Episode 240: Why Third-Party Management is Booming in Self Storage

Announcer (00:03):

This is the Self Storage Podcast with the original self storage expert, Scott Meyers.

Scott Meyers (00:12):

Alex podcast number two. Welcome back.

Alex Erbs (00:15):

I’m happy to be back. Thanks for inviting me. I’m glad you guys didn’t cancel me the first time.

Scott Meyers (00:21):

Well, we just can’t keep up with you now. So last time we were chatting, it was all about the storage mall and all about the operations, but now you’ve made a little bit of a shift within the industry over to the brokerage side with our good friends at EqiCap Commercial, and we know every single one of those people and have for 20 years. As a matter of fact, Jesse Luke, he and I, well kind of helped each other get into the business. He brokered one of my first deals that I got into the business with and we’ve done a number since then. And he’s helped us out at our academy as a frequent member of our mastermind. So as Anne Williams and Marla Choli came through our self storage academy and we taught her about the business When she got into it, she and her husband as well. And then working with Scotty has just been great. He’s represented us on a number of properties. So you are in the right hands. Tell us about the transition however though, and moving from operations into the brokerage world.

Alex Erbs (01:13):

Yeah, it’s interesting was I always joke with people, it’s been a long time coming, even people don’t know that, but it actually started about almost eight years ago at this point. It actually was Ann Williams Blackwell or Ann Blackwell now and Marla Choli we’re actually some of the first ones to say, Hey, do you want to come into brokerage? And this was about 20 18, 20 somewhere around then. Right then I was just getting started. We were just buying some of our own facilities. I was just learning the operations and I was more so, hey, I want to focus focused on getting these operations and getting our different details in place and obviously running our facilities. I still am an owner to this day and still run sites. And it was interesting because it was kind of a natural progression into a few steps here. It kind of went from me running our own sites to phase two was actually brokers like the people you just mentioned, Scott, Jesse, Marla, et cetera, kind of saying, Hey, we really don’t have a management company that can help us in these third party markets in these other areas. So I’ve worked with the team at EqiCap for, I mean I would say always counterparts for the last five or six years. And that’s some of the reasons that the storage mall management group has had a large Wisconsin presence with Scott Rim up there and the great work he does. That’s why we have a Missouri and Illinois presence with Marla and that’s what Jesse has got us in. So a lot of properties have came from them. We’ve had a very, very tight knit and close working relationship for many years

(02:52):

And these guys have always said, the door’s open if I ever wanted to make a move or make a change. And so I’ve had my real estate license, I’ve worked through brokering deals for some of our management clients and other people in the background for many years. And so it was great to be able to, they gave me an opportunity and said, Hey, we’d love you to work alongside of us covering more of Illinois, more of Missouri and some of these areas that I have been. And it was time for that next challenge, but it doesn’t feel like it’s a new challenge, but it’s not a complete pivot. That’s what I wanted to say. It was like, where do I want to go from here and what do you do next? And I’m like, I’ve done the brokerage stuff, I’ve been asked for years. I kind of naturally steer that way as I enjoy interacting with people in those regards. And when the opportunity came, there was really nobody else I wanted to talk to about this. And when they said, yeah, let’s do this, it just was natural timing I guess you could say. And so still a lot of great, the management company’s in great hands with my family here and love seeing them run our client sites and the different properties, including my own and excited to see how everybody can grow in different ways here between management brokerage, et cetera.

Scott Meyers (04:16):

Awesome, awesome. So was that difficult? I mean, you’ve been in the family business for a while to break away, whether you miss the operation side or the family side. Tell me the hard in

Alex Erbs (04:28):

That. You know what, just like any transition, there’s been a lot of great things. And that was part of the timeline here was I want to make sure our clients are really taken care of and that there really wouldn’t be any sort of break in the standards here. And so from the family side, it actually was a benefit that it is that I’ve got to work with my cousins, they’re Jack Bailey and Drew Bailey, and I’ve been kind of able to work with them and train them the last couple of years since they’ve gotten out of school. And so they’ve been alongside me for almost two or three years learning the business and working with my uncles, been great with that and getting able to help with, oh my God, I lost my train of thought there, but hold on. There we go. Okay. So being able to train with them on growing this management company, especially in some of these different markets and different areas,

(05:27):

It’s been a really, really fun process. And I think it was time though that I knew everybody was in good hands because the transition wouldn’t have been tough. And that was really a key of mine because a lot of these people in the storage industry, they become your friends, A lot of these management clients, they become friends and counterparts. And the last thing I wanted in this whole process was anybody going, well, what the hell? Alex disappeared. And I was like, well, Alex isn’t the crux of this operations. It’s really the operating team that we have there that was keeping things afloat and keeping it there. I was happy being the sales guy and being able to usher these relationships and helping with some of the client success down the line.

(06:07):

But

(06:08):

As I can talk about storage a lot, it doesn’t mean that that was the only reason that these facilities were going. And so I think it really, it’s been a lot smoother of a transition than I even expected. I didn’t know how some people were going to take it because still to this point, I’ve had a few people going, well, what the heck, Alex can’t go anywhere. And I’m like, was I chained to your facility here? I don’t. If anything, we can still work together if you know you want to sell or you want to valuation or know where you’re at, and I still have a lot of referrals going to the storage mall and their team and very obviously want to see our family succeed. Otherwise Christmas would be really, really awkward. So there you go.

Scott Meyers (06:48):

So Alex, many times people start up, we’re going to focus on the operations and the management side of the business for a moment. Most people start up a third party property management company out of usually excess capacity that they have on their own. So they’re managing their own facilities, they’re doing it well, they’ve brought on staff, and then sometimes either they scale back their portfolio or they’ve grown or they’ve hired for growth in their own organization and now they get this bandwidth and the ability to take on other folks. What was your progression? What was your path as you began to grow out the third party management side of the business?

Alex Erbs (07:25):

And I’m going to even probably take that even a step back further, even before the third party management started, this was 2016 when we started just my dad and I were buying facilities. And again, this is a little repetitive from the last podcast, but still just the quick synopsis. My dad is an accountant by trade. He wanted to get into storage myself was more of an operator, an engineering background, so enjoyed the back and forth that we had. I like, because I always think it’s great for any operator like we did, is to get their hands dirty on at least one or two facilities first and know the business. You’re never going to learn this business by just having a third party management group until you get your hands dirty, until you take some phone calls from customers, et cetera. Now that makes it sound like I am saying don’t go for third party management. No, there’s a time and place for that. But as somebody who was in business development and was in that, what I would call client success role,

(08:29):

Clients

(08:29):

Don’t know what success is if they haven’t done it themselves a little bit. So they only take whatever their success was based on, well, my management group wasn’t doing good enough or that wasn’t going well enough in that regards, but they don’t know what to expect. They’ve never done it themselves there too. So that’s where I’ve always,

(08:46):

It’s always great. I said, you can tell the difference between an owner who’s operated one site themselves, even if it’s one doesn’t have to be two, it doesn’t have to be 10, even if it’s just one. You can tell a difference between an owner who’s operated a site themselves and an owner who is just investing in it and obviously investing in storage. Not a problem at all. And that’s great, but you have to know that that’s what you’re doing. You’re not trying to micromanage some of your daily operations and that’s why you get third party management

(09:13):

Group.

(09:15):

So I do believe it is. It is interesting. So probably more so answering your question, you will find a time and place for when you need to scale your operations.

(09:26):

We tell a lot of people is you get that first facility. Now do I want to focus on operations or want to focus on buying more? And that’s where the trade-off will start in. And that’s where you’re hearing this phrase, and we can expand on this a little bit, is it’s the dawn of third party management is what somebody said the other day is that third party management is popping up everywhere and everybody’s going with that. So that’s where I think think a lot more people are heading towards that naturally and just don’t get caught not knowing how to run a facility yourself before you transfer that over.

Scott Meyers (09:59):

Yeah, and I think we are seeing that, and I’ve always been surprised by that and only because I really don’t like the management side of the business, why people subject themselves to that. I am the epitome of the hunter and I’m not the farmer, I’m not the gatherer. I understand it. We put the KPIs in place, we can make those collectively. I don’t all know all about the management side as my staff does, but that’s okay. That allows ’em to focus on what is their strong suit and their superpowers and lets me be able to go out and do mine. But you’re right, there is a shift in this, what we’re seeing in the marketplace. I mean one trip to the ISS show this year and I was amazed by, oh my gosh, how many more third party management companies and management software companies can we see here packed into the trade show? I mean, it is getting to be a very, very crowded space.

Alex Erbs (10:50):

And I think, Scott, you already made a great point there on what, as you just mentioned, even your team, you have to figure out how you’re going to build out your team. So you’ve built out a team that’s handled a lot of your, for example, your asset management and some of your different details, et cetera. And then you’ve filtered in a lot of cases a management company or either even some people that are managing their sites into your own platform as such. So it’s really to any owner out there, it’s how they want to build out their platform here. I always think there’s some people that truly want to or truly think that third party management, just because they give the facility to them means that their facility is going to be taken care of and they’re sitting on a beach and they’re never going to have anything ever again.

Scott Meyers (11:33):

No, not the case.

Alex Erbs (11:34):

Not the case. Well, and that’s where we’ve said for years is the storage mall for example. We will handle all your daily operations, all your details, et cetera. You’re still responsible for paying certain debt service bills, you’re still responsible for capital expenditures. You’re still responsible for being the asset manager at the end of the day. And I think that can be a real difference when I talk to owners about, Hey, is it the right time to sell or is it the right time that you need management? And you have to understand if you’re going to go to management, you got to let them do their jobs and sometimes

(12:05):

Their

(12:06):

Job is not always going to line up with exactly the way you’ve done it for many, many years. And that conversation’s not easy. So you’re a great example of you’ve set up a team that you know there’s going to be managers managing this. And I’m also going to take it another level is you’ve seen a bunch of different property management groups. So I’ve seen this interestingly is I’ve always had this theory from a previous company I worked at many years ago, they don’t want to put all their eggs in one basket. I think you need to test a few of those baskets and see, and if you eventually you’ll find which one you like the most and you’ll usually come right to them. And that’s where the storage mall is very successful is a lot of people started with, I went to four different management groups and I really only like these two, so now I’m going to go with these two in this situation there. So obviously seeing what else, seeing what is out there between different groups is always important too, and making sure the team that’s around you, because third party manager is a partnership. It’s not just a this is my vendor. It’s really if it’s done right, it’s a partnership between the owner and the property manager.

Scott Meyers (13:08):

Well, you’ve done because of the way you’ve treated not only ourselves but your clients, that is the reason why you’ve grown so well. That’s why the storage mall has done so well and why Echo Kappa brought you in and then obviously they saw something in you just like the rest of us. And we’re extremely grateful for the job that your team is still doing and the family is still doing for us at our properties in Wisconsin that are managed. But then you decided after you delivered that news, I think it was maybe two days later that all of a sudden I saw 2, 3, 4 listings coming up by Alex’s. It’s like, man, either this was in the works or you hit the ground running, but it looks like out of the gate you’re doing well, but a little scary to make you nervous after being in management so long. And then moving over to this side, which is dramatically different in terms of also performance-based compensation. Tell me what that looked like when you made the final decision.

Alex Erbs (13:59):

No nerves, Scott. It’s perfect over here. I’ve lost thought.

Scott Meyers (14:02):

That’s what thought. It’s

Alex Erbs (14:02):

All good. No, and that’s interesting. It’s like any job or any role here. I mean it’s almost, I’ve mentioned this a lot to people. It’s like I’m kind of leaving the cushy position there. But this is the same thing of when we started buying storage and doing other stuff. It was like I got challenge myself here. I was comfortable. And I think when you get comfortable in anything that you’re doing, then either you’re not doing something right or you got to figure out a way to push yourself here. And that was kind of where I was getting to is I was like, that’s the scary thoughts at night. I’m going, well, crap, I got a pretty good thing going here. Do I really want to blow this up, for lack of better word.

(14:43):

And I think that goes back to the comments before, I don’t think it was a full blow up. I still happy to support the family and what they do here. And luckily my license was with EqiCap for a while, so it wasn’t like I was switching firms or doing anything. It really was. It was there. So I was already brought in pretty early on some transactions pretty fast that we’re needing some assistance because right now this market’s been kind of crazy, for lack of a better word. I mean as of the recording of this podcast, I don’t know when specifically it may launch, but we have a ton of inventory out there and not inventory that’s just been sitting for a long time. It’s inventory that just very recently came on and came on quickly. So you even mentioned is as of the recording of this, we’re at four or five different listings right now with more in the works, and it’s only been a few weeks. So this market has really been interesting. I think some people are coming to the conclusion that this is where the valuation of my property is. This market’s not shifting, it’s not going to go back to sub five cap rates in many situations.

(15:53):

And I think to the point on more of a personal note, I think that’s where a lot of these people, yourself included, et cetera, have trusted our team to run their facility and trusted the process that we’ve had. So it’s been kind of again, that natural progression over to brokerage is that, hey, they trust me to run their daily operations. So they also trust to evaluate what’s going to happen there and give them the advice they need to get this into the right spot. So that’s been kind of the other step of this is I think people have come to this because they want to get some operational guidance. They want to get to this price when they go to sell, I want a million dollars, it’s only worth 800,000. What can I do to get to a million? Here’s the three steps that I would tell you to do if you were either managing with us or you’re just going to do this yourself here. And so I think the word I’ve heard from a few owners is refreshing and it’s like, oh, it’s a different perspective than just other brokers than just coming in and saying, this is what you need to do. You need to get your rates up,

(16:57):

Not just to get your rates up. How are you going to get your rates up? Let’s actually get a little more strategic and a little more into the logistics of how that works versus that. And I think some self storage brokers don’t even have that background to say, well, I don’t even know how you raise rates. I just know you, I’m going to tell you to do it, but I don’t know how to do it. That’s kind the difference.

Scott Meyers (17:19):

So I mean, there’s no doubt that having set so many budgets and be involved in that process is only going to make you a better broker both on the buyer side and the seller side and working both sides. I mean, if you’re a listing agent, you’re still working with buyers and you understand what they’re looking for and what it’s going to take to trade. But that’s having that background and looking at it from that standpoint and then also recognizing and realizing as we have over the years that we can’t buy a facility based our own underwriting and then give it to the management company, which you kind of alluded to, and then just say, here, go work your magic and make it hit this number here. Can’t taken a step back over the years and understood are we managing this internally? If not, then who’s going to manage it? Okay, well then let’s interview them all in this process of when it’s an LOI or under contract and let them set the budget and set our expectations and projections for this property and then we’ll make our decision at the end of due diligence based upon that. So you’ve got a leg up from that standpoint. So tell me how has that background helped you as you now transition over into the brokerage side of the business?

Alex Erbs (18:25):

I knew where you’re going with it. I knew where that was getting to here. And I think that’s where it’s been interesting because

(18:33):

The

(18:33):

Budgeting has always been, I really did actually enjoy a lot of the underwriting or budgeting here. And I’ve told people forever. I mean this was even while I was still with the management group doing that, it was interesting. They would say, I’m looking at this property. Will you provide me a budget on what you would be able to, or a proposal on what you’d be able to do? And they’d always be shocked that I’d say no. And they go, why? I go, well, isn’t that your job? I said, it sure is. I said, I’m not going to do that because I don’t want you to buy this property specifically based off of whatever our proposal is. I think we’re going to be pretty damn close, but I don’t need you to come back later and go, well, because you told me what this was possibly going to do, I bought this property. I said, you need to be comfortable with your own underwriting first. I can give you some guidance. I can give you some rough numbers if you need some help on what payroll should look like or what, I’ll give you some rough guidance,

(19:28):

But you need to be comfortable in the first place on what your numbers are so that even for the scenario you just mentioned, Scott, is now we actually go out and source some quotes from that and whether we’re in due diligence or I always said, I really am not going to give you a budget or a proposal in this case, which is one and the same in this situation until after you’re under contract maybe if you’re close to contract, if you’re going there. And I know some people wouldn’t do that, but that’s why we’ve been pretty tight and close on our budgets and that’s why our owners are aligned because I’ve just seen it way too many times, is that they get this pro forma from X management group that says, here you go. This is what we’re going to do. Scott, I think you even mentioned it. Let’s say you get three different proposals. You have to be comfortable with your own underwriting in the first place to be able to say, okay, this one’s too far over. This one’s too far here, and this one’s the sweet spot in the middle to have an idea. This one’s most in line with what I’m thinking here, because

(20:25):

Bad purchases have been made because of people trusting what somebody else did on the back of a napkin in less than 20 minutes and said, here you

Scott Meyers (20:35):

Go.

Alex Erbs (20:36):

And so to that point, that’s been the same with underwriting as now on the brokerage side, it’s been very similar that just like the rest of our group, and this is one of the reasons I really like EqiCap, is they have closed 95% of the transactions that they have brought to the market there,

(20:54):

And

(20:54):

There’s been a lot more transactions that have not been brought to market. We just did, I just had two last week that I said, I’m the only broker you’ll hear that says, I don’t want to list your property. And they said, well, why? I said, well, it’s not going to meet the number you want and I don’t want you mad at me. The end of the day, here’s going to be the steps that we’re going to get you to where you want to be on your price, or here’s the steps you need to tell your management group so you can get to those to where you want to be. And hey, then we’ll go enlist it in three months from now when it’s ready because not go anywhere. And that’s the difference is that’s where it’s honest underwriting, and that’s where it’s you as an owner need to understand the people that you’re working with, whether you’re sourcing a quote from a management group, whether you’re getting just an opinion of value from a broker. Any broker can tell you what they think it’s going to go for, but do they actually have the background and the people and the database and the right underwriting to get you there because you as an owner need to know, Hey, I think this thing’s probably worth about $3 million. And if some broker wanders it and goes, no, no, no, I can get you four and a half. You want to go, that seems a little off from what I’m expecting here.

(22:00):

And then how many times has they listed at four and a half and now you’re back to, you actually get at the end of the day, 3 million and now lays on happy with the process. Customer service, whether it’s on the management side or brokerage side is the same exact thing. And that comes from realistic, true and honest feedback. And whether that feedback’s good or bad, we’re going to give you the feedback.

Scott Meyers (22:24):

Yep. Well, that’s good. I mean, nobody wants to be in that position anyway, so now there are, and we’ve run into brokers out there and I always, we’ve run into deals out there that are listed by brokers that will take the listing because somebody does have an expectation, a higher expectation of a sales price, and the broker will take it anyways, and then they’ll let the market dictate to the seller that, well, your property isn’t worth 2 million. It’s really worth 1.5, but I took the listing and I want to let the market tell you what it is, and now are you ready to get realistic, which is the wrong way of handling things, and they’re not going to preserve that relationship and then it makes it difficult for the rest of us. So I would much rather the folks take the approach that you did because at the end of the day, we know it’s not going to transact. And also at the end of the day, honesty is the best policy. So if everybody’s operating from a place of transparency, which I think slowly with the more data that we have out there available to us, and we are getting to where I think everybody’s being forced to be at that place where we are a hundred percent transparent because all the data’s there. Would you agree?

Alex Erbs (23:21):

Oh, you know what? I think you can already attest to this from how this market has shifted many years ago, back in 2020 through 20, early 22,

(23:33):

My

(23:34):

Father always said this, you could do well in storage in spite of yourself,

(23:38):

Basically

(23:39):

Is like, Hey, everybody was showing up, everybody was renting. You could name your price. It was great. I mean, crap, if you just built storage in the middle of the side of the highway in wherever, Missouri where I’m at, great, you did great.

(23:52):

Now

(23:53):

It’s interesting because these facilities that were doing that they now are in this weird spot. They’re going, well, wait, I have these units. I was told for many years and now I’m sitting at 85% occupancy. Why is that? What’s going on? What change? And now the data is so much more important, whether it’s supply, it’s demand, whether it’s what the market logistics are. My joke was anybody would pay you whatever they wanted because in 20 20, 20 20, the government was giving you free money. They said, oh, go spend it. Go do something with it. Now it’s 20, 25 times are tougher. People don’t have extra money laying around. I mean, we’ve seen this stat right now just within the management group with five by 10 units like five by 10 and smaller. These small units in many markets are not renting like they used to because people are debating, do I want to spend $50 on a five by 10 for 12 months of a year to put my Christmas decorations in or can I go on Amazon and buy Christmas decorations for 40,

Scott Meyers (24:55):

80

Alex Erbs (24:56):

Bucks or whatever it is? If they want to rent a unit, they want to rent bigger units right now. They want to. This whole thing. Everything in storage now has become data driven. It’s insane because it’s all these stats it supply, I mean, how many times we talked about what the per capita rate is there, how many people are in this area? And that’s an interesting one, is this per capita effect forever. It was eight square feet per capita is the average grade.

(25:25):

And

(25:25):

Then at the end of 21, they came out and said, oh, now it’s 11 square feet per capita average. And you’re like, oh, well that’s great. I can build more the new average. And then two years later they came back and said, actually, it’s seven is the average right

Scott Meyers (25:38):

Now. Yeah, seven and a half.

Alex Erbs (25:40):

And so these markets now are at 15 square feet per capita, and you’re like, crap that doesn’t, none of this is penciling out. And so then these owners get this unrealistic expectation as they’re going, well, why is my facility not filling up? Well, I can tell you because it’s not because of marketing, it’s not because of anything. There’s just not people out there. You can’t make people want a storage unit if they don’t want it. It’s not like getting a pizza coupon, oh, I got a pizza coupon, I want to go get a pizza tonight. It’s not like, oh, I got a coupon for a free month of storage. I’m going to go find some stuff to put in there. It just doesn’t work the same way. And that’s where, it’s interesting, these owners, I mean, I can take it from the management side and some of this brokerage side already it’s been, well, I built this, I built a lot of it and there’s just nobody showing up and I’m putting a ton of money into ad dollars and into this, into that, and it’s, we’re not renting units. And I said, you can’t create demand where there is none.

(26:34):

It’s

(26:34):

Really tough in the, sorry, I sound really doom and gloom right now. So it’s data driven to your answer right there. It’s very data driven anymore. How many people and who needs storage there?

Scott Meyers (26:47):

Well, the data’s available out there. People are getting educated more and there’s more information out there. Alex, you’ve been extremely successful on the operation side and now already right out of the gate becoming very successful on the brokerage side. And so I’m not going to ask you what your secret sauce is, but what are the keys to a successful self-storage investor or anybody that’s in the self-storage game? What do you suppose are some of the, I dunno, the personal traits or what are some of the tools and resources that people need to have to be successful?

Alex Erbs (27:18):

I have said this for years, that people in storage need to be open to change and open to pivoting and open to what can happen next. I think people have this expectation in self storage because maybe they came from another asset class and it’s not multifamily, it’s not residential, it’s not offices, there’s no toilets. This is great. So it’s going to be simple and it’s going to be easy and it’s just a storage unit. How hard can it be? And at the end of the day, yes, it’s not that difficult, but there is easily ways that you can screw it up and there’s easily ways that the market just won’t go the way you expect here. So

(27:58):

After

(27:58):

Now being in this personally owning facilities for almost 10 years, we’ve had good times at facilities, we’ve had bad, we’ve had some good, when I say it’s good, hey, it was some of these COVID years that it was flying. It wasn’t as good. It was great. Money was coming in it, it wasn’t hard to manage. People were pretty straightforward, et cetera. And then the bad times, I’m going to say they aren’t bad. That’s the wrong phrase. It wasn’t like, oh my god, this is terrible and I’m losing my ass here, pardon my language. But it’s, wow, these numbers aren’t where they expected, wow, this is down. Wow, there’s some more CapEx here. So I think being able to go with the flow and being able to pivot as needed and understanding

(28:41):

It’s

(28:41):

Not just going to be 10% net income increases every year. Storage industry is very successful. So to a personal note though, I’ve told a lot of owners, especially first time owners that want to get into this, want to get into storage year one, owning storage is not going to be your best year. Again, I’m sounding like I only go for the negative here, but I promise I’m trying to just be realistic.

Scott Meyers (29:05):

No, it’s the realistic, that’s all we’re asking for.

Alex Erbs (29:07):

It’s not negative, it’s just realistic. I’ve had these owners that, oh my God, these projections look great. And we used to do, in our proposals, we do one line item that says miscellaneous one-time expenses, and it would have zero next to it and it just says, refer to page, whatever. And we go to that page and it would have a list of, Hey, this is only all going to happen if these criteria are met. So I think I may have said this on my last podcast, I apologize, but the big four things that I’ve talked about forever is from the operational side is got to have new signage on your property. That same old sign’s not going to work. Guess what? Signage is not cheap anymore. You have to get some new lights on property. People don’t want to be there in the dark at night.

(29:46):

You got to get some new cameras. That’s just an expectation anymore. And if you have a gate or access control system, you probably got to upgrade it to something depending on the facility right off the bat, that can be anywhere from 10 to $20,000. Now, some may already have that in place and it’s less, but if your income for that year on a small site was only going to be $24,000, year one $20,000 is going to be, that’s a hit. And you’re not going to make very much there. But you’re also now set up for long-term success because the last thing you want on those same capital expenditures is doing that over and over year after year, getting hit with $6,000 light bills and $6,000 camera issues. And I mean those will add up. So owners going with the flow is going to be really key there. And I think understanding that storage is a great asset class, but it’s not going to be perfect all the time. And it’s not easy. You have to understand that there’ll be really good times or really bad times, but don’t get discouraged because of that. Because every site, every site has great moments and bad moments that you just got to find. Make sure you do the due diligence to make sure it’s the site and area that you want it to be, and the site will go very, very well,

Scott Meyers (31:04):

To be honest with you. That’s why we created, that’s why I created the industry’s first mastermind, the selfs storage mastermind. And that’s because I wanted access to more data and more people that are in different markets and different size facilities so that there was an understanding of an expectation when we go into a property rather than just the underwriting or the broker telling us one thing or the seller telling us something else. And so just to have that pool of knowledge to be able to dive into just makes it so much easier and to now see what it’s grown to. I mean, everything that you just mentioned in those conversations that we’re having inside the mastermind so that everybody becomes a better investor, we just continued that. The tide continues to rise inside of there. And yes, I built it to grow a community and some of it was self-serving, but it’s just amazing to see what happens when a group gets together and then anytime you get into a whole bunch of folks in the room that are in the business and you just get more viewpoints, datapoints, it just makes investing that much, not safer, but just more comfortable and without as many blind spots when you head out into the marketplace.

Alex Erbs (32:07):

Well, and let me even add a step to that, the mastermind fantastic group. I’ve said this for years. We’ve had many, I’ve worked with many of your mastermind members, whether from management or even on the brokerage side, et cetera. And it goes back to the same thing you mentioned or we keep talking about, here’s the data and really what is your data source? It’s kind like that’s a big thing in today’s industry too, that it’s crazy the amount of data you can get in the wrong spots because the Mastermind, great group, a lot of usually owner operators that are actually doing this firsthand and seeing it, maybe they even have a management group, but they’re still actively involved. They’re getting firsthand data. It’s really aggravating to me as a broker or operator, or really, I’m going to actually do a shameless plug here right now as I’m part of the, I’m the president of the Missouri Self Storage Association and I’m on the board of the Illinois Self Storage Association. So going to good data points like your other association members or other spots is so, so important.

(33:04):

All I’m going to say is don’t take your facts from Facebook, please. Like the Facebook groups out there and other stuff. I go in there and I see somebody putting a legal question about how I should auction a unit in my state, and I’m glad at least there’s so many good people in this industry that at least say, go talk to your association. So if you’re in the state of Missouri, give me a call. I’m happy to talk you through the legal process. I’m just going to tell you to sell your facility, I promise. I want to actually make sure you’re doing this the right way, because like you said, we’ve joked about this as an association for many years. And same thing like a mastermind or another group is the problem isn’t the people that are at the associations or meetings or at the Mastermind. It’s the ones that are the ones that are not there and actually not trying to learn and not trying to see what the market’s doing. So it goes back to exactly the point is then you talk to some guy and he says, I don’t know what you’re talking about. What do you mean the market’s not is bad? I’m doing great, and you’re just a terrible operator. And then you feel like, oh my God, I must be a terrible operator. And

(34:05):

It’s like, no, that guy has never done, he’s never raised his rent in 10 years, and he sat there a hundred percent full, and he’s actually 90% full today, and he just won’t admit it. Sorry, there’s my rant to the day there. That’s where now I will do, I won’t get invited back now after that to cancel my

Scott Meyers (34:22):

Facebook. Well, of course, you’ll, you are never disallowed from speaking at the microphone on the Social George podcast for telling the truth. That’s for certain. Well, Alex, it has been so good catching up with you once again, and so glad to see you in this role because we love all the folks at Echo Cap. We love Echo Cap, period. They’ve been a huge source of opportunities of properties for not only the folks that are coming out of our self storage academy that are getting into first time properties. And I see even some of those that you’ve listed right now are really ideal. That’s kind of a sweet spot for our members for the first properties in those secondary markets, bite-sized properties, if you will, and pretty much straight up and down the fairway. But just thankful for that relationship with that group and glad that you’re a part of it, and then we’re not losing you completely since you’re not actively working with the management company as well. So that being said, now there’s even more that rides on your income level on your success by getting your name and your contact information out there. So how do people get in touch with you, Alex?

Alex Erbs (35:22):

Yeah, and I think to your point is we really enjoy as a group myself, and I’m based out of St. Louis area. I enjoy working with all these owners in Missouri and southern Illinois even no matter the size property, I know there’s some that I’ll only take over excise property, but the first three properties I’ve listed have all been under a million dollars. So they’re all good kind of starter facilities. I’ve been talking to a lot of first time owners, so enjoy working with people through the process and educating and doing this process here. So would love for you to reach out and talk with me. You can find me@equcapcommercial.com, Alex at EqiCap commercial. They really went crazy there. So alex@equicapcommercial.com, find me on LinkedIn. I’m usually pretty active on there at Alex. Yeah, I mean, that’s about it. I don’t know if I need to get my phone number out. Send me an email and then you get my phone number and

Scott Meyers (36:16):

There you go. That’s perfect. Yeah, let’s keep it at that. Otherwise you won’t be able to sleep tonight.

Alex Erbs (36:20):

That’s fine. I need people to call me so I can get commission here and see what happens. Keep this going.

Scott Meyers (36:26):

Don’t worry. They’ll find you. They’ll find

Alex Erbs (36:27):

You. Perfect.

Scott Meyers (36:28):

Alex, always good to chat. Thanks so much for spending time with us again and Storage Nation. You have been hanging out with Alex Herbs. I’m one of the most genuine guys and just most helpful guys in the industry. And so give him a ring if you are in the market for properties in and around the Midwest. Alex, thanks so much for your time once again.

Alex Erbs (36:45):

Thanks Scott. Appreciate it as always.

Scott Meyers (36:47):

Alright, take care everyone.

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