Ep 505: Developing 100 Storage Facilities in 10 Years With Joe Evangelisti

Transcript

hello welcome to the high with us podcast I'm your host Danny Martinez today we have a special guest I just met

recently the last couple weeks uh Joe

evangelisti what part of the country you from New Jersey right outside of Philadelphia New Jersey we had a couple

couple Northeast people come in how long you've been in New Jersey my whole life well minus uh minus five or six years in

the military I've been here the rest of my life what what branch in the military are you in I was in the Navy CBS which

is the construction Battalion of the Navy so no boats no ships got to do

construction in the Navy which was uh pretty cool actually had a lot of fun like what type of construction because

I'm like I so really all construction yeah I mean just kind of you know I was a builder right so um so I actually did

Advanced carpentry I got to learn how to build I was a carpenter before I went in the Navy so um I kind of had that

background but really everything from concrete to to framing construction to Roofing to yeah you name it we we were

basically taught to do it all wow I did not know that so I didn't even know they had a vision of like that that's very

very interesting so I appreciate your service in the military well you that in your early 20s yeah pretty much out of

high school I went to one semester Community College I realized that it was not for me and uh right in the military

after that did you ever use your military benefits for college yeah absolutely all over the place I think I

went to six or seven different colleges all over the all over the country as I was in the military and I often joke I

think I have like a 130 some credits college credits and never got a degree because they never matriculated as one

college to the next so I just bounced around and got all kinds of different college credits but never actually got a degree anywhere that's

funny did you use your like your your your real estate benefits from the military yeah I I I had one VA loan once

in fact I just paid it off my last house I sold but uh haven't haven't reused it since since uh since that last one okay

yeah I think uh my my brother's in my brother's in the military and he got like two two degrees off of it he's the

only one in my family that's got like college degrees I think he uses his VA loan to get his house which is yeah very

very underrated so if everybody in the military use your benefits super underrated and they've actually they've

made the benefits quite a bit better since uh since I've gotten which is smart that they've now made it I believe

that your your your spouse and your children can utilize the VA benefits for

college now which didn't happen back when I was back when I was in the military so it's I think it's a smart

move do you get those retractive benefits I know already tangent but do you get those benefits since they change

or you only get the benefits of when you were enlisted no I think you have 10 years to use them I think now they've

made it and I could be totally wrong so if anybody's a vet and they're listening to this I could be totally off base but

I'm pretty sure now if you retire your your family can use those benefits for a much much longer period of time I don't

know what how long it is but your your family can use them for a long time now all right that's cool man I said I I

like this little like beginning part because kind of Discovery because like said this is stuff I don't I don't even know about you you know yeah we didn't

even talk about this you know for sure yeah can you give people like a brief description on what you do now just kind

Transition to Real Estate.): Joe discusses his transition from military life to real estate, starting with single-family home flipping and eventually moving into commercial real estate, specifically developing Class A self-storage facilities across the country.

of get high level how how you been doing it I know you've been really for a long time you kind of coach and do stuff like

that but just kind of give high level yeah right now primarily I'm a I'm a commercial real estate developer took

me took me quite a few years to uh to get to this point we did single family Fix and Flip for about 12 years did did

a ton of uh wholesale and you know I've done just about almost everything you can do in in real estate right I've done

single family wholesale I've done commercial brokerage real Residential Brokerage I owned a brokerage I own a

Remax for for many years like I said single family flip new construction new construction

development and at this point now we're building Class A Self Storage properties all over the country and uh we do quite

a bit of entitlement uh land entitlement where we'll take we'll take off Market land and and you know whatever it's zone

for we'll find its highest and best use we'll entitle it we'll either take it down ourselves or we're partner or joint

venture with um a developer and you know we'll take it to fruition that's our goal now

yeah so how many total years have been in real estate said like single family in houses for like 12 right yeah so I

got in in uh in the best time I think the best time in the last you know 50 years I got it in 2007 right before the

market completely collapsed on everybody and uh got to learn the hard way how to figure it out okay so those the I'm sure

it was rough when you first started but people people I talked to a

guy and he started same time same right about that time he said by 2012 he had

like 400 homes so like he like dug in and killed it during that time yeah when

everything was hitting the fan so single family what was the

positioning Pivot Point to go to commercial storage and go down that route because a lot of people like some

people they do single family for their whole life and that's all they do so like what's the what was what was your Epiphany to go to commercial yeah I mean

I don't have like a sexy story about it honestly we just got burned out you you know I mean we we were doing this this

is about five years ago my my business partner and I were we doing our end of year wrapup and we tend to set our goals

for the next year you know at the end of Q3 you know beginning of Q4 we're like what we going to do and we were on Pace

to do about a 100 homes that year uh you know and these are like major fix and flips right these aren't like TurnKey

you know lipstick you know $10,000 you know paint job flips these are like 4060

$70,000 rehabs you know the goal was you know we were doing 100 he said you want to do 120 next year and uh I I asked him

and and he looked at me and he's like dude I don't ever want to do this again like I'm done like we got to figure something else out and I was like I'm

really glad that you said that because me neither like this was this was like this was a burnout year for me like I'm

tired I'm beat you know and there was just a lot that led up to that like you know was you know and I'm sure you might

have been there before maybe you haven't or I mean I'm sure a lot of your listeners have been like it was just a point where we always you know had money

coming in going right out the back door it was just like a churn and burn man and my tax return said I was making

money never never was able to put my hands on it you know I you know I always seem to have money but never seemed to

have enough of it anywhere and it was just like we were chasing our taals and so it was just like a it was like a

point in time where it was like a it was like a you know kind of a realization that we we got to figure out a way to do something different here like I I didn't

set out to flip houses to to turn it into a cash register I turn I wanted to

build real long-term what the term now we coin Legacy wealth right like I wanted to

create generational wealth I didn't just want to flip houses and make a bunch of cash and so that's kind of the position

we stuck ourselves in and you know that's when we started searching for like there's got to be a better way to do this and that's how we ended up in

today's position now well what what was like uh

did you be a mentor you kind of just buy a deal and kind of figure your way through it or how was that like transition process

yeah you know I've always uh I shouldn't say always but for probably the good eight to 10 years leading up to that decision you know I invested in myself a

ton right I joined masterminds I'd hired mentors and coaches and you know surrounded myself what I with what I

think were the right people and so I had an idea that in order to scale it and get into the right rooms and do the

right things I had to it was going to be commercial like I I I I think I knew it was going to be commercial but I didn't

know what industry what asset class like kind of where I was going to go with it and I think at first I thought it was

going to be apartments and I had a really good friend at the time who was kind of one of the big apartment syndicator uh teachers I went to one of

his events and at the time man it was like I don't know if you ever read that book The Blue Ocean strategy right where

they talk about you know you got the Red Waters where where all the fish are fighting the sharks are fighting over the fish and then you know you get the

blue ocean where you know you kind of go out and do your own thing and you figure it all out and so I went to one of his

events and they were talking about apartment um Lois putting an apartment out at the time they were like oh yeah

well don't don't be surprised if you find a good apartment deal and there's 150 or 200 L and they were talking about

creative ways of you know send videos to the seller or you know send like gifts

to the sell's you know office and like find ways to stick out and be unique and

all this kind of stuff and I looked at I looked at my partner I was like dude if I gotta like you know find ways to be

that unique to stand out like dude this is the red ocean like we're fighting like 100 50 people to put an offer in we

got to find a different industry like there's got to be a different way to to to get involved in commercial real estate without this apartment thing and

so I started digging around even more and I ended up having a conversation with a now really good friend of mine

who got into Self Storage development and you know it was so interesting Daniel because when I first had a

conversation with him he was like dude he told me like three things on the first conversation and you know was one

of those like phone calls randomly you think it was going to take 10 minutes and I was on the phone with him for like three hours and uh the first thing he

told me was this the storage industry is a very small community and everybody wants to help which is so true like when

you start talking to folks in this industry every like it's not like a very Cutthroat industry like everyone seems

to kind of want to you know guide you in the right direction it's not a very like you know so people kind of want to help

he said the second thing is and this is a guy who had almost a very similar background he had built a lot of communities and a lot of single families

a lot of developments plan unit developments he's like dude once you build a self storage you're never going to touch a house again like you won't

Focus on High-Quality Storage Facilities.): Joe details his focus on developing high-quality, safe, and accessible self-storage facilities, highlighting how these are designed with features that appeal particularly to single women, a significant demographic in the storage market.

build you won't flip a house you won't build a new house like you're just not you won't build your own house he's like you'll pay someone to build your own

house because it's just too damn easy to build a self storage and trust me you're

not going to do it again and he was right like you know 100,000 square foot Self Storage is not that much diff that

much more difficult than building one or two houses and the upside is tremendous and then I think the third thing that he

told told me that kind of you know put me over the edge which which was that he's like you know the numbers obiously

much higher but the outcome is also way way way higher right and so if you can

just figure out a way to piece the numbers together understand the deal wrap your mind around it he's like you

won't you won't conceptualize the outcome until you do one but once you do

it you're never G to go back and again was right I did my first deal never look

back and now you know we help folks who are kind of in that single family world

that whether they wholesale or Flip or do new construction or you know those type of things help them transition into

commercial because the reality of it is it's only scary on paper until you do a few deals and you realize that man it's

it's not as difficult it might quite frankly be easier to do commercial and the numbers are so much bigger and the

outcome is so much better yeah I think I think the bigger opportunities create

easier they're easier in my opinion these small is hard because there's no you have to like really monitor your numbers because the margins are so

small upside down a small deal pretty quick absolutely man so funny man it's

so it's like a backward way of thinking but it's it's crazy how it works truth y

so you did your first deal now how did you do ground up or did you buy and yes

so we you know I don't finish your question I don't want to interrupt you no no like

did you were you buying exist oh I know my question is now I'm GNA type it out because I can remember but let me ask

this one exist existing are you buying existing units from M pop shops or are you building so I know now you're in

like that building Mo mode but when you first started were you looking for existing yeah so a lot of people think

that I'm just absolutely crazy because when we started out we went directly to 100,000 foot Class A Self Storage

development right like we just jumped out of the gate and and built 100,000 foot but there was a reason behind it

right and and this isn't necessarily like I don't by the way I have I have client coaching clients who have done it

the same way we have done it so it's not impossible right A lot of people are like oh my God you're crazy well yeah I mean maybe I'm a little crazy but but

but this is why okay our model is that I don't want to be in the management space

okay and and I'm I firmly believe and by the way I I can tell you some further stories as to why I believe this but I

don't want to be in the management space because the the reats that are out there they're they're so competitive they're so good

at what they do they're so good at getting the prices they get you know if you Google self storage near me I don't

care where you're at in the US you're not getting a mom and pop location to pop up in the first two or three pages

of Google like these guys are crushing your eyeballs they're beating you at every move they're they're they're

you're you're you're not going to compete with them in a marketing platform right aside from you know

somebody driving by your Comm and pop site on the side of the road and knowing that you're the location that's closest

to their home they're getting the traffic you know they're they're getting the clientele and they're also extremely

Savvy when it comes to you know different types of movein specials and rats and all that type of stuff so I

just learned early on that I don't want to compete with the reats in fact if there's a way I can partner with the reats and make them help us grow or if I

can help them they can help us vice versa then why not just be a great developer and so I've always been

focused on our unique ability and my unique ability is building excellent teams that can go out and develop these

Self Storage sites right so I want to be excellent at what I do and what we do is we underwrite great sites we bring the

teams together we find the money we develop great sites and then we hand it off to the REITs to go manage so we're

going to partner with folks like extraspace Cub smart and we're going to let them manage it so as soon as we hit

certificate of occupancy or really about a month or two beforehand we're giving them the keys they're putting their

moniker their their sign out front and then we're handing it off now we're going to manage that asset we're gonna

we're still the owners of the asset but a lot of folks don't realize that when they see a cub smart sign out there

cubes smart only owns about 50 60% all the the assets in the country with with

a cub smart sign out there 40 50% of those signs are actually folks like like my partner and I that own that asset and

they're managing it for them third part party so that's actually our business model is to is to build these these

Class A assets and then let you know a third party manager go and manage them for us that's how we started off and

that's how we're going to continue to do that now that doesn't take away from somebody who wants to be a self- storage

developer and go build smaller sites but keep in mind that the big third-party managers they're not going to manage

anything that's smaller than about 75,000 square foot which is a pretty big site so that's kind of how we got

started and that's how our our model progresses that's where we're going with it all right so I'm keeping I'm wunning

down my my not my questions here yeah all right so you kind of answered my my first question but competition in the

market from other funds but it seems like you're partnering with them and that was that was my question I was kind to think of like how how are you how are

you competing because I know just like multif family blew up because people found it was profitable and 150 Lois is

crazy for one property is nuts but what's the difference I think times

have changed a little bit and and they're looking for adverse assets the the the fund and institutional side is

it affecting you at all right now or do you see it affecting you in the future competition as far as de

developers other developers or just competition as far as like other other storage properties in the area um yeah

of course we always have to be we always have to be really diligent about who's building and who's around us in the area

however it's really about first to market right and so we have to be careful about saturation levels in

certain markets but if you pick the right Market a lot of people think that

Self Storage has been overdeveloped in in a lot of markets and it's actually not really true there are certain

markets in the US that have been overbuilt and we won't we wouldn't touch those markets but the reality of it is

there's a lot of markets in in the US that are still undersaturated there's still the high demand there's still

necessity for more storage and that's even more true in the last probably 12

to 18 months because a lot of these developers can't get Bank financing commercial financing is completely dried

up in the last 12 months and you're looking at markets that are continuing to grow especially you know in the South

and in the Sun Belt and you know in the Texas area and in the you know all all along the Florida Mississippi Louisiana

Georgia all those areas where people are moving south and so the the demographics

are continuing to increase population levels and things like that and you

still don't have enough storage to to contain those folks so you know where

you have development stopping or you know developers that can't get financing

and can't get these sites out of the ground the demand's going up right and so there's still a lot of areas in some

of those uh states that you know you could develop today if you can get the funding for it and you're going to be

the first one out of the ground you're going to be the first one open when the world comes back to normal which is what

we're looking at right now we want to be those developers right now today and that's the conversations we're having

with different joint venture partners and private Equity firms and family offices is let's get these these sites

out of the ground today where everybody's scared to death to go do things we want to be the people that are

building that that are taking advantage of the great pricing from our contractors because work is slow right

the great pricing on materials because again prices are down a little bit so

take advantage of this market today because in three years we want to be that site that's getting ready to fully

ramp up while all the rest of the sites are still trying to figure out a way to break ground no it's it's huge what's

that what's that timeline because I think you said you're trying to time the market where because right now things are a little what's that timeline from like new development to completion

because I know these things pop up really fast once you get approvals in capital yeah it takes about 12 to 14

months depending on the type of site and and obviously location soil type all that kind of good stuff but as long as

we're in an area that doesn't freeze like we have a site in Ohio where the winter will obviously beat you down but

as long as you can build straight through you're 12 to 14 months to build an entire site from from start to finish

and then it takes you another 12 to 14 months to fill it up so you know really you're under three years to to fully

capitalize a site like this and again if you start right now when there's nobody moving any dirt anywhere you know you're

going to be in a good you're in my opinion you're in a good position turning into the next Market cycle now

you said 36 months is that first Z 12 months is like entitlement then build well so we have

sites right now that are fully entitled ready to ready to break ground you know you definitely could take it really depends if you're starting from scratch

scratch and you don't you don't have you know you're talking about a site that you know maybe needs variance or needs

approval or needs uh it could take anywhere from nine to you know 9 to 18 months to get that done but you know if

you have a permit ready type of site that then it could be three to six months it really VAR it varies depending

on what that site needs and what type of approvals it needs like what what type of acre size are you looking for based

off of that that model to sell to Cub smart and that space like how many acres

does like minimum and do you leave space for Value ad as well so you're looking for like maybe five to 10 acres or

something like that or what's that what's that Bas Baseline project with like yeah really for us now again this

is going to vary for some folks right because if you the more urban you get the smaller site that you need and the

more expensive it's going to be right I mean I I I walked a site in Denver a year and a half ago that was on like an

acre and it went up six stories and it was all climate control and they paid a fortune for it right but for us we want

to be kind of outside that suburban area outside the major Metro generally

between four and six acres the more the more outside of that so like we have sites in Houston that are 10 acres and

they're just spread out and they're all single story you know the more the cheaper the land costs the more we're

going to spread the site out we're not going to do multip story builds so really it depends on where you're

building to understand how much land you're going to need and obviously the cheaper we can get the land and the more

value we can add to the land what I really like to do is to have pad sites I like to build something if I can get 10

or 15 acres and I can do you know a corner property and I can have you know a a Quick Serve or a gas station or or a

um or a fast food location I I want to be able to to do multiple uses on one

piece of dirt as well which I know we talked about when we were in Louisiana right is is how do we take down a piece

of ground and entitle it for more than one use that's the highest and best use for that piece of dirt so we're trying

to become more multifaceted developers instead of just thinking Self Storage which is great it's how do we start to

improve that piece of dirt and get the most use out of it the most benefit out of it long term if we're going to do the

deal we want to think about how how can we capitalize on that piece of dirt not just one Self Storage no it's a huge

huge point and this is one of the things where I think I think you're on the you're definitely in the right thought process because I have the same thought

process as well is like no matter what you need get extra because if you can

monetize that portion of what you're going to do you can get some for free and then you have excess to kind of be

creative with that property and really monetize it again with with another side

project or keep it for free or hold it leave it as a value ad opportunity whatever you want to do you have more flexibility to kind of create whatever

path you want along the lines which I think is huge just by switching de model alone will probably make you a lot more

money just by buying more Acres than what you actually need I think all commercial developers should be thinking

along those lines when they're doing deals is how do I get my basis at or below zero as quick as possible and then

it it der risks the entire deal right because then you can be sitting on a piece of dirt and God forbid the market

does take a dive and you don't have to pay to keep that piece of dirt or seller finance or whatever you can do to get

that risk as low as humanly possible or put money in your pocket now you got a free piece of land and I think a lot of

folks are not thinking about how they can control that way I mean rather than you know obviously the opposite which

would be having a bunch of risk or having a bunch of debt you know frankly which could potentially drown the deal

yeah what does the relationship look like with with the management companies cuz I've are you more like the uh JV

partner are you like the leasy of the land do you actually doing construction like what does that partnership look

like with Cub smart because I did not know that they only own 50% of the buildings like that's new no so when I

say yeah when I say they own it so they own about 50% 50 60% of their own assets

so like when you see a cub smart sign they own about 50 or 60% of their own deals when they manage for someone like

myself it's just a third party management agreement so they don't own our sites they just manage our sites

right so it's just a doing you're doing you're doing the build and everything and you're managing I mean you're you're

you're is it like more like a like a like a net lease type thing management or is it just a management agreement

like a property manager would manage your apartment building so they're just they're just coming in with a management agreement they're getting a percentage

of of gross rents and then the uh the actual payroll and all the overhead for

the employees flows right through the p&l from the from the building itself and goes right on the right on the uh

p&l and gets paid from you know the operating entity whatever the LLC is that we own but they don't have any

actual ownership in the business or the company or the or the property they just have a management contract I like that

because you're really passive at that point because you you're essentially giving it to Great operators that have a great reputation and they're going to be

up to date on their documentation and their processes so that's amazing I

that's I never thought about that way that's that's a really good model that's a really great model yeah I mean you know what's everybody's favorite

question they always go to like tell me about Storage Wars how does that lockout happen you have to auction people's

and I'm like dude I don't know man I couldn't answer that question I don't even know how that works because I have

nothing to do with that stuff right like people's stuff gets auctioned all the time I don't know how like I have nothing to do with that stuff so it's

like you know I don't want to know that part of the business I don't want to know how we get people it's not that I

don't want to know I don't want to sound ignorant right I mean I understand how it works and I get the reports and I have a conversation with the um general

manager of the you know Regional manager of the you know certain properties every month and I understand what we're doing

as far as incentivization and getting that the units filled and I understand their strategy for but again I don't

want to I don't want to dictate how that works and I certainly don't want to learn that process because they're the best at it that they're the ones that do

it every single day and they have they have a process and a strategy that's great so you know let me focus on being

great at developing now they essentially since they have a management agreement this is

one of the things where the property manager could make or break your business is it could affect your noi which is affected your your

actual actual value of the business are they they keep they keep track with like

rent rates and all that stuff to help vacancy and all that stuff they manage all that yep absolutely yeah and that's

and that's been pretty crazy for the last year and a half or so because you know first of all leading through from

Co up until about 12 months ago rental rates in the storage business had that they spiked like crazy I mean we had you

know 10 to 15% year-over-year rental increases Nationwide so if you think

about that for three years we went up by an average of about 15% so you're talking almost 50% in three years right

so in this last 12 months and I don't have the exact numbers in front of me right now but I'm going to guess we

dropped by somewhere between 15 and 20% right so people have kind of been losing their minds but the reality of it is did

we really drop by 15 or 20% we went up by 50 in the last three years like that's so yeah right so it's like you

know people were seeing this kind of like and they're like oh the bubble burst well it didn't really burst we had

a little bit of a correction and so like when I started underwriting these deals the interesting thing was some of these

markets like for example we underwrote deals at $18 a foot right we started

seeing numbers of like23 $24 a foot and everybody was like oh my it's amazing

holy cow this is crazy and now we're like we're like normalizing it $19 a

foot you know it's like well we're still above our proforma yeah right so you know we're still dealing with challenges

obviously because interest rates Rose underwriting has been crazy as far as getting loans on these deals and so

there's still some underlying factors that are that are difficult to to there's a lot of headwinds obviously

still in the industry and Commercial Banking like I said there's a lot of there's a lot of challenges we're still dealing with but ultimately Self Storage

is still uh very very good industry it's I still think it's going to be a solid

industry for decades to come I mean Americans just don't get rid of their stuff it's just amazing to me I was

thinking about this too because everybody's moving from the North and the north have basements because I live in the midwest we have basement so we

had a whole bunch of storage stuff when I was growing up and when I moved South

I filled up my garage y yeah and that was just nature of the thing and then

when I moved West to California same thing there's no basement I filled up my garage you know so you you're you're

kind of fill up that way so if you have especially if you're downsizing moving to different areas you always have excess something and you the sentimental

value with that you don't want to necess get rid of yeah I'll tell you a funny story Daniel it's it's and this is

ironic has nothing to do with me being in the business but four or five years ago before we got into Self Storage I've

never had a storage unit I mean I think I did one time a 20 years ago when I was in the military for a couple months but

in 20 years I haven't had a store unit now ironically has nothing to do with me being in storage I I realized the other

day I actually two months ago I got a personal Self Storage my business partner and I have two storage units and

now I have a personal Self Storage so between the two of us we have three self storage units just in the last year and a half and I'm like this is crazy why do

I have all this storage it's like you know so now all of a sudden I have three self storage units and I don't even

understand why you know but this is part of it it's like we just we just store stuff right and then and and it's normal

onethird of Americans have or have had self storage in the last six months you

know so w it's a big number yeah my my wife my wife uh when she moved from California to Indiana she

paid storage for like three years because she had stuff there that when she left and then I ended up paying for

it to get transported back to Indiana and then I've been taking it with me ever since because those stuff that uh

she she kind of inherited after her mom died but those stuff you want to get rid of it just happens yep just happens and we

pay for it and you know it's uh it's a a fact of life and I'll give you one more kind of crazy statistic but 95% of all

the sell storage in the world is in the US right this this is an anomaly it

doesn't happen anywhere else right like you go somebody was asking me to day like would you do this in Canada and I'm

like sure maybe but it's not a thing in Canada they have to understand like there's a microcosm in Canada like

doesn't exist you know it does but it really doesn't you know around here it's everywhere you know so well what's the

average cost to build from ground up because you said you're you gota buy You Gotta Be You Under $18 square feet

what's the cost to build so $18 so so we try to shoot for $20 plus rental rates

per square foot that's that's kind of like a internal goal um cost of construction is going to vary obviously

greatly depending on um where you're building and what you're building right so uh a lot of people I say some of

these numbers and people were like oh I can build it for so much cheaper look if you're going to build a cheap crappy you

know garage only non-climate control outdoor like so this is the thing right so we build what I would consider really

really nice Class A like like beautiful

like glass storefront like if I showed you pictures of what I build it looks like a shopping mall but I do it because

we're trying to not only have u a really really goodlook end product we're trying

to be the best in most of our markets we want we want to attract the clients the

fastest right and the reality of it is even in Self Storage Believe It or Not here's another statistic 25 to 30% all

the clients are single females okay and so the market has changed dramatically in the last 10 to

15 years Self Storage traditionally was what it was down in Industrial Road like

a dark like like dirt Industrial Road it's and actually in in historically it

was industrial Zone to this day one of our biggest challenges is getting Self

Storage approved in commercial zoning or retail zoning because they don't want it there right because it's an industrial

zoning but the reality of it is it's zoned that way because that's where it was historically that's not where people

want it right that's not where the consumer wants it the consumer wants it on the main road yeah consumer wants

easy access they want to come down a main street they want it well lit they want to pull right off the main road and

they want to be in their storage mostly because you have a lot of single women who are accessing it and what do they

they want go ahead say safety concerns yeah they want to feel safe they want to be well lit they want a bazillion

cameras on them at all times they want to be able to plug in their code go get their stuff get back in their car and

not feel like they're going to get attacked right that's what they want and so that's what we build I build a site

where there's automatic lights every 10 10 inches that they walk you park your

car you get into an automatic door there's cameras everywhere you get on the elevator lights are going off

everywhere there's LEDs there's spotlights like there's nowhere where there's a dark corner that they don't

see coming and they get back in their car and the whole time they feel totally

safe okay so to do it properly in my mind you have to spend real money and

you're doing it because you don't want something that's going to take maintenance or capex down the road and

you got to build it properly so all that being said we're still under $100 hours of foot we're in that like1 to $105 a

foot Blended rate now that's Blended between your garages which are pretty much standard garages with everything I

just said they have automatic lights and cameras non-climate controlled single you know roll up garage doors the whole

thing and and that's blended with your three or four story climate control you

know fire suppression systems the whole the whole nine yards HVAC system the whole thing so you're going to be more

expensive obviously on the climate control and much much less expensive on the garages but when you blend the rate

across the 100,000 square foot facility you're right around that $100 a square foot now you have some Builders say oh

my God that's crazy you could spend 65 bucks a foot you absolutely could it's not going to look anywhere nearly as

nice as ours and that's okay there's a lot lot of Builders out there that say just build it as cheap as possible at

the end of the day you're worried about noi yep yeah maybe you are but that's not what we're looking for so yeah

you're looking you're long are you you're long are you what's your and this is I love I love that this this line of

questioning is that so what's the strategy are you holding forever or is this like a five-year exit stabilization

type thing or is this a it dep I guess depends on you and your goal and your lendage it's Al yeah it's also not an

easy question because we have a we have a myriad of different partners right I have some partners that are joint ventures that you know the goal is to

exit whenever the time is right and then we have partners that are family offices that are like dude we're never selling

forever and there's buyout agreements in place that you know if you guys ever want to you guys meaning like me and my

partner you ever guys ever went out there's a buyout you know in 10 years from now we'll give you money because we're never selling like it's never

going to be on the you know so I'm building these things as if I'm never going to sell them right and then if I

ever do I I might right and then there's you know there's deals where you know you you have to you you're looking for

cash right so you're going to flip some of them for cash our goal is to build a 100 self- storage facilities in 10 years

and I'm talking 100 Class A 2530 million facilities so this this this is not a

it's not a light goal right it's not a you know it's not an easy overnight goal this is a big time goal and so to do

that there's going to be you know you're going to have to sacrifice some early you're going to have to sell some early you're going to have to you know find

the right Partners you're going to have to build the right relationships you're going to have to have the right cruise that they're not always going to you

know last you know 30 40 years right there's going to be some that are you know we sell quicker than we want to

there gonna be something that we hold on to Forever and that's great but I always tell people I'm agnostic to the outcome

right so like when it makes sense to sell that that's when we sell all right so I have I have a

question this is based off the conversation we had in Louisiana but you're you you mentioned you're always sourcing capital and not all capital is

good Capital which we we but you said when we were in Louisiana you said something interesting that it stuck with

me but money needs to bring more than just money to your relationship can you talk about that because I think it's

such a great it such a great lesson and we're stuck with me even since today and now that we're talking today I want I

wan to share that with the world because we don't record that conversation yeah you know I've had this I've had this theory in my mind for a

very long time and I think a lot of Real Estate Investors specifically and I'm sure actually I shouldn't even say Real

Estate Investors but let's focus on Real Estate Investors first for for a minute right a lot of businesses need cash and

I think they tend to lean on different private lenders or any lender for example short of a commercial bank right

because you know any banking institution is not going to fall into this category but let's say anything outside of a bank

for example I'm always looking for this the Strategic effect of the money right

so a lot of people can cut a check and I think that when you're early on

especially I was actually I was in an event about two months ago and Damon it was a very small event there was only

like 25 or 30 people in there and this event had um Damon John was one of the speakers okay super good guy I don't

know if you ever met him I've actually had the pleasure of meeting him a few times oneon-one or or in small groups

and Damon said I don't want to mess up the quote but something to the effect of the earlier you asked for money the more

expensive it's going to be and that's you know in all in in every sense of the

word we all know that that's the case right the earlier you ask for it the more expensive it's going to be in my

first deal that I ever did when I flipped the house I was telling a story about this on one of my podcasts a couple months a couple weeks ago my

first deal my private lender and and I'm telling you the story for a reason I'll Circle back to why right yeah my first

lender and I always say if you want money ask for advice and if you want advice ask for money okay so I asked my

first lender for money gave me a bunch of advice he tried to introduce me to a bunch of Banks and long story short

after about four months he couldn't find me any money and I had this smok and hot deal and it was a short sale and I ended

up buying it and I was like I was like dude like this is a great deal do you know anyone that can give me the money

and finally he caved and he was like okay I'll give you the money but it's going to be a ridiculous terms I said

okay well there are terms he said I want 15% interest and I want 20% of the

profit said fine let's do the deal right and I forget exactly what I borrowed but

the bottom line is I flipped this house in under 90 days from start to finish I bought it I rehabbed it put it back on

the market and we killed it we knocked it out of the park I made him so much money that we had lunch about two weeks

after closing and he brought a check to lunch for $5,000 and he handed me $5,000 and he was like you paid me too much

money I feel bad he gave me $5,000 and I was a broke kid man like I had

just flipped my first house I had like I mean obviously I just made some profit but I'm still broke right yeah and I

ripped the check up and I gave it back to him and I was like dude a deal is a deal this is what we agreed to and this

is what I this is what we said we're were going to do and I and and I would tell you guys this this it wasn't

because I had some kind like I'm some kind of honorable guy or something like that it was just because a deal is a deal right and I believe when you do a

deal that's the way you should do a deal yep and so from that point forward first of all

I think he lent me 150 Grand or something like that I I worked my way up to8 million at at one point with him8

million of his money on the street okay from 150 Grand all right and so the point is I

think at the beginning when you're doing deals with somebody it doesn't matter what it cost you to do your first deal your second deal your fifth deal for

that matter you have to prove your worth number one however I also believe this

is a guy that I knew going into it had a lot of experience lending money on the

single family level like he owned a title company he knew a ton of flippers

he knew where to Source deals he knew how to find deals he knew contractors he

knew where to get materials right so in other words what I'm saying to you is he didn't just know how to write a check he

knew how to cover my ass if I got in trouble yep how to bail me out okay and

let me tell you I got in trouble a lot and when I had 8 million of his money on

the street I got in trouble a few times and he bailed me out right so so a

partner that writes you a check is not important if they can write you a check

is are they a good strategic partner can they help you make connections can they

help you become a better whatever you do flipper developer or you know can they

can they create you to become better but you have to get your ego out of it right

because if somebody's writing you a check but you think you're so good you don't need them well then it don't matter right because your ego will be in

the way the whole time you're just like give me a check I don't I just need your money I don't care about I care more

about today maybe because I'm older and wiser and you know I I've just been doing this longer I care more about the

Strategic relationship than I care about the check right lots of people can write

you a check and by the way you're you might find if you've just started doing this or maybe you've been doing it for a

while there's lots of people that can write you a check and they're complete deags maybe you guys have borrowed money

maybe you haven't or maybe somebody listening has borrowed money there's a lot of people that write checks and they're complete pain in the ass right

they buy they bug you they're it's the opposite of a strategic partner right they drive you crazy I just give them

their check back I don't want their money right if you're gonna give me money and and then drive me crazy I don't want

that money right I'm starting to look for more alignment right money is one thing how can we create strategic

relationships and grow together and how can I help you help me and vice versa

right because writing a check is is just one part of the equation but if we can't grow together then there's really no

sense in in in me taking your money if I can't help you and you can't help me so I think the Strategic piece of it is

just as important as as the money and that right there I don't even want to add to that that is amazing I'm gonna

cut that whole part into a clip because I think more people need to hear that because it is it is it's such an and a

lot of you don't understand this like pay whatever it costs in your first deal your first five deals pay whatever it

costs it doesn't matter and I love that you You' got it up to 8 million I love you tell the story because I I tell

people this all the time like I I told u a new partner they're like oh I know you guys got private capital what's it going

to cost to do the deal I'm like 50% yeah oh to expensive I can't do it all right Deuces people burn Bridges like

that it's so aggravating it's like dude you have no especially if they have no experience right it's like you have no experience and you're trying to write

the rules it's like dude you got somebody who's got 10 20 years of experience and they're trying to tell

you this is what I need and you're all over the deal before it's even gotten started it's like that

person could help you do your next hundred deals yep you're on them for the first deal yep it's like

that dude that guy by the way could have told me he wanted 50% of the flip and I would have gave it to him yeah didn't

matter it it doesn't matter because the the biggest thing is you knew he had experience and you're willing to take

the you're willing to pay him for the time and you understood that so you're willing to pay him through the

transaction yes you're still going to get paid it's less than what you want or would like but you're paying him for his

experience and then that opened up the door to where you're at now 10 years later and you had $8 million on the

street at that point but he was more and the it's such a great story I love that when

you're starting out overpay Capital find a strategic partner that's going to bring more than that's so I love that

man this best part of the whole episode in my opinion that amazing what is a quote that is yours or somebody else's

that you resonate with oh man I say this all the time but where where focus goes energy flows right like we just gota pay

attention to what we're focused on because I mean it's such a simple quote but it's it's so impactful because I

think so many of us especially today you know there's a lot of people hurting right now you know and I think the more

that you focus on opportunity the more you're going to see opportunity and the more you focus on the downside the

negative and God forbid media and politics and the that's going on in

TV and you're G to get more of that and and I really believe that that that if you focus on opportunity there is so

much of it out there Daniel you know this there's opportunity everywhere and the more that you focus on it the more you're going to find it

that's good where can people find you online this has been this has been a really good episode I'm like taking notes and I'm like tell my editors gotta

get this part yeah I'm easy to find Joe evangelisti in Instagram Facebook

LinkedIn all the socials I have the flip King what's that no that's that's like

an old one yeah take that out of you have your podcast I want I want

to plug the podcasty blueprint podcast um really most active I think on Instagram

probably mostly for um for the stuff that's going on Legacy uh Legacy builder. coach is the uh is the coaching

platform we're getting ready to have um I don't even know if this will be out before the event we're May 16th and 17th

we just released the dates for the Charleston event but by the time people hear this it might not be uh we might be

down there I don't know I'll try I'll try and finagle it to make sure it gets out by

then but Legacy blueprint go check it out it's got 100 episodes plus and uh

your host you just heard some good Knowledge from him if you like this episode please go like go share subscribe go follow Joe on Instagram and

uh thanks for your Tam this has been this has been amazing awesome man thanks for having me

[Music]

Ep 505: Developing 100 Storage Facilities in 10 Years With Joe Evangelisti

Daniel Esteban Martinez

Joe Evangelisti