in,
into a bunch of different things.
And it's just, I just, it's, I like saying live in 90 days per month because
like, you know, I kind of split my days up into, into three different chunks.
You know, I get so much, I wake up at 5am.
It's non-negotiable every day. I get a lot done before anybody else is pretty
(26:48):
much awake, almost like a whole work day's worth of work. Then I got the middle chunk of the day.
And then I got the last chunk of the day, which sometimes bleeds into the evening
and even after the kids are to bed, but able to get, you know,
like three work days worth of, you know, time in.
But I'm still doing the, you know, the, you know, stacking, you know,
five of those 20%, you know, doing a bunch of things.
(27:09):
That's why I could do all these different businesses. and I've had business
partners that are like, oh my gosh, you're just like everywhere.
You're, you know, how are you doing? You know, they get all.
They get very overwhelmed. But the ones that I stick with are the ones that,
you know, have that same mindset.
And they don't get too overwhelmed. It's like, you could do a podcast,
I could have a self storage business, I could have a capital company,
(27:30):
I could have a wholesaling company, I could do apartments, I could do a fund,
I could do courses, I could do coaching, like all these different things.
In addition to being a father of two wonderful children
and a husband to a wonderful wife and a a
dog dad of two uh siberian huskies to
oh wow that's a that's a dog that needs some
attention that is yeah you know we don't walk
(27:52):
them they walk us let's put it that way so but anyway yeah so there's a lot
of stuff going on but that's just how i'm kind of built and you know it's you
know anybody could do it but you know you do get overwhelmed on occasion but
the thing is just having that mindset of like you could accomplish so much more
you could do so much more with your day.
And part of that is being able to delegate to people.
(28:13):
I use virtual assistants and VAs. They're great. They make life easier.
You don't have time to underwrite a bunch of deals. You train a VA to do it.
They could underwrite the stack of properties coming your way.
My first VA I hired was doing that for me for apartments.
I felt bad because all these great brokers were sending me all these deals,
(28:35):
and I just wasn't getting to them in time.
So I was like, oh my gosh, I'm damaging these relationships because they keep
sending me stuff and they're like.
Hey, did you look at that property? It's like I sent you five last week and
it's like, oh my gosh, I feel terrible because I was in so many different markets
looking at all these different properties.
So all these brokers are sent. So I hired a VA, trained her how to underwrite a little bit.
(28:58):
So she would do that plus do like three scenarios to find a price that made sense.
And then I would take a look at the good ones. Basically, she'd bring it to my attention.
And then those are the ones I'd respond to the broker about.
Out. But like a lot of that, a lot of that just takes, took time,
you know, to underwrite those deals.
And, you know, the, they would, they would handle that for me.
(29:19):
And it, you know, going, going into, you know, back into the VA thing,
they could do cold calling for you.
They could do, you know, I did that with my wholesaling. They could,
they could handle pretty much anything.
And for my storage facilities, VAs play a huge role in it because I don't have
to hire, basically people in the US to take incoming and outgoing calls.
(29:40):
All my customers could be called from VAs and they can also take calls to the facility.
And the cool thing is I have a management company. So one VA can handle multiple
facilities, just different numbers coming in.
They know based on the number, like which facility is calling.
So it's like my expense ratio, I could get down to like 15%,
(30:01):
depending on property taxes in the area, where like expense expense ratio is
like 30 or 40%, you know, kind of common.
And of course with apartments, even greater than that on occasion,
but, but yeah, VAs are great and just you could do so much more if you delegate
and just hire people. Like another thing is I.
I don't mow my own lawn because it's not beneath me to do that.
(30:24):
You know, I actually do a lot of fun. But the thing is, like,
I know somebody else could do it better than me.
Plus, I'm not going to take that time to do that. I can use that time to spend with my kids.
And the person mowing my lawn is going to do all the houses in my neighborhood.
I mean, they got the block covered. So, you know, it's their business.
They're efficient at doing that. Whereas me, to take all that stuff out,
(30:44):
I'm not going to do as good of a job. I got to take time away from my family
or take time away from work or whatever.
You know, the same thing goes with other stuff. And I don't frown upon people
that order a lot of food in when they just don't have time to cook or they're
using the time that they would use to cook to, you know, spend with their family.
Like if they're using that time wisely, then it makes sense to hire that out.
(31:07):
So do that with like anything you could do that's taking time.
And I make this board that has a list of stuff that's just like getting in the
way of me getting other stuff done, like stuff I need to delegate.
And, you know, that helps me stay focused, you know, growing my businesses and
focused on stuff that I need to focus on.
And then just having other people that I work with take on certain tasks and
(31:30):
it just frees up a ton of time. Yeah.
No, I love that. And efficiency is the biggest thing, especially someone who
runs multiple companies. I did a similar thing with the property management
company, with the education companies, with the sales company.
I made the mistake of buying a resort thinking I want to be in hospitality,
which I absolutely hate running.
That is hard to run efficiently unless you get a big enough resort.
(31:52):
I got like a four and a half million dollar purchase, 20 cabins with hot tubs.
It's super cool, very unique piece of real estate. Just turned 90 years old. Wow.
And it is the bane of my existence. Even though it makes money, it is so much time.
And it's too small to add enough systems to truly optimize it.
You can make it semi-passive.
(32:14):
But you don't have enough people. So someone leaves too much.
The knowledge leaves with them. You got to get involved with the train. Next person.
You need to build a business that is scalable.
We built a, we started building a business that we're like, Oh,
we have no interest in scaling this. And it's too small to be self-sustaining.
You've done a good job going from multifamily to finding, Hey,
(32:37):
the way I operate, I actually have even more efficiencies in self-storage.
You understood what your business is and you
built systems around that everything you just described to me builds
directly to plug in to the business that you're building they build on each
other and they synergize that is the mark of a skilled entrepreneur you understand
what you're doing why you're doing it and when you do a new venture it's focused
(33:01):
on building the things that you already have in place i mean that's what i'm
hearing from you which is for anyone listening This is how you play the game.
That is exactly how you play the game. Get traction on something and then add
systems and add processes and at times add businesses that all complement each
other and build a bigger engine.
Phenomenal, phenomenal advice. Vice. In your career, this will be the final question.
(33:24):
In your career, we have something that we call the stupid tax.
When you're new and you haven't done it before, it's more expensive the first time you do it.
This entire podcast is dedicated to talking to other owners and doing the owner
meeting for people. And especially if you're busy or in your workday,
you're listening to the pod.
I want you to learn from the most expensive mistakes we all make.
So Chris, what is your highest stupid tax been so far in the learning process
(33:48):
of running real estate? I got a good one. Good.
Yeah. So I talk about this in my, I'm putting a course out on partnerships and
also we're going to touch on what you just talked about with systems and all that stuff too.
But what I learned from partnerships is you've got to, you got to double check stuff.
(34:09):
You can't just take someone's word for it, especially when it comes to like
big rehab stuff. I was, I was,
A big rehab job that we're doing on some apartments, I took someone's word for
how long it's going to take and how it's going to go. Here's the plan.
They were experienced in rehabbing, experienced in doing construction,
(34:29):
stuff like that. So I figured, okay, well, we're good.
I'll believe them. I'll believe the duration. I'll believe the numbers,
how much cash we're going to need, what we have to raise, what we have to borrow.
And we had the opportunity to borrow
you know about three or four hundred thousand dollars
that we needed and then you know i asked him
(34:49):
like you know like this hundred grand we're borrowing
seems a little light are you sure that this is like all we need are you sure
like i asked him three times like oh like man this this doesn't look right you
know and he laughingly was saying oh this is more than we're going to need more
than ever and then ended up having to shell out like around $200,000 of my own cash.
(35:12):
And that's a lot of cash to put out and it could set you back quite a bit by having to shell out.
I mean, who wants to just throw 200 grand into something that they didn't think they had to?
So I had to do that. So the thing is, I don't want to do a capital call because
I take good care of my investors and it wasn't in the business plan for them to have to do that.
So we could have borrowed it from the person we borrowed the
(35:33):
you know 100k from easily but you
know i had to just randomly start putting my own cash into it
and it's like wow i can't believe i did that but you know
the thing is like lessons are learned we go to college we spend money
on college degrees and we also spend money on our stupid tax stuff right so
it's it's like mistakes sometimes are okay with me because you don't have to
(35:56):
pay money because i learn a lesson but i went to college and i paid for that
college degree right so So I'm doing the same with being new at stuff.
Like I'll make a mistake. It's going to cost me. It's like, you know what?
Like I could have gone to real estate school or like somewhere to learn this.
Right. And, or paid, you know, an expensive course or mastermind to learn about this. But, you know.
(36:18):
You know, that would still cost me money anyway. So you need to pay money to
learn usually, or you just listen to great podcasts like this and you could
learn quite a bit, especially with the stupid taxes.
But anyway, that was a really big one. And you could end up having to shell
out a lot of your own money just by not doing the due diligence.
You know, I should have sat down and be like, hey, let's look at this here.
Okay, the duration, how is this 100,000? Okay, what's this going to cost?
(36:40):
What's the holding cost?
How are we managing this? We're going to have vacancies. how's
that going to look are we only going to kick out are we going to do it in waves
or like kick everybody out at once like what is this
going to look like like what's this going to cost you know let's do projections
make a spreadsheet and calculate this and that's what i do with my storage projects
and everything moving forward you've got to highly calculate everything you
(37:03):
know i'll do when i'm buying a property i'll do a three-year month over month so 36 month projection,
of like what the what the numbers are going to look like you know and when we're
going to lease things up, you know, rehab costs, all that stuff.
So you just got to really do your due diligence and double check stuff.
How, you know, if you're partnering with someone, they might be good at doing
something and better than you, but sit down with them and have you like,
(37:26):
show me your work, basically, like prove it to me. Exactly.
Exactly. And that can be massively helpful. And I've had, I
have had over a million dollars of checks that I've written to the
partners to either get rid of them on projects or they're
not doing their job or to where they've been
delegated to do a certain part of the job and they just didn't do
it and it ended up costing you know i think
(37:48):
last time i looked at i think i have written and granted these are all on properties
that did make money but i have had about a million one hundred seventy five
thousand in checks that i didn't expect to have to write that's a pretty that's
a pretty set number do you know the cents attached to that too so i I know.
It was an exact dollar amount. That's the exact dollar amount.
(38:10):
We did all the buyouts and round numbers.
But to either eliminate partners or to have to, I've only once had to go to
a mediation where we were blatantly right,
but we had a partner that wanted to be reimbursed for every month of vacancy
that we had during renovation directly from us. Wow.
(38:32):
Because, yeah, we still don't get the because. It was a four-hour mediation
where I never did get the answer of why we thought that was going to be a thing.
But you have all sorts of things that come up.
And to your point, the most expensive thing for me has not been the debt.
It has not been the properties.
(38:52):
It's not been the unexpected surprise with the building.
It's always been the people. People are typically your largest variable.
I mean, I suppose if you were syndicating back in the day and you got all variable
rate debt, that might have been a pretty big variable.
I got a friend whose debt cost went up about 280 a month from his variable rate debt.
(39:13):
But generally speaking, people are the biggest variable in your business.
And if you do a good job, you need to understand each aspect.
You don't need to be an A player in every aspect of your business,
but you need to have a solid understanding of every piece so that you can check
people's work. You have to have someone in the driver's seat.
And if you are the head of your company, that's you.
And if you take that ownership early, your stupid tax can be a lot lower.
(39:37):
Chris paid a lot of money. I've paid a lot of money to learn that lesson.
If you can learn it from this podcast, that can save you a ton of pain.
Chris, you have a course and you mentor people on how to do this.
Where would someone find you if they want to learn more about self-storage,
more about partnership, more about real estate acquisition? If they want to
learn from you, where would they connect with you? Yeah. So I'm most active on Instagram.
(39:59):
You could just find me Chris Kirkman on there, but you could find me at chriscirkman.com.
I have like a link to all the, a lot of my different businesses,
but all my educational stuff is at stating it real.
It's kind of a play on words like real estate, get it? I was going to say that is a very clever one.
Well done picking up that website. That's good IP.
(40:21):
Yeah, yeah, yeah. So podcast is named after that that's coming out,
we're putting together, but I'm releasing it by the time this podcast is out,
I'll probably have my really good, super robust course.
It started out just being about partnerships and forming LLCs and companies,
but it evolved into this like all encompassing course on just like how to get
(40:43):
started, how to scale, how to grow, you know, how to buy properties,
how to officially manage them.
Um, and then how to exit basically. And you know, it, how do you,
it tells you how to form a company and where to go for that and different entity
structures and different, you know, like different key terminology with,
with, it's just like, it's just, you turn into like,
(41:04):
I'm probably like 70 videos into it. It's like crazy. So this huge thing.
So yeah, have that out and then good community on there too.
But yeah, just check it out.
And I would love to connect with a lot of folks and I'm always open to chat. So hit me up on social.
I would love to talk about self-storage or multifamily or really anything.
(41:28):
Out-of-state investing is another topic I love talking about too.
Awesome. Chris, thank you so much for joining today. If you guys want to learn more from him,
go ahead and follow the links they'll be in the show notes here to uh check
out his instagram his socials his website uh chris thank you so much for joining
us today and everyone else we'll see you on the next episode.
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