Why Self-Storage Outperforms other Real Estate Assets Even in the Worst Market Cycles with Joe Downs
August 12, 2025 • 42 mins
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ed Mathews (00:52):
Greetings and salutations, Real Estate
Undergrounders.
It is Ed Mathews with the RealEstate Underground.
Today, I am joined by a fellowVillanovan, which I'm very
excited about.
Joe Downs is the CEO of BelroseAsset Management.
So today we're talking aboutself-storage and maybe some
other asset classes, but I thinkwe're going to focus on that.
Joe, welcome to the show.
(01:14):
I can't wait to have thisconversation.
Joe Downs (01:16):
Ed, super excited to be here.
Thanks for having me, and we'regoing to do our best
collectively.
We're going to hold each otheraccountable to not talk about
Villanova basketball while we'reat it.
Ed Mathews (01:23):
Yes, but I just discovered that, while I'm three
degrees probably from the Pope,you actually know a guy who
knows the Pope really well.
Joe Downs (01:30):
Just three people that are one degree, that know
the Pope directly.
Ed Mathews (01:33):
Yeah, you got me beat, so that's awesome.
Welcome to the show and thankyou so much for your time.
I know you're busy, so Iappreciate it.
Thanks for having me again.
Yeah, tell us a little bitabout you and Belrose.
Joe Downs (01:44):
Yeah, Belrose, me, I'm a conundrum of sorts.
I've been someone that's had toreinvent themselves since
Villanova.
I think I realized later inlife that I was an entrepreneur,
after I'd already demonstratedit a few times.
I actually was working while Iwas at Villanova, djing and
bartending.
So while you were at Kelly'shanging out, I was probably
DJing, yeah, playing tunes youwere listening to.
But yeah, so that's me, I've,I've.
(02:06):
Since Philadelphia, I had onekind of short career it wasn't
that short 70 years as afinancial advisor and then, not
because of 9-11, but because of9-11, I decided that wasn't for
me, and what I mean by that isit's not like I lost my brother
or something in the towers, thatwasn't, and there's no stolen
(02:26):
valor here.
It was just a moment in time.
It made me realize the pauseand say is this really what I
want to be doing?
And it wasn't.
And from that point forward,all of my intentions were to be
in real estate.
It took me a couple of years,but I got there.
So I've been in real estate forover 20 years now in some
capacity.
So I've been in real estate forover 20 years now in some
capacity.
So that's who I am and I loveit and I wake up every day and
(02:49):
it's how.
What am I doing in real estatetoday and how am I excited about
it, not to say a lot of dayswhere the minutia of whatever
you're involved in gets you, butI just love real estate.
So how did I end up inself-storage?
I'm constantly finding thatreal estate is no different than
other businesses andself-storage I'm constantly
finding that real estate is nodifferent than other businesses.
There are cycles to what you'rein and I found myself having to
(03:11):
reinvent through some of thosecycles.
The mortgage meltdown in 2000really started in eight, but
most people recognize it as nine, 10, 11, right, and I was part
of that, unfortunately, and Ihad to reinvent.
But that led me to anotherbusiness, distressed debt, and I
still have that business,although that business went
through a cycle of its own whereI had to reinvent again.
And in that reinvention is whenI found storage.
(03:33):
Oh, divine intervention, justdown market cycles, financial
intervention.
Ed Mathews (03:38):
Yeah.
Joe Downs (03:38):
Financial down cycle intervention.
But you learn a lot throughthose cycles, not only about
yourself and your character, butalso about business, and you
take each one of thoseexperiences and you apply it to
the next thing you're in.
And so I've been in storage.
I'm still in distressed step,by the way, but that down cycle
gave me the opportunity to learna new trade, a new trick, if
you will.
I wasn't an old dog yet,although I think I am now.
(03:59):
I think we just discovered thatwe are, but in that opportunity
I was able to learn about aspace that a lot of people are
talking about today, but theyweren't six and seven years ago
and now they are talking abouttoday, which is great.
I get to be guests on podcastslike yours and thank you again
for having me.
It's been an exciting ride,fantastic to learn about storage
, especially when I had abackground raising money for
(04:21):
multifamily and for office andfor some other kind of
alternative type of deals.
So it's neat to be able tocompare and contrast the two and
see what you like and don'tlike.
Now, I was never an operator, Iwas never CEO of those other
companies.
I was the sales guy.
I was raising money.
I didn't have to source thedeals, find the deals,
underwrite the deals.
I wasn't responsible in chargeof any of that, so it's been
(04:42):
very different this cycle, thistime around this asset class,
but I'm having so much fun andI'm loving it.
Ed Mathews (04:48):
Yeah, it's interesting.
I've been looking at a friendof mine, actually now an
investor in one of our funds,Brian.
He has gotten me into flex andindustrial spaces.
So similar play to storage insome respects, but it's
interesting the multifamily play, especially here in the
Northeast.
You're based in the Philly area, I'm based up here in
(05:10):
Connecticut.
It's been a bit of a challenge.
The pricing is still out ofalignment with the debt costs.
It's pretty hard to find a dealthat pencils well and looking
at other asset classes justmakes sense, which is one of the
reasons I was excited to haveyou on the show.
Joe Downs (05:24):
Yeah for sure.
And, by the way, we're notimmune to that in storage either
, especially in primary markets.
So there's this old saying ifyou want to beat Tiger Woods at
something, just don't play himin golf.
So in storage, for me that'spublic extra space, keep smart.
And then probably 10 moreinstitutions you've never heard
of.
Sure no disrespect, you're justnot in the space.
No one's ever heard of them.
Their brands are not onbuildings, but I can play
(05:46):
against them.
I'm going to lose a lot, but Ican play against them.
Or I can operate in marketswhere they don't play, in
different sandboxes and smallerponds.
And so that's what we've done.
We've figured out where theydon't play and they can't play
where we actually have theadvantage over them, and that's
in the secondary, tertiarymarkets Just is not immune to
what you're going through.
We've just gone through a fairlydifficult cycle where interest
(06:09):
rates are higher, not just forus, because we can operate in
any environment.
Buyers and sellers can figureout where the equilibrium is on
the transaction, but we arereliant on our tenants who are
usually coming in and out of oraround some sort of real estate
transaction.
So if the interest rates aretoo high for people to refi or
move, then we're stagnant.
(06:32):
So what we just came out with?
What storage realized?
Maybe for the first time ever,because they've only been really
recognized storage as a realasset class since the year 2000.
And I say that only becausethat's when we have robust data.
You don't have a robust databefore the year 2000.
Starting in the early 2000s,we've got a lot of data on
storage now that we've startedto collect as an industry.
So, starting around there,storage for the first time in 23
(06:56):
and 24 saw a stagnant realestate market.
We saw a crazy real estatemarket in 8, 9, 10, 11, 12.
Everybody knows that was a goodmarket for storage because it
was transient.
You had people downsizing, youhad people losing jobs.
All kinds of things werehappening the 4Ds, death,
divorce, dislocation all of thatwas happening in 2008, 9, 10,
(07:19):
11.
Real estate values plummeted butstorage doesn't care about that
.
It's like shingles.
Shingles doesn't care.
Storage doesn't care about realestate values.
Storage cares abouttransactions.
Right, the more transactionsthe better.
We do so.
The first time in 23, 24, ourtransactions dried out.
We were just coming off of thepeak of self-storage in its
(07:40):
history because of COVID, itnever saw occupancies and rates
as high as we saw during COVID.
So coming out of COVID and yourpeak of everything, the bottom
fell out of the market in termsof transactions, occupancy fell,
rates went with.
It became very hard.
So we are not immune to thosecycles and for the first time
it's been documented andrealized that, holy cow, this
(08:03):
industry is more reliant on thetransactions in real estate than
anyone ever realized before,because it's never happened
since they've been recording it.
Ed Mathews (08:10):
Obviously, every asset class has its cycles.
I'm curious about how resilientstorage has been as an asset
class over the last.
You said 22, 23,.
Let's go back three, four yearsOver the last three, four years
.
How are properties changinghands adoption rates, things
like that, vacancy rates how hasthat been affected?
Joe Downs (08:32):
Look, a bad operator can screw up a deal.
The story is as solid as anasset class as there is the
worst cycle it's ever seen.
We just went through.
Okay, as there is the worstcycle it's ever seen, we just
went through.
So even during those yearswhere multifamily got crushed
and office, which is gettingbrutally crushed, decimated
retail, decimated, storagethrough its worst downturns, was
(08:55):
still the best commercial realestate asset class.
The industrial guys will makean argument that's the best
asset class and the multifamilyguys will say it's all cyclical.
The storage is the best from apeak standpoint but it's
certainly the best from a valleystandpoint.
Our lows are not nearly as lowas any other commercial real
estate asset class.
It's not even close.
Ed Mathews (09:15):
I tell my team all the time I'm very happy to hit
singles and doubles all the time.
I don't care about home runs wefind them every once in a blue
moon.
But let's stick to the knittingright.
Let's get on base first andsingles and doubles, that's it.
Joe Downs (09:28):
We're very resilient.
Even through this downturnwe're coming out okay.
We got some bumps and bruisesand it was difficult and you had
to operate the hell out of yourfacilities because it wasn't a
buying game anymore, it was anoperating game.
Right, you had to watch yourexpenses and really market your
facilities and you're up againstthe reeds or tanking rates
maybe in a market and that'swhere we got hurt.
We've acquired 20 facilities.
Four of them were in trouble,one of them was bad, three of
(09:54):
them will be okay, the restfantastic.
But all of them went throughthat.
Almost all of them went throughthat cycle.
Most of them will come out, theones where we're hurt, where
we're feeling it the most.
We also bought at the top ofthe market, not because we
overpaid.
We paid the right amount inthat market cycle.
(10:15):
That's just part of the marketcycle.
Ed Mathews (10:18):
Yeah, when you acquire from a capital stack
perspective.
What does that look like foryou?
Do you use bridge debt at all,or is it all long-term debt?
Joe Downs (10:25):
No, we so.
For most of our the 20 thatwe've acquired really 19 of the
20, we now are working with aninstitutional investor, so we
moved away from the passive,smaller investor scenario.
But most of them were boughtwith that.
But I think the highestleverage we had was and that's
we probably.
I think we did two sellerfinance deals where the leverage
(10:46):
went to 75, but we werecomfortable with it because
there were no covenants whenwe're controlling the loan docs
and the seller has no idea whatthey look like.
We stripped out all the notthat there was, we weren't
sharks, but we stripped out thebanks.
You can remove a lot of riskright.
We removed all the risks.
So going to 75 or 77 orwhatever it was on a seller
(11:08):
finance deal we were verycomfortable with On any bank
loan we have I don't even knowif we have one at 70.
We might.
The rest are all 65 LTV andeverything else was equity.
We put money in every deal andthen we have investors in the
deals.
So even the deals I'm talkingabout were struggling.
Those were underwritten veryconservatively.
Deals so even the deals I'mtalking about were struggling.
Those were underwritten veryconservatively.
And if we bought at a seven capor a six cap, our exit in the
(11:29):
performing what was a six cap ora seven cap.
We didn't play with numbers.
You're very conservative witheverything.
Sometimes it's just a toughcycle or a tough market.
In the case of our deal wherewe're going to lose money on,
that deal was not just bought atthe top of the market.
It turned out to be the mostchallenging market we were in in
terms of small one, three, fivemile market.
(11:50):
We had retold up.
They tanked rates.
We had something else going on.
It was a perfect storm of bad.
Yeah, scariest part is inhindsight there's not that much
different we could have done,because some of the stuff just
came out of nowhere.
There's a few things we'velearned we probably would have
done differently.
But look, one out of 20 is apretty good odds in any industry
, I think.
Ed Mathews (12:10):
Yeah, I was speaking to a group not that long ago
and one of the questions was howdid you plan for COVID and how
did that impact your business?
And I said we didn't.
Who plans for a global pandemic?
But what we did do was we'rerigorous with our tenants, our
residents, and so we know thatthey're good, hardworking,
(12:32):
responsible people and ifthere's a problem on the
employment side, they pick upthe phone and call us and we
work it out Right, and that'swhat saved us.
It wasn't necessarily that wehad 18 months of reserves
sitting there waiting forsomebody to take the sniffles.
Joe Downs (12:45):
You rolled up your sleeves, you put your operator
hat on, you started operatingbecause it wasn't money just to
buy them anymore.
Ed Mathews (12:50):
So there are things you can't plan for and I'm an
Irishman, I fully expectmushroom clouds on the horizon
and when they don't appear I'mpleasantly surprised.
But I plan for the mushroomclouds.
And COVID certainly changed howwe look at things.
So you look at like marketdownturns and everything.
And it's interesting because inparallel and admittedly I
haven't looked at the numbers,the comparison numbers in the
last year or so, but the lasttime I looked, multifamily was
(13:13):
in the 12, 13% historical returnand storage was in the I want
to say 16, 17% historicalreturns give or take.
And is that still consistentwith your experience?
Joe Downs (13:28):
Yeah, what's the snapshot?
Just after the last few years,maybe it's down to 15.
I'm not even looking.
It sounds about right.
The deals that we see that weshould be in, that we do go into
.
Yeah, I'd say 15 to 20, so callit an average.
Ed Mathews (13:46):
When you're buying, regardless of your cost of debt.
It's relative to your debtright the cost of debt and
operating costs and all theother things that you're
figuring out.
If you're comfortable at thepoint of purchase and you're
cash flowing or at least youhave a path to cash flowing once
you fix what's going on in theoperation, it doesn't matter
what the market does to cashflow.
And once you fix what's goingon in the operation, it doesn't
(14:06):
matter what the market does,because you're operating in a
snapshot in time where you signthat 20, 30, 40 year debt at a
certain interest rate, certainterms, and you're buying at a
price point relative to thoseterms.
So it doesn't matter if themarket goes up or down, as long
as you're cashflowing, itdoesn't.
It doesn't matter Cashflowversus appreciation.
And if you're a three to sevenyear, 10 year hold on a property
(14:29):
like that, it doesn't matterwhat happens the next 12 months,
18 months.
The cycle will change in 18months.
Joe Downs (14:35):
Look, I'm agreeing with what you're saying.
We have to go into every dealwith we're going to operate this
and improve and increase thevalue of this facility.
I can't control what cap ratesand interest rates do.
What it can do is put us in abetter position to take
advantage of a favorable caprate and interest rate
environment.
The only risk really facing usis a five, because whether the
(14:57):
debt's 20 or 30 or 40 years,regardless of what the debt is,
it's a five-year term.
So five years that marks matter.
So we need to be in a betterposition five years from now
than we are today, and we focuson doing that in year one and
two, right From year three andfour.
Look, we have to put outperformance, but it's a crystal
ball at that point.
We're focused on the next 24months.
(15:19):
That's our job.
It's improved the value of thisfacility from day one of
ownership to 24 month ofownership, sure, and for us, the
way we do that, what's maybe alot different?
I'm sure there's crossover inmultifamily.
One of the glaring differencesis in multifamily.
Particularly if you're talkingto an investor or whoever, you
(15:39):
can physically see the changesyou make.
I'm assuming there's stillFormica countertops out there
and you're swapping them out forcourts or whatever right.
You can do before and afterpictures and say, look what we
did and see how beautiful it is,and anyone can see the
difference.
That's harder for us to do withstorage.
If you took a picture of abefore and after of a storage
facility, 99 out of a hundredpeople would not tell you the
(16:02):
difference.
I'll notice it.
I'll notice that you addedcameras and lighting and maybe
put a fence here and a signthere or something, because it's
not pretty Right.
The physical improvements whereyou smoothed out the gravel or
added some gravel over here.
These are the physicalimprovements that we make and
they're not a lot to facilities.
(16:23):
The value that we add is in themanagement.
It's taking a mom-and-pop runfacility and bringing it into
the 21st century and deliveringto whoever the buyer is.
In our case, typically we wantthe buyer to be some sort of
institutional buyer.
Right?
We're delivering them a turnkeyfacility that's operating the
way that they operate, becausewe know how they operate.
Ed Mathews (16:45):
It's hard to visualize an upgrade in software
.
Joe Downs (16:47):
Or even adding software at all.
You drive by the facility.
You don't know what softwarethey're using, if they're using
it at all.
Or a paper-based ledger of somesort.
What I tell people is,regardless of the condition that
we find the facility in from amanagement standpoint, but when
we're done with it and this islike within a week you can find
it on your cell phone, run aunit on your cell phone, set up
(17:09):
your auto pay and we're adding asmall little insurance to it as
well.
Nice, the main difference thatyou can tell when we're done
with the facility, after we takeit over, we've brought it into
the digital world and then fromthere there's marketing website,
all that stuff.
But all those are intended forhome, because that is the future
, that's where our renters are,it's the here and now, man, it's
(17:29):
the now.
Ed Mathews (17:30):
Yeah, no, I know, bringing modernizing a storage
business operation is sodifferent in terms of the things
you can do to affect the netoperating income and
profitability of that kind ofbusiness, versus going in and
say, using your example, goingin and ripping out the formica
and adding granite and charging$100 more a month in rent.
Joe Downs (17:50):
Add a clubhouse and a pool $1,200.
Exactly right.
You knew that Everyone looks atit and says I get why this
makes more sense Understood.
Ed Mathews (17:58):
Let's get into the final five.
I'm always curious about howleaders like yourself, how your
brains work and what gets youout of bed on Monday morning.
And leaders like yourself, howyour brains work and what gets
you out of bed on Monday morning.
And I think about it in termsof you've been very successful.
You run an excellent business Ihave no doubt that it's very
(18:18):
successful and which means thecollege tuitions are probably
already figured out, themortgage is taken care of, the
car payments are probablynon-existent.
Right, you're good financiallyand yet you still get out of bed
on Monday morning, go to work,and you're fired up to do it.
So that tells me that's purpose.
Right, it's what gets me out ofbed.
I suspect it's what gets youout of bed on Monday to go to
work.
It also eliminates the Sunday.
What do they call it?
The Sunday horrors or theSunday jitters?
(18:39):
Right, because I'm fired up togo to work on Sunday afternoon.
What gets you out of bed onMonday morning?
What's your purpose?
Joe Downs (18:45):
The easy layup response is my family right, but
to your point, because you cutmy needs out from under me there
saying you probably set upfinancially.
Okay, fair, and you're right,there's plenty of money towards
college, multiple houses, we'rein good financial shape for sure
, so why do we keep doing it?
I'm actually up in the Poconosright now and my partner one of
my partners just left.
(19:05):
We're having an offsite meeting.
He asked me that same question.
He's in a different financialsituation than I am.
He's almost 20 years youngerand I said because I love this,
this is exciting.
I told you I want to start apodcast as well.
Why?
Because I'm passionate about it.
I've got a lot of knowledge Iwant to share and I realized I
(19:26):
like sharing it.
I actually teach storage.
I went through, I learnedstorage through Scott and
Byron's Academy.
I teach there.
Now I actually run the thing.
Now my company is responsiblefor all the student fulfillment,
meaning we mentor and train allthe students.
We redesign the program.
Yeah, we do everything.
Now my company does it.
I'm actually taking it over asScott takes a step back.
(19:47):
I'm becoming more involved.
Let's say that in the ScottMyers category.
So why I'm a big believer in.
Have you heard of Dan Sullivan,a strategic coach?
He wrote the book who Knows?
Yeah, so I'm a strategic coach.
I go once a quarter up toToronto and we have a one-day
workshop once a quarter.
Dan and his leadership programhas made me realize there's way
(20:09):
more to life.
I'm looking forward to.
The word retirement meansnothing to me.
My wife says retirement whatdoes that mean to you?
I'm not going to stop working.
I'm going to work less.
I'm going to do what I want todo, but my goal, what I'm
working now towards is growingwhat we have, which is growing
my employees.
I love watching them grow.
Now I'm focused on the nextgeneration, which is my kids.
So my one son.
(20:29):
He'll be a sophomore at MahatoPrep.
He came to me over the summer.
He wants to start a business.
We're starting a business.
I don't really have thebandwidth for it, but I'm
helping him start an Amazonwholesale business.
My daughter's a dancer.
She's into some other stuff.
I got my other son.
They're both lacrosse players.
He's flipping lacrosse heads.
Now he's buying used lacrosseheads online, cleaning them up,
streaming them, painting them orwhatever you call it, dipping
(20:52):
them, dyeing them and sellingthem.
So I'm now incubatingentrepreneurs.
So that's my why it's reallythem.
I'm not done with Everything'spaid for, but it's staying
active, it's teaching, it'sbeing involved on, and I'm doing
it also because I'm going to bedoing it for the next
generation and I'm love it.
(21:12):
It's fun, I love it.
Couldn't agree more I lovesharing stories, so what would I
do?
Ed Mathews (21:18):
if I wasn't doing.
A buddy of mine, actually afellow Villanova, Jack Flood,
said hey, at what point are yougoing to retire?
I'm like never I'm having toomuch.
Why would I do that?
Will I be doing 10 deals, 20deals a year?
No, when I'm 80 years old, Imight do one.
Joe Downs (21:33):
I won't be the CEO of my company in a couple of years
, and that's.
I'm looking forward to thatnext chapter, but in the
meantime I'm building towardsthat.
Ed Mathews (21:40):
Yeah, and I think we're both a similar age.
We're both looking for thatemeritus or emeritus title after
our name, so that'd be cool.
Yeah, I was hoping you might beable to help me out with that,
but thank God for chat GPT.
So I'm always curious aboutmentors and coaches that you've
had in your life.
You mentioned that you're doingthat for other people.
I'm curious about the bestadvice you ever got and who gave
(22:01):
it to you.
Joe Downs (22:02):
Yeah, I'm going to go with.
There's been so many littlegood ones.
But I'm going to go back toStrategic Coach for this Because
it wasn't one eye-openingmoment.
I could probably just lean onthe book who, not how, but
there's so much more to thatbook that you get when you go to
Strategic Coach.
You really understand what'sbehind that book.
(22:23):
The who, not how is not aboutdelegation, it's about
recognizing there are peoplebetter suited to do whatever the
task at hand that needs to bedone.
I'll give you one.
I could design a website, socould.
There are tutorials out there.
We could even now use ChatGPTto help us.
We could go through all theprompts and set up.
(22:44):
You and I are smart enough to dothat.
Should we be doing it?
Nope, or should we be payingsomeone else to do it?
Because where's our time betterspent?
What is our unique ability?
My unique ability is talking topeople.
It's educating people.
It's motivating people.
It's triaging things andpulling stuff together.
It's not tasks that are howeverbig or small.
(23:05):
It's not running out step onethrough step 100, which is what
it would take to build a website.
Right, that's not my uniqueability.
So the best advice I've everbeen given started with the book
who, not how, which talks aboutyour unique ability in there a
lot, but at the high level youreally dive into it.
As a strategic coach.
It's been learning to embracethe fact that we all have unique
(23:26):
abilities and we should reallyfocus on ours and when something
falls out of our unique ability, find your who Don't figure out
how to do it.
Find your who's going to do itand that who it better be their
unique ability.
Fall with the scope of theirunique ability.
Me, that's honestly the bestadvice.
It wasn't like one statement,it wasn't something I read, it
(23:47):
was an amalgamation of from abook to coaching classes.
Ed Mathews (23:51):
Right on.
Yeah, I agree with you thatit's not a delegation book,
that's a book on scaling right,and that's an entirely different
concept and effort and one ofmy favorites.
As a matter of fact, we'll makesure that we put a link in the
show notes to that book, causeif you haven't read it, you need
to.
I'm also curious about and wetouched on this earlier in the
conversation, but I think,fundamentally, we learn more
(24:11):
from the mistakes that we makeprofessionally than the
successes, and so I'm curiousabout the decision that you've
made over the years that youlook back on and you go man, I'd
love to have that one back.
What'd you do about it?
So I made the same mistaketwice in two different
businesses.
Joe Downs (24:27):
The first one, you'll know, was a bar and restaurant.
So after I was a financialadvisor for a year and a half,
you used to know it as the brickbar.
You probably went in for ahoney brown jug nights or
something like that, buddy Dan.
Ed Mathews (24:38):
I know exactly what you're talking about.
Joe Downs (24:39):
It was this Villanova bar that got shut down.
I was a bartender for years.
I reopened it back up more as apub restaurant.
Everything was going fine for awhile.
Here's the mistake I made andlearned later and then made
again.
I knew how to run the front end, the bar.
That was the easy part.
I didn't know anything aboutthe kitchen and the kitchen
killed me.
So I ended up losing thatbusiness and losing a hundred
(25:00):
grand of not even all my money.
So money had to pay back themoney I was responsible for,
which at the time I was 30,maybe and 31.
And that was a painful, brutalmistake, learning lesson.
I look back on it and I say,well, that was almost better
than college, right?
But the takeaway was and thisis what I tell people even
(25:25):
though I made it again.
I'll explain in a second what Imean.
The phrase I still use is youhave to know what's going on in
your kitchen.
I had no idea what was going onin the kitchen.
I thought the chef was theexpert there and he had it.
That's fine, he was the who.
But you still have to make surethat who was doing what they're
supposed to be doing, stillhave to have checks and balances
there.
I made the same mistake instorage.
(25:46):
Us be doing still have to havechecks and balances there.
Yeah, I made the same mistake instorage.
We had someone come along saythey were an expert and they
could handle all of ourmanagement, our underwriting and
management.
So early on in storage weallowed this individual to run
our underwriting and we listenedto everything she said.
We came to the management offacilities.
The facility I'm losing theonly one we're gonna lose money
on was a direct result of herunderwriting and her management
(26:10):
and me allowing it to happen.
I didn't know what washappening in my storage kitchen.
I was off finding other dealsgrowing the company.
I forgot 15, 20 years later,wherever it was.
20 years later, the same lessonand I made the same mistake
twice.
It's embarrassing, but I did itagain and I'll never do it
(26:30):
again.
So how do you mitigate thatissue now Without micromanaging?
Ed Mathews (26:34):
That's too much brain damage for me.
Joe Downs (26:36):
I have to know what's going on.
I have regular check-ins.
What's happening?
They now question everything.
Sometimes I don't know what I'mquestioning.
You start getting into theminutia of the operations.
Look, part of it is I'velearned a ton about how to
operate these things right, butyou don't want me operating your
storage facility day to day.
That's not my unique ability.
Oh, there are certain thingsthat happen that I'm just.
I don't know how you transitiona facility and set up the
(26:58):
credit cards and this, and thatI don't know anything about it.
And I don't want to, Ishouldn't.
But I should know that it'sbeing done and it's being
handled properly and taken careof, and I should be checking in
on it.
And I also know that I have mypartners who are capable
overseeing it as well.
So I'm really checking in onthem and questioning them and
pushing them.
You have to know, or at thevery least pretend like you know
(27:20):
, what's going on in yourkitchen, because if you do, then
there's checks and balances andpeople will operate properly.
And, by the way, you'll startto see it in the numbers In the
bar and restaurant.
I wasn't even looking at thenumbers, I was just looking at
the globe.
Well, why can't I pay themortgage?
Why can't I pay this?
Why is revenue down?
It wasn't the revenue was down,it's the expenses were up.
(27:41):
That's what killed me is theexpenses in the kitchen.
I should have streamlinedthings earlier so that we could
make it through a certain periodof time, right the slower
seasons and streamline the menu,cut down the cost.
I didn't do it.
I didn't know to anything.
Pay attention to it.
Ed Mathews (27:56):
Yep.
Joe Downs (27:56):
Just focused on revenue.
Ed Mathews (27:58):
Yeah, I've been guilty of the same thing.
It's easy to do.
I abhor bookkeeping.
I will do anything not tobookkeep, but there's a
responsibility that you and I,as the CEO, have that we've got
to know what our numbers are andwe've got to know, at least at
a key performance metricsperspective, what's working,
(28:18):
what's not.
Joe Downs (28:21):
And what's working and what's not working from a
marketing standpoint.
I'm marketing for 10 years.
What's working, what's notworking?
Why isn't it working?
Why are we continuing to spendmoney here if we're yielding no
results?
Ed Mathews (28:31):
Yeah, you improve what you measure.
If the folks that work for youaren't paying attention to it,
then nobody.
It's a common thing.
We're two guys who've beendoing this for a long time and
we both made that mistake.
So Dan Sullivan's book.
But I'm curious about latelywhat book is on your nightstand
virtual or physical, it doesn'tmatter.
(28:51):
But who are you payingattention to these days in terms
of the books you read or theinformation you're taking in?
Joe Downs (28:54):
The book I just finished that every business
owner should read, and I can'tbelieve it took me this long to
read.
It is by Keith Cunningham,called the Road Less Stupid,
sitting right on my desk.
Ed Mathews (29:04):
I just received it actually.
Joe Downs (29:08):
I'm going to listen to it because I do a fair amount
of driving around, or to listento it again.
I found that's one of thethings I found, so I listened to
who, not how?
Probably three times.
Ed Mathews (29:16):
Yep.
Joe Downs (29:16):
I find a really good, impactful, meaningful book.
I usually listen to it a secondor third time, even though it's
a heavy lift.
It's probably nine, 10 hours oflistening time.
I'm going to listen to it again.
There's so many good nuggets inthere to the point where I'm
finding it hard to get through abunch of books.
I can probably read off a listin my Audible right now of all
the books I'd like to get to.
But what I have found and Idon't know if you've done this
(29:38):
in chat GPT.
But have you created your ownboard of advisors?
I have not.
Yeah, so if you have the pro,are you paying for it?
Yes, 20 bucks.
So you can go into, create aGPT and you can actually ask GPT
.
First, how do I create my ownboard of advisors and then I'll
tell you how to create a GPT.
But you can go in and create aboard of advisors.
You can ask questions too.
So, like on my board ofadvisors, I have Warren Buffett,
(30:03):
keith Cunningham, charlieMunger, elon Musk, richard
Branson, kobe Bryant, marcusAurelius.
The GPT already searches theirentire life's work, everything
they've published, that they canget its hands on, and then,
when you ask it the question orfor advice.
It will give you every singleperson, everyone on your board's
(30:24):
suggestion, as well as anexample, like for Charlie Munger
, we'll tell you about.
I would do this.
It reminds me of this time atSee's Candy, which is a famous
company that they own, for it,when we had this happen and this
is how we handle it.
Or, keith Cunningham I'm stillreading books and that's what is
top of mind for me.
Sure, I don't even know what'snext.
Am I?
Am I audible?
(30:45):
Probably the road less stupidagain.
But if you're saying, if you'reasking the questions, what's
top of mind, what's your go-tonext?
That's actually my go-to.
I'm learning more from them.
And then the other, the otherreally neat AI hack I'm going to
give you right now because itfeels like this is where it fits
.
Yeah, I'm paying for all the AIsright now, so I'm also paying
for Grok, but Grok you can havea conversation with.
(31:07):
So Grok was the Elon Musk's.
Yeah, sure, 20 bucks a month.
You full-on voice mode.
You put your earbuds in oryou're driving or whatever.
You can have full-onconversations.
So, storage, self-storage, iswhat brought me here.
We're also developingpro-storage, which is because we
recognize there's so many needsand paradigm shifts happening
in the world in general.
Pro storage is the storageversion of flex industrial.
(31:30):
It's just b2b storage.
So it's the same potentialcustomer who would rent a
thousand square foot unit offlex industrial would also
potentially rent a pro storageunit which would be a thousand
square feet, which is month amonth versus a three-year lease
so tell me more about prostorage, what I have a
preconceived notion, but I don'twant to.
So self-storage is B to C.
I have a storage facility.
(31:52):
Ed Mathews rents a 10 by 10 andstores all of his life's
treasures in there, which isjunk, right.
Yep.
Pro storage is for businessowners Like contractors.
We own a storage facility inWilmington, north Carolina.
When we bought it it wasdifferent than all the rest and
I'm skipping over the wholestory because of time.
We have 60,000 square feet ofbusiness owners and the unit
(32:13):
sizes are 500 square feet to1,000 square feet.
Self-storage your unit sizesare 50 square feet to 200 square
feet.
The two-bedroom apartment ofself-storage is the 10 by 10.
It's 100 square feet.
The two-bedroom apartment ofself-storage is the 10 by 10.
It's a hundred square feet.
Two bedroom apartment of prostorage, which again is just
like flex industrial space,might be 750 square feet.
(32:34):
The middle ground is 500, 750,a thousand.
They'll come in different sizes, but point so it's for
contractors, business owners.
It doesn't have to be acontractor.
Think about a catering company.
What you need?
You need an office, probablythe retail center, where you
pitch, you sell the nice lookingoffice with the pictures of the
events and you sell the brideand groom.
(32:55):
They come in, they select theflowers, they select that food,
they select what don't you.
That's 25, 30 bucks a squarefoot retail right, what don't
you need to pay 25 bucks or 30bucks a foot for to store your
racks of glasses and dishes andtables?
Don't you need to pay 25 bucksor 30 bucks is foot forward to
store your racks of glasses anddishes and tables and chairs.
You need industrial fuck spacefor that, right.
So it's not just forcontractors, it's for business
(33:16):
owners furniture stores withextra inventory, whatever.
We're also seeing businessespop up now because of look,
we're all changing the paradigm.
Shit if I'm referring to is howwe consume ordered goods now,
yep, perishable.
We go to the store actually notnecessarily because we've got
Amazon Fresh now, but everythingelse is delivered to our house.
It's changing distributioncenters.
(33:36):
It's changing last mile you'veheard of last mile warehouse.
That's so that they can get youwhatever you ordered by
tomorrow.
You want a stat that'll blowyour mind and this is why Flex
Industrial is going to do welland Pro Storage is going to do
well Right now.
So Walmart and Amazon are thetwo largest online retailers
right, they're the two biggestthat are gobbling all this space
(33:57):
and they're gobbling up all thespace that's already existing,
the smaller warehouses, which isdisplacing all the former
tenants, contractors, hvaccompanies, whatever.
They're all getting displacedbecause the rents have doubled,
because their space is in demand.
Why?
Because today Walmart andAmazon know this is August 7th
2025.
Walmart and Amazon know rightnow, today, if they cannot
(34:20):
deliver a product to you bytomorrow, they're losing 25% of
their sales.
A year from now, they expectthat same 25% loss to occur if
they can't deliver it to yousame day.
We as consumers will not acceptanything less than tomorrow.
So to get you whatever the hellyou're going to order next and
I don't know what that is theyhave to have it within a day's
(34:42):
drive of your house and reallywithin an hour or two.
My son, on the way to schoollast year, was begging me to
order a pull-up bar.
He's all into fitness andworking out.
I said absolutely not.
You're not ruining our doorjams, it's going to be
successful.
He beat me down and beat medown Dad, this one doesn't do it
.
It doesn't clamp, it doesn'tthis, it doesn't hurt the paint.
There's videos.
Fine, this was on the way toschool.
(35:03):
I said go ahead, order it.
I didn't even know he was doingit in the car.
He did it in the car, came homethat night, dead Six o'clock at
night, dead Doesn't hurt.
The door jams.
What are you talking about?
The pull-up bar within twohours of my house?
(35:26):
How is that even possible?
That's how these logisticcompanies are thinking.
They have to have every productnear us.
To do that, they have to have awarehouse space.
It's going to have to be smartwarehouse space with RFID, so
they know what's coming andgoing.
Ed Mathews (35:34):
Yeah, that's fascinating.
Joe Downs (35:36):
I'm also expecting the Amazons and the Walmarts to
start gobbling up on that spaceas well.
So the investment you're makingwith your buddies is a smart
one.
Ed Mathews (35:42):
Yeah, the hundreds of thousands and probably
millions of square feet thatAmazon alone here in Connecticut
is putting in place over thelast three to five years is
insane Getting set up to deliverto you.
So I'm curious about how youdefine success in your life.
Joe Downs (36:03):
Yeah, that's a tough one.
I think it's an evolving one.
I'm a father, so for me there'sno greater dopamine release
than to hear someone tell me howpolite my son or daughter was
or how great it was to have themaround, whatever.
And I know that sounds clicheand I know our parents told us
the same thing.
But you realize, as a parent,that's impactful and meaningful,
(36:24):
right.
So success to me health,obviously, but it's having a
really solid core family unitthat is holding itself in
society.
And I know it sounds like sucha BS answer, but it's really
meaningful.
And years ago I don't think Icould have answered it this way.
I think I would have talkedabout something monetarily, but
to me that's become the mostimportant thing.
(36:46):
Money matters.
Money allows you to achievethat.
We just took a two-weekvacation to Europe.
If we didn't have money wecouldn't have done that and we
couldn't have bonded as a familyand grown together as a family.
So I'm not giving you some BSanswer that it's all
philosophical.
Highfalutin, I'll give my moneyaway as long as I have my
health and my family.
That's not true.
I think that's too ideological.
There's a modicum of successthat I want personally too.
(37:08):
We all need that.
I'm not a recognition guy otherthan privately and quietly and
seeing people grow and knowingI'd handed it.
I love seeing closed storagedeals, like students of mine
that close their first deal.
The looks on their faces,storage deals, students of mine,
I closed their first deal thelooks on their faces, the
excitement that they have to methat fuels that's successful to
(37:30):
me.
So for me, it's health andfamily and being able to be
present in my kids' lives ishuge.
I actually used to drink a lot.
I'm an Irishman as well.
I quit drinking because I feltlike I was drinking too much.
It was like maybe four or fiveyears ago and I wasn't.
I was physically around my kidsbut I wasn't mentally present
because I might've been buzzed.
So that's something that's, tome, is successful.
That that's success.
It's being present.
However, that is that's.
(37:51):
I mean.
You have to quit drinking.
That's what it was for me.
That's what I needed to do.
But, yeah, I think it's a lotof those like feel good things
that add up to hey, you knowwhat?
I'm living a successful lifeand certainly building
successful businesses is part ofit.
There's dopamine release fromthat as well.
I'm not going to say thereisn't.
I would like to break 70 oneday in golf, but I don't know if
(38:11):
that works.
Ed Mathews (38:12):
I'm still trying to break 90 or, If I break 90, I'm
walking in the clubhouse handsraised overhead, looking for my
green jacket.
Joe Downs (38:18):
You got to hit me up when you put me there.
Ed Mathews (38:26):
Absolutely.
I have a profound lack oftalent when it comes to golf.
As long as you're fun out there, I can carry on.
That's all it is for me.
I get my money's worth.
We're paying by the stroke.
I'm doing very well.
Hey Joe, I really admire thebusiness you've built and how
you think and how you operate.
When you're not talking aboutreal estate, what do you just
mentioned travel and beingpresent with your kids.
What else do you like to do?
Joe Downs (38:43):
I'm the world's most underpaid Uber driver, although
my son just turned 16, got hispermit Revolutionary, isn't it?
I'm inching closer to my best.
I still got a 13-year-old, so Igot a couple of years ahead of
me.
I find myself on a lot oflacrosse sidelines.
There's not that many dancecompetitions I go to actually
sidelines.
There aren't that many dancecompetitions I go to actually.
(39:05):
It's my daughter.
I'm on a lot of lacrossesidelines with multiple clubs in
school and my boys are verygood.
They're very good athletes, soit's a lot of fun.
They play for a prettywell-renowned high school in
lacrosse.
That's pretty cool.
Golf, obviously, is what I'mdoing.
I'm not doing that, and then mywife and I have a couple of
short-term rental properties,airbnbs, poconos, the Jersey
Shore Tinkering with that stuffand other.
But you said, when I don't havemy real estate, yeah, I guess
(39:28):
it's head first thing to kidsand then golf, if I have time on
the side for that.
Ed Mathews (39:33):
My kids are swimmers and a softball player.
I used to joke with somebodythat swimming meets was eight
hours of sitting for two minutesof swimming.
She'd be in the water for aminute in the beginning of the
match and then somewhere in themiddle she'd swim for another 30
seconds and then at the end shewas part of the relay, and so
we were there for eight hours.
I was never better read thanduring those years when she was
(39:55):
swimming, because it's justExciting.
Two minutes, though, but thefour hours in between I had my
nose in a book and my wife wouldelbow me and say, hey, katie's
on the block, let's go.
And yeah, with mags, it'ssoftball.
We're either in the car or on aplane chasing her around
watching her play ball.
Joe Downs (40:10):
I imagine there's some good reading opportunities
there as well, between games.
Ed Mathews (40:14):
Yes, but I'm a former baseball player and a
softball coach, so I'm reallyinto the whole strategy and all
that and so I really enjoy it.
But swimming I didn't knowanything about.
So that was just me cheering mydaughter.
Joe Downs (40:30):
That's me with dance.
So you have maybe three or fourtwo minute routines and nine
hours of other girls dancing inbetween.
Ed Mathews (40:33):
So how can people learn more about Belrose Asset
Management or get in touch withyou?
Joe Downs (40:38):
Email's probably the best way.
joe@belrose.
com email is , soB-E-L-R-O-S-E-A is an asset.
Amazon management com is thebest way Awesome.
I'm amazed at all the peoplethat don't reach out of fear.
Shoot me an email if you'reinterested in storage, or one
(40:58):
direction pointing.
We don't have passive investorsanymore, but if you're
interested, I can point you inthe right direction.
If you're interested, whetheryou want to buy storage or learn
more about storage, or come toScott Myers Academy, where I'll
be in teach other conversation.
Ed Mathews (41:10):
Yeah, I tell everybody I'm a cheap cup.
I'll buy anybody a cup ofcoffee, either virtual or in
person.
Joe Downs (41:14):
Yeah, if you're in Silly, let me know.
Ed Mathews (41:23):
Oh yeah, I'll be there.
Joe, thank you so much for yourtime.
It's great to see you andcontinued good fortune.
Joe Downs (41:25):
Thank you so much for having me.
Ed Mathews (41:26):
Truly my pleasure.
Greetings and salutations, Real Estate
Undergrounders.
It is Ed Mathews with the RealEstate Underground.
Today, I am joined by a fellowVillanovan, which I'm very
excited about.
Joe Downs is the CEO of BelroseAsset Management.
So today we're talking aboutself-storage and maybe some
other asset classes, but I thinkwe're going to focus on that.
Joe, welcome to the show.
(01:14):
I can't wait to have thisconversation.
Joe Downs (01:16):
Ed, super excited to be here.
Thanks for having me, and we'regoing to do our best
collectively.
We're going to hold each otheraccountable to not talk about
Villanova basketball while we'reat it.
Ed Mathews (01:23):
Yes, but I just discovered that, while I'm three
degrees probably from the Pope,you actually know a guy who
knows the Pope really well.
Joe Downs (01:30):
Just three people that are one degree, that know
the Pope directly.
Ed Mathews (01:33):
Yeah, you got me beat, so that's awesome.
Welcome to the show and thankyou so much for your time.
I know you're busy, so Iappreciate it.
Thanks for having me again.
Yeah, tell us a little bitabout you and Belrose.
Joe Downs (01:44):
Yeah, Belrose, me, I'm a conundrum of sorts.
I've been someone that's had toreinvent themselves since
Villanova.
I think I realized later inlife that I was an entrepreneur,
after I'd already demonstratedit a few times.
I actually was working while Iwas at Villanova, djing and
bartending.
So while you were at Kelly'shanging out, I was probably
DJing, yeah, playing tunes youwere listening to.
But yeah, so that's me, I've,I've.
(02:06):
Since Philadelphia, I had onekind of short career it wasn't
that short 70 years as afinancial advisor and then, not
because of 9-11, but because of9-11, I decided that wasn't for
me, and what I mean by that isit's not like I lost my brother
or something in the towers, thatwasn't, and there's no stolen
(02:26):
valor here.
It was just a moment in time.
It made me realize the pauseand say is this really what I
want to be doing?
And it wasn't.
And from that point forward,all of my intentions were to be
in real estate.
It took me a couple of years,but I got there.
So I've been in real estate forover 20 years now in some
capacity.
So I've been in real estate forover 20 years now in some
capacity.
So that's who I am and I loveit and I wake up every day and
(02:49):
it's how.
What am I doing in real estatetoday and how am I excited about
it, not to say a lot of dayswhere the minutia of whatever
you're involved in gets you, butI just love real estate.
So how did I end up inself-storage?
I'm constantly finding thatreal estate is no different than
other businesses andself-storage I'm constantly
finding that real estate is nodifferent than other businesses.
There are cycles to what you'rein and I found myself having to
(03:11):
reinvent through some of thosecycles.
The mortgage meltdown in 2000really started in eight, but
most people recognize it as nine, 10, 11, right, and I was part
of that, unfortunately, and Ihad to reinvent.
But that led me to anotherbusiness, distressed debt, and I
still have that business,although that business went
through a cycle of its own whereI had to reinvent again.
And in that reinvention is whenI found storage.
(03:33):
Oh, divine intervention, justdown market cycles, financial
intervention.
Ed Mathews (03:38):
Yeah.
Joe Downs (03:38):
Financial down cycle intervention.
But you learn a lot throughthose cycles, not only about
yourself and your character, butalso about business, and you
take each one of thoseexperiences and you apply it to
the next thing you're in.
And so I've been in storage.
I'm still in distressed step,by the way, but that down cycle
gave me the opportunity to learna new trade, a new trick, if
you will.
I wasn't an old dog yet,although I think I am now.
(03:59):
I think we just discovered thatwe are, but in that opportunity
I was able to learn about aspace that a lot of people are
talking about today, but theyweren't six and seven years ago
and now they are talking abouttoday, which is great.
I get to be guests on podcastslike yours and thank you again
for having me.
It's been an exciting ride,fantastic to learn about storage
, especially when I had abackground raising money for
(04:21):
multifamily and for office andfor some other kind of
alternative type of deals.
So it's neat to be able tocompare and contrast the two and
see what you like and don'tlike.
Now, I was never an operator, Iwas never CEO of those other
companies.
I was the sales guy.
I was raising money.
I didn't have to source thedeals, find the deals,
underwrite the deals.
I wasn't responsible in chargeof any of that, so it's been
(04:42):
very different this cycle, thistime around this asset class,
but I'm having so much fun andI'm loving it.
Ed Mathews (04:48):
Yeah, it's interesting.
I've been looking at a friendof mine, actually now an
investor in one of our funds,Brian.
He has gotten me into flex andindustrial spaces.
So similar play to storage insome respects, but it's
interesting the multifamily play, especially here in the
Northeast.
You're based in the Philly area, I'm based up here in
(05:10):
Connecticut.
It's been a bit of a challenge.
The pricing is still out ofalignment with the debt costs.
It's pretty hard to find a dealthat pencils well and looking
at other asset classes justmakes sense, which is one of the
reasons I was excited to haveyou on the show.
Joe Downs (05:24):
Yeah for sure.
And, by the way, we're notimmune to that in storage either
, especially in primary markets.
So there's this old saying ifyou want to beat Tiger Woods at
something, just don't play himin golf.
So in storage, for me that'spublic extra space, keep smart.
And then probably 10 moreinstitutions you've never heard
of.
Sure no disrespect, you're justnot in the space.
No one's ever heard of them.
Their brands are not onbuildings, but I can play
(05:46):
against them.
I'm going to lose a lot, but Ican play against them.
Or I can operate in marketswhere they don't play, in
different sandboxes and smallerponds.
And so that's what we've done.
We've figured out where theydon't play and they can't play
where we actually have theadvantage over them, and that's
in the secondary, tertiarymarkets Just is not immune to
what you're going through.
We've just gone through a fairlydifficult cycle where interest
(06:09):
rates are higher, not just forus, because we can operate in
any environment.
Buyers and sellers can figureout where the equilibrium is on
the transaction, but we arereliant on our tenants who are
usually coming in and out of oraround some sort of real estate
transaction.
So if the interest rates aretoo high for people to refi or
move, then we're stagnant.
(06:32):
So what we just came out with?
What storage realized?
Maybe for the first time ever,because they've only been really
recognized storage as a realasset class since the year 2000.
And I say that only becausethat's when we have robust data.
You don't have a robust databefore the year 2000.
Starting in the early 2000s,we've got a lot of data on
storage now that we've startedto collect as an industry.
So, starting around there,storage for the first time in 23
(06:56):
and 24 saw a stagnant realestate market.
We saw a crazy real estatemarket in 8, 9, 10, 11, 12.
Everybody knows that was a goodmarket for storage because it
was transient.
You had people downsizing, youhad people losing jobs.
All kinds of things werehappening the 4Ds, death,
divorce, dislocation all of thatwas happening in 2008, 9, 10,
(07:19):
11.
Real estate values plummeted butstorage doesn't care about that
.
It's like shingles.
Shingles doesn't care.
Storage doesn't care about realestate values.
Storage cares abouttransactions.
Right, the more transactionsthe better.
We do so.
The first time in 23, 24, ourtransactions dried out.
We were just coming off of thepeak of self-storage in its
(07:40):
history because of COVID, itnever saw occupancies and rates
as high as we saw during COVID.
So coming out of COVID and yourpeak of everything, the bottom
fell out of the market in termsof transactions, occupancy fell,
rates went with.
It became very hard.
So we are not immune to thosecycles and for the first time
it's been documented andrealized that, holy cow, this
(08:03):
industry is more reliant on thetransactions in real estate than
anyone ever realized before,because it's never happened
since they've been recording it.
Ed Mathews (08:10):
Obviously, every asset class has its cycles.
I'm curious about how resilientstorage has been as an asset
class over the last.
You said 22, 23,.
Let's go back three, four yearsOver the last three, four years
.
How are properties changinghands adoption rates, things
like that, vacancy rates how hasthat been affected?
Joe Downs (08:32):
Look, a bad operator can screw up a deal.
The story is as solid as anasset class as there is the
worst cycle it's ever seen.
We just went through.
Okay, as there is the worstcycle it's ever seen, we just
went through.
So even during those yearswhere multifamily got crushed
and office, which is gettingbrutally crushed, decimated
retail, decimated, storagethrough its worst downturns, was
(08:55):
still the best commercial realestate asset class.
The industrial guys will makean argument that's the best
asset class and the multifamilyguys will say it's all cyclical.
The storage is the best from apeak standpoint but it's
certainly the best from a valleystandpoint.
Our lows are not nearly as lowas any other commercial real
estate asset class.
It's not even close.
Ed Mathews (09:15):
I tell my team all the time I'm very happy to hit
singles and doubles all the time.
I don't care about home runs wefind them every once in a blue
moon.
But let's stick to the knittingright.
Let's get on base first andsingles and doubles, that's it.
Joe Downs (09:28):
We're very resilient.
Even through this downturnwe're coming out okay.
We got some bumps and bruisesand it was difficult and you had
to operate the hell out of yourfacilities because it wasn't a
buying game anymore, it was anoperating game.
Right, you had to watch yourexpenses and really market your
facilities and you're up againstthe reeds or tanking rates
maybe in a market and that'swhere we got hurt.
We've acquired 20 facilities.
Four of them were in trouble,one of them was bad, three of
(09:54):
them will be okay, the restfantastic.
But all of them went throughthat.
Almost all of them went throughthat cycle.
Most of them will come out, theones where we're hurt, where
we're feeling it the most.
We also bought at the top ofthe market, not because we
overpaid.
We paid the right amount inthat market cycle.
(10:15):
That's just part of the marketcycle.
Ed Mathews (10:18):
Yeah, when you acquire from a capital stack
perspective.
What does that look like foryou?
Do you use bridge debt at all,or is it all long-term debt?
Joe Downs (10:25):
No, we so.
For most of our the 20 thatwe've acquired really 19 of the
20, we now are working with aninstitutional investor, so we
moved away from the passive,smaller investor scenario.
But most of them were boughtwith that.
But I think the highestleverage we had was and that's
we probably.
I think we did two sellerfinance deals where the leverage
(10:46):
went to 75, but we werecomfortable with it because
there were no covenants whenwe're controlling the loan docs
and the seller has no idea whatthey look like.
We stripped out all the notthat there was, we weren't
sharks, but we stripped out thebanks.
You can remove a lot of riskright.
We removed all the risks.
So going to 75 or 77 orwhatever it was on a seller
(11:08):
finance deal we were verycomfortable with On any bank
loan we have I don't even knowif we have one at 70.
We might.
The rest are all 65 LTV andeverything else was equity.
We put money in every deal andthen we have investors in the
deals.
So even the deals I'm talkingabout were struggling.
Those were underwritten veryconservatively.
Deals so even the deals I'mtalking about were struggling.
Those were underwritten veryconservatively.
And if we bought at a seven capor a six cap, our exit in the
(11:29):
performing what was a six cap ora seven cap.
We didn't play with numbers.
You're very conservative witheverything.
Sometimes it's just a toughcycle or a tough market.
In the case of our deal wherewe're going to lose money on,
that deal was not just bought atthe top of the market.
It turned out to be the mostchallenging market we were in in
terms of small one, three, fivemile market.
(11:50):
We had retold up.
They tanked rates.
We had something else going on.
It was a perfect storm of bad.
Yeah, scariest part is inhindsight there's not that much
different we could have done,because some of the stuff just
came out of nowhere.
There's a few things we'velearned we probably would have
done differently.
But look, one out of 20 is apretty good odds in any industry
, I think.
Ed Mathews (12:10):
Yeah, I was speaking to a group not that long ago
and one of the questions was howdid you plan for COVID and how
did that impact your business?
And I said we didn't.
Who plans for a global pandemic?
But what we did do was we'rerigorous with our tenants, our
residents, and so we know thatthey're good, hardworking,
(12:32):
responsible people and ifthere's a problem on the
employment side, they pick upthe phone and call us and we
work it out Right, and that'swhat saved us.
It wasn't necessarily that wehad 18 months of reserves
sitting there waiting forsomebody to take the sniffles.
Joe Downs (12:45):
You rolled up your sleeves, you put your operator
hat on, you started operatingbecause it wasn't money just to
buy them anymore.
Ed Mathews (12:50):
So there are things you can't plan for and I'm an
Irishman, I fully expectmushroom clouds on the horizon
and when they don't appear I'mpleasantly surprised.
But I plan for the mushroomclouds.
And COVID certainly changed howwe look at things.
So you look at like marketdownturns and everything.
And it's interesting because inparallel and admittedly I
haven't looked at the numbers,the comparison numbers in the
last year or so, but the lasttime I looked, multifamily was
(13:13):
in the 12, 13% historical returnand storage was in the I want
to say 16, 17% historicalreturns give or take.
And is that still consistentwith your experience?
Joe Downs (13:28):
Yeah, what's the snapshot?
Just after the last few years,maybe it's down to 15.
I'm not even looking.
It sounds about right.
The deals that we see that weshould be in, that we do go into
.
Yeah, I'd say 15 to 20, so callit an average.
Ed Mathews (13:46):
When you're buying, regardless of your cost of debt.
It's relative to your debtright the cost of debt and
operating costs and all theother things that you're
figuring out.
If you're comfortable at thepoint of purchase and you're
cash flowing or at least youhave a path to cash flowing once
you fix what's going on in theoperation, it doesn't matter
what the market does to cashflow.
And once you fix what's goingon in the operation, it doesn't
(14:06):
matter what the market does,because you're operating in a
snapshot in time where you signthat 20, 30, 40 year debt at a
certain interest rate, certainterms, and you're buying at a
price point relative to thoseterms.
So it doesn't matter if themarket goes up or down, as long
as you're cashflowing, itdoesn't.
It doesn't matter Cashflowversus appreciation.
And if you're a three to sevenyear, 10 year hold on a property
(14:29):
like that, it doesn't matterwhat happens the next 12 months,
18 months.
The cycle will change in 18months.
Joe Downs (14:35):
Look, I'm agreeing with what you're saying.
We have to go into every dealwith we're going to operate this
and improve and increase thevalue of this facility.
I can't control what cap ratesand interest rates do.
What it can do is put us in abetter position to take
advantage of a favorable caprate and interest rate
environment.
The only risk really facing usis a five, because whether the
(14:57):
debt's 20 or 30 or 40 years,regardless of what the debt is,
it's a five-year term.
So five years that marks matter.
So we need to be in a betterposition five years from now
than we are today, and we focuson doing that in year one and
two, right From year three andfour.
Look, we have to put outperformance, but it's a crystal
ball at that point.
We're focused on the next 24months.
(15:19):
That's our job.
It's improved the value of thisfacility from day one of
ownership to 24 month ofownership, sure, and for us, the
way we do that, what's maybe alot different?
I'm sure there's crossover inmultifamily.
One of the glaring differencesis in multifamily.
Particularly if you're talkingto an investor or whoever, you
(15:39):
can physically see the changesyou make.
I'm assuming there's stillFormica countertops out there
and you're swapping them out forcourts or whatever right.
You can do before and afterpictures and say, look what we
did and see how beautiful it is,and anyone can see the
difference.
That's harder for us to do withstorage.
If you took a picture of abefore and after of a storage
facility, 99 out of a hundredpeople would not tell you the
(16:02):
difference.
I'll notice it.
I'll notice that you addedcameras and lighting and maybe
put a fence here and a signthere or something, because it's
not pretty Right.
The physical improvements whereyou smoothed out the gravel or
added some gravel over here.
These are the physicalimprovements that we make and
they're not a lot to facilities.
(16:23):
The value that we add is in themanagement.
It's taking a mom-and-pop runfacility and bringing it into
the 21st century and deliveringto whoever the buyer is.
In our case, typically we wantthe buyer to be some sort of
institutional buyer.
Right?
We're delivering them a turnkeyfacility that's operating the
way that they operate, becausewe know how they operate.
Ed Mathews (16:45):
It's hard to visualize an upgrade in software
.
Joe Downs (16:47):
Or even adding software at all.
You drive by the facility.
You don't know what softwarethey're using, if they're using
it at all.
Or a paper-based ledger of somesort.
What I tell people is,regardless of the condition that
we find the facility in from amanagement standpoint, but when
we're done with it and this islike within a week you can find
it on your cell phone, run aunit on your cell phone, set up
(17:09):
your auto pay and we're adding asmall little insurance to it as
well.
Nice, the main difference thatyou can tell when we're done
with the facility, after we takeit over, we've brought it into
the digital world and then fromthere there's marketing website,
all that stuff.
But all those are intended forhome, because that is the future
, that's where our renters are,it's the here and now, man, it's
(17:29):
the now.
Ed Mathews (17:30):
Yeah, no, I know, bringing modernizing a storage
business operation is sodifferent in terms of the things
you can do to affect the netoperating income and
profitability of that kind ofbusiness, versus going in and
say, using your example, goingin and ripping out the formica
and adding granite and charging$100 more a month in rent.
Joe Downs (17:50):
Add a clubhouse and a pool $1,200.
Exactly right.
You knew that Everyone looks atit and says I get why this
makes more sense Understood.
Ed Mathews (17:58):
Let's get into the final five.
I'm always curious about howleaders like yourself, how your
brains work and what gets youout of bed on Monday morning.
And leaders like yourself, howyour brains work and what gets
you out of bed on Monday morning.
And I think about it in termsof you've been very successful.
You run an excellent business Ihave no doubt that it's very
(18:18):
successful and which means thecollege tuitions are probably
already figured out, themortgage is taken care of, the
car payments are probablynon-existent.
Right, you're good financiallyand yet you still get out of bed
on Monday morning, go to work,and you're fired up to do it.
So that tells me that's purpose.
Right, it's what gets me out ofbed.
I suspect it's what gets youout of bed on Monday to go to
work.
It also eliminates the Sunday.
What do they call it?
The Sunday horrors or theSunday jitters?
(18:39):
Right, because I'm fired up togo to work on Sunday afternoon.
What gets you out of bed onMonday morning?
What's your purpose?
Joe Downs (18:45):
The easy layup response is my family right, but
to your point, because you cutmy needs out from under me there
saying you probably set upfinancially.
Okay, fair, and you're right,there's plenty of money towards
college, multiple houses, we'rein good financial shape for sure
, so why do we keep doing it?
I'm actually up in the Poconosright now and my partner one of
my partners just left.
(19:05):
We're having an offsite meeting.
He asked me that same question.
He's in a different financialsituation than I am.
He's almost 20 years youngerand I said because I love this,
this is exciting.
I told you I want to start apodcast as well.
Why?
Because I'm passionate about it.
I've got a lot of knowledge Iwant to share and I realized I
(19:26):
like sharing it.
I actually teach storage.
I went through, I learnedstorage through Scott and
Byron's Academy.
I teach there.
Now I actually run the thing.
Now my company is responsiblefor all the student fulfillment,
meaning we mentor and train allthe students.
We redesign the program.
Yeah, we do everything.
Now my company does it.
I'm actually taking it over asScott takes a step back.
(19:47):
I'm becoming more involved.
Let's say that in the ScottMyers category.
So why I'm a big believer in.
Have you heard of Dan Sullivan,a strategic coach?
He wrote the book who Knows?
Yeah, so I'm a strategic coach.
I go once a quarter up toToronto and we have a one-day
workshop once a quarter.
Dan and his leadership programhas made me realize there's way
(20:09):
more to life.
I'm looking forward to.
The word retirement meansnothing to me.
My wife says retirement whatdoes that mean to you?
I'm not going to stop working.
I'm going to work less.
I'm going to do what I want todo, but my goal, what I'm
working now towards is growingwhat we have, which is growing
my employees.
I love watching them grow.
Now I'm focused on the nextgeneration, which is my kids.
So my one son.
(20:29):
He'll be a sophomore at MahatoPrep.
He came to me over the summer.
He wants to start a business.
We're starting a business.
I don't really have thebandwidth for it, but I'm
helping him start an Amazonwholesale business.
My daughter's a dancer.
She's into some other stuff.
I got my other son.
They're both lacrosse players.
He's flipping lacrosse heads.
Now he's buying used lacrosseheads online, cleaning them up,
streaming them, painting them orwhatever you call it, dipping
(20:52):
them, dyeing them and sellingthem.
So I'm now incubatingentrepreneurs.
So that's my why it's reallythem.
I'm not done with Everything'spaid for, but it's staying
active, it's teaching, it'sbeing involved on, and I'm doing
it also because I'm going to bedoing it for the next
generation and I'm love it.
(21:12):
It's fun, I love it.
Couldn't agree more I lovesharing stories, so what would I
do?
Ed Mathews (21:18):
if I wasn't doing.
A buddy of mine, actually afellow Villanova, Jack Flood,
said hey, at what point are yougoing to retire?
I'm like never I'm having toomuch.
Why would I do that?
Will I be doing 10 deals, 20deals a year?
No, when I'm 80 years old, Imight do one.
Joe Downs (21:33):
I won't be the CEO of my company in a couple of years
, and that's.
I'm looking forward to thatnext chapter, but in the
meantime I'm building towardsthat.
Ed Mathews (21:40):
Yeah, and I think we're both a similar age.
We're both looking for thatemeritus or emeritus title after
our name, so that'd be cool.
Yeah, I was hoping you might beable to help me out with that,
but thank God for chat GPT.
So I'm always curious aboutmentors and coaches that you've
had in your life.
You mentioned that you're doingthat for other people.
I'm curious about the bestadvice you ever got and who gave
(22:01):
it to you.
Joe Downs (22:02):
Yeah, I'm going to go with.
There's been so many littlegood ones.
But I'm going to go back toStrategic Coach for this Because
it wasn't one eye-openingmoment.
I could probably just lean onthe book who, not how, but
there's so much more to thatbook that you get when you go to
Strategic Coach.
You really understand what'sbehind that book.
(22:23):
The who, not how is not aboutdelegation, it's about
recognizing there are peoplebetter suited to do whatever the
task at hand that needs to bedone.
I'll give you one.
I could design a website, socould.
There are tutorials out there.
We could even now use ChatGPTto help us.
We could go through all theprompts and set up.
(22:44):
You and I are smart enough to dothat.
Should we be doing it?
Nope, or should we be payingsomeone else to do it?
Because where's our time betterspent?
What is our unique ability?
My unique ability is talking topeople.
It's educating people.
It's motivating people.
It's triaging things andpulling stuff together.
It's not tasks that are howeverbig or small.
(23:05):
It's not running out step onethrough step 100, which is what
it would take to build a website.
Right, that's not my uniqueability.
So the best advice I've everbeen given started with the book
who, not how, which talks aboutyour unique ability in there a
lot, but at the high level youreally dive into it.
As a strategic coach.
It's been learning to embracethe fact that we all have unique
(23:26):
abilities and we should reallyfocus on ours and when something
falls out of our unique ability, find your who Don't figure out
how to do it.
Find your who's going to do itand that who it better be their
unique ability.
Fall with the scope of theirunique ability.
Me, that's honestly the bestadvice.
It wasn't like one statement,it wasn't something I read, it
(23:47):
was an amalgamation of from abook to coaching classes.
Ed Mathews (23:51):
Right on.
Yeah, I agree with you thatit's not a delegation book,
that's a book on scaling right,and that's an entirely different
concept and effort and one ofmy favorites.
As a matter of fact, we'll makesure that we put a link in the
show notes to that book, causeif you haven't read it, you need
to.
I'm also curious about and wetouched on this earlier in the
conversation, but I think,fundamentally, we learn more
(24:11):
from the mistakes that we makeprofessionally than the
successes, and so I'm curiousabout the decision that you've
made over the years that youlook back on and you go man, I'd
love to have that one back.
What'd you do about it?
So I made the same mistaketwice in two different
businesses.
Joe Downs (24:27):
The first one, you'll know, was a bar and restaurant.
So after I was a financialadvisor for a year and a half,
you used to know it as the brickbar.
You probably went in for ahoney brown jug nights or
something like that, buddy Dan.
Ed Mathews (24:38):
I know exactly what you're talking about.
Joe Downs (24:39):
It was this Villanova bar that got shut down.
I was a bartender for years.
I reopened it back up more as apub restaurant.
Everything was going fine for awhile.
Here's the mistake I made andlearned later and then made
again.
I knew how to run the front end, the bar.
That was the easy part.
I didn't know anything aboutthe kitchen and the kitchen
killed me.
So I ended up losing thatbusiness and losing a hundred
(25:00):
grand of not even all my money.
So money had to pay back themoney I was responsible for,
which at the time I was 30,maybe and 31.
And that was a painful, brutalmistake, learning lesson.
I look back on it and I say,well, that was almost better
than college, right?
But the takeaway was and thisis what I tell people even
(25:25):
though I made it again.
I'll explain in a second what Imean.
The phrase I still use is youhave to know what's going on in
your kitchen.
I had no idea what was going onin the kitchen.
I thought the chef was theexpert there and he had it.
That's fine, he was the who.
But you still have to make surethat who was doing what they're
supposed to be doing, stillhave to have checks and balances
there.
I made the same mistake instorage.
(25:46):
Us be doing still have to havechecks and balances there.
Yeah, I made the same mistake instorage.
We had someone come along saythey were an expert and they
could handle all of ourmanagement, our underwriting and
management.
So early on in storage weallowed this individual to run
our underwriting and we listenedto everything she said.
We came to the management offacilities.
The facility I'm losing theonly one we're gonna lose money
on was a direct result of herunderwriting and her management
(26:10):
and me allowing it to happen.
I didn't know what washappening in my storage kitchen.
I was off finding other dealsgrowing the company.
I forgot 15, 20 years later,wherever it was.
20 years later, the same lessonand I made the same mistake
twice.
It's embarrassing, but I did itagain and I'll never do it
(26:30):
again.
So how do you mitigate thatissue now Without micromanaging?
Ed Mathews (26:34):
That's too much brain damage for me.
Joe Downs (26:36):
I have to know what's going on.
I have regular check-ins.
What's happening?
They now question everything.
Sometimes I don't know what I'mquestioning.
You start getting into theminutia of the operations.
Look, part of it is I'velearned a ton about how to
operate these things right, butyou don't want me operating your
storage facility day to day.
That's not my unique ability.
Oh, there are certain thingsthat happen that I'm just.
I don't know how you transitiona facility and set up the
(26:58):
credit cards and this, and thatI don't know anything about it.
And I don't want to, Ishouldn't.
But I should know that it'sbeing done and it's being
handled properly and taken careof, and I should be checking in
on it.
And I also know that I have mypartners who are capable
overseeing it as well.
So I'm really checking in onthem and questioning them and
pushing them.
You have to know, or at thevery least pretend like you know
(27:20):
, what's going on in yourkitchen, because if you do, then
there's checks and balances andpeople will operate properly.
And, by the way, you'll startto see it in the numbers In the
bar and restaurant.
I wasn't even looking at thenumbers, I was just looking at
the globe.
Well, why can't I pay themortgage?
Why can't I pay this?
Why is revenue down?
It wasn't the revenue was down,it's the expenses were up.
(27:41):
That's what killed me is theexpenses in the kitchen.
I should have streamlinedthings earlier so that we could
make it through a certain periodof time, right the slower
seasons and streamline the menu,cut down the cost.
I didn't do it.
I didn't know to anything.
Pay attention to it.
Ed Mathews (27:56):
Yep.
Joe Downs (27:56):
Just focused on revenue.
Ed Mathews (27:58):
Yeah, I've been guilty of the same thing.
It's easy to do.
I abhor bookkeeping.
I will do anything not tobookkeep, but there's a
responsibility that you and I,as the CEO, have that we've got
to know what our numbers are andwe've got to know, at least at
a key performance metricsperspective, what's working,
(28:18):
what's not.
Joe Downs (28:21):
And what's working and what's not working from a
marketing standpoint.
I'm marketing for 10 years.
What's working, what's notworking?
Why isn't it working?
Why are we continuing to spendmoney here if we're yielding no
results?
Ed Mathews (28:31):
Yeah, you improve what you measure.
If the folks that work for youaren't paying attention to it,
then nobody.
It's a common thing.
We're two guys who've beendoing this for a long time and
we both made that mistake.
So Dan Sullivan's book.
But I'm curious about latelywhat book is on your nightstand
virtual or physical, it doesn'tmatter.
(28:51):
But who are you payingattention to these days in terms
of the books you read or theinformation you're taking in?
Joe Downs (28:54):
The book I just finished that every business
owner should read, and I can'tbelieve it took me this long to
read.
It is by Keith Cunningham,called the Road Less Stupid,
sitting right on my desk.
Ed Mathews (29:04):
I just received it actually.
Joe Downs (29:08):
I'm going to listen to it because I do a fair amount
of driving around, or to listento it again.
I found that's one of thethings I found, so I listened to
who, not how?
Probably three times.
Ed Mathews (29:16):
Yep.
Joe Downs (29:16):
I find a really good, impactful, meaningful book.
I usually listen to it a secondor third time, even though it's
a heavy lift.
It's probably nine, 10 hours oflistening time.
I'm going to listen to it again.
There's so many good nuggets inthere to the point where I'm
finding it hard to get through abunch of books.
I can probably read off a listin my Audible right now of all
the books I'd like to get to.
But what I have found and Idon't know if you've done this
(29:38):
in chat GPT.
But have you created your ownboard of advisors?
I have not.
Yeah, so if you have the pro,are you paying for it?
Yes, 20 bucks.
So you can go into, create aGPT and you can actually ask GPT
.
First, how do I create my ownboard of advisors and then I'll
tell you how to create a GPT.
But you can go in and create aboard of advisors.
You can ask questions too.
So, like on my board ofadvisors, I have Warren Buffett,
(30:03):
keith Cunningham, charlieMunger, elon Musk, richard
Branson, kobe Bryant, marcusAurelius.
The GPT already searches theirentire life's work, everything
they've published, that they canget its hands on, and then,
when you ask it the question orfor advice.
It will give you every singleperson, everyone on your board's
(30:24):
suggestion, as well as anexample, like for Charlie Munger
, we'll tell you about.
I would do this.
It reminds me of this time atSee's Candy, which is a famous
company that they own, for it,when we had this happen and this
is how we handle it.
Or, keith Cunningham I'm stillreading books and that's what is
top of mind for me.
Sure, I don't even know what'snext.
Am I?
Am I audible?
(30:45):
Probably the road less stupidagain.
But if you're saying, if you'reasking the questions, what's
top of mind, what's your go-tonext?
That's actually my go-to.
I'm learning more from them.
And then the other, the otherreally neat AI hack I'm going to
give you right now because itfeels like this is where it fits
.
Yeah, I'm paying for all the AIsright now, so I'm also paying
for Grok, but Grok you can havea conversation with.
(31:07):
So Grok was the Elon Musk's.
Yeah, sure, 20 bucks a month.
You full-on voice mode.
You put your earbuds in oryou're driving or whatever.
You can have full-onconversations.
So, storage, self-storage, iswhat brought me here.
We're also developingpro-storage, which is because we
recognize there's so many needsand paradigm shifts happening
in the world in general.
Pro storage is the storageversion of flex industrial.
(31:30):
It's just b2b storage.
So it's the same potentialcustomer who would rent a
thousand square foot unit offlex industrial would also
potentially rent a pro storageunit which would be a thousand
square feet, which is month amonth versus a three-year lease
so tell me more about prostorage, what I have a
preconceived notion, but I don'twant to.
So self-storage is B to C.
I have a storage facility.
(31:52):
Ed Mathews rents a 10 by 10 andstores all of his life's
treasures in there, which isjunk, right.
Yep.
Pro storage is for businessowners Like contractors.
We own a storage facility inWilmington, north Carolina.
When we bought it it wasdifferent than all the rest and
I'm skipping over the wholestory because of time.
We have 60,000 square feet ofbusiness owners and the unit
(32:13):
sizes are 500 square feet to1,000 square feet.
Self-storage your unit sizesare 50 square feet to 200 square
feet.
The two-bedroom apartment ofself-storage is the 10 by 10.
It's 100 square feet.
The two-bedroom apartment ofself-storage is the 10 by 10.
It's a hundred square feet.
Two bedroom apartment of prostorage, which again is just
like flex industrial space,might be 750 square feet.
(32:34):
The middle ground is 500, 750,a thousand.
They'll come in different sizes, but point so it's for
contractors, business owners.
It doesn't have to be acontractor.
Think about a catering company.
What you need?
You need an office, probablythe retail center, where you
pitch, you sell the nice lookingoffice with the pictures of the
events and you sell the brideand groom.
(32:55):
They come in, they select theflowers, they select that food,
they select what don't you.
That's 25, 30 bucks a squarefoot retail right, what don't
you need to pay 25 bucks or 30bucks a foot for to store your
racks of glasses and dishes andtables?
Don't you need to pay 25 bucksor 30 bucks is foot forward to
store your racks of glasses anddishes and tables and chairs.
You need industrial fuck spacefor that, right.
So it's not just forcontractors, it's for business
(33:16):
owners furniture stores withextra inventory, whatever.
We're also seeing businessespop up now because of look,
we're all changing the paradigm.
Shit if I'm referring to is howwe consume ordered goods now,
yep, perishable.
We go to the store actually notnecessarily because we've got
Amazon Fresh now, but everythingelse is delivered to our house.
It's changing distributioncenters.
(33:36):
It's changing last mile you'veheard of last mile warehouse.
That's so that they can get youwhatever you ordered by
tomorrow.
You want a stat that'll blowyour mind and this is why Flex
Industrial is going to do welland Pro Storage is going to do
well Right now.
So Walmart and Amazon are thetwo largest online retailers
right, they're the two biggestthat are gobbling all this space
(33:57):
and they're gobbling up all thespace that's already existing,
the smaller warehouses, which isdisplacing all the former
tenants, contractors, hvaccompanies, whatever.
They're all getting displacedbecause the rents have doubled,
because their space is in demand.
Why?
Because today Walmart andAmazon know this is August 7th
2025.
Walmart and Amazon know rightnow, today, if they cannot
(34:20):
deliver a product to you bytomorrow, they're losing 25% of
their sales.
A year from now, they expectthat same 25% loss to occur if
they can't deliver it to yousame day.
We as consumers will not acceptanything less than tomorrow.
So to get you whatever the hellyou're going to order next and
I don't know what that is theyhave to have it within a day's
(34:42):
drive of your house and reallywithin an hour or two.
My son, on the way to schoollast year, was begging me to
order a pull-up bar.
He's all into fitness andworking out.
I said absolutely not.
You're not ruining our doorjams, it's going to be
successful.
He beat me down and beat medown Dad, this one doesn't do it
.
It doesn't clamp, it doesn'tthis, it doesn't hurt the paint.
There's videos.
Fine, this was on the way toschool.
(35:03):
I said go ahead, order it.
I didn't even know he was doingit in the car.
He did it in the car, came homethat night, dead Six o'clock at
night, dead Doesn't hurt.
The door jams.
What are you talking about?
The pull-up bar within twohours of my house?
(35:26):
How is that even possible?
That's how these logisticcompanies are thinking.
They have to have every productnear us.
To do that, they have to have awarehouse space.
It's going to have to be smartwarehouse space with RFID, so
they know what's coming andgoing.
Ed Mathews (35:34):
Yeah, that's fascinating.
Joe Downs (35:36):
I'm also expecting the Amazons and the Walmarts to
start gobbling up on that spaceas well.
So the investment you're makingwith your buddies is a smart
one.
Ed Mathews (35:42):
Yeah, the hundreds of thousands and probably
millions of square feet thatAmazon alone here in Connecticut
is putting in place over thelast three to five years is
insane Getting set up to deliverto you.
So I'm curious about how youdefine success in your life.
Joe Downs (36:03):
Yeah, that's a tough one.
I think it's an evolving one.
I'm a father, so for me there'sno greater dopamine release
than to hear someone tell me howpolite my son or daughter was
or how great it was to have themaround, whatever.
And I know that sounds clicheand I know our parents told us
the same thing.
But you realize, as a parent,that's impactful and meaningful,
(36:24):
right.
So success to me health,obviously, but it's having a
really solid core family unitthat is holding itself in
society.
And I know it sounds like sucha BS answer, but it's really
meaningful.
And years ago I don't think Icould have answered it this way.
I think I would have talkedabout something monetarily, but
to me that's become the mostimportant thing.
(36:46):
Money matters.
Money allows you to achievethat.
We just took a two-weekvacation to Europe.
If we didn't have money wecouldn't have done that and we
couldn't have bonded as a familyand grown together as a family.
So I'm not giving you some BSanswer that it's all
philosophical.
Highfalutin, I'll give my moneyaway as long as I have my
health and my family.
That's not true.
I think that's too ideological.
There's a modicum of successthat I want personally too.
(37:08):
We all need that.
I'm not a recognition guy otherthan privately and quietly and
seeing people grow and knowingI'd handed it.
I love seeing closed storagedeals, like students of mine
that close their first deal.
The looks on their faces,storage deals, students of mine,
I closed their first deal thelooks on their faces, the
excitement that they have to methat fuels that's successful to
(37:30):
me.
So for me, it's health andfamily and being able to be
present in my kids' lives ishuge.
I actually used to drink a lot.
I'm an Irishman as well.
I quit drinking because I feltlike I was drinking too much.
It was like maybe four or fiveyears ago and I wasn't.
I was physically around my kidsbut I wasn't mentally present
because I might've been buzzed.
So that's something that's, tome, is successful.
That that's success.
It's being present.
However, that is that's.
(37:51):
I mean.
You have to quit drinking.
That's what it was for me.
That's what I needed to do.
But, yeah, I think it's a lotof those like feel good things
that add up to hey, you knowwhat?
I'm living a successful lifeand certainly building
successful businesses is part ofit.
There's dopamine release fromthat as well.
I'm not going to say thereisn't.
I would like to break 70 oneday in golf, but I don't know if
(38:11):
that works.
Ed Mathews (38:12):
I'm still trying to break 90 or, If I break 90, I'm
walking in the clubhouse handsraised overhead, looking for my
green jacket.
Joe Downs (38:18):
You got to hit me up when you put me there.
Ed Mathews (38:26):
Absolutely.
I have a profound lack oftalent when it comes to golf.
As long as you're fun out there, I can carry on.
That's all it is for me.
I get my money's worth.
We're paying by the stroke.
I'm doing very well.
Hey Joe, I really admire thebusiness you've built and how
you think and how you operate.
When you're not talking aboutreal estate, what do you just
mentioned travel and beingpresent with your kids.
What else do you like to do?
Joe Downs (38:43):
I'm the world's most underpaid Uber driver, although
my son just turned 16, got hispermit Revolutionary, isn't it?
I'm inching closer to my best.
I still got a 13-year-old, so Igot a couple of years ahead of
me.
I find myself on a lot oflacrosse sidelines.
There's not that many dancecompetitions I go to actually
sidelines.
There aren't that many dancecompetitions I go to actually.
(39:05):
It's my daughter.
I'm on a lot of lacrossesidelines with multiple clubs in
school and my boys are verygood.
They're very good athletes, soit's a lot of fun.
They play for a prettywell-renowned high school in
lacrosse.
That's pretty cool.
Golf, obviously, is what I'mdoing.
I'm not doing that, and then mywife and I have a couple of
short-term rental properties,airbnbs, poconos, the Jersey
Shore Tinkering with that stuffand other.
But you said, when I don't havemy real estate, yeah, I guess
(39:28):
it's head first thing to kidsand then golf, if I have time on
the side for that.
Ed Mathews (39:33):
My kids are swimmers and a softball player.
I used to joke with somebodythat swimming meets was eight
hours of sitting for two minutesof swimming.
She'd be in the water for aminute in the beginning of the
match and then somewhere in themiddle she'd swim for another 30
seconds and then at the end shewas part of the relay, and so
we were there for eight hours.
I was never better read thanduring those years when she was
(39:55):
swimming, because it's justExciting.
Two minutes, though, but thefour hours in between I had my
nose in a book and my wife wouldelbow me and say, hey, katie's
on the block, let's go.
And yeah, with mags, it'ssoftball.
We're either in the car or on aplane chasing her around
watching her play ball.
Joe Downs (40:10):
I imagine there's some good reading opportunities
there as well, between games.
Ed Mathews (40:14):
Yes, but I'm a former baseball player and a
softball coach, so I'm reallyinto the whole strategy and all
that and so I really enjoy it.
But swimming I didn't knowanything about.
So that was just me cheering mydaughter.
Joe Downs (40:30):
That's me with dance.
So you have maybe three or fourtwo minute routines and nine
hours of other girls dancing inbetween.
Ed Mathews (40:33):
So how can people learn more about Belrose Asset
Management or get in touch withyou?
Joe Downs (40:38):
Email's probably the best way.
joe@belrose.
com email is , soB-E-L-R-O-S-E-A is an asset.
Amazon management com is thebest way Awesome.
I'm amazed at all the peoplethat don't reach out of fear.
Shoot me an email if you'reinterested in storage, or one
(40:58):
direction pointing.
We don't have passive investorsanymore, but if you're
interested, I can point you inthe right direction.
If you're interested, whetheryou want to buy storage or learn
more about storage, or come toScott Myers Academy, where I'll
be in teach other conversation.
Ed Mathews (41:10):
Yeah, I tell everybody I'm a cheap cup.
I'll buy anybody a cup ofcoffee, either virtual or in
person.
Joe Downs (41:14):
Yeah, if you're in Silly, let me know.
Ed Mathews (41:23):
Oh yeah, I'll be there.
Joe, thank you so much for yourtime.
It's great to see you andcontinued good fortune.
Joe Downs (41:25):
Thank you so much for having me.
Ed Mathews (41:26):
Truly my pleasure.
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