[00:02:24] Sultan of Storage: And he described this strategy of buying mom and pop storage facilities that had been undermanaged fixing them up, both physically and and more so operationally and turning them into cash flowing beasts. And I thought, you know, at the time I wasn’t sure what I wanted to do with my life. I had come outta.

[00:02:43] Sultan of Storage: 15 years in financial technology and I knew I didn’t want to continue to do that. And I, I was on a mountain bike ride when I was listening to this podcast, and I remember that moment where I was like, I can do this. I had been looking for what that next thing was for my career and I thought, man, this sounds, sounds like something I can do.

[00:03:02] Sultan of Storage: So the, the rest is history.

[00:03:04] Robert Leonard: So, not to get too personal for a second here, but was your wife or, or girlfriend or anybody was, were they on board? Like how, what was that picture like? I know sometimes that’s a big barrier to, to not only making a career switch, but even just like getting involved in real estate.

[00:03:15] Robert Leonard: Some people have a misconception of what real estate is, and so they’re, they’re really concerned if their partner or something goes into it.

[00:03:20] Sultan of Storage: So I’m curious if there is any dynamic of that for you. I guess rewinding to that point in my life, it was a real point of transition. I had come outta this long career in tech.

[00:03:30] Sultan of Storage: We had just moved back to Colorado from London and, and my wife was along for that journey and she saw me go through so many ideas of what I wanted to do. When I walked in the door that day and told her I wanted to start buying self storage properties, she probably just thought, yeah, ok. That’s the, the trick of the day.

[00:03:49] Sultan of Storage: I’ve heard you’ve come with many ideas. Let’s, I’ll believe it when I, when I see it. And luckily she’s pretty understanding. She’s financially very frugal. So I didn’t describe her how much of our savings would have to go into this project to make it successful. But now I tell her the numbers and she’s not impressed.

[00:04:05] Sultan of Storage: She’s far less impressed than I think most of my Twitter followers, but she lets me.

[00:04:10] Robert Leonard: So you paid $1,500 for a talk. There’s a lot of kind of misconceptions out there about needing mentors maybe, or paying for coaching. Like explain to us why you spent the $1,500, if it was worth it, kind of what you learned from it.

[00:04:24] Robert Leonard: And if you’d do it again, if you, you were going back, or maybe you’re talking to somebody who’s listening to the show today and they’re wondering if maybe they need to pay a little bit of money to talk to an expert to kinda get their wheels turning.

[00:04:33] Sultan of Storage: There are a lot of folks out there on the internet pushing info products.

[00:04:39] Sultan of Storage: But I, I will say that, that that $1,500 that I spent is the, the best return that I’ve ever generated on spend, and that was with Nick Huber. So at, at the time, he was offering self storage consulting. So the $1,500 got me an hour of his time to walk through a a deal, helped me evaluate a deal, and then he provided me a bunch of his resources that he had built, including his underwriting or financial.

[00:05:05] Sultan of Storage: And that was worth it only because I had an actual deal in pocket that I needed help evaluating. So I, I got my first call back from an owner of the first property that I bought. He gave me all the information that I needed to underwrite the deal. I ran it through some models that I had built on, on my own, but I needed somebody else to help me look at that and, and make sure that it was right.

[00:05:30] Sultan of Storage: So Nick walked through the model that put my, plugged my numbers into, into his model. And I think we had a call at like 5:00 AM my time. Cause it was, I needed to get his opinion on this quick and he like, if you want to talk to me, it’s gotta be at 5:00 AM your time. 7:00 AM my time for my, my day starts and.

[00:05:48] Sultan of Storage: Super grateful that, that he got me in again, the best 1500 bucks that I’ve, I’ve ever spent. So he looked at that and I had come in with this mentality of cutting costs. So I saw that the, the prior owner was running at like a 50% expense ratio, meaning his expenses were half of his revenue. And I had read on the internet that a storage property should operate more at like a 30% expense ratio.

[00:06:11] Sultan of Storage: So I thought, ok, I, I could see the fluff, I could see he was overpaying an onsite manager, he was paying crazy amounts for things bookkeeper. 600 bucks month for a bookkeeper, that’s something that pay less than 50 bucks month for now. And so I had built this model to forecast all these cuts and expenses, and I hadn’t really forecasted any increase in revenue.

[00:06:31] Sultan of Storage: He looked at it with me. He is like, man, this, this deal is going to make you a million dollars within 18 months. And it’s not just through cutting costs, but it’s also through managing revenue. The property’s full today. That in itself tells you that the, the current owner is underpriced. He’s, he’s not charging enough.

[00:06:48] Sultan of Storage: And so we, we plugged in some pretty moderate increases to revenue along with the decreases to expenses and the law. You know, it said that the property would cash flow really nicely and probably be worth a million dollars more than, than I bought it for in, in a fairly short period of time. And that proved to be reality.

[00:07:04] Sultan of Storage: So I was able to do exactly that. Increased net income, which is the number that storage properties are used to be valued. And I’ve more than doubled net income in the. I guess 20, 21 months I’ve, I’ve owned that property. Where is that property based? It’s in rural New Mexico.

[00:07:25] Robert Leonard: How’d you end up there? Middle of nowhere.

[00:07:27] Robert Leonard: Did you take that out of the Nick Huber kind of playbook? I know he, you know, I mean he’s, he’s much bigger than he was now. I had him on the show a while back, but when he first started or when he first came on the show, he was still relatively small and I know he was looking at like very rural areas in pretty much any state.

[00:07:41] Robert Leonard: Is that kind of how you ended up in rural New Mexico? Yeah.

[00:07:44] Sultan of Storage: For me it’s, it was really, because it’s within an hour of where I live and I, I drew that hour radius around where I’m seated today and this property, was it within that, that radius, and I’m in a very rural area, and it was on that list. Today, I’ve, I’ve continued my focus in tertiary markets.

[00:08:03] Sultan of Storage: Some of my markets, I’m not even sure that you’d consider ’em tertiary. They’re, you know, they’re sub tertiary for a couple of reason. One, there’s not as much competition from guys like me. Like there’s not, you don’t see a lot of like, or even guys bigger than me, you don’t see a lot of in institutional buyers in those areas driving prices up.

[00:08:22] Sultan of Storage: Second, for me, it’s, it’s easier to understand the local market. You can pretty easily call around to the other facilities in the area, get an idea of how full everybody is, and use that data to figure out whether or not there’s a, a balance between supply and demand or potentially an oversupply or, or over demand oversupply being really bad if you’re looking to buy a facility in the area.

[00:08:46] Sultan of Storage: Over demand or under supply, being a, a good thing, meaning that you can drive prices. I’ve continued to look, I’ve expanded outside of my, my little neck of, of the woods here and now own facilities that are as far as, you know, six and a half hours away from me. And I’m focused primarily on tertiary markets in the West.

[00:09:07] Sultan of Storage: I don’t know what’s really holding me back from going outside of sort of the Southwest region, other. There’s just so many opportunities and I gotta figure out some way to, to focus and, and today it’s focusing on very specific communities in the west. Do you go to the properties? I’ve visited every property before I bought them.

[00:09:29] Sultan of Storage: I have multiple properties I have not been to since closing on them. We have a, a remote management model and storage is not a passive in. It is a very active investment, particularly early on before you reach scale. But my focus with this has always been to create a business that can run without my involvement.

[00:09:53] Sultan of Storage: I want to make it as, I won’t call it passive, but I’ll make it as uninvolved as possible. And I’ve been, you know, I’ve been lucky to have, have created that. So I’ve, I now have a team of both remote customer service employees and, and a manager. Along with onsite local contractors that really run the business for me, the day-to-day operations.

[00:10:13] Sultan of Storage: And my view is that if I have to go onsite to a property, something’s broken in my model. Cause I should have, my goal is to build this model so that I don’t have to be involved.

[00:10:25] Robert Leonard: Yeah, I own, I don’t own self-storage, well, I own self-storage through a, a syndication, but I own single family homes, long distance and the remote, similar to kind of your model, but with a different asset class.

[00:10:36] Robert Leonard: And that’s always my philosophy is if I have to go there, like I’ve never been there, I’ve never been to the town in my life. I’ve never seen the properties, nothing. So it’s really remote. I always say, if I ever have to go there, then something went really, really wrong. So it sounds like you’re kind of in the same boat.

[00:10:48] Robert Leonard: But the flip coin of that is, or the flip side of that is that you don’t really have an excuse now to not go long distance. You can look all over the country now because you have the systems in place, so you kind of have to just take that leap once, once you’re ready.

[00:11:00] Sultan of Storage: Definitely. I think there is, there is a lot of value in focus though, and that’s why I’ve, I’ve chosen to focus in, in specific areas because if I get, if I start casting the, the wet, the net too wide, I think I’d lose some of that focus and become less effective.

[00:11:17] Sultan of Storage: I think part of what led to that success early on was just that maniacal focus on the area around.

[00:11:26] Robert Leonard: Before you became today known as the Sultan Storage, and you did everything that we’ve talked about so far, you were doing, like you said, business development in the FinTech industry. I’m interested, you know, because a lot of people bash kinda the W2 nine to five world and I, I personally love entrepreneurship.

[00:11:42] Robert Leonard: I love people doing their own thing, but I do think that there is some value in W2 and, and nine to five s and i, I think that there is a lot, a lot of value there. So I’m curious, what are some of the skills, the key skills that you learned doing business development in your w2, your nine to five job in the FinTech world that have really helped you in buying and operating your self storage?

[00:12:02] Sultan of Storage: I’d encourage anybody who’s in a W2 today to focus on what they can get from that outside of money. because I think that I probably missed some of opportunities and like really focusing on what could I get outta that? Where could I grow? How could I learn? I always wanted to quit my job from very, very early on in my career.

[00:12:20] Sultan of Storage: I, I was focused on achieving financial independence so I could quit and I wish that I had focused more on what I could learn and, and gain from that experience. But I think. I was a BizDev leader. To be successful in that role, you’ve gotta be a great communicator, as I stutter with that word. You’ve gotta be a great communicator.

[00:12:38] Sultan of Storage: You’ve gotta be able to tell stories and, and get people on board with your vision. I think that’s been really helpful with storage. In most cases, I’m buying from people that are very invested in these properties. I hope that none of them follow me on Twitter and see me referring to their, their properties as, as crapp.

[00:12:58] Sultan of Storage: But the reality is, is that, you know, in most cases they’re older, they’ve had these properties in their care for decades, and they want to see them pass to somebody that’s going to take care of them. And I think that I’ve been successful in building relationships with these sellers before they commit to, to selling to me.

[00:13:16] Sultan of Storage: In multiple cases, I wasn’t the only guy that had sent them letters, but I ended up being the guy that they sold the properties to because I was able to connect with them, ask them questions, not just about the storage property, about themselves and their, their lives. And I think because of that, they realized that I was a good guy that would take good care of the, these properties after they, after they sold them and, and convinced them to, to sell ’em to.

[00:13:40] Sultan of Storage: Outside of that, I think, you know, I, I gained a, a general financial expertise. I understand how to read a profit and loss statement and a balance sheet, and that came in very handy. I, I understand basic financial metrics like return on investment and that was helpful in me actually being able to plug some numbers into a model that I built to understand whether or not the numbers made sense, whether I was going to make enough money for, to justify the, the amount of work that would go.

[00:14:07] Sultan of Storage: And then on the sales side, like the lack of fear, which I, I’m not going to say I don’t have fear, but I think I developed a, an ability to just pick up the phone and, and call people over the years. And today I still have to give myself a little bit of a nudge to, to make phone calls. I made a couple of cold calls this morning and.

[00:14:25] Sultan of Storage: Always, no matter how long you’ve been selling, unless you’re a very special character, there’s always a little bit of, of hesitation to call. But luckily I’ve, I’ve built a little bit of armor over the years to be able to make those calls and I have to tell myself like, look, you’re calling these people to offer them a giant amount of money for a property that they own.

[00:14:44] Sultan of Storage: If somebody called you today wanting to buy your property, are you going to be mad about that? No. I would have, I would gladly have a conversation with anybody who, who called me. I have to frame it that way.

[00:14:53] Robert Leonard: When I think about making these calls, let’s unpack some of those metrics and the financial pieces that, that you talked about.

[00:15:00] Robert Leonard: I want to, I want to learn how you source your properties and what you’re looking at when you evaluate ’em. I know we kinda went over that with Nick a little bit, but let’s dive in a little bit deeper. So first, we know you’re where you’re investing, but tell us how are you finding those deals, your deals, specifically in that.

[00:15:14] Robert Leonard: And then once you’re analyzing what are the big, most important metrics that you’re looking at when you’re deciding whether you actually want to buy it or not.

[00:15:20] Sultan of Storage: Starting out with how do I know if a deal is a, a good deal for me, it’s, I’m a value add investor. I’m looking for properties that I can add value to, and that will, that added value will re result both in, in cash flow and appreciation in the property.

[00:15:39] Sultan of Storage: Things that, that shout value add to me would be an undermanaged or, or even mismanaged business. So in, in the modern world, those would be things like lack of a website, a poorly managed Google profile, not accepting electronic payments. You won’t believe how many of the, the properties that I’ve, you know, I’ve introduced card payments for the first time ever.

[00:16:00] Sultan of Storage: They, you know, these are cash and, and check only businesses. And then I, I look to the financials for any inefficiencies in expenses, but more importantly, comparing their pricing to the market. And so in most cases, I’m looking for properties that are below market and what they’re charging, where maybe they’re, they’re 50% below what their, their neighbor down the road is charging.

[00:16:23] Sultan of Storage: So all of those factors together combined to create what I, I’d call a crappy storage. The most fun that I have is going in and, and taking something like that that is very poorly managed today and making it just a beautiful machine, adding software, adding a website, supporting electronic payments, not only supporting, but requiring electronic payments, investing some, you know, investing in in some basic marketing, implementing accounting software.

[00:16:53] Sultan of Storage: It’s all pretty basic stuff, but I’ve been surprised with how much I really enjoy remodeling businesses, which is what I do. I’m looking for businesses to fix up, and I’ve found storage as the perfect asset class to do that. You asked about how I sort of evaluate the properties or source and evaluate.

[00:17:12] Sultan of Storage: Sourcing the properties. It’s a very manual task today. I know there’s software out there that could probably make this easier for me, but I try not to overcomplicate things and if I, I start looking at, at software packages to make life easier, that’s just in many i’ll cases, I could just get distracted and focus.

[00:17:31] Sultan of Storage: Actually prospecting just take a very basic approach of, of Google Maps to identify properties in an area. Manually building Google sheets, and I do use a CRM software to, to manage my, my pipeline when it comes to evaluating the, the financial metrics of, of a property, I build a, a proforma pnl, which is a fancy way of saying a, a forecasted pnl where I plug in the prices that I think I could get for the units, what my expenses would be, what my cash investment would be in the business, and that then spit out sort of a five year profit and loss.

[00:18:08] Sultan of Storage: Forecast that shows me what I could expect the property to do. My number one hurdle that I’m looking for a property to hit is cash on cash return, and I’m, I’m looking for a minimum of, of about 20% cash on cash. In some cases, I’ll get down to about 15% cash on cash return if I, I really like the property, but in almost every case today, I’m, I’m hitting or exceeding that.

[00:18:30] Sultan of Storage: Others look at metrics like i R R, internal rate of return. That’s important if you’re planning to exit. I don’t have a specific plan to exit these properties. Like, I mean, they’re, I don’t know why I would sell them unless I want to just completely retire, like, or I just really need liquidity to go buy more.

[00:18:50] Sultan of Storage: It’s just amazing looking at the numbers and the pay downs of the loans and the, the tax treatment, all of it. It’s just all really favorable and I, I see no reason to sell anytime soon.

[00:19:02] Robert Leonard: What size of the properties that you’re buying, how many units, what’s your, what’s your minimum there?

[00:19:05] Sultan of Storage: They are anywhere from 10,000 square feet on the low end, up to my largest properties, 40,000 square.

[00:19:13] Sultan of Storage: Anywhere from 70 units in some of those square foot properties up to North 60 units, square foot property, anywhere for cheap property up to, I’ve bought 5 million.

[00:19:34] Robert Leonard: So when you talk about that 15 to 20% cash on cash, Do you set a basically a deadline for those? Because when you buy these properties, obviously, like you said, you, you yourself have said they’re crappy properties.

[00:19:45] Robert Leonard: They’re mom and pop properties, so it’s going to take some time before you stabilize that asset and, and get it to achieve your kind of proforma returns, your 15, 20%, how long you give that property to get to that point.

[00:19:56] Sultan of Storage: I’m typically shooting for about six months to stabilize. In the first few months, properties may not even be servicing the debt that I’ve, I’ve got on them, but I, I always want to see within six months a path to the cash on cash returns.

[00:20:12] Sultan of Storage: And then the other metric that I, I look at is that debt service coverage ratio I want to be north of, of one and a half x more comfortable with like a two x debt service coverage. , and I’m normally hitting that within, within six months, sometimes a little bit longer.

[00:20:29] Robert Leonard: So if the properties aren’t hitting, even covering their debt service in the first say, six months, how are you funding that?

[00:20:35] Robert Leonard: Are you just going into that property with enough reserves to cover that, knowing that’s going to be an issue? So you go in pretty heavy with reserves?

[00:20:41] Sultan of Storage: Yeah. It’s pretty rare that a property will negatively cash flow. Even, even early on. Typically, I’m getting a check at, at closing from the, from the seller for prepaid rents that they’ve collected.

[00:20:53] Sultan of Storage: Then we’ll, we’ll cover a bit. You know, typically you don’t have a, a big property tax bill early on. You have a bit of time before that hits. Usually the properties are at least covering the debt for at least covering the debt early on. If they aren’t, if there’s months of, of negative cash flow. I’ve just got, I’ve set aside enough reserves to cover that early on, but.

[00:21:15] Sultan of Storage: I would say that I’m, I’m a very conservative, like financially, I’m, I’m very conservative. I have always lived very well below my means. I’ve always been focused on stashing cash and building big bucket of reserves, and I follow that same mentality when purchasing these properties and taking on debt.

[00:21:34] Sultan of Storage: Like I’ve, you know, I tweeted the other day, I’m, I’ve accumulated 6.3 million in, in. If I told myself of 10 years ago that I had that much debt, my 10 years ago, self would probably faint cause I, I always had this major aversion to debt. I think that started out from an early age. My, my dad went bankrupt when I was three years old.

[00:21:56] Sultan of Storage: He was a commercial real estate developer. I laugh because I now am a commercial real estate owner, but he was, he had a very different approach than me. He was looking to get rich quick with the sale, with the development of his first property, built it in the, in the late eighties market, crashed in Denver where he was at the time, and he was left with debt that he couldn’t pay and, and an office space that he couldn’t rent.

[00:22:20] Sultan of Storage: You know, lost everything, lost his, his money, his family, his health. I think from an early age, I’ve taken that experience to be very financially conservative and, and very risk averse. But I’ve now realized that it’s not just about saving money. It’s about putting that money to work for you and you can safely leverage debt to generate outsized returns without outsized.

[00:22:48] Sultan of Storage: So I’m, when I’m, when I’m looking at these deals, I’m making sure that there’s, the value add plan is pretty shoe in and can be done without question, and then I can get to a point where I’m not in any danger of, of not being able to, to service the debt.

[00:23:03] Robert Leonard: Did your dad’s experience and, and kind of what you saw with his experience make you hesitate to get into real estate?

[00:23:10] Robert Leonard: And I know you said, I mean, you said you get into it a little bit later in life. You had already been in your career for 15 years before you really jumped in. So do you think that’s what took you a while to get.

[00:23:18] Sultan of Storage: I think it did. I think that that probably had a pretty major imprint in on my mentality, whether or not I recognized that, that that was the source.

[00:23:27] Sultan of Storage: And I’ve always, like I said, I’ve always lived very well below my means. I never wanted to be in, in danger of, of losing at all. I would say that that’s been helpful in that I was able to, to stash a, a lot of cash to be able to go and buy all of these properties. But I think it also hindered me I should be much further than, than where I am today.

[00:23:47] Sultan of Storage: For so long, I, I held cash instead of putting in the markets. I mean, I had, I had big windfalls when I was in my, my twenties and, and thirties. I’m now. You know, I had six figure windfalls where that cash ended up just staying as cash. Cause I was so scared of putting it in the market and losing it. You know, I’d seen 2008, 2009 when things crashed and the worst thing that I could imagine was putting money in into a fund or an ETF and, and watching it lose 40% of its value.

[00:24:14] Sultan of Storage: And so for years, I just let that money sit in, in like high yield savings accounts, earning whatever, like three 5% if. I finally just realized I was at a point of desperation trying to figure out what I, what I wanted to do next with my career, but I realized that I, I had this capital that should have been working much harder for me all along, and, and I could combine that with a bit of business expertise and, and hard work to, you know, get off this, this fire train and focus on doing work that I really enjoy while, while making good money.

[00:24:49] Sultan of Storage: I’ll talk to us a little bit about that. So from an an early age in my career, I was always focused on fire. I wanted to gain financial independence to retire early. I remember that moment. It was probably in 2000, probably 2007, 2008, which is going to sound like an amazing amount of time for many of your younger listeners.

[00:25:09] Sultan of Storage: But I remember thinking at the time I had a, a high yield savings account and I was paying 5% interest. I was in Telluride, Colorado. Riding my mountain bike and I rode the lift up with, or the gon up with a guy that was clearly in his forties. It was a weekday. He was out riding his mountain bike and I thought, man, I want that life.

[00:25:26] Sultan of Storage: I want to be able to just screw off and go ride my mountain bike on a, on a weekday without taking vacation. I built this story in my head that he just, he just didn’t work. He wasn’t on vacation, he was just riding his mountain bike on a week. I thought, man, if I could just get a million dollars into a savings account at 5% interest, I could make $50,000 a year without any effort.

[00:25:47] Sultan of Storage: That’s enough to live on. I think at the time I was probably making a year and I thought, man, I just gotta get to a million. And I had that mentality. The goalposts kept shifting and I think eventually in, in like 2020, I thought, I just need 10,000 a month. I need $120,000 a year. I’ve got a family of. That should be enough to pay the bills and, and live a, a comfortable life.

[00:26:07] Sultan of Storage: So I thought, ok, using that 3% rule, I’ve gotta get to what is, what is the number 3% of who knows?

[00:26:14] Robert Leonard: You know, it’s five, six, 6 million. Come on, you listen to my first million. You know, we don’t do public math. Yeah, we don’t do public

[00:26:21] Sultan of Storage: math. I gotta get my, I gotta get my calculator out divided by oh 3%, so that 4 million.

[00:26:28] Sultan of Storage: So I needed to get to 4 million to be able to safely withdraw hundred 20,000 a year. And I don’t know what this, but I, I realized in, in 2020 I still wanted to work. I didn’t want to just retire. What am going to, what am I going to do? At the time I had like a, a three-year-old and a, and a a six-year-old, what am I going to do while my kids are going to school?

[00:26:49] Sultan of Storage: I gotta do something with my time. And so I was lucky that I found this space where I get to work. I’m really enjoying my work and I’m making far more than the, the $10,000 a month in just two years of, of doing this.

[00:27:03] Robert Leonard: I can tell you’re conservative because even in that calculation, it’s known usually as the 4% withdrawal rule, and you use 3%.

[00:27:10] Robert Leonard: So I could tell you’re even, even a little bit more conservative than the general rule of thumb. So I want to go back to your analysis. When you’re analyzing a deal, what are your major red flags? Obviously not meeting your cash on cash returns is a big red flag, but what else in the analysis is a red flag?

[00:27:25] Robert Leonard: And then also, what about the properties themselves? Is there anything specific on the properties that are just a no-go For you? It could be location, maybe something to do with the property itself. What, what does the, what do those red flags look?

[00:27:36] Sultan of Storage: I think for the financials, the value add plan has to be sure, like it’s gotta be, it’s gotta be a no-brainer that I could charge higher rent and achieve those targets.

[00:27:47] Sultan of Storage: If the property is already at market pricing, chances are there’s not going to be a lot of room to to add value If I’m just relying on sort of an annual rent increase of five, 10%, which is probably even aggressive now in current times. I’m not going to do that deal. It’s gotta be a really sure shot that I’m going to those metrics.

[00:28:09] Sultan of Storage: Other red flags. You’ve gotta be careful about property taxes. So I have to understand what’s the impact of a, of a sale on property taxes? Because you could buy a property where their, their taxes are $10,000 a year today, and when it sells, it’ll be reassessed. And if it then reassesses it at the higher value, those property taxes could double, triple.

[00:28:28] Sultan of Storage: Quadruple, depending on, on the area. So I’ve gotta study the, the local approach to appraisals and tax treatment. The other thing is, is looking at occupancy in the area and new supply. So this isn’t necessarily part of the, the financial model, but I do have to look at, are there new facilities going up in the area that could dramatically increase supply and, and therefore create an imbalance with.

[00:28:54] Sultan of Storage: Are the other properties full or, or near full, or are there others that are less full? That may be an indication that there’s an oversupply in the market? So those are the, the kinds of things that are red flags in terms of the, the property itself. I like to buy operationally crappy properties that are physically in good shape.

[00:29:14] Sultan of Storage: I’m not interested in buying something that requires a ton of, of CapEx or, you know, investment in, in fixing up the property. In, in most cases, I’m adding a, a fence and gate, an automated gate. I’m adding signs, lights, but not doing a lot of really heavy physical value add. I just recognize that’s, that’s not in my, in my skillset.

[00:29:37] Sultan of Storage: I’m not a, a developer. I’m a, I’m an improve. So I’m looking for properties that, that are actually like physically in, in pretty good shape, which in most cases these are, these are pretty basic metal buildings that have lasted in many, many cases for, you know, 30, 40 years. They’re usually in, in okay shape.

[00:29:54] Robert Leonard: You bought your first property not that long ago, and today you have a portfolio, I think of about seven properties. And you did that in give or take, about 20 months or so. And not to do public math, but that’s what, three months between deals or, so it’s a deal every three months. And I mean, that’s pretty quick.

[00:30:08] Robert Leonard: That’s quick for, I’d say anybody, even an experienced real estate investor. But for somebody who just jumped in, I mean, you just did your first deal not that long ago, so do seven in 20 months is, is. How have you grown so quickly and what have you experienced as kind of the pros and the cons of growing so fast?

[00:30:25] Sultan of Storage: I mean, I’ve grown so quickly because I, I mean, I set, I’m not a huge fan of setting goals, but I did actually, Nick Huber set a goal for me. He tweeted at one point before I had the Sultan of Storage profile, but I was just sort of a lurker under my own own profile on Twitter. I saw that he, he posted after our conversation and he said, this guy.

[00:30:46] Sultan of Storage: Referring to me, this guy’s going to own five self storage properties in a year. And so that became my goal. And I didn’t hit it. I only got to to four. That was a year. From December of 2020, December 21, I closed on my fourth property on my fifth and, and what was it, March. So it took me a little bit longer to get there, but I had that goal in my mind.

[00:31:07] Sultan of Storage: But more importantly, I needed to replace my prior W2 income, or I, I wanted to replace my, my prior W2 income. And I knew. I had to keep going to hit my, my cashflow targets, so there wasn’t really the option to stop. And even today, like I’ve, you know, financially it’s good. I don’t need to continue to add more, but I’m really enjoying what I’m, I’m doing.

[00:31:30] Sultan of Storage: I would continue to do this for the foreseeable future, even if it wasn’t, well, I don’t know if I can say, even if it wasn’t creating financial returns. Like I, that’s part of what I really enjoy of. But I guess what I’m saying is that I’m already at a number that I’m comfortable with, but I’m going to keep going cause I’m, I’m having fun things that I, I’ve learned along the way, honestly.

[00:31:50] Sultan of Storage: So it’s seven today, it should be 11. And there was at least four properties that I wish that I would have have purchased. I don’t spend a lot of time thinking about the, the past, but I passed up on some deals that I now realize I should have done. And the, the reason for that was lack of confidence.

[00:32:10] Sultan of Storage: Distraction. The lack of confidence was that I was still early. I wasn’t sure that I could execute on this playbook that the internet had given me. And so I, I just didn’t do deals because I, I just, I remember thinking, man, maybe you should throw, you should slow down. Like you’ve, you haven’t even closed your first deal and now you’re under contract on your second deal.

[00:32:32] Sultan of Storage: Like, what if you close on your first and you realize that this is business that you don’t want to be? You’ve gone so far down this, that, that you can’t get outta it. So with the benefit of hindsight, I wish I would’ve been more aggressive early on and, and gone after a few more that cross my plate. So that’s a, a bit of a, a learning.

[00:32:50] Sultan of Storage: And then I think the other thing too is just being aware that you, you always have to keep building your pipeline. I’m at a point right now, I don’t want to be in and that I have, it’s the first time in two years that I don’t have a property under. And I think I have, I’ve taken my foot off the gas a little bit.

[00:33:07] Sultan of Storage: There’s a little bit less urgency I think in, in what I’m doing because I’ve, I’ve sort of achieved some of my early targets and I’ll not ed as aggressively as I should have for the last months or so. I’ll give myself a little bit of an excuse in that, you know, buying seven properties in that shorter period of time, there’s, there’s a lot of heavy lifting to do operationally and fixing them.

[00:33:31] Sultan of Storage: So I was, I had some distractions there, but I also, the, the other distraction I referenced is I got and quit two FinTech jobs in the last three years. I was lured back to W2 roles twice in both cases realized I, I was happier convincing mom and top pop storage owners to, to sell their businesses to me and, and left those rules.

[00:33:53] Sultan of Storage: But man, that a cushy W2 deposit every two weeks is, it’s a hard drug to, to wean yourself off. Why not do both? You could. I questioned that. I mean, I experienced it. I recognized that I was leaving a lot of opportunity on the table by staying in the w2. I was taking that instant gratification of, of the W2 income, but it was.

[00:34:17] Sultan of Storage: Coming at the expense of much greater value that I could have been building in, in storage. I mean, quite frankly, I, I can make more money buying storage than I could as a, as a w2, and I have, I have more control over the, the value of the business, whereas with stock options, I’m, I’m subject to the performance of that business that I have a small role in.

[00:34:40] Robert Leonard: So, all of this has been done with your own capital. How do you think about potentially bringing in investors? And I’m curious because it’s kinda like having a W2 job and, and people always ask me whether I guessed on another podcasts or even guests that come on here. They ask me like, what is your plan with your future real estate?

[00:34:56] Robert Leonard: And I’m like, you know, I could scale much larger if I brought in outside money, but to me then you have, now you have a boss again, right? You have your investors are essentially now your boss and you’re reporting to those investors. And I. To me personally, and I’m not a hundred percent sure on this, but I kind of feel like I’d rather own 50, a hundred units by myself.

[00:35:13] Robert Leonard: Scale slowly. Just own it entirely by myself. No, no investors, no boss versus owning a thousand, 2000 units with with outside investors. I’m curious how you think about that.

[00:35:24] Sultan of Storage: I often deliberate on this. The question is, do I want, want to own a little of a lot or a lot of, a little? And the conclusion I’ve come to today is that I want to own a lot of, a little, and that’s relatively little.

[00:35:40] Sultan of Storage: I don’t want a job. I don’t want to have to report to anybody Today, I, I report to the bank who’s loaned me a boatload of money. And, and that reporting consists of like twice a year sending them profit and loss statements that I pull from QuickBooks in a matter of of seconds. If I stop paying my bills, they become a really nasty boss.

[00:35:59] Sultan of Storage: But in reality, I don’t have anybody that I report to. And I, I love that freedom. I love the fact that, you know, I’ve ridden my mountain bike more in the last six months than I, you know, than I, than I had, you know, decades before that, I, I went to, I took a trip to the French Alps, a last minute, 10 day trip to the French Alps to watch the mountain bike World Champions championships and, and mountain bike with, with some mates over there.

[00:36:25] Sultan of Storage: I couldn’t do that if I, if I had a, a w2, I couldn’t, I don’t know if I could do that. If I was running a, you know, what is a, a, a small private equity equity business. My conclusion is today that unless I run outta capital and I have more opportunities than I have personal capital, I’m going to keep playing with, with house money.

[00:36:44] Sultan of Storage: I think that if I come across a big deal that I can’t take down on my own. And I’m sure that there’s a lot of value to be added, and I’m the guy to add that value, and I just need some, I need some additional capital. Then I think I’m, I’m forced to make the decision whether or not to, to take outside investment, but for today, I’m, I’m really happy just in investing my own money and, and taking the control that that comes with it.

[00:37:06] Robert Leonard: That piece you said about I don’t think I could do that. if I had outside investors, that’s ex, I don’t think you could, I mean, I mean, it depends how you design the business, how big you get. But I think that’s the exact point is that if you have investors like that, you can’t do stuff like that. And maybe, maybe you make a little bit more money if you, you have a fund, you do a little bit of small private equity stuff.

[00:37:24] Robert Leonard: But I don’t know, to me it’s just, that’s not the route I don’t think I want to go. I don’t, it sounds like you’re, you’re in the same boat there.

[00:37:31] Sultan of Storage: I’m sure I could make more money as a GP raising outside capital. That’s not the most important thing to. You know, money was like number one for most of my career.

[00:37:40] Sultan of Storage: Now it’s, it’s not, number one to me is freedom. You know, I referenced the France trip in August. My family and I are planning a to spend six weeks of, of our, a spring and summer next year in, in Europe somewhere. Like, we’re trying to figure out where, where that’s going to be. I couldn’t do that if I, if I had investors report to, although, I mean, maybe I could, but I would be less comfortable.

[00:38:04] Sultan of Storage: Again, I’m, as I’m building this, what is a business with a real estate component, my focus is building it to, to work without me. You know, that’s with my, my team. Like I’ve built a, it’s a very lean team of three people that manage the properties plus, you know, call it seven local contractors. You know, I would have to, if I wanted to build this thing out and scale it using investor money, that operational team froze too.

[00:38:28] Sultan of Storage: And I’m, I’m not just reporting to investors, I’m also leading a.

[00:38:33] Robert Leonard: As we wrap up the show, what is the biggest takeaway you want our listeners to walk away with from this episode, and where can people go to connect with you? What’s your Twitter? Do you have a website? Any other social media, email, anything that you want to, you want to have people connect with you with?

[00:38:47] Sultan of Storage: The only place that you can find me today is on Twitter at Sultan of Storage. I debated whether or not I’d, I’d reveal my real name on this podcast, but for now I’m going to stay anonymous because it, it allows me to, to be more transparent with my numbers. If you go, you go to my, my Twitter profile and search terms like cheddar or bags of cash and you’ll see all the, the threads that I’ve put together on how did I stash away, you know, one and half million to, to put in of my own funds into, into storage.

[00:39:15] Sultan of Storage: How did I finance these, these properties? I go in pretty deep detail there, so go to, to at of storage on Twitter where I am anonymous today, but someday I’ll, I’ll tell you all my real name, but it’s assure it’s not as, as interesting as of storage and then advice for anyone out there. You know, I’m 40 years old.

[00:39:34] Sultan of Storage: I felt like if you would’ve told me when I was 25 that it took me until 40 to figure out what I really wanted to do with my life. I guess I figured it out when I was 30. I would’ve thought, man, that’s a long time, but I’m glad he finally figured it out. So my point to, I think you, your, your listeners are, are probably a, a variety of, of ages, probably leaning more towards a younger age.

[00:39:55] Sultan of Storage: My advice is don’t wait. There is a big difference between saving and investing. And I think when you’re young, you can take bigger risks with investing, but you should take calculated risks. So I’m not saying like go buy cryptocurrency risks, but more of when you’re young focus on buying cash flowing assets, like, you know, go buy.

[00:40:17] Sultan of Storage: I think real estate is one of the best ways to, to grow wealth. And I would encourage your listeners to go look for real estate that you can add value. I think that’s, that’s what I love about self-storage is it’s a combination of a business and a real estate asset where you can really add value through enhancing the business while getting the tax treatment and lending availability of, of a real, real estate asset.

[00:40:41] Sultan of Storage: And I think the other point of guidance is just to, like, I think you should keep your antennas up looking for those opportunities that are, are interesting to you and learn about them, but at some point you have to take. And I see so many people on Twitter in my, in my dms asking questions that they should not be asking unless they have a, a deal in their pocket that they’re ready to move on.

[00:41:06] Sultan of Storage: Don’t overthink it, don’t overcomplicate it. Just take action. And like I’m a good example of that. If I would’ve sat and thought more about it, I wouldn’t have typed up those 50 letters and sent them. I would’ve myself, or I would’ve figured out a better way to do it, and I probably never would’ve done it.

[00:41:22] Sultan of Storage: So really, in the end, just take action.

[00:41:26] Robert Leonard: Well, saltan of storage, thanks so much for joining us today. I really appreciate you taking time outta your day to do so. I really, I learned a lot, enjoyed the conversation. I had a ton more questions written down that I would love to ask and talk about, so Patrick or myself will have to invite you back here on the show soon to finish the conversation.

[00:41:44] Robert Leonard: I really appreciate you joining me.

[00:41:46] Sultan of Storage: Sounds good. Thanks, Robert. I’ve really enjoyed it. All right, guys.

[00:41:50] Robert Leonard: That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

[00:41:55] Outro: Thank you for listening to TIP. Make sure to subscribe to. We Study Billionaires by The Investor’s Podcast Network.

[00:42:03] Outro: Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to the investors podcast.com. This show is for entertainment purposes. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.