DE 32: Building a Self-Storage Empire – with Scott Meyers

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Scott Meyers is a real estate investor based in Indianapolis. It all began in 2005 and since then he has grown in the self-storage industry as a developer, owner, syndicator, and operator. He has several multi-million dollar businesses under his belt but his favorite is self-storage and today he is in control of over 7,500 units. Scott started ‘The Self-Storage Mastermind’ to teach others about the self-storage business. 

In today’s episode, he discusses how he entered the real estate industry, why he’s chosen to grow with self-storage, and what one should keep in mind before investing in a facility. He gives us insight on one of his memorable deals over the years- what happened, what he learned and what’s going on with it today. 

Some Of The Episode Highlights:

  • His Self-Storage Business
  • His ‘Why’ in Self-Storage
  • The ‘Boomerang Property’
  • Special Gift for Our Listeners 

Connect with Scott:


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Intro: Hey guys, this is Don, your host. In today’s episode, I will interview Scott Myers. Scott is an amazing investor and he specializes in one of the most interesting asset classes, self-storage facilities. Today, me and Scott will discuss the nature of this market. Also, as previously mentioned, I want to remind you that you have an opportunity to get a free 30-minute phone call with me and Eden if you review our podcast on iTunes. Simply rate the podcast and write a review of how you feel about the content and the show. To redeem, email us the content of the review to You will then be contacted and scheduled for a 30-minute phone call with me and Eden, where you could ask questions or network about any subject or project that you would like. So, let’s get started and I hope you guys will enjoy the interview.

Lady: Welcome to the commercial real estate investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to off-market strategies.

Don: Scott, welcome to the show. How are you doing today?

Scott: Hey, Don, I am fantastic. How about yourself?

Don: I’m great. How’s the weather up in Indiana?

Scott: Well, that depends. We had our first snowfall of the year last night. It had about three inches, which is a little bit more than we normally get this time of year. So, I think I’d rather be down next to you conducting this interview right now.

Don: Yeah, I mean, we just got the best weather right now in Florida. It’s been very muggy for November, 75 degrees all throughout. I used to live in the Midwest, and I know it kind of gets cold in that period of time of the year, right?

Scott: Sure can. Yep.

Don: Yes. You’ve been living in Indiana, all of your life, born and raised?

Scott: Born and raised in Michigan. I went to the University of Michigan and after I graduated, I moved down to Indianapolis where I took a job. I was working in the telecommunications industry before I got involved in real estate.

Don: Wow. Okay, so that’s a pretty sharp transition. What made you move into real estate?

Scott: When I began looking in investment books on ways to I guess diversify my retirement rather than relying on our 401k stocks and bonds and mutual funds ran across several books, one of which was Robert Kiyosaki’s book terms in real estate and the more I looked at more I realized that I didn’t want to put my money into the stock market as the poor dad did in Robert Kiyosaki’s book ‘Rich Dad, Poor Dad.’ And so, I began investing in single-family homes and then it took off after that.

Don: Yeah, let’s talk about your initial investments in the single-family space. What did you do, fix and flip?

Scott: Began to buy single-family homes, and then fix them up, refinance them and rent them out. And I did that for a number of years until holding. It’s kind of a tough gig holding on as a landlord unless you’re flipping some as well. So once the economy began to turn in 1999 and 2000 during that downturn, shortly after the government came out with the Community Reinvestment Act, and made it easy, a little too easy for anybody to own a home and so we began then turning around our houses to sell them. So, we became retailers in addition to landlords.

Don: Nice. I know right now you’re focusing primarily on self-storage. Tell us about the first time you got to learn about this asset class and this market in general.

Scott: Began looking into self-storage because of, well, that wasn’t the cash flow that I wanted to have in single-family homes and apartments on like I had intended. And then when I went back and looked at the business model, I realized that most of my expenses were a result of a related to tenants and toilets and trash. And so, we all love real estate and we love running real estate if it weren’t for that. So, I began looking into what are the other asset classes in real estate that has the benefits of real estate, but without all the hassles of the three T’s. And it’s either parking lots or self-storage. And so, the more I begin to look into self-storage in the business model, yeah, I really liked what I saw. And began attending some industry trade shows, then dip my toe in the water by getting into a partnership with someone in a self-storage facility. And the rest they say is history.

Don: Yeah. So, there is a question that I want to ask you. I know now that you’re very big on the self-storage space and you own or you’re in control of over 7500 units, I’m guessing in self-storage just since 2005. So, you’ve been a longtime player in that space, but I want to ask you more about the beginning because I remember I just recently did a transition from residential wholesale real estate into commercial real estate. And even then, being an experienced investor and owning a lot of properties and having capital, it’s not easy. So, you said something about going to shows and learning about… So, tell us a little bit about that period of time where you did not make your first deal in self-storage yet, but very attracted to that asset class and what you did in that time period, how much time did it take for you to get your first deal?

Scott: There weren’t any resources. You found me, Don because we have an education company as well. We teach people how to go about and do this business and we’ve been doing that since 2008. But prior to that, that company was really born as a result of that. There wasn’t a resource, there wasn’t a Scott Meyers out there to learn from it. So, I attended the industry trade shows and those shows are primarily for the folks that are already in the business. 

So, I begin talking to the attendees and just asking them, “What do you like best about self-storage and what don’t you like about self-storage?” just to get an understanding from several folks that before me and how to get into it. There still wasn’t any way to learn the nuts and bolts, the A to Z or how to get into it. When I came home as I began to do more research on my own, I reached out to a consultant in the industry and I spent a day with him and drove around and taking notes and asking about it. 

He owned a management company as well. And he managed several facilities for other folks. I asked him as many questions as I possibly could to fill in the gaps and I filled up three notebooks full of paper, just answering the questions that I had about the business and I, like you, been in multifamily and apartments and I understood commercial real estate. But all the nuances and all the intricacies of self-storage to bridge that gap and fill in the gaps took me all day and a bunch of notes and even then there was no way to get it all but that’s how I started. And then just sort of trial by the fire going out and talking to other owners and brokers and begin exploring and looking at several facilities to buy.

Don: Okay, tell us a little bit about the market itself. So, what are the biggest players, what is considered a big property? I know so when you’re looking at multifamily anything over 200 units is considered very big. Mobile home parks, anything over 150 is considered institutional. So, what would you say is a big deal when you talk about self-storages?

Scott: Yeah, we’re in that 400 to 450 unit range and which equates to roughly greater than 60,000 square feet. Those facilities that are larger than those are the ones that are going to be typically institutional, so those are the ones are going to be held by Public Storage or Extra Space or Bridge or CubeSmart number of the big players or reads in the marketplace. Now not all the time we own several facilities that are that size as well with the goal and the intention of eventually off to the reeds and that’s what we’re developing and building now. That’s really what’s considered the big boys. And so the reeds are the institutional properties and facilities that size you know, that only accounts for about nine to 10% of all the units and all the square footage of self-storage are below that and are owned by some regional players that own you know, 1, 2, 5, 7 properties. Some national players that aren’t considered and then a lot of the mom and pops that we buy our facilities from that can go all the way down to as low as 15 between units per facility.

Don: Okay. So, mom and pop are always good because you can get a pretty good deal. Somebody that owned the property for quite a while, they have a lot of equity typically and there is a lot of value-added. So, I would assume that the value adds basically comes to play when talking about raising up the rents, right? So, they’re just not fulfilling their potential.

Scott: Yeah, that’s absolutely one of the ways that we look at. We’re always looking at turnarounds and value adds and the first of which is usually what you just mentioned is usually poor management. They haven’t raised rents in a while because they like to stay full, they have fallen behind on technology and we do utilize software and kiosks to manage these facilities or at least help to manage these facilities, which reduces our payroll, which is our second highest expense, line-item expense next to property taxes. In many cases, not all the cases many of the mom and pops didn’t understand how to market their facility, therefore they suffer from a lower occupancy than if they were running very well and had a better website and then a means for people to rent a unit or reserve units online.

Don: Yeah, what would you say are the biggest minds or the things you should be careful when you’re buying a self-storage, especially when underwriting a deal?

Scott: Well, the normal due diligence that we go through first the physical side, we hire an inspector, we do our site visits and we hire an inspector to look at all the physical aspects with the underwriting. As you know Don, that some in commercial real estate, you make a $10,000 mistake and underwriting and just at a 10 cap is $100,000 valuation mistake that you’ve made. But in today’s seven or six cap environment, we’re talking about $120,000 – $130,000 mistake. So, it’s making sure that if we’re buying it from a seller and individual seller, or if we’re buying from a broker, we need to get the seller’s numbers, and all of the expenses. So, it has an art and a science to it. But the science part is just knowing exactly what to ask for. And in self-storage versus apartments versus mobile home parks, there are expenses that are associated with each one of those asset classes. 

So it’s important to know what are the expenses of running a self-storage facility and making sure that your account for that. And as I’m sure you’re used to and telling your folks as well but just because the seller and the broker don’t include it has zero alongside an expense sentiment doesn’t mean it’s going to be zero for you. So, management of lawn care and landscaping and snow removal, if that manager does that, or their employer does that, well, they’re not going to do it for you so you need to add those expenses in. So, I think that’s one of the places where people get tripped. Another is the change in property taxes. 

If you run it for a million dollars, and the last time it was assessed was at $500,000 and in this county, they assess based upon a sale, you can expect your property taxes to double roughly and so you need to account for that and underwriting that you’re different set of expenses when you buy it versus what is given to you by the seller. So you know, we can go through each and every one of those but just making sure that you pull all the bills and you all of the information in terms of all the income coming into the facility, as well as all the expenses of that underwriting based upon that to give your valuation and your offer. But then we always have two sets of numbers that we use afterward, which is how we’re going to run it today meaning 30 days after we bought and then what does it look like in the next one to five years down the road once we have stabilized it and added more value.

Don: Okay, and what does it look like as far as the demand and the supply for self-storage facilities across the United States when we’re talking about late 2019? I know that people are buying and we’re consuming a lot more than what we used to, especially those you can buy everything online right now. And I know people have a lot of things that they want to store. What is your take on this industry and the direction in which it’s going in the future for 5 or 10 years?

Scott: What we’re seeing right now is a demand for self-storage. We always look at supply; supply and demand for a particular market. And the good news is that we draw a ring around a particular site if we have developed for an existing facility of about three miles, five miles as if it’s rural or one mile if you’re in downtown Miami. But then we’re looking at the amount of self-storage square footage already in that market in a three-mile radius, compared to the population in our industry is considered somewhere between six and a half to seven and a half square person. And it depends upon the market and there are some areas that are quite a bit different than that. But that’s kind of a round number. And so, that alone gives us an idea of what the demand is. So, then we visit those facilities and determine if that truly is the case, if they have waiting lists, the rental rates in the market will also be an indicator of what the demand is, obviously. And so, then we base it upon that, but there’s only four square foot of storage per person in this market, and the rates are considerably higher than we see around the rest of the country and all the facilities are full and have waiting lists, then there’s probably a need for some storage there. In the case of development, we’re also going to get a feasibility study on just like you do Don when your billing departments often saying, “Yeah, we think it’s going to work, we have to get a feasibility study before the bank will give us money and private equity partners as well.” But that’s how we look at it in today, in real-time for looking at a facility to develop or even to turn around. 

Now in terms of moving forward or looking forward, we don’t see a whole lot of changes being the demand for self-storage. And we don’t have a crystal ball that is perfect, but we keep an eye on trends and we’ve seen in the past, we’ve seen that the baby boomers have created a huge demand for self-storage as they’ve been downsizing and moving into assisted living and then passing on. Their kids store their items in storage for the future. 

But then the concerned about the millennials that perhaps they wouldn’t have the same demand and self overseeing just the opposite. Yeah, they’re minimalists, they have smaller homes or apartments because they want to give them up and go travel instead of having a house or they want to live in a smaller home. But they like adventures and experiences and adventures and experiences require skis and gear and mountain bikes and camping gear and kayaks and all those other things. And they don’t fit in in their tiny houses or apartments or condos. And so we’ve seen an even greater surge in demand for self-storage, and we see that happening in the foreseeable future.

Don: So, you wouldn’t think there are any major disruptors coming in the form of let’s say, multi families that are being built with storage facilities inside them. Would you say that this is a disrupter?

Scott: I don’t think so. Because sometimes they are done either on the grounds and in the basement in some of those areas. For they’re doing that to a degree but we haven’t seen that effect because if you’re going to build apartment and you already have construction crew on-site, you’re going to maximize the living space because you’re going to generate a heck of a lot more revenue per square foot in living space, and you are for storage. So it’s an amenity that they can put in place, but not to the degree that it meets the demand for the entire area or the market. So, we may lose a few of those clients in a three-mile radius, but it certainly doesn’t speak to the entire market that we’re marketing to if that makes sense.

Don: Yeah, it makes sense. So where are you focusing on buying these self-storage facilities? Are you buying across the country or you’re looking at particular markets and then when you’re looking into a market? I know when I’m looking for mobile home parks or multi-families, that I’m looking for job growth and population growth and understanding the environment of the market. Are you doing anything different when you’re looking into a self-storage facility, are there different stats that you got to understand before moving in?

Scott: When I was also in homes and apartments and we’re always looking for the emerging markets that were always a buzzword and some of the guru’s had created. And you always want to see where there’s growth in those markets. And that’s always like that as well. Because if you see, you see self-storage facilities going up. Typically, they’re going out not too far from apartments in a growing market, we’re not too far away, they go hand in hand or in step with one another. But the good news about self-storage, unlike apartments and single-family rentals is that in a downturn in the economy, or even in a market that is experiencing a little bit of a decline in population or maybe some job loss in self-storage, we’re in the trauma and transition business. 

If there’s trauma, people losing their jobs are having to move they need storage, and they’re downsizing and moving back with their parents are moving in with somebody else. And so that creates a need for storage. We’ve seen during the last recession and everyone prior to that self-storage does extremely well because businesses are downsizing. So, as we head into a changing economy, we feel that we’re in good shape. When we’re in a growing market or growing economy, people buy more stuff or there are more people to store things therefore there’s a need for storage. But even if there’s a downturn in a particular market that is losing jobs, there’s a need for storage and self-storage does extremely well. 

Now doesn’t mean that we do great in every single market in every single economy. The one caveat or the one market in which we wouldn’t do well, and as those in which there’s just a new extreme blight or a flight. So, if there are several manufacturers are leaving, and there are thousands of jobs that are leaving a market. That there are some instances that we’ve seen that or even New Orleans when Katrina came through and wipe them out, there’s lots of areas within a three-mile radius that the population is so low that self-storage facilities are struggling, same in Detroit and Flint, Michigan, exited as the auto industry has left, the same thing. So, we do have to be careful that there is an extreme blight in those markets but we like just about every market and every economy for storage.

Don: Yeah, but I would think that whenever there’s an extreme blight in the market, then it’s not going to be just self-storage is not going to be affected. It’s going to be all types of real estate…

Scott: Exactly. And you’re right.

Don: It doesn’t really matter. So, I want to ask you about a specific deal. One that you remember, one for the ages is what we call it. So that you can intrigue everybody that’s listening to this episode about self-storages and is considering to get into space, something that you bought, made good money and it was interesting and intriguing. So, tell us about one of those.

Scott: Yeah. So, this is a property, it was a larger property that I bought back in 2007, so just prior to the Great Recession. I bought the property for $1.5 million with no money down, I used seller financing and a bank and bank debt on it. And it was an industrial building that had offices in it and warehousing, but we converted a large portion of it to outdoor parking for storage is the indoor self-storage. So, we put about $400,000 with a bank loan into the project and we had $1.9 into it. Then in 2007, at the end of it, so about two and a half years later, we sold it prior to the recession of 2008 and we sold about a $2 million profit on that one. 

Then came the recession and the buyer went bankrupt because he was a developer out of California and had lost his portfolio, retain the rights to market some of those properties, this being one of them. So, he offered it to me several times over the next several years, and the price kept coming down, down and down and then finally I was able to buy it back for $545,000. And so that’s when we get good at syndicating as we mentioned Don when you run out of cash. We’ve leased it back up again and we’ve rehabbed them and renovated several areas, leased up the storage, added more storage to it. And it’s under contract to sell right now for just a little shy of $3 million.

Don: So, you made $2 million the first time and then a little bit over $2 million the second time. It is coming back to you giving you $2 million whenever you work with it.

Scott: We affectionately call it ‘The Boomerang Property,’ so yeah.

Don: That is just great, that’s phenomenal. Okay, that’s beautiful. You bought the property, that was luck also buying it right on time and selling it just before the recession, won’t you say?

Scott: We had that thing leased up so that we really couldn’t create much more value in it. It was at the top, it would have just been through some minor rate increases. And so, we didn’t foresee the recession coming and certainly not the magnitude that it was. So, I absolutely will not pretend that I knew what was happening. So yes, we were fortunate enough to be able to sell it at that time when financing was plentiful, and he was able to buy it and that was really good timing. And boy, we learned a lot of lessons through that recession. Fortunately, we weren’t holding that one during that time.

Don: Okay. What market was it?

Scott: That was here in Indianapolis.

Don: Nice. Great. That’s very interesting. And I’m sure everybody that’s listening could see that you could make $2 million on a self-storage facility, one that you bought for $2 million or was in for $2 million. That’s amazing! That’s a 100% return on your investment. That’s great. What book would you recommend for somebody to read in case they already read ‘Think And Grow Rich’ and ‘Rich Dad Poor Dad?’

Scott: Wow, let me see here.

Don: Difficult question, huh?

Scott: It is. I’m just looking at my bookshelf of the many things we’re utilizing our company right now as we scale and grow just depending upon where folks are at is ‘Traction’. So, it’s more than just a book. It’s where Gino Whitman talks about the entrepreneur operating system and really how we as entrepreneurs need to handle and run our business and treat it as a business no matter what the size is. So, I would strongly recommend ‘Traction’ by Gino Wickman. That is the one that’s probably had the biggest impact on us recently. This is for yourself as well as any staff that you may be bringing on are the Four Disciplines of Execution or 4DX all about just getting things done. Bestseller on our wall street journal number one, and again loads of information on how to, well, just how to get things done and how to not make excuses or procrastinate and move the ball forward in your business.

Don: Yeah, it seems that procrastinating is always one of the keys to failure. Everybody’s saying to never procrastinate, always take action and get things done. Amazing. Yeah. So Scott, what’s the best way to connect with you in case anybody wants to learn more about self-storage is or invest with you or anything of that nature?

Scott: Sure. Well, is our website with all things self-storage, and lots of freebies to download and some videos. But I got a little something that I want to give to your folks done specifically for being on this podcast. If you want the beginning a roadmap or what we call the blueprint into self-storage, you’ll go to that same site the numeral one behind it. It’ll show you the steps that you need to follow to get involved in this incredible business that we call self-storage.

Don: Well Scott, thank you very much for sharing that with our audience and I hope that you’re going to have a great day and thank you for being on the show today.

Scott: My pleasure. Thank you, Don.

Don: Yes, you’re welcome. You have a great rest of your day

Scott: You too.

Lady: Thanks for listening to the real estate investing podcast with Don and Ethan. Stay tuned for more episodes. Till next time.

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