#127 with Nick Huber - Building a $10m Self-Storage Business and the Opportunities in "Sweaty Startups"

yeah i feel like i could rule world i know i could be what i want to put at all in it like a day's off on a goal travel never looking bad okay sweet what's up everybody we're here with special guest nick hub you are known as what is it sweaty start on on twitter it is i appreciate you guys thanks for having me why why is that your twitter handle because i'm all about a different type of entrepreneurship i guess talk to sam a little bit about it but i think you can gain a lot by looking up from your computer screen and and if you get out and work a little bit with your hands and see people's eyes and and i interact with the world around you there's a pretty big opportunity and i'm i'm living proof that and a lot of people that i know i'm are on some similar journey so that's kinda what i pitch because not many people talk about that a lot of people talk about the cool ideas out in san francisco but but not very many people about talk about moving boxes up spiral staircase cases and that's how i started when i was twenty two oh okay you're you're all you're coming out hot already with the like you know pan these who are just you know type in a way a computer go do some real work no i i i do talk down upon that type kind of entrepreneurship but mainly it's because those folks are a lot smarter than i am so i'm i understand that this is not for everybody and there's hundred ways to win i mean that's the beautiful thing about entrepreneurship there's thousands of ways to do this stuff so tell people in short words which what do you do and then we'll we'll ask a bunch questions so i'm in the self storage business right now we buy mom and pop self storage facilities and operate them if we won't rewind a little bit that all started because in in two thousand eleven when i was twenty two we started a pickup and delivery student storage company while we were undergrad in if new york basically when the students went home for the summer we would drive around and pick up their stuff started out in our cars and then in vans and when when they went home we'd store it and over the summer we'd put in a warehouse and then deliver it back to them wherever they moved next year so basically out of state and international students relied on us to help them move between semesters and our our career kinda went from there but now you how how big your you you have a a miniature one day large empire what what's the can you give people the size now like can you brag about yourself so we look more legit yeah well i'm still pretty small i mean we have about ten million dollars for the self storage we have a little over a thousand units hundred over a hundred thousand square feet but actually two hundred fifty thousand square feet eight facilities in about six different states how much money do you make yeah i don't know anything about social i don't know if i should be impressed by all those numbers you just said i don't know what square what that gonna the wrong question sean you have to ask like like the cap rate or something i mean you gotta you gotta ask you gotta ask it differently well i guess give me a sense like you know is this is this something where you know here there's three three stages i'll talk about right like you bought yourself a job so it's like instead of getting a job i have a business that ends up paying me maybe a hundred two hundred k a year of profits at the end of the year but i get to like run my own show i don't have to you know have a boss and and wear it tie to work and then there's like the next stage where it's like well i built up either assets or profits that are you know made me a a a millionaire single digit multimillion millionaire and then you have like the ten million plus range or it's like oh i've actually built sort of a mini empire here which of those buckets has your your self storage start up taking you two and was it was it one step at a time or did you jump straight to one of those yeah yeah first two years we were in bucket number one we had jobs for ourselves by year three which was about two thousand fourteen fifteen we started making two hundred fifty grand a year each my partner and i two thousand sixteen we had a half million dollar set aside that we developed our first self storage facility with and did a big cash out ref refinance in two thousand nineteen and now we're going and reinvest all those all that profit into into bigger and bigger buckets so i'd say we're somewhere between two and three but yeah i'm i'm fairly early in the journey i love it tall are you you're thirty two thirty thirty so you're you're we're all the similar age and by the way sean he nick ran track and field at cornell he was a lot better than i was okay is this is this your next race partner and i don't know what happened with that other guy that he like i was gonna race him and i was fit he would beat me a little bit but i i could've ran probably twenty two eight which is like not bad for a thirty one year old that's good that's good you would beat me but this guy he's forty years old his name's tyrone he's he's badass he's forty years old so i thought i'd crush them he could still probably run twenty one eight so he would he would have beat me but nick can i i i think i might be able to beat you now but you back then would have crushed me i was a little bit i was good at ever decent at everything so i did to ka which is ten events and they add the scores all altogether and it's also kind of a the if you could character my my life in into into a couple words it's like choosing the path of lease resistance nobody did the ka there's about three hundred people in the country that did it so i was top ten in the country at one point doing that one thing right i'm all about choosing your competition and if they're really good and really fast i'd go somewhere else and sean did you hear how nick and i became friends i was doing a twitter live video session and he like asked a question and i was like i keep seeing your picture all over just wanna call me and he this call me and we did a forty five minute call live and that's how we became friends that's amazing yeah and unfortunately i had to i said too much about the structure of my investments so we had to delete but yeah that was fun thanks for thanks for having me on that so so describe okay so i don't know shit about self storage aside from the fact that when i was like twenty maybe i i read this book that really got me hooked into real estate and i was like what i'll say two millimeters away from just going down that path it was a book called confessions of a real estate entrepreneur i don't know if is a popular book in the real estate world or if it was with some random mass book that i picked up but the guy basically just walked through a bunch of deals that he did and one of them was a self storage deal actually two or three of them were in the book and and it seemed fascinating right it it seemed like a great business to be in and so describe to me like i i like to think about you know different businesses is like you know sort of like a business in a box and it's like okay well you know like let's take a restaurant i now know how roughly the restaurant industry works where let's take like for fast casual restaurants it might cost half million to a million dollars to build one you know you took part of that down payment part of it as a loan it'll generate let's say a million dollars a year in revenue thirty percent that that goes to food thirty percent of that goes to labor you know you're left at at the end of the whole thing with ten fifteen percent and that's like what winning looks like and then you need to do that multiple times in order to build a kind of multi dollar portfolio so describe to me like the business in a box of self storage so so i know there's some variance so try to just kinda like go for averages and rules of thumb and somebody will come nit pick later but who cares we're trying to give you let's say let's say you're gonna buy a million dollar property piece of self self storage it's worth a million bucks you can count on that generating between sixty and and a hundred thousand dollars a year in net operating income which is before you pay your debt service and your depreciation and so on and then another you know twenty or thirty goes to debt service and and the rest is what you have left as a as a real estate entrepreneur so it's very simple the bank finances is about seventy five percent of it you only need to come up with about twenty five percent of the cash to buy it but then you know the tech the the real power of real estate is in the tax advantages and the slow amortization on that loan as you pay it down and just the economies of scale as you grow and get more assets that really make it kinda special but what we do that's kinda unique is we buy these self storage facilities that are in small town america owned by sixty five year olds who literally keep paper ledger handwritten ledger and have never accepted a credit card or check and we come in and we automate the facility make it so we can run it without a full time manager and you you find better yield we can find better yield by going to these small towns because not a lot of investors can can kinda automate these facilities are you just using some off the shelf software for that yeah sixty bucks a month for an average facilities sizes that sorry called it's called easy storage solutions so and i know a little bit about that space because i was looking at investing in a company called open unit have you looked at them yeah they're awesome too i mean it's a very competitive space and it keeps getting cheaper every year the features keep getting better i wouldn't recommend an entrepreneur try to compete with easy storage site or open unit there's there's a lot of really good ones and they're all owned by the same company right like they all root got rolled up not necessarily the ones we use are out of salt lake city team of about eighty folks they got several thousand units though that they helped manage they do a lot of accounting services they sell insurance there's a of good subs subsidiary businesses off of that but site link is the big one that was the big one that you know two thousand five was dominant was the only software they're the old guard now little more expensive than anybody else and and not as good how much you buy your average unit or your average storage business for we buy the small ones yeah if you're if you're looking at one in a in a in austin texas you're gonna spend ten million bucks to buy it we buy these little thirty thousand square foot properties in ship pennsylvania or new field new york and we'll pay between you know our average deal is about two million bucks one point five and two million bucks to buy storage facility and how much what type of multiple is that it's generating an eight cap usually is what we're buying them so eight and a half per eight to eight and a half percent yield on that overall cost so if we're spending a million bucks that's eighty eighty five thousand dollars a year net operating income so two million is hundred and seventy grand what's your what's your cash on cash return though because the cap rate is that's a little is that misleading did you go just by the cap rate when you have debt yeah it is after you pay your debt service you gotta gotta you know the cash in the bank is what really matters we we target fifteen percent to twenty percent cash on cash yield on the money that we deploy which is phenomenal yeah it's good especially considering that a lot of real estate entrepreneurs pay absolutely no tax and the money keeps piling up in the checking count it's wild because bonus depreciation we can we can count thirty percent of our purchase price against our profit year one as a tax write off and it's it's pretty spectacular what that can do for you when when you wake up at the end of the and you got five hundred grand in your checking account but you technically lost two hundred thousand dollars that year but do you have any employees on on not on sight no we have some stayed at home employees a couple actually that i've never met that two of them live out outside of chicago that we're friends with my business partner grown up they stayed at home and hang out with their kids and answer phones and you know let let people in their units a customer pulls up to one of our units there's a number to call they call in rent the unit instantly pay online and and get their lock right away and you need like like you just have connections in other every town where you just have a security or the or the the police know who you are or or something in case of you need to contracts yeah we get little cleaning contractors who bill us thirty bucks an hour to go every monday to do the checklist yeah we do have the police you know to call if somebody breaks in but that's pretty rare honestly there's they the cleaning service sees anything they're like hey nick looks like there's a homeless guy sleeping here just so you know like they show up and they they their job their checklist is we got a pretty regiment where they show up they take photos we look at it all i mean we see security camera footage every morning of all the motion in and out of all the facilities so we can keep an eye on it from afar because that's the one reason why i wouldn't wanna go in this industry is because i wouldn't wanna and the this sounds elitist us but like i'll be real i don't wanna deal with like people who work in a storage unit facility right like like if you have to have your to have like two or to have like two or three hundred of those employees it's got like a freaking pain in the neck you know it's like holy restaurant having two hundred waiters work for you like i was a waiter you know waiters like love the party and not show up and i i will say i came from a business that was logistically the one we started with the pickup in delivery storage was the most logistical challenging business that i can think of we had to be on time we we were they were expecting uber type service with their boxes being picked up and delivered and now we're in self storage where the the worst thing that could happen is the latch doesn't quite open there's no plumbing there's no hvac there's no real problems in a way living here so nothing's ever an emergency it's pretty easy to manage how often you working i mean you making it the sound easiest thing ever yeah i i work about thirty to forty hours a week and play play off and hang out the best like awesome what do we doing yeah i'm doing the i'm playing the game on hard mode it sounds like no i think but the first three years of our careers i mean we were we were literally working with our hands carrying boxes to kinda to kinda finance and bootstrap the growth of our company just as a small tech entrepreneur is is writing the code right how did you how do you find your deals just on the yelp we cold call a lot of self storage owners we get a hold of these sixty five year olds and hopefully catch one at the right time who the winter coming and they they wanna go florida man they're tired of the new york or the pennsylvania winters and they the business is a lot more stressful for them than it is for us because they're taking cash they're going to the banks they're they're doing all the stuff that is not fun they wanna get out of it and we are there ready to make them an offer when they when they make that decision this seems like we've had people in the podcast i forget who do we have sean we've had a few storage folks it seems like it's gotten way more competitive in the last decade yeah that's the that's what i was gonna ask as well like you know so self story i'm in a totally different asset class than all these class a three store climate controlled self storage facilities that you see in major cities those things traded a five cap right i'm buying at a eight eight and a half cap so yeah i'm i'm a little bit nervous about self storage industry as a whole because of all the overs supply i mean when covid hit rates got crushed and a lot of major cities it it's like anything right when it when something sounds really sexy and really easy a lot of investors flocked to it but you're paying back your your your equity into the into the business within what two and two two and a half years or something like that so the real powerful thing about this is is it's all that it's all valued based on how much money the thing makes so we're spending a million dollars to buy facility that makes eighty grand but we raise rents we decrease costs and all of a sudden it's a hundred and twenty grand and the bank thinks it's worth more money now so you should go back back and hey this thing i bought for a million bucks now worth one point five and then they'll lend seventy five percent of that one point five you get all your initial cash back that you put into that property in the first you know eighteen months in and you get to just go dump it into another property we're personally guaranteeing these loans though i am yeah yeah it's not like housing where there's a lot of you know regulations and and options to do he locks and everything like that to get out of personally guaranteeing in these things how do you like how do you think about your safety net right because you might your name might be on i don't know how many let's just call it five properties right now where you know if if the property goes under or goes in the red you know you still need to make a payment and you've now ref refined out you know you yes you took you took the money out but you reinvest that and so you're still on the hook for all these different buildings so how do you design your safety net yeah that's that's everybody thinks real estate awesome until your property's worth less than what you refined out at and you that's why everybody went broke everybody who was over leveraged went broke in two thousand nine two thousand ten so we're really careful we keep a lot of cash reserves more than we should probably what what most do what do you do percentage wise for for for that we're about to we're about to deploy two million bucks and buy about ten million worth of storage over the next twelve months and we keep a we're gonna keep a million in reserve while we do that because we wanna we wanna have that money available if if things change and there's some opportunities and we wanna have that so that we're not on that list of folks who made the first million before thirty and and lost it before they were thirty five right so when you started the business you had a traditional moving business you said that was horrible but you said it allowed you to bootstrap the storage company what how much capital did you start this with not that that was the best i i mean i i it was horrible work but it was the best thing that ever happened to it changed my life and i think more people should consider doing it and i'm gonna talk to you guys about that i'm sure but yeah we i was in i was in my dorm i had a nineteen ninety nine cadillac devil bill sitting in the parking lot that i drove that i bought from my grandma had a huge trunk and i used that car to go pick up the boxes stored the stuff in my room over the summer in the first year me and danny made seven or eight grand with no expenses at all and we used that seven eight grand to buy fifteen hundred dollar cargo van into lisa space and to get a bunch of flyers and to go do some marketing and the next year we made you know a hundred and twenty grand and then year after that we made half million and year after that we made one point two and year after that it was two point five and then two point five and then you know almost three so kinda over time and we we don't have any debt at all in the business we never have and you've never taken any investment from a external investor yet no we own we own fifty fifty and the thing spits off half million year for us and and we don't do a whole lot we automated it so that's what's allowed us to kinda build that real estate portfolio now i love it so then you started with half a million to build the real estate portfolio that we put in half a million we had a little extra right we had two hundred fifty grand extra as a safety net but but yeah the that's the thing about real estate everybody wants to get into real estate but the the cold hard truth about real estate is you better have some money to get into real estate you like you can't you can't just go do it you gotta be able to personally guarantee the loans you gotta have some assets as collateral and you gotta have some cash you're we have a lot of internet folks listening i mean like me and sean sean maybe more than me but still me are like these the stereotype at silicon valley internet folks and which i i embrace because it's true mh mh and we have a lot of those listeners though we do like champion like small businesses and we do champion not sexy stuff what opportunities are you seeing pop up in the space that you think that some of the listeners and some of the internet based software based folks should exploit yeah i mean the the the way that i feel about business is that six months after you a business you're not gonna be doing said thing anyway so it doesn't matter if you hate scrubbing toilets or painting walls or doing any of this stuff you're gonna be hiring managing firing training del and doing it at all everything that you know takes to run a business and and i'm all about picking your competition who would you rather compete against a bunch of brilliant stanford grads or the guy here in athens georgia on the corner who makes three hundred thousand dollars a year and hasn't you know uses a fax machine and you know writes checks and doesn't answer the phone and runs this business basically i guess nineteen eighty five but when you're going through this process no i and i hear you on that if if you're wanna be entrepreneur listening to this podcast and you're like a lot of people are like wow there's so my parents own a produce brokerage where they basically buy million dollars of onions and they sell that millions of dollars of onions to walmart for one point one million dollars and they do their business probably does ten million in revenue very tiny margins but all done through fax machines and checks and no cell phones no computers things like that mh and so those are the businesses of target that's a beautiful opportunity in my opinion yeah and so but still even even i grew up around that i'm like you know everyone's using technology when it's definitely not the case so where are there any examples of processes in your business that need to be automated that aren't or need to be more efficient that aren't that i wouldn't know about yeah so to i'll give like i bought a house i when you buy did you buy your house do you guys own your homes did you have to get your vendors and things like your non care your you gotta to take care of the how was it dealing with those people right half of them didn't answer the phones you make ten calls for lawn care companies and you can get maybe one or two to show up their lead time is three weeks it's trying to build a fence out back and it took me took me like ten hours of work just to get a contractor to to come out and bid my fence in my backyard to build it they're all under charging they're not raising their prices enough and they're all so busy they're running around like chickens with their heads cut off instead of kind of putting systems in place and raising their prices and scaling businesses they're not they're not business people they're not entrepreneurs they're not people who study business they are just people who built themselves a job so which opportunities are you referring to specifically home services yeah people are spending a ton of money in home services painting cleaning maintaining washing doing all the stuff in your home that like if you wanna charge double what the nearest competitor in town is charging but you have your first on google you're gonna answer the phone you're gonna provide online bids instantly to do the work you can convert thirty percent of your leads instead of seventy or eighty and you can make really good money doing this stuff and business is all about momentum so you start out doing some of the work yourself the year after that you're del even more you're making more profit five years down the road you have seven hundred fifty grand sitting the checking account you can build a build a self storage facility with right that's not kind of that's how it works who are some other people that are like you that have done us sweaty startups that that people should either follow on twitter or that you can give us the kind of their their one minute story about what they did that's a slightly different path than you yeah that's the thing nobody shares this stuff the people who have done this stuff are sixty five years old and they're playing golf every day at their country clubs and they're the wealthy people in our towns they're not the ones getting articles written about them they're not the ones on social media this is a message that is not widely distributed by any means i can't i i mean andrew does it right wilkinson yeah but he doesn't do these types of businesses so he he buys he he internet business that are already profitable i would say that's the opposite of a what dodge i think he his his goal is not to sweat and yeah andrew who's our great friend so i say this with love he he doesn't wanna do any of this right he wants software he wants right he's not trying to break yeah but similar mentality is you but he he he he wants he's boring software company similar in the sense that he's like look the fundamentals of these businesses just make sense and why are you guys all chasing these unicorns when like there's a bunch of business models that just make sense that are profitable and hey like why is everyone forgotten about profitable and durable and like simple businesses although mh of a different style so okay so so you don't think andrew has ever lifted a box in his life though i say that was brent i guess brent b sure brent b sure is the version of andrew on on this you know he's by he's rolling up roofing companies and plumbing companies mean if you got no money no cash and no resources you're gonna start cleaning the company right but but if you if you have some money if you had some management experience you have a team you can buy plumbing companies roofing companies hvac companies that are doing i two hundred grand a year and you can roll them up and scale them up to be doing a million dollars a year pretty relatively risk free if you do it right you know who did who who did this quite well and who we're friends with is brian sc the founder of one eight hundred got junk mh mh his business i don't know exactly how the revenues counted because it's like a franchise at this point but it's like a four hundred five hundred million dollar year company yeah there's massive versions of it and there's a a good friend of mine in dc who runs a super scoop business that does five hundred and fifty grand a year in sales at forty percent margin and he works three hours a week scoop poop out of people's yards makes a quarter million dollars a year like because nobody poop wants to scoop poop it's scoop out people's dog poop yeah it's a poop or scoop business where they show up and they charge you monthly fees to walk in and scoop the poop i mean pest controls another excellent one where you show up with an un skilled employee spray some liquid it for fourteen minutes and charge two hundred dollars a month for that right i mean these businesses that are not sexy and tech entrepreneurs are never gonna go after but if you look up from your computer screen at our everyday world there's businesses that are making phenomenal money and honestly i'm very good at business right and so you're gonna say something about cornell yeah so you went to cornell so i assume you're pretty smart dude yeah i i i got in because i could run track i had probably the lowest sat scores at cornell but i got out so i guess i'm sorry what was your sat did you graduate what was your gpa my gpa was like three point two i i i took a joke major though i the engineering and sciences on a whole level but i think my score was eleven eleven ten or something like that this is on the sixteen hundred act was twenty three hundred okay or no wait act was twenty three sorry twenty three yeah three i would did that than you yeah my high school's ranked i think it's in the like only the fifth percentile in the united states i went to a high go with eighty three people and so in in spanish class i think this was class we paid poker instead of studies never took a about you you went to cornell where you're gonna be surrounded by a bunch of people who got like you know fifteen hundred on their sat and take this shit super seriously and we're like go trying to fast track to banking consulting you know that sort of thing and so what what was that like when you were there at that time did you realize like i'm not like these people i'm gonna do something different or were you also trying to play that game at that time that's a tough question i mean we knew we had a ton of opportunity costs leaving cornell i mean when i told my dad i was gonna be starting a moving company he goes are you kidding mean you just told me your buddy is gonna get paid a hundred and twenty grand a year to go work in manhattan and you're gonna buy fifteen hundred dollar cargo van and move boxes around and he's like what the hell did i send you to the ivy league for but i i don't know we just got excited about it we saw that cash on our bed after we ran around and worked our butt off for a week and a half and then we said alright what do we have to do to make this worth it so instead of just keeping it really small and starting just doing the next year at cornell only we said alright we need to take some risk here and get after this so we convinced the friend at i u to open a branch there we convinced the friend illinois and we said if we don't get three hundred customers and do over a hundred thousand revenue we're wrapping this thing up and we're gonna go get jobs and and we just got after it and we had a blow out year and then another blow out year and our friends made fun of us early on that we were moving you know they made fun of our van because it was nineteen ninety eight window list van that we were driving around college campus and and but then you know five years later we're out earning you know all of our friends so it's it's and we did it virtually risk free no no decision did we look at and say if this decision goes wrong we're gonna be broke or we're gonna waste three years or you know we we're not gonna get funded or we're not gonna have an exit and you know most most people i know who go into real to have a similar path where they start with a kinda of operating operating business that's giving them cash flow and then eventually they buy the the land or they buy the building and then they right inside of it and now they're getting the sort of double dip where they own the real estate and they own the business inside the real estate and what i've seen is that a lot of them just say like fuck this whole operational thing i'm just gonna own the real estate i'll just be a developer and i'll lease it to the next kid who wants to run self storage and and manage customers and do all this is that the path you're going down yeah definitely i mean we do man it we self manage just because we're good at it and it's and it's low stress and we can wrap it in technology and with three employees we can manage million dollars worth of self storage but our goal is to own the real estate and let the real estate work for us right and over the next twenty years just grow that portfolio so that yeah we're making a couple million bucks a year by not doing a whole and so sorry so you said you have three employees managing how many facilities is that oh well they they work at our other company too so i i guess if you would say self storage portfolio only it's about two full time employees worth all years they managed so about a hundred manage how many facilities eight facilities worth about ten million dollars wow so each person can manage a four facility so us individual employee can manage four facilities and the rest you're doing is contractors to come clean and do do any of that stuff those are not people on your payroll that you have to manage and that's only in and that's only three hundred dollars a month on average per facility to do the on site stuff yeah we're buying we're buying these buildings who from people sometimes they have an office with a full time person in that building right and we are replacing like we're we have a facility in in new york fifty one thousand square feet and we have no full time manager three hundred dollars a month payroll that guy down the street has it the exact same amount of square feet the exact same amount of revenue in an annual basis and they have a full time employee almost two full time employees work in retail hours in an office right there but why did it take what did it take to do that did you how much equipment did you have to purchase in order to automate that whole thing sixty dollars a month on easy storage solutions and a fifteen fifteen thousand dollar automated gate and keypad and about a six thousand dollar security system so that we can look at the hallways and look at the driveway and and make sure that yeah people aren't sleeping in our units and there's not a big couch left outside of a unit and so on and then but like and that you all can you you take a credit card payment right there yeah oh yeah they they sign up they pay right on the line and they get a text message with their unit number they go right in their unit like five minutes after they look at our facility they don't they have a unit they've signed to the lease and everything is done but don't they don't and you said you needed a a gate security cameras don't you also need like automated doors for each unit no they're just long storage units that you slide open and we put a free lock right inside and they they go to their unit number open the door and a lock is waiting for right so they lock it with their own combo and then they they manage that themselves so so so let's just take okay so on on one side door number one is traditional the the guy across the street from you who's not doing it your way he might be paying a total of what like fifty thousand dollars a year or something like that to to kinda manage that property or more do you think mh yeah eighty grand year eighty retail hours so one employee can't work retail hours all year that's you know that's that's way more than forty hours okay so eighty so eighty grand a year and then you're replacing that with essentially nobody or a quarter of an employee let's say because one person's managing for and then you're putting in certain technology software to automate this thing your whole software stack plus contractors to do the cleaning and anything else you're all those miscellaneous services what do you think you're adding up to or do you probably know what what are you adding up to and when you replace that yeah about twenty twenty five grand a year five hundred so great so yeah their expense ratios maybe fifty percent or sixty percent of revenue our expense ratio is thirty five percent of total sales so if we have a facility that does five hundred grand a year in in in revenue you know our our cost our competitor maybe making two hundred fifty grand in net operating income we're making three hundred fifty grand net operating income and could you sell like a training system to like the other self storage operators that are not selling right now that says hey here's how you can reduce your expense ratio by you know fifty percent you do these five steps and i will i i'll i'll be with you on the phone and to kind of explain you how this works and look you get all your time back you get money you get more money to the bottom line i mean if you ever tried to teach your grandma how to use anything that makes her life more efficient on a on a computer i mean these people don't want to do it they've been doing it one way the whole the whole time they wanna see people they wanna shake their hands they wanna have a signed lease we're buying there's nothing these sixty five year olds but there's another path of i and this is bay which sean is getting at is how if sean wants to buy this to get this to storage units no that's not where i'm getting at i'm just thinking like you know there's only gonna be so many that you're gonna be able to buy or want to buy when you'll be limited by cash and how much the sellers wanna sell mh and so but it sounds like your your secret sauce is you know there's just a normal blocking and tackling of doing a real estate business that you're doing well right like mh getting money getting financing building up credit you know you know watching your books and doing your taxes smartly and then there's this other side which is you're actually able to operate each facility at cheaper which means that you're buying it when it's valued at a hundred grand of profit but to you you know within a year there's gonna be at a hundred and eighty if i just do my normal playbook right and so i was just wondering these things are worth more to us than they aren't anybody else when we buy exactly so that's that's the secret of real estate is is when when you when you get more value out of the thing than the next buyer then you're always gonna be able to bid in a sort of smart way it's so yeah real estate is ripe for disruption i mean you you guys wouldn't you wouldn't believe the amount of money that's made by people who do not wrap their businesses in technology like a the tech mindset allowed us to yeah we have a competitive advantage we're gonna scale it and we're gonna do really well for our ourselves there's there's hundreds of other real estate asset classes i mean why do we start to check into a hotel by talking to somebody there when i can go to an airbnb five years ago and instantly check myself in and go right to my bed yeah i hate that i i think five years from now ten years from now somebody's gonna make a ton of money by totally automating hotels why why the heck do you need that check process when we have the technology to do all of it on our phones can we let's go down this path keep keep r on that what else have you noticed like you know sean not know anything about this yeah hotels hotels are valued at of hotels are valued at the same way you buy a five million dollar hotel it's gonna be valued at a seven or eight caps so it's gonna make seventy thousand times five in in revenue but if you can cut the expenses boom you instantly just made a huge competitive advantage so while it's a five or six cap for the other person buying it you can get a lot better cash on cash returns you could scale up a business like that very quickly and and you know then all you gotta do is worry about staffing the cleaning a hotel has a staff twenty four hours a day there so what's twenty four hours a day times twenty bucks an hour fifteen bucks an hour at the front staff you can save seventy percent of that when you're time boutique or small motel or hotels at the moment when every everyone's going out of business somebody's gonna make a lot of money doing that yeah and a lot of people are able to convert these kinda crappy motel that are they're pretty bad as motel but they could be pretty great as airbnb bees and you know if they're generating dollars because you know their occupancy rate is seventy five percent or whatever per month now they're gonna be valued at that price but if you know oh if i list this on airbnb and i can charge a little bit more per night because i have now a vintage looking airbnb then you know this is worth more to me than it is to them and and you can go scoop a lot of these kind of like distressed or or just sort of like misused properties and use them as airbnb it town america has a ton of ten twenty thirty bed hotels that are ran by families that the next generation is not gonna wanna take over right and somebody got particularly indian families sean are like crushing the motel industry in middle america that i read seventy percent or something like that of motel is it mh i don't know too much about indian culture but it what what's the patel yeah the well it's just like one of the like five it's like smith right like one of the five common last names of of indian people there was like an article about like the patel clan maybe there's one patel clan i don't know like one group one large extended family i was reading about them that they just crushed dunkin donuts like they just own eighty percent of them and then they also own most the motel right like a large percentage of the motel and the problem was is that the children were like i don't wanna do this you know i'm you sent me to stanford like you know it's like the same it's like the whole immigrant cycle of like you know you come here poor hardworking and driven and then your your kids get soft because you send them to stanford because you succeeded so well so i like an interesting problem or an interesting opportunity i think i agree with you nick yeah the immigrants i think they have an advantage because they can say hey come over to the united states will get you the green card to work here if you run this pizza restaurant or this chinese restaurant but we're gonna own fifty percent like you're just gonna do a lot of the work and know in a small amount of it kinda of like a mini franchise system where they bring in family members to to help grow an empire over time here b you you wanna read what what what's the say bra you you just share us a link i'm not sure if this is the guy you're talking about but i talk patel yeah it's kind of goes over a story of like coming to the united states at nineteen eighty five like twenty dollars in his pocket and then building up like a little empire around hotels yeah mo it's motel and dunkin donuts one of the things that happened was so patel it's not actually one family it's just again it's like the last name smith but it is like a race of people that are all like from a certain part of india and what ends up happening is that they're financing these for each so they're they found a model that works they tell the other people like hey this motel thing works and then they provided it they basically became a community bank for each other was is what i understand where where they provided financing and i think jewish people do as really well too where jewish people do a great job of funding other jewish entrepreneurs and business owners and so the the whole sort of the whole society or the whole race will we'll do better over time and because they have this great culture of paying it forward have you ever heard this nick and sean i used to have this good buddy it was i dated this girl in nashville this my my girlfriend in nashville at the time she had a good friend and he and she worked for him and he ran a locksmith business in nashville and he was from israel and the whole stick was they convinced their israeli to buy to come here and they yeah i got a locksmith job for you i have no idea why israelis and locksmith but it's like all of the locksmith in in nashville and i think even throughout the country are israeli immigrants and they come and they just crushed the locksmith industry and they do it by they this guy i won't say his name but i knew him and he was like yeah so here's all i do is i create ten different websites i call it like smith locksmith i call it expert locksmith lock abc b c locksmith aa a locksmith like is and and i rank on yelp for all of them and no matter who they call they go to my call via service and on the phone i just see like yeah you know like you know maybe three hundred dollars does that sound good to you you they just make up prices and then they deploy their their coworker out there and they own the whole nashville locked smith they own number one through ten guys got like ten shirts and his trucks it gets out he's like who am i today oh i'm i'm expert locksmith i'm wanna gonna put that one on in the head inside and and and like their businesses will be like abc b c locksmith or a plus locksmith because they always wanted to off alphabetical corey yeah i i got a funny story like that too i was when we were in the early days of starting self storage our student storage business we weren't sure if it was gonna work so we're putting a lot of other irons in the fire in bloom indiana has it's always been a town i wanted to move or live in because it's awesome i put up a little lawn the lawn squad so my business was called storage squad i put up a the lawn squad in bloom indiana a a little google my business location in a website and i didn't really do much with it for about three years and then my brother got into i went to i and and and i'm like andrew i've been in a lot of calls for lawn care in indiana do you want to start answering him and go make some money and you fast forward three years and now he's a full time landscaping business in bloom indiana he works thirty hours a week for twenty seven weeks a year clears about a hundred grand and then plays golf off and fishes all winter long and living to dream there's some like overworked person right now listening to this who's just like saying fuck to themselves like at their at their desk or in the car i'm telling you it's if if tech entrepreneurs if tech on who who knew how to wrap these small businesses in technology whether it be seo content marketing you know software to do the bidding i mean just look up from your computer screen at the world around you and there are opportunities galore everywhere that just keeps incredibly efficient the problem is is that in san francisco and in new york where a lot of the these folks whatever we call them techie i don't know whatever you wanna call them there aren't local sir you don't need local sir you don't you don't need the lawn hair you don't meet like and people don't everyone rents like it's like oh that is post that's not that is not true at all that is not true at all there are tons of people who keep the city clean mainstream maintained but i'm saying that a renter ivan haven't had a long in ten years like what i'm saying is like you have in these cities that you're referring to most of these people they don't know this is actually a major opportunity because they're like mh they've they forget how how many how most of america has a long they forget that most people own a home whether you need plumbing help every once in a while you know that's what i'm saying they forget that the the the plumber walking into the law offices on the fifty fourth floor in new york city are making more money than the lawyer right while they're there that's the that's the bull quote for the episode my my father law owns a moving business he and it's very very very successful they've got a house my father love they got a house in the hampton they got a house here and they got a house here they're very they crushed it immigrants knocked it out the park and all they do is commercial moving and high school dropout type of situation and so no i feel you and i think it's just looked under the hood if you guys looked under the hood at how these businesses actually did business how they build how they communicated amongst their teams how they communicated with customers you you would your your head would explode when you see how much money they make at the end of the year with those methods i mean that's what we when we when we launched our student storage business there were twenty other companies doing exactly what we were doing and part of me and like hey are we gonna try this and he goes well let's look at all the other competitors and see what we think they're doing we kinda counted their customers acetone the ton questions about how they did business and really soon we realized that every every time they'd say oh this is how we do business we'd be like oh my gosh really that's how you guys do it you really holler around clipboard and when google sheets is a thing now you can get a tablet with lte where you can live update this stuff and you gotta send in a check and we gotta sign up by mail sometimes and that's that's real okay so what's a tell me teach me a brother which okay you got the storage unit business on lockdown where what what where should i look at you said home services specifically what does that mean yeah home services are the people who clean your carpet clean your driveway install shelves in your closets these are the people anything that physical that you need done where you need a person to show up to your house whether it be pool service cleaning anything like you know putting together anything building anything fixing a pipe fixing i mean twenty years ago everybody knew how to do everything at their house they're outsourcing everything now to companies because nobody knows how to do any of this stuff nick so your business works because you started with the moving boxes in a truck and then you're like okay we'll have a storage facility that will run and then you're like okay i'm gonna own the building for the real you became in you got in the real estate game that's why your business is actually great now you go and try to do this with painting and with shelving and with lawn care you're never gonna be able to do the real estate side of things you're only gonna be in the service business for as long as you can now that that business might be profitable but it'll stay sweaty right it's not gonna be you i guess what you're saying is that systems that your cash and the systems that these guys operate with are are totally under optimized whether it's labor or it's marketing and or customer service right and and what you're saying is you can make them more profitable and you don't have to do the service you can hire and train people to do these dumb services they're not that hard to learn you can you know the pest control guy can learn this in a month how to do this in serve a certain area but those never get the real estate side which i think is a pretty big difference between your success and what somebody going into these spaces might might achieve business is all about momentum though right i mean i about the wealthiest people that i know they all started really small they all started really low risk i mean you guys know different subset of the population you know people who went big and hit it big and one i know people who started selling t shirts out of the back of his truck and he got a an artist to draw car shirts on those t shirts and then he made a deal with the nba that when michael jordan larry bird won the nba title they got to put those shirts on of his and then he sold that business to haynes for three or four million bucks started buying planet fitness with his three or four million bucks and then when planet fitness went public he he was worth a hundred and fifty million dollars business is all about momentum right who is when you're twenty one twenty two twenty five is not gonna be the same thing that you're doing ten twenty years from now who's that person all i can't say is name i don't think but you can look it up if you if you search the there's goes those characters yeah the the you know you know what i'm talking about those shirts with all those you know like larry bird had a huge nose yeah exactly exactly yeah the i think you're right that business about momentum but business is also about leverage i think really really ultimately it's about leverage and you're trying to get an enough momentum so that you're leveraging the different things that can be leveraged right like in silicon valley people leverage code right it's like oh you have to every day you have to go you know trim someone's lawn you know i wrote this program once that like fixes this bug on their computer and now i sleep and people just keep using that product and it just works for me it's my server does the work i don't even need a human mh so that's the leverage that they get or sam right sam does media it's like i write one thing i write one email one day and i can have a million people read it i don't have to go print and deliver newspapers so he's got you know media plus software as his leverage capital is leverage and so there's always i think really what you're really what business is all about if you really wanna make money is figuring out a point of leverage that makes sense now it's true that when you're operating momentum is what feeds you right and as your momentum dies your business basically dies and so i think there's sort of some blend of the two where you'd have to find a point of leverage if you're gonna go into these kinda sweaty startup spaces and figure out okay how am i gonna use either software capital media or you know what how i gonna use one of these levers to make this business worth a lot more with less work or reach more people with about the same amount of money or the same amount of employees i think that's that's what you've done well as you found leverage where you're you're using technology so that one person can operate for self storage facilities yeah and then that lets you double no which lets you buy things and and make profits and lets you ref refine them out quickly because you're able to like increase the values so quickly that's your that's the real secret to your model yeah i just think it's a little bit about risk too like if you wanted if your goal and and what you want in life if you want to to make it big if you wanna be you know to to continue to do bigger and better and scalable things and become a ten twenty thirty millionaire obviously a lawn care company is not the place to start but if your goal is to make two hundred fifty grand a year and work twenty hours a week and and and that can make you happy then you know i think the lowest risk way to get there is to compete with the folks who are making that kind of money and don't know what the hell they're doing yeah let me wrap up by i asking you a question which this question's is gonna sound disrespectful because but i i'm not i don't necessarily believe it but i i wanna get get at it and hear what you think which like you're talking about doing these things and not working a lot you're talking about again it's gonna sound rude but i don't actually think it but like you're relatively meaningless stuff like you know you're not making something that is potentially going to change the world or potentially is not gonna save a life how do you it's not sexy sleep no like but like do you stay motivated when you just like so what's the point appointment man this is just financial arbitrage again i'm not saying i believe this but this is like the devil's advocate of like someone would say is like you know like you're not like solving cancer you're not it's also a little bit like low creativity right so just is low innovation in that sense yeah it's tackling and blocking and and and at some point it's not rewarding right and then what do you wanna what do you wanna do and who do you wanna affect meaning in in and a lot of this or excitement or joy i mean like getting a rich and providing for your family is a good answer but is there more i think rich on unfortunately money is power unfortunately money is power and money wealth is that's the that's when you can start doing things that are fun like that's when i can start the sweaty startup up podcast and all a sudden i have half a million people that have heard this message about changing their life for the better because i see too many people work in a hundred hour weeks driving an hour each way at a town to work for corporate america that have already been through divorce and are not you know that's that's what the majority of my buddies that i care so much about are spending their time doing they can't get together for bachelor parties they can't get bet together for golf trips they can't see their kids can't see their lives so thing think this whole journey for you is definitely not that you give a shit about storage business i don't give a crap about lawns or painting or cleaning i give a crap about living the life that i wanna live with the people who matter to me and making memories with those people and if you ask me the the quickest and easiest way to make that happen and everybody wants to do what they wanna do they wanna work on what they're passionate about they're mixing what they love to do and how to provide i like to divide those things i like to make the money in the most efficient way to make money and then do whatever i wanna do in my free time that is rewarding to me affects people in a positive way allows me to make memories with people who matter to me and honestly when you start making good money in these service businesses you're in a lot better position to change the world and you're in a lot better position to then take a big shot you're like look at me i'm a just a southern guy who scored not much on his sat i'm sitting here in a podcast with youtube guys and i have a twitter twenty thousand people on twitter following me and you know it's just the doors open the doors open when you get out you learn something you master something you make a little bit of money so what's your game here you have a the end game i wanna build a big real estate portfolio that i can hand off to my kids i want to and then i wanna spend my time doing exactly what i wanna do every day that's my goal i don't wanna spend a single day doing something that i don't want to be doing i mean i love working i i thrive on progress when i wake up in the morning and i'm achieving things i sleep better at night when i feel like i'm moving things forward but i don't want ever to have to do things because somebody else told me that that's what they want to it would be that day those those days where you're like you you here you're doing exactly what you want what what would it what would that be yeah i mean me my business partner sat down three weeks ago and we said look all we have to do is buy a couple more storage facilities and we're gonna be making a half million dollars a year and we can and we can pay another employee and if we deploy all this money we'll be making a million dollars year each and we can do absolutely nothing we can do nothing right that's that's a pretty good spot to be in where you're you have an opportunity do keep growing and going after let's say you got to that point what would you do with your time then exactly what i'm doing now and i'd probably start another business and i'd probably get excited about something else right i i think i i'm i'm too too much of a person who thrive off of accomplishment to sit back and have fun on vacation all day but i'm just gonna get to work on solving some bigger problems now like i've carried a lot of boxes up up us upstairs so now i get to attack some things that that matter to me and and you know maybe even take a big shot at a bigger company i'm only thirty i don't know i something that matters to you what's a big shot you would you'd be interested taken right now what i'm really excited about is is getting this small business message out to a lot of really smart people okay it's it's it's you know taking a lot of my energy but i yeah i think there's some other asset classes in real estate that are pretty exciting that have a ton of innovation and i think i'm in old in at thirty years old out hotels like we said it's industrial real estate there's boutique you know there's all kinds of little niche like animal cr that can be a real estate play there's all these little really cool things that can be a play in real estate that sixty five seventy year olds are the only ones who make the calls and these things and they don't care about slack they don't care about cr like a well you get ashes from your dog people people will pay three to five hundred dollars to take their dog in to get cr and get it earn of their dogs i can remember their pet that's allowed to do that yeah it makes a ton of sense and you make a little business that is like a drive through it sounds crazy but it's a it's a one thousand square foot piece of real estate and you you put a pretty low skilled staff in there or you pan operated operate it and you own the real estate and other they're cropping up all over the place you learn something new every day when you listen over this of funeral home funeral homes and and actually s are really good asset class s are profitable businesses whether you know that or not many of them are owned by cities and municipalities but they can be very profitable you have cold storage for like distributors you have little pieces last mile industrial warehouse space that you know there's a big shortage in our cities of this last mile industrial delivery space real estate is really fascinating to me and i love it and i'm sure that i can i'll stay at my entire life but but yeah it's cool awesome i think this was you dope website people are gonna like this a lot you wanna let them plug himself here where should people find more about about what you're talking about yeah they can email me nick at sweaty start startup dot com they can follow me on twitter at sweaty startup they can listen to this way startup podcast i interact a pretty small community this is not sexy stuff that it excites a lot of people so i have two or three thousand people that we listen to each of my podcast episodes and and i'm very active on twitter at what startup up awesome thanks nick yeah thank you i appreciate everything you guys do cool see you man