In the first part of our self storage millionaire series, we dive into the incredible journey of Sam, an engineer who became a multi-millionaire through self storage investing. Join us as Sam shares his strategies for acquiring self-storage properties without using banks, our value-add techniques that significantly increased the value of his investments, and the pivotal deal that changed his financial future!
From Engineer to Self-Storage Millionaire
Sam, one of our dedicated students, embarked on his commercial real estate journey fueled by a desire for financial freedom and a secure future for his family. A seasoned engineer by trade, Sam faced the all-too-common challenges of job insecurity and financial concerns for his retirement. What began as a search during pandemic downtime, scanning countless YouTube videos, evolved into a mission to master commercial real estate. That’s when Sam became a student of our Protégé Program, a decision that would change the course of his life.
Self-Storage Investments
Sam’s venture into self-storage facilities was marked by two significant acquisitions, each demonstrating the power of strategic purchasing and seller financing. His first deal was a 360-unit storage property. Sam purchased it directly from a seller using a master lease agreement, bypassing traditional banks. Originally acquired for $5.5 million, the value of this property soared to an estimated $8 million due to strategic improvements and increased net operating income (NOI). With ongoing projects, Sam anticipates the property’s value will reach approximately $20 million.
The second self-storage property Sam purchased is 230 units and is strategically positioned across from a prime East Coast family campground. This property, bought for $1.5 million, again off-market and with seller financing, offers immense potential. Sam’s renovation and expansion plans are expected to significantly increase its NOI, ultimately boosting its valuation to around $3.5 million.
Multifamily Properties
Not limiting himself to self-storage, Sam diversified further with two multifamily properties. He purchased his first multifamily asset, an 11-unit building, approximately a year and a half ago. Despite its initial distressed state, Sam saw its potential. Through careful management and renovations, he stabilized the property, raised rents, and increased its overall value, allowing him to retrieve $240,000 through a cash-out refinance to repay investors.
His second multifamily acquisition was a 5-unit property. Sam applied the same strategies, focusing on renovating distressed units and optimizing rent. This property, currently in development, has the potential for a 1031 exchange into a larger asset, further contributing to Sam’s growing portfolio.
For Sam, stepping into the world of self-storage investing has transformed his financial future. In our interview below, Sam recounts his inspirational journey, highlights his remarkable deals, and shares our value-add strategy that created millions of dollars in upside in his two self-storage properties! Plus, Sam discusses overcoming financial worries, his long-term vision, and the crucial role of mentorship and faith in his success.
Meet Sam: Self-Storage Multimillionaire
Peter: Welcome everybody, thank you for joining us. I am doing a series called Self-Storage millionaires and this is part one. Today I have Sam with us. He’s been one of my students for the last few years and Sam is a multimillionaire with self storage and multifamily. Sam, I know you just got off an airplane at midnight last night, so thanks so much for joining us this morning.
Sam: Thank you for having me here. It’s my pleasure and honor to be in the video again.
Peter: All right, you’re welcome. Let’s jump straight into it. Share with the audience your why. So why commercial real estate? What are some of the driving factors of you contacting us.
Sam: I had been researching commercial real estate investment, and I was watching a bunch of YouTube videos during COVID when I had nothing to do, and before you know it, I’m diving straight in about three years ago and it’s all thanks to Peter’s programs. Throughout those videos, even though they teach you a lot, I knew that I need a coach because those videos also mention landmines. And I just don’t want to lose my investment because I am inexperienced. So, I knew I need a coach.
I think the main driving force for me to really step into commercial real estate investment is kind of because of my current nine to five jobs that I have. I’ve been working in the IT industry for about 20 plus years, but still, I don’t see any end to my career. On top of that, I have family expense burdens that I have to deal with. So I was looking for ways to relieve those worries. I was looking for freedom from worries.
First Self Storage Deal: A Game Changer
Peter: I have to echo that because when I first started, that was my concern too. And I think most people that come into our program have that same concern. You jumped right in and let’s talk about your deals now. So, under our tutelage you purchased two self storage properties and two apartment buildings. Let’s start with the self storage. The first one is a doozy.
Sam: Yes, so the self storage I have, which is the very first one that I step into thanks to Peter because I wouldn’t have pulled the trigger if it wasn’t for him. It’s a 360 unit property situated in a very stabilized neighborhood. I bought it from the sellers directly using a master lease agreement at for $5.5 million. And currently is estimated value at this point is about $8 million because I made some initial improvements, which are still ongoing.
Value-Add Plan
This is a very big project. There’s still a lot of upsides and we’re still going through permitting to get increase the units and do some renovations and that will bring an even higher growth. So, when the property is stabilized and all the projects are done, the value should be at about $20 million. I think this deal, which my first year is so good, it will probably be the foundation of my commercial real estate portfolio.
Peter: That’s awesome, Sam. So, this self storage facility is over 300 units. You bought it with a master lease at $5. 5 million, 10% down, no banks at all. No banks, just a bunch of attorneys. I was with you, right? Just a bunch of attorneys. They get in the way always, but we got it done. And from the time you owned it, which was a few years ago to now, you pretty much tripled the NOI (Net Operating Income) at about $400,000and you went from being worth about $5.5 million up to $8 million. We have a couple more phases to a build out the storage facility with covered RV and some storage. And you believe that by the end of year five you’ll have an NOI of about $1 million and the property will be worth about $20 million at a 5 cap. Is that right?
Sam: That’s correct. Yes.
Convincing the Seller to Finance the Deal
Peter: That is so awesome. So, Sam, I’m sure that the audience is wondering, how did you manage to buy a $5.5 million property direct from a seller without a bank? How’d you pull it off?
Sam: The seller in this situation was eager to sell because he had inherited the property from his parents and his brother. It had been in the family for two generations and I think he just didn’t want to manage this property anymore. He wanted to let it go, enjoy life and during our initial conversations, because I had done quite a bit of research, I set the tones.
I knew the caps in these areas and also mentioned similar properties I was looking at so that he would know that I’m serious and not wasting his time. And I think through those conversations I kind of built his trust and that allowed him to give me a shot, to continue this with the negotiation, and ultimately close the deal.
Peter: And you always hear us say that this business is a relationship-based business. And that’s how you convinced the seller to finance the property. Again, no banks, no credit check; you just need to have the money to buy it. Okay, that’s deal number one.
Second Self Storage Deal: Off-Market Acquisition
Let’s talk about your self storage number two, which is also seller financing, master lease and no bank involved, right? So please share that, Sam.
Sam: Yes, that is correct. The second one is also off market and is about 230 units properties. This one is situated in a very popular tourist and family vacation destination, and the property itself is right across from the largest east coast family campground. So very attractive location. I bought it for about $1.5 million using a master lease agreement, at 6%, interest only. And I just, I got it very recently, so it’s still in development. We’re currently working through two phases to get this property stabilized.
So phase one, the whole purpose is to turn over some of the unused units or damaged units, and we want to convert as much open space to self storage. As we move through those phases, we hope to triple the NOI, and when the stabilization is done hit about $3.5 million.
Peter: And last night, you returned from that facility where you just installed a security gate around the facility, right?
Sam: Yes. What we did is remove the existing gates and put two new gates, so that we can set up proper access parameters for our tenants and give them a more security and peace of mind. At the same time, we also moved the property fence line at the backend. So that does help as well.
Off-Market, Motivated Sellers
Peter: Yeah, that’s great. The best deals like this are all off market, right? And this self-storage deal, you understood that the property was underperforming. It was a father and son team, that were maybe just not paying attention to the park, and you were able to envision how to get it performing and voila you’re buying it for $1.5 million. There’s a couple of phases we’re going to do, we have a five-year deal with no banks, and it will be $3.5 million at the end of the day.
Sam: Yes, definitely. The owners, this is more of an outlier property for them. They are actually very experienced self-storage investors. They have a couple of self-storage properties in their neighborhood. This one, they just wanted to let go because they’ve been self managing their properties and they just want to focus on the closer properties that they have in the neighborhood.
Peter: Ladies and gentlemen out there, I tell you the best deals are off market and these two deals are marvelous. Sam, I can vouch for the city because we own property there. So, you brought forth a great solution to the seller. We like to create win-win deals and that’s exactly what you did. All right. Thanks for that, Sam.
Diversifying with Multifamily Investments
Peter: You also branched off a bit and purchased two multifamily properties; quickly share those with us.
11 Unit Multifamily
Sam: Yes, the one multifamily that we have right now is an 11 unit that we bought a little bit over one and a half years ago. It is also in a very good location and a distressed situation. It was poorly managed, and the units are under rent. So, we needed push up the rents by doing some minor renovations, and it took about a year to bring all the units back up into the market rent. Right now, it’s stabilized and I was able to pull out about $240,000 through a cash out refinance and pay back the investors.
5 Unit Multifamily
Shortly after that, we acquired another 5 unit multifamily property, and this one is still going through renovations, but we are applying the same method of taking care of the distress units, in order to get the optimal rents. For this property, rather than holding it, we might do a 1031 Exchange to a bigger property once it’s stabilized.
Achieving Multimillionaire Status
Peter: Awesome. Thanks for sharing that. That’s four deals in a few years. Look where you are now! So now that you have achieved what we call multimillionaire status, what has changed for you? Has your outlook changed?
Sam: Yeah, that’s a good question. You know, the multimillionaire term is very subjective for me. I don’t consider myself as a multimillion status, because like I said, my goal is to try to reach the freedom of worries, and I still haven’t reached that point yet. But boy, I can tell you, compared to four years ago, I definitely have less worries.
- I’m not going to be worried about losing my job.
- I’m not going to worry about my daughters. I have three daughters. I’m not worried about my daughters cannot find a job after the college because I have three daughters. I have ways to support them is needed.
- And I’m not worried about my retirement because I have good cash flow.
Peter: This is why we do this business. Right, Sam?
Sam: Right. For sure.
Pearls of Wisdom: Advice for Aspiring Investors
Peter: So, Sam, most of our viewers are beginners, some advanced, but could you share with them your top three pearls of wisdom?
#1: Find the Right Coach
Sam: Yeah, the first thing that came to my mind right away was, find the right coach. Like I said, initially it’s a bit overwhelming. When I first looked into commercial real estate, I realized that the more you know about commercial real estate, the more you know there’s a lot of landmines. So, definitely find a coach that has extensive experience, not only into commercial real estate, but also specifically to what you’re trying to invest in. Someone who understands the challenges and the nuances throughout the whole acquisition process, because it’s a long process and a very challenging process too.
You also want to find someone who understands your limitation too, and helps you overcome them because throughout this, at least in my experiences, when you start going through this program for acquiring commercial real estates, it will show your limitation. There are some areas that you will have to overcome. So that’s where the coach can come in to help you overcome that.
#2: Have Faith and Jump In
Peter: So that’s problem number one. How about number two, Sam?
Sam: The second one I think is important to know is you need to have faith to jump in. It’s kind of just like my religious belief. Since I’m a Christian, I understand that sometimes you’re never going to fully grasp a concept or get a hundred percent knowledge of what’s going on. But the first step is you just need to have faith to commit and then jump in because you don’t want to be staying on the sideline. And the way for me to commit and jump in is, I weigh the benefits for the risks; the benefits of getting into commercial real estate definitely outweigh the risk if I don’t jump in and stay on the sideline. Then as time goes by, I might grow old, and I will regret the time I’ve been procrastinating and staying on the sideline.
Peter: Yeah, that is so deep, Sam. When you mention the word faith from a Christian standpoint, the definition of faith is, “being sure what you hope for and certain of what you do not believe”. And you are certainly walking that Sam in this business. So just want to congratulate you there. All right. So that’s two pearls of wisdom. How about number three?
#3: Stay Focused and Patient
Sam: Last but not least, it’s also important to stay focused and be patient. This is something I learned from the coaches, because when you’re taking on the first deal, you’re always very anxious. You want to get going. “I’m ready to go. Now I have faith. I’m jumping in! I want to take the deal.” Maybe the first deal that I find, I want to take it. And it’s actually very interesting, you mentioned that real estate is about relationships, but at the same time, you also need to learn that, when you try to get a deal under contract, at that point, you might want to separate your emotion.
That’s because you spend so much time and effort to get the relationship going, but you just need to look at the numbers. Look at what really works, if the numbers really work for you. You just need to be patient and be a bit less emotional and focus on getting that deal.
Peter: Yeah, that’s so good, Sam. So what I got out of that, your number three pearl of wisdom is that when emotions go up, intelligence goes down, right? And in commercial estate, we can’t have that happen. That’s why you need a coach to make you level headed. And, the other one is to really, don’t fall in love with the property, fall in love with the numbers. That’s why no one ever talks about a certain things, like “What is the exit strategy?” You may be so excited, but how are you going to get your money out? So, we put a big emphasis on that. And when we do that, that causes all of us to kind of double and triple think about this deal and make sure we only do good deals.
The Power of Mentorship
Sam: Exactly. And I think this is a benefit for having a coach because, we’re there talking to the sellers and build relationships. But at the same time, a coach being not in that relationship, they can look at the numbers and guide you through more of a logical way of thinking to get you out of emotional pitfall.
Peter: That’s our job here. All of us coaches. That is so well explained, Sam. All right. Sam, this has been wonderful. Again, I know you just got off an airplane probably six, seven hours ago. So I appreciate you making time today to share with us your inspiring story of your commercial estate journey with us. Thank you so much, Sam.
Sam: Thank you, Peter, for your long coaching effort to help me out. I really appreciate it and am honored to be in this program. Looking forward to share more as if needed, but I appreciate the talk.
Creating an Amazing Future
3 key takeaways from Sam’s interview:
- Your Decisions Impact Others: Sam did not want to have any regrets at the end of his life. He realized that his decision to invest impacts not only his financial security but also the legacy left for future generations. His strategic decisions, guided by sound advice and a willingness to act, have laid the foundation for a secure financial future for his family.
- Not Making a Decision is a Decision: Not making a decision is, in itself, a decision to do nothing. So, be sure to choose wisely.
- Create an Amazing Future: If you are behind on your retirement or need to build a better financial future, what’s the remedy? The remedy is to create an amazing future! Sam’s remarkable journey from engineer to self-storage multimillionaire is a testament to the power of strategic real estate investment, and the importance of mentorship. And just like Sam, you can choose to create an amazing future through commercial real estate.
Sam’s Key to Success: Mentorship
As Sam highlighted in his interview, the path to success was not a lone venture. He emphasizes the importance of having a knowledgeable coach. In fact, it was the guidance from our team that enabled Sam to navigate the complexities of commercial real estate, identify landmines, and ultimately make strategic investment decisions without missteps.
Questions or Comments? Text PETER to 833-942-4516.
Every Successful Commercial Real Estate Investor Has a Mentor
Ready to start investing in real estate? Consider our Protégé Program, where we mentor and guide you through the intricacies of commercial real estate investing. Remember, taking the first step can define not only your future but also the legacy you leave behind. Let’s get started! Apply here and get mentored by me and my team: Commercial Property Advisors Protege Program
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