Joe:   Welcome to the Real Estate Investing Mastery Podcast. Glad you're here. Today we're going to be talking about self-storage. And not just from anybody. Some guy that's actually doing it. And I've known Alex for a long time. I've known him when he was doing a ton of houses at a very successful house wholesaling business and started doing storage. I remember when he started doing storage thinking, man, Alex, what are you doing? You know, like he was doing so many houses and he was just killing it. Now, I was thinking, is this just a fad? Is he just going to flame out and then get back to doing houses? So we're going to be talking about why you should consider self-storage as another asset class without you know, this isn't something that you have to do full time. It doesn't have to replace what you're doing with houses or vacant land or whatever. Right. This is a strategy that you can look at that you can start investing a little bit of time and money into without it being another shiny object, right. Where you can find real freedom from doing this. And we're going to be talking about how some of these deals that he's done where he's made 300 and something thousand dollars in profit and that was one of his worst deals. We're gonna be talking about why that is the case and how and why he went from doing only houses now to only storage and a few other things. But I'm excited about this because I want to learn more about storage. I've always wondered, is that, you know, is it just a fad or is it just a bubble? Our storage units like over valuedis arethere are too many people trying to chase storage? Is this, you know, the cap rates not good anymore? Those kinds of things. We're going to be talking with Alex Pardo. How are you doing, Alex?

Alex:   I'm blessed, Joe. It's great to be on the show, brother.

Joe:   Glad you're here. Yeah. All right. So you talk a little bit about wholesaling houses. You're in the Florida area. You were doing a lot of houses and you decided, I don't wanna do that anymore.

Alex:   Yeah, You know, Joe, I guess I got started in real estate in 2005. And like I'm sure many of your listeners and the audience, I got in because I wanted freedom, right? Not just financial freedom, time, freedom. And yet, ironically, I found myself wholesaling a bunch of houses, I don't know, north of seven, 800 houses or so over a 15 year period. And while I'm grateful for that business because it generated a lot of cash, I kind of got burnt out. The fact that I was starting from scratch every single month, right? So I do a bunch of deals. We do five, six, seven, eight deals a month and then start them a month from scratch. I was getting taxed at the highest tax bracket, and so eventually I got wise in a little bit smarter. I said, okay, well let me start building a team so that I'm not the one, you know, going on appointments and doing all the things that wholesalers do. And so I built a team. We got to about nine people, and then I realized that I had to close 2 to 3 deals a month just to break even. So my overhead was somewhere between 40 and $47,000 a month. And I was like, This doesn't line up with my vision, right? Like, I don't like the idea of having a lot of overhead, of having up to me what felt like a big team and then having to put out those kinds of fires. And I was fortunate that I happened to be coaching somebody who owned the storage facility. And when I got an inside look into the asset class, I was just blown away. I mean, he had cash flow, he had time freedom. He didn't have any overhead. He didn't have employees. And he wasn't dealing with like tenants and toilets and trash and all this stuff that single family investors have to deal with. But I wasn't I don't know that I had the knowledge or the courage to just completely rip the Band-Aid off, transition away from single family. But when Covid came, it was a blessing in disguise for numerous reasons, one of which is it Just to me, I took it as a sign from God that, hey, it's about time to put this chapter behind you. So over a two month period, I completely unwound the wholesaling business even though it was profitable. And later that year in 2020, I said, Hey, I'm going to commit myself to self storage. I don't believe it's a fad. I don't believe it's a bubble. When I started to look into the asset class and I realized that it's considered one of the most recession resistant asset classes, and then I thought about like my personal use, like I have a storage unit. I don't know about you, but my wife is constantly ordering stuff from Amazon. And so like just the US citizens are just consumers. Like we're wired to buy things. And so whether it's a great economy or whether it's a poor economy, people are either downsizing and they need a place for their stuff because they don't want to get rid of it. And that's a different conversation. If that's a good or a bad thing, then the economy's great. People are buying things and they still need a place for storage. The last thing I mentioned before I kick it back to you is it's a very sticky product, right? When somebody moves into a unit and they're paying between 50 and $350 a month, the pain of disconnects not that high. And often times, like our average length of stay for our customers is just under three years. So obviously that's great. From a cash flow perspective.

Joe:   The pain of disconnect is high. If they had to stop paying, they'd have to take all their stuff out and find some place to put it.

Alex:   Yeah. SoI think to think about if you and I had a 10 by 20 unit, think of the effort, the time and energy that it would take to move all our stuff out. Like you got to get a truck or a moving company or you have to bother your friends and family. And so oftentimes people would just continue to stay in. And again, I really like the fact that I'm not dealing with tenants in toilets. I was a terrible rapper. And so there's no repairs, low maintenance. So it just really aligned that asset class with a lot of what I was looking for.

Joe:   Okay. Fascinating. Let's talk about the numbers in a bigger picture sense if we can. Right? So like you're all selling houses, you had to do a couple of deals a month to break even. I understand that. But you could have also wholesale houses on a smaller scale. Right. Just you and 1 or 2 Vas or something. And you could have Gap making some money. So what kind of numbers are you talking about in the self-storage?

Alex:   Yeah, So it's a great question that doesn't have a black and white answer because it depends on numerous factors. And I'm going to circle back and I will answer your question, but it depends on the size of the facility. It depends on where the occupancy is. What's driving the NOI? So the net operating income, it depends on the market and how you finance it. But like I'll give you, I think you alluded to it in the intro, I just closed the deal. It was seven weeks ago where I sold the storage facility and the net profit. But I like people oftentimes like flash your hoods and all that and they sell a big number. But oftentimes it's not that's not the net profit. In this case, the net profit was $369,000. And I would consider it the worst deal I have ever done in my entire career, not in my four years of storage. And we can get into that. But storage, the asset class, it's a business with the benefits of real estate and it can cover up a lot of mistakes, right? Much like single family or any type of like, investing that you're doing. You make your money when you buy. And I happened to have bought that facility. Right. And we can get into the details. But everything that could have gone wrong with that deal, Joe, went wrong from the fact that I couldn't raise the occupancy to the level that I thought to the number of break ins and security challenges that I had in that particular market. Like literally everything that could have gone wrong went wrong. And so instead of making 7 to 800,000 that I projected when I first got into the deal, I ended up making 369. So I'm not sharing that to say, Hey, woe is me type of thing, but if you buy it right, it's an asset class in a business that can just erase and cover up a lot of mishaps that maybe you didn't account for going in.

Joe:   That's good. I like that. I like that you're talking about those kinds of things that can go wrong. So is your goal too? Is your end goal when you buy these things to hold them for the cash flow or to flip them eventually?

Alex:   Great question. When I got into storage, my goal was to buy a couple, let them take the equity and then go put them into assets that can provide the cash flow. So I didn't transition from wholesaling to storage because I wanted to keep flipping. If anything, I wanted to get away from flipping, but I came across my first couple of deals were deals that were in a market that were not so great, but I was able to buy them, right? I knew that if I could raise the value, I could go out, turn around and sell them, take that capital and then now go put it into a storage facility that can produce cash flow long term in a market that I want to be in interest. So that was my plan.

Joe:   And are you doing that now where you added one plan?

Alex:   Yeah, So I have so I've done six storage deals in just under four years, up until seven weeks ago. I own three. To this day I own two. I have one in Mississippi and then I have one in Amelia Island, Florida. The one in Amelia fits that long term plan. Great market, steady cash flow, no break ins, right? Like I've owned it for two years and we haven't had one break in. So you talk about when you hear stories, everybody talks about the cash flow and the time, freedom and everything that can go right. Let's talk about what like what are the headaches in storage? The two biggest headaches that I've experienced are security challenges which can be mitigated if you just buy in the right markets. That was a mistake I made early on. I bought in in a market where the demographics were. I think the median household income was $26,000 a year. So returns are great on paper. The reality of owning and operating it, you're going to deal with a few more headaches. And then the second thing is I like to be in cities where the population is increasing over time and the population is at least 1 to 60,000 people. I happen to have bought in a big city with poor demographics, and so I had to deal with security challenges. And then the second inconvenience is that every once in a while, automation, right, like our gates stop working. And so we have to send somebody out there to fix the gate operator to open it for our customers. Outside of those two challenges. Storage is pretty semi passive. I don't want to say completely passive because everything requires some type of input. But when I had the three storage portfolio, which was about 104,000ft² across 840 units, maybe I was spending an hour or two, two hours a week managing that portfolio. So now, don't get me wrong, the time, energy and effort is spent in finding those opportunities. But I've kind of like I'm in the process of perfecting a system where, like, literally anybody can do this without having to spend a bunch of money on marketing. Like I literally I can show you live right now where we go on Google Maps and we identify. Mom and pop storage operators where we can go in and we just pick up the phone and call them. Like, it's literally that simple.

Joe:   Nice. We are. Let's do that in a minute. Let's look at that. So your goal, you've owned seven of them and so you sold four and you now own three, is that right?

Alex:   No, I've fulfilled three and I own three. I just sold the ones several weeks ago, so now I own two. But yeah, there's, that's the cool thing about, about storage that I didn't realize when I got into the asset class is that all of the skill sets that we acquire in single family or land or any real estate asset class translate smoothly over into storage. Like literally everything I did to find houses and wholesale houses is the same exact thing I'm doing in storage, right? Like I've gotten my deals from cold calling, from direct mail, from a wholesaler and from relationships in general. So everything we do in land or single family or anything like that translates over into storage. The major nuance is how you evaluate the deal, which is pretty simple.

Joe:   All right, so how did you transition? You stopped wholesaling houses and then you started you in storage, but how are you making that money? How did you make any money during that transition time?

Alex:   Okay. I didn't I didn't. So I transitioned into storage December of 2020. And if I'm being honest with you, man, I think I came into the business overly confident. I was like, I, you know, I bunch of that. But I've done a bunch of real estate deals. Like I almost felt like I was owed to me. And I was running the mastermind in March of 21 and a member came up to me and said, Hey, I heard you got into storage, how's it going? And I had like a big egg on my face. Like I literally had zero results to show for it. And if I'm being honest, it's because I wasn't putting in the work right? Like, I wasn't picking up the phone and having conversations. I wasn't sending offers or what we calling commercial letters of intent. Otherwise I wasn't doing the necessary work. And so right when I got back from that mastermind, I just recommitted myself. And lo and behold, about 38, 39, 40 days later got under contract on my first storage facility. And I closed on that. Joe September of 21. So I committed to storage December of 2020, bought my first deal, which was a 43,000 square foot facility in Mississippi in September. And it was because I just recommitted and I did the work. You know, people often ask me like, Hey, how do I succeed in storage? Right? It's the same answer for any business, any asset classes get around people that are going to pour into you and then execute and do the work. I mean, it's not sexy, but it's the truth.

Joe:   So when you wholesale storage units, that's not a it's not like a double close or an assignment on a deal. Right? Like you actually you're buying it with some private money, some commercial funding. Right. And then you're fixing it up. What's the word? Re stabilizing it or something. Right.

Alex:   And then. Yeah. Yeah. You're not. Not in my case. In my case, it was in one case, it was an assignment. In the other case, I actually, I opened up an LLC the day before closing, bought the facility and the LLC. And on the day of closing my LLC, I sold 100% interest in the LLC for my profit, which was 150 grand. Right? So I thought about that was September of 23. I wholesale a 22,000 square foot facility for 150 grand. I put it in a contract for 400, and I assigned it essentially my interest in the LLC for 550. But the same thing we do in a single family, whether it's an assignment, a double clearance, you can buy it, you can restabilize it and then sell it. That would be more the equivalent of an actual fix and flip. But that's not what I did. In my case. It was either an assignment or selling the LLC.

Joe:   So was your goal just to sell them quick or to build cash flow.

Alex:   In those particular cases, my goal was to sell them. So I have a very clearly defined by box, right? Like what I would call like my storage avatar. And that's a particular market that it needs to be in a particular size. In the course of my marketing, if I come across an opportunity that doesn't fit my box, the plan is always to wholesale it. As long as it's a deal, it's a deal for somebody else. It just doesn't have to be for me. So that's my plan, is I'm looking for a specific size between usually 20 and 50,000ft² in a good market. But in the course of my marketing, if I come across other opportunities, I just put it under contract and then we can do the same exact thing we do in single family. There's a few nuances here and there, but for the most part it's the same thing.

Joe:   Okay, talk about like when you're wholesaling them, what's your average profit or what are you shooting for and then what you're trying to buy and hold them for cash flow. Give me some example numbers of how much cash flow you could expect on a facility you're looking for.

Alex:   Yeah. So the smallest wholesale deal I did was $33,000, which is kind of misleading because it was a $99,000 wholesale deal. I just split it with two other people. So each of us got 33. Typically speaking, I would say the average assignment on these wholesale fees is anywhere between 50 and 100,000. Right. My apologies. I got my dogs excited about storage, too, barking in the background. Then the other one that I closed last year was 150. What I say that's the average or the norm? Probably not, but I would say the average is anywhere between 50 and 100 is what I typically hear in terms of storage, wholesale. These in terms of cash flow. The one that I have in Amelia Island, we're cash flowing a little bit over $3,000 a month. Here's the kicker. We're only at 61% occupancy. And so after our debt service and that was a seller finance deal. So after that payment to the to the bank a.k.a the seller, we're generating $32,300, give or take, on the month in cash flow. Now when we get to about 80 to 85% occupancy, that cash flow should be just over eight grand. And that's on one storage facility, eight grand a month.

Joe:   So is that the deal you're hoping to keep for a long time?

Alex:   Yeah, that's a buy and hold because it's in the right market. It's got the right demographics. It's a headache free property. Sowe have I have a three prong management system, so I have a third party management company that has an in-house call center. What does that do? That allows me to not have to take customer calls. I'm not, you know, on the phone trying to, like rent out a unit. I'm not dealing with, hey, there's no lock in here. I'm not dealing with any of that stuff. I have a third party management company that has a call center. They deal with that. And then get this. We hired a part time 1099, what we call a boots on the ground subcontractor. We pay them between 500 and $600 per month, and they go to our facilities once a week. They're the ones that, like take pictures for auctions, do unit clean outs. So between the call center, the third party management and the part time boots on the ground, that allows me to run the business pretty semi passive.

Joe:   Okay. And so I'm just wondering what makes you decide to wholesale or to keep it? Is it if it's not in your buy box, you'll just wholesale it?

Alex:   Correct. So as an example, I come across 8 to 12,000 square foot facilities. When I talk about square foot, I'm talking about net worth, square feet. So in storage, I don't necessarily look at the number of units like you might in multifamily. I look at net rentable square footage. Anything to me under 15, 18,000. It's an automatic wholesale. Like for me, the juice is not worth the squeeze. I'm looking to get involved in bigger deal. So call 20,000 and up. So automatically, anything under that threshold, call it 15 to 18,000ft². It's a prime candidate for a wholesale. And then if it happens to be in a market that doesn't have the demographics I'm looking for. Right. So if the median household income is under 50,000, maybe the population isn't growing and there's not a lot of jobs coming into that general market, that's an automatic candidate for a wholesale right. The cool thing, Joe, about that, I wish I would have known this early on is the very first deal that I wholesale, which was about, I don't know, a year into my journey, I was able to wholesale it, make that 33 grand I talked about, but I also retained some equity and some ownership in that facility, which I still own today. So I don't have to deal with like ownership or the management or any of that. I just was able to get my cake and eat it too, in the form of a wholesale fee and retain some equity. That's pretty common in the storage world.

Joe:   Okay, let's talk about how to find the deals and you want to share your screen. Yeah, I'd love to. We're talking about how to find these deals.

Alex:   So let me show you how simple this is, how literally anybody with Google Maps can do this. So just go to maps to Google.com and I'm going to put myself on the spot here. Give me any small to midsize city. And when I say small to midsize, I don't expect you to know the population. But anything between 1000 and 60,000 and if it falls outside those parameters, that's okay as well because it's the same exact process. But give me any city that comes to mind.

Joe:   Let's do Wright City, Missouri, right there.

Alex:   Okay, perfect. So all I'm doing is Wright City, Missouri, inside of Google Maps. And then here's the key right here. The button that says nearby. Click on nearby and are you going to do is type in self-storage. Now, what is this going to do? This is called the Google map pack, right? So all these red dots that you see are all of the storage facilities in Wright City, Missouri, that Google's picking up. Now, here's kind of a site tip. If you happen to be driving and you notice and you pull up facilities and you notice that there's not a red dot. That's an opportunity. That's the equivalent of like a vacant, boarded up house that nobody's aware of. So this doesn't mean that it's all of the storage facilities in this city. But Google does a pretty good job of picking up the majority of them. So here's what we're going to do along the left hand side here. There are four things automatically that I look for, and this is what I've trained my virtual assistant to do to build our organic storage list. So right out of the gate, anything that does not have a website, right, is an automatic. It gets put on the list. So how do you know if has a website, if it has this little circle right here that says website, it has a website. Here's a perfect example. Stone storage, No website, RJ and Storage Bell Road. No website. And if I keep scrolling down, I'll probably find 5 to 10 facilities in this market that don't have a website, right? So anything that doesn't have this blue button automatically goes. Now, why is it important to target facilities that don't have a website? Well, more than 76. 70. 7% of our customers come from online marketing. Whether it's search engine optimization or pay per click marketing. So if it doesn't have a website, it's just a pretty strong indicator that it's a mom and pop operator that's just not really dialed in from a marketing perspective, from a business operations perspective.

Joe:   So if you zoom out on the map, do you think I'm too close to Saint Louis? Maybe a lot of those storage units have websites possibly.

Alex:   That could be one reason. So to your point, Joe, like I probably wouldn't be looking at St Louis as a market because it's too big of a city. That's a good indicator of the city's too big right here. If you see extra space storage, if you see Cube Smart, if you see any of the big like storage facilities, which we call REIT's Real Estate Investment Trust, the REITs own, that's probably in a market where like we look for secondary and tertiary markets where the big players like extra space are not going to want to set up shop.

Joe:   Yeah, the city I gave you is it's still outside of the St Louis area, but it maybe is too close. That's what I'm wondering.

Alex:   So your point though, I like cities like St Louis, but I'll probably go an hour to two hour, an hour, 2 to 1 to two hours outside of that, or might go 50 to 100 miles outside of St Louis. I wouldn't be like with a 30 minute drive distance of St Louis. Okay. All right. Yeah. So storing storage, no website. What's the other thing I look for? Google reviews are extremely important. So tell me anything under 20 reviews and I'm automatically putting it on my list. Right. So H and K storage. You can see they got five stars, but they only have four reviews. If I go to reliable storage, 15 reviews, right. That's not a whole lot of reviews in storage. Anything under 4.5 stars, it's a pretty good indicator that there are some challenges there. So you can literally just scroll down the list here and every single one of these facilities could get put on your organic list. And these are prime candidates for mom and pop storage opportunities. What's the other thing I look for? I'm going to randomly click on this website and let's see if this is a good example or not. Okay, So this is actually a decent website. This is true.

Joe:   I still don't see. You don't see the website there.

Alex:   You don't? Okay. How do I do it with shared tab instead? Okay. How about now? Yeah. Okay. So this is a decent website. This is through easy storage solutions. I just know because it has the same template, but whenever I click on a website, sometimes you're going to see websites that look like they were built 20, 30 years ago. Like it's just that old school looking site that's an automatic indicator. It's a mom and pop facility. But here's how simple this is to contact these people. Obviously you can call them, but I often like to go to the contacts section and any time I see what appears to be like a personal email link like this right here, RJ and whatever at Centurylink dot net like this is how easy it is to these are mom and pop storage operators and then we can get into what that conversation looks like. But if I was to go back down to here, let me share this tab again. I can click on any number of websites and for the sake of time, like here's a good example. Look at this particular website.

Joe:   Sure, sure. This tab.

Alex:   Okay, hold on. Let me, let me share that. Okay. Share tab instead. Okay. You should be able to see it now. Yeah. I never easy. You could tell it's the same template. Another easy storage solution. So I'll go to contacts and then here we go. Here's a gmail address. These are all indicators that these are not big companies with the massive call center. And I would venture to say that if I were to call if we spent five minutes and I called some of these people, I'm likely speaking to the owner of the facility. Joe, I was looking at a facility, I don't know, a month and a half ago, and I pulled up the website and it had the rotating E from Internet Explorer at the top. I mean, it was a website builder like the mid-nineties, like. Menzel Yeah, man, Like, those are all indicators that these are mom and pop storage operators. So cold calling is one of my favorite ways to get deals. Now, I know what a lot of people are thinking. I don't like cold calling. It's a little bit challenging. Well, the way that I would approach cold calling in the way that I teach my students, it's it takes the pressure off. When I first started cold calling storage facilities, I wasn't calling asking to buy their facility or I wasn't calling asking if they were interested in selling. I would humble myself and I would identify who I was and why I was calling within the first 10s. And essentially what I would tell them is, Hey, my wife and I are looking to purchase our first storage facility, right? We own some single families or we've been in single family and it's a headache. Why? Why do I say that? A lot of storage owners can relate to the fact that single family can be a headache. So I just instantly connect with them and I'll say, look, I'm looking at your facility online. It looks great. Looks like you've done an awesome job, so I'll compliment them. I was hoping I could just kind of ask you a question or two to see if you could point me in the right direction. What I have experience, Joe, is that these are mom and pop operators or business owners. Generally speaking, by and large, they want to help and they're super, super friendly and easy to connect with, right? Like there's no emotional attachment to the business like. There isn't a single family. Well, after establishing some rapport and asking them about storage, like what do you think about the business? How did you get involved? How often ask them. I say, Well, look, clearly you're very well connected. I'm sure you have other friends and people in your network that own storage facilities. Do you know any of them that might consider selling? And I would probably say 30 to 40% of the time. That opens a door for now me to have a conversation with them. Oftentimes they say, well, I would consider selling, you know, under the right situation or the like. And now I've just entered into a different conversation with them. Okay. Okay. That is my approach when it comes to cold calling. And it's proven to be an effective one, right? Like worst case scenario, they're giving me some valuable information about storage or about the area. Best case scenario, they're either giving me a referral like i.e. a free lead, somebody who's interested in selling or they're open to having a conversation about selling. So that is one of numerous ways that you can approach cold calling. But one that I have found takes the pressure off for a lot of people.

Joe:   Okay, so they say, Yeah, I'll sell it at the right price. Make me an offer. That's kind of the next step. What do you do then?

Alex:   Yeah, so I like to do something called a back of the napkin analysis. So in storage there. And let me stop sharing my screen here and then I can I can share anything else you need. But I'm in storage. There's something called the back of the napkin analysis. So everything is driven, the value is driven off of the net operating income. Right? So what is the NOI? The net operating income revenue minus expenses is the NOI equals the net operating income. So in storage, we oftentimes people base things off of a certain cap rate, right? I tend to do that. I think cap rates are I think people sometimes put too much emphasis on a cap rate. But as a simple example, like let's say a storage facility is generating $100,000 in annual net operating income. And I was going to place a value of a ten cap on that facility. Well, that's $1 million facility, right? $100,000 divided by 10% gives you the value of the facility. So when it comes to cap rates, Joe, like I tend to put things in a particular like range if it's a larger facility. And when I say larger, I'm talking 20,000 plus square foot facility, then most of the time it's going to sell for a lower cap rate, right? So it could be a nine cap and a cap, maybe a seven cap, right. The smaller the facility, then the higher the cap rate it's going to sell out. So if we're talking about a 10,000 square foot facility, I might be looking to apply a ten, 11 or 12 cap on that offer. So everything is based on the net operating income. If I just get from the storage owner, the revenue that they generate, then I can just come up with my formula, which because I'm typically applying anywhere between a 30 and a 40% operating expense ratio on storage. Okay. So if a storage facility generates for simple math, $100,000 in revenue, not NOI, but revenue, and if I was going to apply a 40% operating expense ratio, that means the NOI would be 60,000, right? 100,000 times just backing out the 40% expense ratio.

Joe:   So you're looking for you're looking for bargains. You said before you make your profit when you buy. Correct. Does it ever make sense to if all you care about is cash flow? Right. Does it ever make sense to buy it for what it's worth today?

Alex:   Yeah, absolutely. Let me tell you when that makes sense. The biggest thing to look for is I look for the spread between what the current net operating income is, but relative to what the up the net operating income should be. So we look at the average of the market street rates. Let me give you let me dumb it down and give you a super simple example. Let's say I'm looking to buy your facility, Joe, and your ten by tens. You're asking $50 a month for your ten by ten. But let's say I look at your competitors within a five mile radius, and most of them are collecting between 80 to $110 a month. Well, that's an opportunity that, like, my eyes go like this because all I have to do is if I can go into your facility and buy it, I can simply raise the rates to match the average of the market rates. What is that going to do? That's going to drive up my net operating income. So I'm happy to pay you what it's worth based on today. If I feel the spread is big enough between what the net operating income is and what it should be based on the average of the market rates.

Joe:   Okay. Let's talk about financing right now because interest rates have gone up. When you get financing from a bank, you're going to need to put some money down on it, right? Yes. By the average 20, 25%.

Alex:   20 to 25% is typically the average. Some banks require 30%. That's it if you're going to go your traditional bank financing route. So all the deals I've done, I have yet to put any of my own money into these deals. But yeah, to answer your question directly, if you're going to go bank financing, you should expect 25 to 30% down.

Joe:   And then with interest rates going up, do the numbers still work?

Alex:   It can, but it's one of the challenges in storage as rates started to climb is that it was getting harder to find the right deals. You know, when you run your analysis and you put a higher interest rate, it puts a squeeze on the cash flow. So like anything else, you just have to sift through more deals to get to the right one. Right, you really got to be buying it, right? At today's interest rates, you know, relative to like when I got started in storage, rates were, you know, being commercial between three and a half and 5%. It was a lot easier, right? Nowadays, you just have to go through more opportunities. But yeah, we can make deals work at seven, 7.5% interest rate. But that's one of the reasons like I love, love, love, seller financing and storage owners have a big appetite to sell these facilities on seller financing because they're used to the cash flow. Yeah, right. And with seller financing, I can pitch, hey, you can get the same cash flow, sometimes less, sometimes more, but without the headaches. And you know, I stress headaches, even though to me it's not a headache of them owning and operating it because they don't have third party management companies, they are used to operating and managing it themselves.

Joe:   Yeah. That's awesome. So do you like when in your l.a. Why'd you give the seller's options? You might say.

Alex:   Absolutely.

Joe:   Yeah, I'll pay cash for this. And if you do seller financing, I'll pay this.

Alex:   That's right. And sometimes a hybrid. Sometimes it's some cash with some seller financing, sometimes it's all cash. But yeah, I always like to present three options. I don't do any more than three. Sometimes I'll just do two depending on the personality type of the seller. But yeah, 2 to 3 options I like to give them, and then one of those offers will usually be an anchor or it's just a lot lower than they want to be. And what I really want them to do is select one or the other offer.

Joe:   Okay, man, there's so much more we could talk about, Alex, but we need to get going here. How can people get a hold of you? Get more information on what you do?

Alex:   Yeah. And thank you. I appreciate the opportunity, Joe. A couple different ways. www.storagewins.com. Anybody interested in adding storage to their portfolio, doing storage deals, all the marketing you're doing, all the acquisitions, it all transfers over. So head over to storage wins.com and then the other way is connecting on the Flip Empire show which I was, I was grateful to have you on. And so I've been hosting a podcast for a little bit over eight years not quite as long as you Joe but yeah this the Flip Empire show is another way to connect.

Joe:   So storagewins.com I put it there on the screen and that's the place where they can get more information from you right Yes for a direct to www dot storage wins or

Alex:  Yeah. W ww dot it should still work but yeah. W ww dot storage wins.com and that'll just take me over to a Google web form.

Joe:   Cool. Yeah I see that. All right. Yep. And then you just put in some information here and then on your Flip Empire show, do you have podcast episodes where you talk about the strategy and how.

Alex:   Yeah, we, we go deep into storage. Obviously here we were only able to cover like a little small portion, but there's other ways to get deals, right? Whether it's direct mail or wholesalers or relationships. One of the things I've recently done on the podcast is go and you can find these deals and storage Facebook groups and it's like one of the easiest things in the world to do. So yeah, we go a lot deeper on the podcast as well.

Joe:   Awesome. Then you're active on Instagram.

Alex:   Yeah. Alex Pardo 25, is the Instagram handle. AlexPardo25.

Joe:   Awesome. Alex, thank you so much for taking the time to be on the show. I appreciate you, man.

Alex:   Thanks brother. I appreciate the friendship.

Joe:   Then go check out Storagewins.com guys. Check out Alex's podcast, The Flip Empire. He's doing it for a long time. Listen to the interview I did with him. It was really good. We talked about following the fat man.

Alex:   I love that. That's going to be the title.

Joe:   Did you call it that? Did you give it that title?

Alex:   No, we're calling it that. I told you we were going to do it.

Joe:   You'll have to go and listen to the episode to find out what that was all about. All right. See you guys. Thank you, Alex.

Alex:   Take care.