Joe M: Hey, guys, welcome. This is Joe McCall, and this is the Real Estate Investing Mastery podcast. Today, we're going to be talking about how you anybody could be making bird dog fees by finding self-storage units for investors like Joe Evangelisti, who we're going to have here as a guest on the show. We've talked about self-storage, investing a little bit, but I'll be honest, it's a little intimidating when you don't know about it, Right? You see them everywhere and you have no idea, how could I? Little Joe Blow the average Joe. Hey, how could I make money doing real estate? We're doing self-storage units, right? And typically, sometimes most of the times you see these big self-storage units and, you know, like the million dollar facilities, these are you know, these are big, big, huge buildings right off the interstate, you know, very expensive land. So is there a way for the little guy, the average Joe, to actually make money doing self-storage? Well, yeah. What if you found somebody who's doing them already and you became a bird dog, you became somebody that finds them and then gets paid for bringing these deals. And then this is a cool thing about this. This is why I wanted Joe on the show. When you bring the deal to somebody with the experience, you're going to learn how to do these deals yourself so that in the future you can do them as well. Cool. That sounds good. We're going to talk about that on this podcast. First, though, this podcast is brought to you by my free land contract. Here it is. You heard me talk about it. If you've not. Well, we'll talk about it real quick here. This is a vacant land deal that I did with my son at the time. He was 15 or 16 years old. So about two or three years ago, this was a property. This particular deal here was in Wilkes County, North Carolina, 5.08 acres. We bought the property for 70 $600, sold it for $19,000, made a profit of $11,224. With this simple one page contract that you can get for free if you go to simple land contract dot com, I'm going to be doing more and more of these kinds of free things. I was you know, a lot of you guys know Jerry Norton from Flipping Mastery. The guy is a beast. His YouTube channel is amazing. I recommend you all go look at it. And my goal is to have more lead magnets in Jerry. Okay, If you open any of his video descriptions, he's got about 30 of them and they're really good stuff. And I want to have more than him. And I'm Jerry and I are friends. I give him a hard time. But whatever, you know, I don't know if I can ever be as good as Jerry, but I'm going to try. So one of them is this contract, which Jerry doesn't give away, by the way. He does not give you a free contract for flipping land. He gives you contracts for houses, but not for vacant land. So get mine for free before I change my mind at Simple Land Contract dot com. Okay, simple land contract dot com. Let's bring Joe on, shall we? Joe Evangelisti, how are you my man?
Joe E: Fantastic. Joe Thanks for having me on.
Joe M: I'm glad to get you on. We've been going back and forth a lot and it's good to see you again. Last time I think we saw each other was at our little mastermind with another mutual friends of ours in Florida. You've been doing some big things. I see you all around social media. One of the things you like to do is storage investing. So. Joe Yeah, we met in a mastermind and you do a lot of self-storage stuff, right? Correct. Why self-storage? How did you get involved in that?
Joe E: Yeah, I really, I it was low was a lucky coincidence. I kind of fell into it, you know, We did, we did. Single family fixed and flip wholesale brokerage. I mean, I did just about everything in single family land for about 12 years. And, you know, to be honest, we just kind of almost got a little bit burnt out. You know, our last year we did something like 88 transactions, lots of houses flipped. And at the end of the year, me, my business partner, looked at each other and said, like, what's the goal? Next year you went to 120, 120 and he looked me dead in the eyes and he's like, Dude, I never want to do 88 again for the rest of my life. It's like, I'm kind of glad you said that because it's just a lot volume, the transactions, the motion, the cash flow. And so I kind of I think it was late 1918 or 19, I sat down doing my year review and I started saying like, okay, what's the next thing I knew? I had to be commercial, but I didn't know it was apartments, was it retail was offices. And so I went to a good friend of mine, Tim Bratz's Commercial Empire event, probably a month or two later.
Joe M: What year was this?
Joe E: I think it was 18 or 19. It was something along those lines. And, you know, I sat in that room with 500 apartment investors and, you know, the sentiment around the room was, man, we're putting in $50 to buy a deal. And, you know, and it was just this volume. And, you know, I if you ever read the book The Blue Ocean Strategy. Right. But I'd sort of I was in the Red Ocean and I'm like, man, if I'm going to start to get into this multifamily thing, what's going to separate us? And so I start having conversations with my staff and some other people, and I had this piece of ground actually under contract and I thought I was going to build like either a senior care facility or an apartment building. And I started talking my engineer, and he was like, you know, I think we can get some storage approved here. Yeah, I never heard of that. I never really got into that asset class. Let me start researching. And so I had a bunch of conversations and I ended up talking to a good friend of mine now who I only met for the first time on the. Back then. And he said, Joe, I did a transition. I was a he was doing plan year developments. He had done restaurants in Manhattan. He had built 3000 houses for one of the big companies. And he said, you know what, I'm on my fourth self-storage facility. And he says, once you build one, you will never touch another house again. You're going to have people build, you know, building your own house for you like you're never going to touch single family again. And he was right. I mean, it's a it's a very easily scalable business. And, you know, it took a lot to get into. But ultimately, I wouldn't change it.
Joe M: You know, what's interesting is when you are thinking of something, you see it everywhere, right? Like if you're thinking of purple Teslas, all of a sudden you start seeing them or you buy one because you're like, Man, I want to be the only one with a purple Tesla. And you go out on the road and you'll start seeing a ton of purple Teslas. And so sometimes I think people wonder, how are there self-storage units everywhere? Because I see them and I think of my friends that are investing in self-storage and like me, I see these things. Aren't there enough of them? Haven't they been overbuilt? What do you say to that?
Joe E: I tell them, Go try to buy a unit. Go try to rent a unit. Right. You'll go to five facilities before you find the availability. Really, national average over the course in the last ten years is 93% occupancy. Wow. You know, the little availability of units that's available most of the time. It's only there because the sizing is incorrect, right? Like you need a ten by 30. They're out. They have all five by five. So, you know, when they have that five, 6% vacancy, it's generally because they don't have the right sizing in their units. But for the most part, very, very difficult to find a storage unit even if you're in an area with a lot of them.
Joe M: Okay. We got a little rough connection there. It's probably me. My apologies. That's why are they how do they do in recessions and strong economies, slow economies. Does it matter?
Joe E: It's a great question. Yeah. So the recorded history of the industry is only about 40 or 50 years old. And so in that 40 years, there's never been a down year, which is almost just kind of mind blowing. Right? They call these things recession proof because of the I believe it's because of the mix and tendency. Right. And you got you got contractors, store materials, you got mom and pop upsizing, downsizing, moving. Now you got millennials who don't want to live in any one place. So they put all their stuff in storage and they spend three months in Austin and three months in San Francisco, three months in Dallas. You know, they're moving all around. There's just a very diverse tenancy inside of it. And so whether the market's going up and businesses are starting and they have inventory in that room, they need to put things in in storage or whether it's going down and businesses are going out of business, there's always something in movement in motion, and that's what's really creating a very, really robust tenancy for these storage units.
Joe M: You know, you just reminded me, having thought of this in years, my dad owns a cleaning business here, Just he just sold it. And for years he had an office in a storage unit because he had to pay for it. My dad's very smart financially right then. Very, very frugal with his money. You wouldn't know it, but he's doing well. But like. And this is why he rent. He had it. He had to have a storage unit to store his chemicals and mops and carpet cleaning tools, you know, equipment and stuff like that. So he just put a desk in there and would work a couple hours a day. Usually he's out in his car going around the places that he was cleaning. I mean, at the time, I think he had 50 or 60 employees and he still ran his office out of his storage unit. Yeah, just crazy with the smell of the chemicals. I don't know how he was doing or what he was thinking, but eventually did get in office, thank God. But yeah, you can use storage units for anything. So there. Do you find that. Well, the other question I have I guess is this, You know, I'm driving down south an hour outside of Saint Louis to go visit some family. I have a lake house down there and I see these storage units out in the middle of nowhere. And you wonder, like, is there still even a market for these self-storage units out in the country like that?
Joe E: Yeah, I mean, there's definitely markets on my market. It's on the market that we want to be in. But, you know, they're definitely out there. You know, I have I have clients in our mastermind that live in Alaska and have, you know, 30 garage bays, you know, 20 miles from their house and things like that. That's not what we're after. We're after class eight facilities, your typical public storage cube, smart, 100,000 square foot sites. But there's definitely a market. And one of the interesting factors, Joe, and you can appreciate this is about 70 to 80% of all self-storage in America is still held by mom and pop.
Joe M: Seven, how much again?
Joe E: Between 70 and 80% still mom and pop. So you know you just saw this week. As a matter of fact Public Storage is trying to do kind of a hostile takeover of Life Storage. It was the cover of the Wall Street Journal yesterday.
Joe M: Really.
Joe E: $11 Billion takeover and Public is by far the largest public publicly, you know, publicly traded REIT in self-storage. They only own 9% of the self-storage in America. So it's a big piece, obviously. But you know the big REITs only control about 30% overall in all the units.
Joe M: Wow, you're kidding me.
Joe E: Yeah, it's huge.
Joe M: I would have thought it was a lot more risk because, again, the things in places that you see, I'm looking at it right here, Public Storage bids for rival in unsolicited $11 billion offer.
Joe E: Yeah, they were calling it a hostile takeover only because they made the offer public, which makes everybody say, okay, well, you know, it's they're going to try to force the shareholders hand to make a decision. Is the thought process.
Joe M: Okay. All right.
Joe E: We'll see how it plays out.
Joe M: 70 to 80% of storage units, the existing ones are owned by mom and pop. Are you going out and buying existing ones? Are you building new ones for primarily developers?
Joe E: So if I'm buying something, if it's a value add, for example, I'm buying it to make it bigger or to increase the obviously the cash flow like a standard value, I would have got a lot of mom and pops that build these things 20, 30 or 40 years ago and there's deferred maintenance, there's bad marketing, there's bad security, there's bad lighting, there's a lot of ways you can increase value and increase rents. Market rents are substantially higher than where they were five, ten years ago. So if you've got yourself an operator that doesn't raise rents a lot, there's a very easy, you know, transition to raise rents. But we're primarily developers. We're looking at old Kmarts and Sears where we're taking land and putting up new facilities. And you know, if we're doing a value add, it's usually an expansion opportunity.
Joe M: So you find an old Kmart or you're tearing it down or you turning it inside, you know?
Joe E: Yeah, I mean, look, you know, if it if it needs to be torn down, well, it's probably not it's probably not the reasoning. We're looking at it. But if I find out, you know, we're doing a site up in upstate New York right now, 21 acres, 100,000 square foot building, had a brand new roof. So, you know, I look when I'm looking at Kmart, I'm looking for roofs and foundations. Right? If it's a solid roof and a solid structure, everything else is getting fit up anyway. It's getting gutted. We're doing remediation, we're cleaning it up where we're fitting it out with lockers, doors, etc. So as long as the roof and the foundation are stable, that's a good building for us at the right price.
Joe M: So inside, how do you frame the storage units? Is it metal studs. All metal. It isn't.
Joe E: Yeah. I was told it was concrete, steel and asphalt. That's how you make up an entire storage facility. I mean, I've got four toilets and a hundred thousand square foot typically.
Joe M: So it's not. What do you do for the ceiling? What are the ceilings like?
Joe E: They're metal. Yeah. And so they're just corrugated metal. And, you know, depending on the roofing structure, they're either metal plus insulation or, you know, something like trusses or something along those lines. But it's all metal.
Joe M: So I imagine a lot of advantages to having an interior storage, a storage unit inside of a building because it's climate controlled, right?
Joe E: Correct. Yeah. And that's another good value add to a lot of times you're picking up value as you just garages and you can add a climate control facility. You know, typically people are looking for that and it depends where you're at. But I mean, there's not too many climates that you don't need heating, cooling, Right.
Joe M: How are how do you find like the cities and the counties, zoning commissions and all that in approving self-storage units, whether it's new build or expansion, it is a hard to get those things kind of permitted and pushed through all the red tape.
Joe E: It definitely is. Joe and I and I look at that as like kind of one of our unique abilities is our team is putting together a really good story. And, you know, we hire these people called planners, which basically sell the story to the zoning board, you know, but if you're in the right area and, you know, like dark and Big Box is a great example, you know, big box is going out of business. You know, I don't care. I say this all time. Best Buy is still in business. I got one a mile from my house I haven't been in in five years. You know, like those type of stores are going away. And what happens is when you're the zoning official, the municipality, and you have a darkened big box like that, you have an obligation to figure out how to fill. You know, nobody wants to drive by that on Main Street for ten years seeing it vacant, you know, So we're generally able to sell the idea that, look, there's no other big box coming in here, so you might not love storage, but wouldn't you rather have a viable operating facility rather than a vacant big box? And, you know, generally, obviously, we do a better job of selling it than I just said to you. But, you know, it's an opportunity for them to turn something in to downtown from maybe where it wasn't before.
Joe M: Okay. All right. Good. Can you give me some of, like, numbers of, you know, compare self-storage facility to a rental? Smaller a rental mobile. I mean, a rental three or four door unit, you know, what's the word I'm looking for? Like a small family rental property, multiple, smaller, multifamily. That's what I'm looking for more maybe even an apartment complex. But like, can you can you put them in terms that we can compare them to or like how many houses would you need to have the same kind of cash flow you get in a normal storage unit let's say.
Joe E: 100 to 1 minimum, while maybe more. You know, I had I had a little over 100 single families when I transitioned into this. I sold a lot of them off in the last cycle. But I can tell you that one self-storage facility is going to make a heck of a lot more than a portfolio like that. You know, typically, not only are the rents, it's the it's your it's your cost, your cost ratio, right? Like when you're doing multifamily, you know, you're probably what, 50, 60% cost depends. I mean, I don't know what you know typically when you're I don't I don't own a 100 unit apartment building Right. But I know from friends of mine that there are, you know, let's say 40, 50 plus an expense ratio. You know, we're usually at 30, 35. Build cost is less than half. You know, we're averaging in that 100 to 110 range. You try to buy and build apartment. Right now I don't I'd be guessing in the last couple of years what it's costing. I'm sure it's north of 250 foot. So yeah, I mean the cost to do it is a whole lot less and the, you know, the expense ratios are a whole lot better.
Joe M: Okay so. Could you summarize kind of the benefits of self-storage, why you like them better than residential real estate?
Joe E: Yeah, I love it for a lot of reasons. One is super simple to build. It's concrete, steel and asphalt like we talked about. We designed our first deal from scratch and my design team has now designed and we're in process of 12 other deals and they are 11. After the first one, we made almost zero decisions, right? The design team has a brand product picked out. They know exactly what it looks like. The finishes are all the same. You know, again, we're not picking out toilets and tile and countertops and cabinets. It's all concrete. And so it's a very, very easy design to make happen. It's very easy to maximize the engineering inside to make sure we're maximizing the value and the NOI. They're very easy to build. And the tenancy management right around on hundred thousand square foot facility with basically one or two full time staff and one or two part time staff.
Joe M: Onsite full time staff, correct?
Joe E: Yeah. So, you know, once it's up and running, you know, there's not there's not a whole lot of make your make ready is a broom, you know, or a blower. You blow the unit out, it's clean. You make sure the lock works, you shut the door and it's ready to rent. So I am literally doing three make readies on some of my single family stuff. And it's like full blown construction site. You know, they're painting the entire unit and they're replacing countertops and they're sand and floors. So yeah, the turnover time is, you know, an hour instead of potentially two weeks, three weeks. And I know what you have to do. So it's a lot of reasons that go into it. But I think one of my favorite reasons is, again, it's recession proof. You know, we've seen, you know, ten, 12% increases in the last 12 months where a lot of people are seeing states, you know, it's stabilizing or they're going down and rents and self-storage doesn't see a whole lot of that. And again, you have to be in the right area. It's huge. I mean, I'm talking, you know, globally. But the reality of it is if you have it in the right spot, it's going to do it should do really well.
Joe M: Does it depend on the market? I mean, are you you're going to find you're not are your numbers better in a midwestern area than maybe on the West Coast or in the New England area?
Joe E: Yes, definitely. The more urban that you get, the more that your rates go up, but also your land values go up. So, you know, the way I like to kind of bridge that gap is I love to be in tertiary markets that are outside of major metropolitan. You know, look at MSAs that are growing right now. That's huge in Texas and Florida. Obviously, you know, we have a lot of sites in Houston. We're in that like path of progress where people are starting to push out and we're in there. We're in that way. We're going to catch them as they come out in that tertiary market. So, yeah, I think for me it's finding really, really good MSAs that I like to work in, but also being just outside of the main, you know, downtown and that's best for today, maybe ten years from now. It's different, but I'm not buying in New York City.
Joe M: All right. So how many of these buildings do you own right now or manage?
Joe E: Yeah. So right now we're at 12. We you know, we're developers. So again, we're four years into this. So we have four that are either just got delivered or about to get delivered the next three months. And we're breaking ground on four more in the next three months. So we're in that process right now where, you know, it took us a couple, you know, years to get full approvals and permits and all that kind of stuff, which is pretty normal. One of our biggest challenges right now is not how I say this not site approval by permits. Right. So we know when we take a deal down that it's it can be 100,000 square foot self-storage. It still takes us, you know, 6 to 9 months to actually get a permit package to break ground.
Joe M: And is your offer to buy that property contingent on going through the permit process?
Joe E: No, it will always be contingent on approval, but again, not permits. So we'll definitely take the land down and then get the permits, you know, after the fact. But at that point, I still know I'm going to have our facility. It's just a matter of where is the wall going to be and, you know, where do they want the retaining pond?
Joe M: Let's talk about in a typical deal, maybe your standard average storage facility. What's the size? How many storage units inside of it? Yeah, it's the cost, your cost to finance it. And what is what kind of cash flow do you get from it?
Joe E: Okay. So typical deal is, you know, first of all, we want it We want to kind of be in, you know, roughly 60, 65% all in so I can build a side by side, develop a site, hard cost, soft cost, the whole thing. We have a site right now that we're all in and around 13 and a half million. It's probably sitting in it's worth 22 right now. That's an asset. So when we get it fully occupied will be worth closer to 25. Of course, it takes a little bit to ramp up, you know, estimated about 18 months, 24 months to get fully stabilized and. Yeah, and then that's our goal is to be at that 60, 65% mark all in on our deal. So we're kind of, you know, kind of pre estimating that land cost development, soft cost, our cost. The good news is that the way we control it is most of our subcontractors are nationwide. So we're using general contractors that have the same numbers and they're giving us the correct numbers in advance. And really the only kind of fluctuation in that is your site work, right? Because, you know, you can do all the soil boring tests that you want upfront, trying to make sure that everything's stabilized, but you start digging Earth or knocking down trees. Things change. So the local contractors are generally going to be our site guys and our concrete guys.
Joe M: Okay, so these are. Buildings that are worth 20 to 25 million. You're into them for maybe 13, 15 million. Yeah, that's right. So this facility, how many units are inside of it?
Joe E: Yeah, Units also are totally it's totally swag, right, Because it's based on what's the feasibility of the area. You know, if there's a high demand for five by fives, we're going to have more units if there's a high demand for ten by 30. So, you know, we never count doors in the storage business. It's always rentable square foot. That's the number you want to look for. Okay. That being said, you know, 1000 100,000 square foot could be anywhere between 650 and 850 units. Right. Depending on the one we just delivered in New Jersey is like 98,000 net rentable. And I think it's 750 doors, something like.
Joe M: All right, so that's 700 units, let's say. What do they each rent for in there?
Joe E: So the industry average across the country is about 90 bucks. 90 bucks a month is your industry average. That being said, again, ten by 30 climate control, like we have RV spots up in New York that are going to rent for somewhere in the 4 to 500 a month range.
Joe M: Wow. Okay. So looking at these numbers probably intimidate a lot of people. They're like, oh, I'm sure $13 million.
Joe E: Yeah. Intimidated me for a long time.
Joe M: Right. Well, how did you get over that mindset?
Joe E: You know, just mindset and focus. You know, at the time we were controlling. You know, again, if you're flipping 100 houses and you're controlling a lot of private equity, a lot of money, a lot of moving pieces, I just looked at it like, look, I can take the same amount of money and do two or three facilities with it rather than all of this headache of running around at different single family houses. And, you know, one of the challenges in flipping jail, which I'm sure you know, and listeners know, is when you're starting to manage, if you can do it all in, you know, you're in Las Vegas and you're flipping 50 little ranchers that all look exactly the same. It's one thing, but, you know, we're in New Jersey, so I'm in three different counties, and my flips ranged from 150 to 1.5 million. Nothing looked like I had five different finishes packages all the way up to fully custom. It was just a lot of moving pieces. You know, if you can plan it and you can systematically do it, maybe you're in an area with a lot of row homes. It's a lot easier. But when you're in a 50 mile radius and you're doing five or ten different types of deals at a time, much, much more difficult. So again, it's the systematic and the process behind just developed the same thing, almost the same look, same feel, same finishes, and then I can plug in in anywhere in the country.
Joe M: Okay, so let's talk about money, the capital needed for leasing. You already had some private investors that you partnered with borrowed money from for your houses. Probably. Right. Do did a lot of these same private lenders stay with you when you transitioned into self-storage?
Joe E: Believe it or not, not as many as I would like, because it was you know, for some of them it was overwhelming. Like they can see me buying a house and borrowing 150 grand. But, you know, me building a facility in Texas was a different animal for them to kind of wrap their heads around that. We've since brought a lot more of them back on board. But the reality of it was we ended up going out and finding a lot new, a lot of new private money, a lot of new investors, and built some great relationships.
Joe M: So when you're when you when you got 30 million into a deal, what percentage of that is typically private money that you raise and what percent is institutional money?
Joe E: So, you know, you're two you're talking let's ask the year rough number. Say it's a $10 million deal. You're probably raising three, three and a half million for that. And that's covering your equity plus, you know, holding costs and, you know, design costs, whatever it is. And so you break ground. The banks are generally lending somewhere in that 65% range, somewhere around there.
Joe M: The current value of the property?
Joe E: Correct, yeah, that's the percentage of overall cost. Right. So, you know, you have enough equity in the game for that for them to, to be able to lend on that. And you know they're pushing the numbers. You know, when we started out we were getting offers of 80% loans to cost right now. Now we're down to banks, start out at 60 and you work your way to 65, 70. So now, you know, again, I think that that that's the challenge of this environment. I don't think it's going to stay that way forever.
Joe M: Yeah. So you got to be good at raising private money.
Joe E: Yeah. So I look at it as a team sport, right? You know, you bring something to the table. There's about five or six players, right? There's the private guys, private equity, there's the developer. Right? There's potentially the person, you know, who's the bird dog or there's no we are what we call a certified field agent. That's binding deal. You got your people who are the construction worthy people. They may or may not have equity. And then some folks need a KP, right? They need somebody to sponsor the loan with the bank. They're going to probably get some equity for doing that.
Joe M: What's a KP?
Joe E: So a key player in the deal. So like, you know, when you're doing construction financing, it's recourse debt, right? You need somebody to privately personally guarantee it. So up to this point, my PFS has been able to substantiate that. But, you know, we're actually starting to talk to some KPs now to help us get the one sponsored across the finish line.
Joe M: What's PFS?
Joe E: I'm sorry, personal financial statement. Right? So you have to have net worth. You have to have liquidity obviously to go into this, but you can also get people that had that network and liquidity involved in the deal and basically just for signing their name on the line, they're going to get equity in that deal to get it across the finish line.
Joe M: Cool, this is important for people to understand it was you out there watching Instagram, YouTube. You see these influencers talk about these big deals they're doing. Every single one of them are just partners in the deal and they make it look like it's them. They're doing it all themselves. You know, they're swinging their, you know what? And now they're probably one piece of five or six in that deal of partnering. Maybe they're bringing in the money. Yeah, maybe they're bringing the deal. But they've got somebody else in there, I promise you, is the money guy who's managing the re who's dealing with the banks or whatever. So they're just a little part of it. It may be a big part, but it's important to think about like is this can get over intimidating. Maybe if you're thinking that you're doing it all yourself. Yeah. Which brings us to getting paid as a birddog. So somebody wants to get into self-storage. Great way to start. I mean, even in real estate, a great way to start for houses is find the guys who are buying them and rehabbing them and then bring them the deals. So it's real. It's the same thing here with self-storage, right? Somebody who's interested in this business can get paid by going and finding the deals for guys like you, right? Joe? Correct. Yeah. So how does that work?
Joe E: Yeah, we created a process, you know, first starting out right when I started, when people started coming to me and say, Hey, you do storage, they do what everyone else typically does. They throw deals at you, Right? I was driving by this sign and here's a commercial broker to call. And so that started happening more and more often. And I started to realize, like, man, I got to create an actual process and training around how to find the deals that we want to buy so that people aren't spinning their windows, just throwing us stuff. And then my team, my underwriters aren't spinning their wheels trying to figure out whether it's worthy of a deal. All right. So we basically started out and created this, you know, this training called Certified Field Agent Training. And we've kind of proved the concept. And, you know, in the first like 18 months, I think we had five people do deals with us where they learned the process, they did the training, they understood the underwriting, they brought deals to the table and they closed on a deal where they got paid anywhere between, let's say, 30 and $40,000 on the front side. They won and we generally give them between three and 5% equity in the deal. So to me the equity is the exciting part. Everyone, everyone looks at the cash flow like, Oh man, I can make 30 grand on the side finding deals. Yeah, you can. That's wonderful. But we just did it. We just we just did a whole a breakdown of one of the first guys. So one of the deals that a CFA brought us probably two years ago was actually getting completed at the end of March.
Joe M: Were you in the military, Joe?
Joe E: I was. So what's the hook.
Joe M: OK, You're using all these acronyms.
Joe E: Oh, I didn't mean to. I apologize.
Joe M: CFA again is a certified.
Joe E: Certified field agent.
Joe M: God bless you, thanks for serving.
Joe E: Thank you. Thank you. So we extrapolated, Hey, what's this guy's equity worth? All right, So keep in mind, he made 35 grand 18 months ago. Deal's getting close now. It's going to take another year or two to ramp up, but his equity is going to be worth well over $1,000,000 a week when we capitalize and refinance and stabilize this asset. This guy who arguably spent, I don't know, call it 500 hours, I doubt he I doubt he spent even nearly that much at the time. But we went we went crazy and figured out that if he put in 500 hours into this thing, there's no way there's no way he did. He probably put in 100 hours, but it's worth well over $1,000,000 to him. And so started saying, okay, well, how do we train other people to do this? And so we put together this training. You know, again, it's a six week class. They get live interaction with my team, my underwriters physically take deals from them, underwrite and show them what works, show them, show them what done. And on average, you know, a CFA or a certified field agent puts in anywhere north of 50 deals like, you know, putting those deals and underwriting generally, they're going to see a deal come through. And so we've done it now five times where these five different individuals, only one of them had any real estate experience whatsoever. One guy I was just talking about as a crypto guy like that, he does crypto all day long and nights and weekends. He submits deals on the on the underwriting board and my team literally goes through him one by one and says, you know, this works, this doesn't, this is why. And then that's it. Once it's once it's submitted their hands off, they're an equity partner, but all they did was go out and find a deal. And so my goal is, is to make many, many, many millionaires out of people who literally just spend nights and weekends looking for commercial property.
Joe M: Anywhere in the country, or do you give them specific boundaries?
Joe E: I like to target their area because, again, the more, as you know, Joe, the more you get deep into an area, you start to understanding municipalities, what works, what doesn't, what can get approved, what can't. You know, certain areas care more about environmental, obviously, and you know, a lot of other factors. So we'll try to target them. I love to see them take like a county or two and target them. But as this thing grows, we're going to start to create more of a hierarchy, you know, with a lead CFA and a junior CFA and they'll have regions and all that kind of stuff. Right now it's a little bit a little bit more scattered because people can literally bring deals from anywhere. So I think that's helpful for them.
Joe M: So it's helpful for you though, to have somebody with eyeballs on the property. You can go there, take pictures, me, your boots on the ground.
Joe E: Absolutely. Yeah.
Joe M: When you say they get a share of the equity, do they get. A share of the depreciation, the write offs. Yeah. How does that work? I've always been curious about that.
Joe E: Well, so they're getting actual equity, you know, like. And so they're an equity owner in the project. And so they're getting all the tax benefits. They're getting that percentage of cash flow, they're getting that percentage of depreciation. They're getting that percentage of refinance proceeds tax free. They're getting all that stuff, which is nice. It's in I mean, it's incredible. I mean, you know, again, I mean, we're doing it right now as let's ramp up and grow. But it also becomes like a feeder for our mastermind. You know, we have a mastermind that does nothing but storage, self-storage, development and people all over the country that want to buy deals. So when we can certify and kind of vet a deal and get the design and approval across the finish line, it creates a value add for it for our members.
Joe M: All right. So I know you have a course that teaches it. Give us a little teaser, though, of and I put the website right there. Storage Syndicate dot com slash CFA. Storage Syndicate dot com slash CFA. Talk a little bit about what you guys teach. How do you teach people to go and find these deals?
Joe E: Yeah, I mean we can spend 2 hours talking about that, but you know, essentially we give them our proprietary methodology for looking at it, trying to figure out what are the demographics that you need, what is nearby, what is the land itself. The pros and cons when you're looking at a piece of dirt. Accessibility, visibility. You could do a lot with Google Maps nowadays, by the way. I mean, first of all, the first five guys that have done this with us didn't even live near the site that they bought. So it's definitely a benefit if you could drive by.
Joe M: Are they're looking for vacant land or are they looking for existing storage facilities?
Joe E: Both. Yeah. Well, really three things. They're looking for vacant land. They're looking for value ideals and they're looking for big box conversions. So, you know, going through, you know, I have one guy who focuses on Kmarts. Like, he just has a whole list of all Kmarts, and he's just knocking through, trying to talk to brokers and find these deals and put together the right, the right numbers that work. You know, again, but, you know, it's where they focus at and the demographics make everything right. What's the competition, the area, what's the need was the demand. And again, they don't have to know all this stuff, but they have to have a high-level understanding so they can bring the deal to the table for the for my underwriters.
Joe M: And they need to invest some time into it.
Joe E: They definitely do. Yeah. It's a six week course. You know, it's an hour training and it's an hour of live Q&A with me and my team each week. So it's very hands on and it's very time consuming for us, but it's worth it.
Joe M: Which is why you have to charge for it, right?
Joe E: Absolutely. Yeah. And it's a great point, Joe, because, I mean, at the beginning I did this for free. And you know what you get when you do stuff, right? They just get nothing but headache. And then so we justify charging for it. I mean, it's nominal is $1,000. But, you know, again, you know, people who pay they pay attention. They play in that sandbox, they learn this stuff. And I think it's important to mention as well that, you know, they can graduate from the CFA course, go do deals, assign them to Joe McCall. They don't have to assign it to us. However, you know, it's you know, obviously we'd prefer that they learn it and they come do business with us and they get paid.
Joe M: So I'm showing you guys here the website. I'm trying to make it bigger so you can see it, but it's not working anyway. So here it's certified field, storage syndicate dot com slash CFA and I don't get anything from recommending this. I just like Joe. I'm telling you guys about it. All right. 995, one timer, three payments of 395. Right. Go behind the scenes with us through our six week online course and learn tactics to locating the best commercial property deals in the U.S. from proprietary methods that got our team into $200 million of sites in under two years. I love it. So you're going to get the resources and tactics to locating the best commercial property deals, six weeks of live classroom calls and then six weeks of coaching calls. Week one is getting started And you're still building this out.
Joe E: They're still building this out, then just actually updated this site yesterday. So there's some Latin on here, guys. I don't speak Latin either, Joe.
Joe M: Week two though is locating the prospects week three is analyzing opportunities before is funding the deals week five is putting it all together and week six is profit structure and you get extra credit points if you understand that. But cool. That's awesome. I mean, it's important for I love the education part of this because you're educating people not just on how to bring new deals, but like I'm hoping somebody brings you deals and then all of a sudden be realized, man. Okay, this is cool. I want to do more. Yeah, I want to be more than just a bird dog. I want to maybe be a private investor of these deals, right? I want to be more involved. And so then then they can negotiate something. If they can bring a deal and participate in it even more on a more active role as well, right?
Joe E: Yeah, it's really life changing for folks, man. I mean, because, you know, we had a guy he's on a second deal with us now, and he said when the second deal closes, my wife gets to quit her job. And so it's like, you know, it's the impact it makes for people. You know, it's that that's the most interesting thing to me is, you know, I want to build lifelong relationships. And, you know, we're building them by teaching people an actual skill that they can go get paid to do.
Joe M: Excellent. Yeah, this is really cool. I'm excited about this because there are courses you could buy and coaching programs that teach you the Everything A to Z about self-storage, which there's cool. That's a place for that, right? But I would rather work with the bird dog as a bird dog with a company so I can go get there, get some training, learn how to find the deals and then submit the right. Now, again, somebody going through this, when they are done with the training, they're not just going to be sending you an address and a phone number of a broker right there doing there's more involved with it. Can you explain your involvement?
Joe E: Yeah, we actually put them in our operation system back end. So we use it. We use a platform called Monday.com. A lot of people use it, but literally all of our all of our data stays on that board, that the board and my team interacts with them on the back end. So there's probably six or ten points of data that they have to enter. And then that point, my team will ask them questions that you do this. They should do that with a results. Did you call the municipality, whatever from that point? Once it's a deal and it pencils and it makes sense. My team takes it all the way to the to the finish line so they're not responsible for putting in the ally or negotiating the contract or all that kind of good stuff. We just want to make sure we have a viable site and then my team takes it from there all the way to the finish line.
Joe M: Yeah, cool. In the website is storage syndicate dot com slash CFA. If you're watching this on YouTube, we'll have the link below in the description as well. Joe, what final words, parting advice? What would you say to people who are thinking about storage units and want to be doing more of them? Be more like you?
Joe E: Yeah, just take action, right? So like, you know, I mean, you don't have to do what we do. You don't have to do the CFA training of do any of that stuff, but get in the right rooms, start taking some action, start learning. There's so many valuable resources. I mean even if you go on Store Syndicate that comments a whole section we call the vault where we can just, I mean dozens of interviews with some of the top people in the industry. Just take action, learn. But, but, you know, learning is great, but if you don't put it into, into, into action, it's completely useless, right? So put one foot in front of the other and take some action.
Joe M: Nice. All right, cool. Well, one more question I just thought of, and I think our connection is not very great. So we don't have a lot of people watching us live right now. But do what do you foresee in the future with the economy, where things are going? Are you concerned about what you're seeing in the news with inflation, high interest rates, unemployment going up? I was looking at Wall Street Journal just while we were talking, looking for that article and while Disney's now laying a bunch of people off. Who cares really about Walt Disney? Anyway, I'm sorry, there's 7000 people that are losing their jobs. It's not fun. Yeah, so but like, the news looks pretty bad. So what's your outlook? And now take on that.
Joe E: I heard it quote early on in Covid, Joe that I've been repeating now for three years and it was something along the lines of adversity creates opportunity and maybe forces us to do things that we should have been doing all along. Right. And so that's what I look at. I look at, you know, you're still going to have, you know, yes, you lost 7000 jobs, but people are talking about the 100,000 people that Disney employees like, that staff are still going to move forward. Is it going to be more difficult? Yes, it's way more challenging. Yes. Is there going to is going to be a little bit thinner than it was? Maybe. But the reality of it is when we all decide to get paralyzed and let fear control our lives, that's the biggest loss, you know, And so there's going to be opportunity out there. There's going to be players that are continuing to work there, going to be banks that continue to loan. You know, you just got to figure out your way in this world and create opportunity. And the more you can solve problems and create opportunity, the more you're going to get in result.
Joe M: I love that outlook on it. Things, you know, because people can get freaked out. But if you think a little bit higher, a little go about 30,000 foot view elevation. Look at the bigger span of time and you look at during times of great recession or depression, some of the biggest best companies came out of that. And so crisis creates opportunity. Yeah that's really good to think about that absence does it's not necessarily a half glass full or optimist perspective but it's looking at okay this be realistic here. Well it doesn't disappear. It just transfers it's gone from here to over there. Let's go see where this over there is and let's get involved with that. Awesome. After all, Joe, you're doing some good things, man. Appreciate you being on my show. And if people want, they can go to storage syndicate dot com slash CFA. How else can they get a hold of you?
Joe E: I'm all over social channels. They can go on Facebook, Instagram, LinkedIn, find me anywhere. I love to communicate with folks too, message me. Talk to me about what you got going on. I'm never going to sell you anything that I don't think is going to benefit you in some way. I'll point you in the right direction. But, you know, I just love it. I love interacting with action takers. Go out there and get it done, guys.
Joe M: Good. All right, Joe, thank you. Appreciate you, man.
Joe E: Thank you, appreciate you.
Joe M: See you guys, everybody. Take care.