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David: Alright guys, welcome back to the discount property investor podcast. I am your host David Dodge and today I have a special guest, Andrew Abernathey is joining me and I met this guy in Tampa Florida a couple weeks ago. We were both in the same mastermind group and this mastermind has little mini meetups throughout the year and it's such a valuable group. I love this group and Andrew and I actually stayed at the same house together and neither one of us knew each other so we actually had a good opportunity to meet each other and I got Andrew on the show today, so we're going to pick Andrew's brain. This guy is doing huge things, saying that he's doing big things is an understatement, he's doing huge things, so I'm really really happy to have Andrew on. I'm grateful for Andrew and his time. Andrew, welcome to the show my friend.

Andrew: Thank you so much, I'm excited. Yeah Florida was- yeah I met some good guys including yourself that weekend, it was a good time. Very lucky to have been.

David: Florida was cool. So we were down in Florida, we were flying fighter jets guys. It was-

Andrew: Awesome.

David: -a bucket list item for sure so we're really- again really happy to be in that group. So Andrew again, thanks for coming on the show. Tell the audience a little bit about yourself if you don't mind. I was impressed, I am impressed with you know, basically you being in your late 20s which is extremely young.

Andrew: Yeah.

David: For any real estate investor in general, especially one that's doing the things that you're doing. So if you don't mind, tell us a little bit about yourself and kinda how you got started.

Andrew: Yeah of course, appreciate it. So I'm 27, I grew up in North Dakota, basically dead center up towards the Canadian border, family farm, six siblings including myself so five siblings, there's six of us and you know, started working for my dad in the farm at a young age, 5 bucks an hour and started on the fam at 10. By 14 I had about $4000 saved up and that's when I jumped into the stock market. You know, I was only 14 years old but March, my birthday March 23rd of 09, you know, the market bottomed in March 5th of 09 so kind of lucky on timing but [inaudible]-

David: How much did you have saved?

Andrew: What's that?

David: How much did you have saved?

Andrew: $4000.

David: That's it? $4000 dollars.

Andrew: That's it. Out of five bucks an hour. Well I would have had 6000 but I spent 2000 on a red go kart, I mean can you blame me? I mean I was only 14.

David: I love it man, I love it.

Andrew: Yeah threw it in and the 4000 I turned it to 80,000 by my 10th grade in high school, you know, so it's about 2010, a year and a half later, and then then I went to real estate. I found some apartments in Bismarck about 3 hours from where I grew up, capital of North Dakota, I bought him and the oil boom hit and so- it's a funny story though. So I went to my buddies dad, he's a banker in Mohall, town of 800, and I'm like hey I need $1.25 million for these apartments in Bismarck and I'm like here's 80,000 cash right? My money from the stock market. He's like Andrew that's pretty cool and stuff but I mean to buy these you're going to need another 300,000 and some personal guarantees. So anyways, I went and I printed off Warren Buffett's original 1956 partnership agreement 'cause I couldn't afford a lawyer at the time and I went and raised 300,000 from 2 farmers in two days and went back and got the loan and went and bought them. And then the oil boom hit and we sold them for 2 million before I even graduated high school.

David: Wow, so you turned 4000 into 80K in the stock market.

Andrew: Yeah.

David: And then you took 80K and you raised a little bit more money. I would assume, right? That's what you did?

Andrew: Yup. I raised that 300, yup.

David: To get the down payment and you bought those apartments for how much?

Andrew: At 1.15.

David: 1.15 million was the purchase price.

Andrew: Yeah, sold them for 2 million.

David: And you had those for just what? 2, 3 years or a couple years?

Andrew: No, I held them for 15 months 'cause the oil boom hit.

David: That's it? 15 months.

Andrew: Yeah the Bakken formation hit right after we bought them and things went nuts in North Dakota.

David: Everybody probably just started moving up there right?

Andrew: Yup, so we- our rents went from 400 to 800 in like 10 months so by the 15th month, the city actually bought them from us and tore them down to add onto the school. We were right next to a school in Bismarck.

David: Oh my goodness.

Andrew: So we cashed out, call it about a million bucks after fees and everything of that sort. So the 380,000 went into a million in 15 months and I only put in 80 of that and these guys I'm like hey here's your money back and they're like Andrew that was awesome, you keep 350 and then our 650, 325 each, we want you to invest it again, we want to pay you. So that's when Abernathey Holdings started and that was-

David: That's a cool story, that's so awesome.

Andrew: -that million went right into that bank account. And I was graduating high school at the time and we were farming, my brother and I were farming at the time and we had we had a custom combining company, we had a lot of things going on but this is just this little- this little road here.

David: Man what a cool road.

Andrew: Yeah.

David: Holy cow. So basically you had sold these before you were even out of high school?

Andrew: Yeah it was a- it was a few months before I walked out down the graduation aisle whatever you call that.

David: Wow that's crazy man, that's so crazy. Alright so these two investors are loving you, right?

Andrew: Yeah they're happy.

David: They're really happy, you're happy. You made some money, you made them some money.

Andrew: Yup.

David: And then now they say they wanna pay you to invest their money and they're gonna basically give you this money that you made them back, right?

Andrew: Correct, so between- I start with the 4000 so when I was graduating high school I had the 350 for my real estate and then the farm operations and other stuff I was doing. I had- my net worth was a million before I graduated high school on paper, and so 350 at that point was allocated to Abernathey Holdings and the other 650,000 was other ventures. So then yeah, so then I went and I was going to college and I'm like alright you know, I'm gonna need more money 'cause I don't want to do stock market, I wanna- I wanna go buy big companies like Warren Buffett style. And so I went and raised uh- farming was good, so farming's been really good like 3 times in the past hundred years and this was one of them so I went and was knocking on doors-

David: How long is it good for when you say like 3 times over a 100 years, is it good for like 10 year periods or just-?

Andrew: Yeah, yeah it goes pretty good for call it 10 years.

David: Okay.

Andrew: And then it kind of cycles and hopefully that gets- those good times get tighter as we go forward in the future with just maturing industries.

David: Right. Sure sure.

Andrew: So I went in, I was knocking on doors when I wasn't in college one rainy day when we weren't in the field 'cause I was farming and doing on the side, and I raised $1,000,000 in one day. So I would just go knock on 10 doors, 10- I would go to 10 farmers in our region that you know, we all knew each other and was like hey and they'd be like yeah farming's good here's a- here's $100,000. Pretty cool track record. So I went and raised- in the matter of 12 months, I raised $10 million so I had 10 plus the one so I had 11 million and I was like 19 and then that's when we- and then I went and bought my first company. I bought an equipment dealership that started in 1947-

David: You did all this knocking on doors?

Andrew: Yeah.

David: Holy cow. That in itself is impressive. Holy cow. So in the 12 months, you raised 10 million more so you got 11 million at this point.

Andrew: Yeah.

David: Wow. Alright cool go on, go on.

Andrew: Yes and then we went and bought our first operating companies equipment dealership in Great Falls Mt and they sell equipment to city states and counties municipalities across the Midwest. I'm not going to bore you with the details but it was a good business, it was 3 and a half million dollar revenue. They were [unintelligible] of 3 to 4 hundred thousand and so that was part of our money went towards that and then we bought into an insurance company. Now that does $70 million a year and it's public, it's on NASDAQ, we're the largest shareholder with the family. And then we started doing real estate, you know, we did some HUD- we did some HUD properties, we did some retail. Anyway so as you can tell at this time of my journey- 'cause nothing is perfect so I'm gonna tell you the good's and the bad's. The issue with what I was doing at this point in my journey is I didn't know who I was, I didn't really have an identity, I really wasn't focused on anything. I was great at a lot of things, I wasn't amazing at anything. That was the issue at this point in my life so I kind of plateaued there, right? I raised this money, I didn't- how do I do an elevator pitch on who I am is just too confusing, right? I'm all over the place. And then so the fund, the company from 2012 to like 2017 went from 35,000 a share in Abernathey Holdings to like I think it was like 70,000. So we doubled our money in like 5 years and that's when I hit my first loss. So by being too wide and not knowing who I was, we went and bought into a helicopter company with like 10 or 15% of our portfolio and lost it all. The management- numbers were great but the management, the team was not what I thought and anyways we lost it and that's when I sat there and I went to my mentor Gary, and that's when he told me Andrew you know, you've really gotta focus, you gotta figure something out, you're great at a lot of things but I- like amazing at anything.

David: So at this time you had- you didn't have that real estate anymore 'cause you had sold that off from the 1 million to 2 million dollar increase but you went out, you had raised an additional 10 million so you had about 11 million. You bought an insurance company, you bought an equipment dealership or I should say the equipment dealership first.

Andrew: Yup.

David: And an insurance company and then a helicopter company, so you had just-

Andrew: And into more real estate yeah.

David: Say that again.

Andrew: We had some- we had HUD- we had a 90 Plex HUD property, some retails, so we had a couple of real estate.

David: And you had some other real estate in there too, okay cool. So I guess the question is when you went to buy the helicopter company, you still had the equipment dealership and the insurance company and that real estate, this was just basically another thing. It wasn't like the only thing you were doing at the time.

Andrew: No yeah it was all- and now it's [inaudible].

David: [inaudible]. Holy cow.

Andrew: Yeah. Who is- Andrew, who are you? Like at this moment, I-

David: Yeah who are you? I was just gonna say what are you- why you got so many things man?

Andrew: I was 20, you know, 21. Building the plane as I'm flying it as they say.

David: Yeah for sure I heard that before, okay. So what went wrong with this helicopter company? Why did that not work out?

Andrew: So all the numbers made sense and I actually we did well so we bought, it was publicly traded.

David: Okay.

Andrew: So we bought it at 10 a share, we put a million in and then we went to 20 so we sold and made $1,000,000 profit like 6 months.

David: Okay.

Andrew: And then I looked back 3 months later, it went from 20 back down to 10 and I'm like what the heck? So I put a million in, it went to 8, put a million in, it went to 6, put another million in so we're 3 in, and this is after the oil crash so I'm just like hey it should be fine like it's cyclical, they had the assets, the cash on hand, all the numbers were good. Went out the management though, we missed that piece. I don't have control and the management withheld information and had a lawsuit against them and a deal fell through and there was a- I actually- we were the lead plaintiffs of a civil lawsuit and we won, so we sued him but we got $0.10 in the dollar and yeah they're in jail but doesn't matter, it took 3 years and it was just a mess.

David: Yeah yeah gotcha. Okay okay.

Andrew: Yeah.

David: So man, hiccups along the way, that's all part of the game.

Andrew: Yup.

David: Alright alright.

Andrew: Towards 17, I would be 23 and I did get on the board of that public company, the insurance company.

David: Nice.

Andrew: That's kind of funny. So I went to the management, I'm like hey now that I'm the- one of the largest shareholders, I'd like to be on the board and they said hey you know, we have it so that you have to be experiencing prior public companies, we can waive that but they said the insurance commissioner of Alabama requires you to be 30 years or older to be on a public company board. So I'm like okay well how do we- how do we address that? How do we change that?

David: How do we fix that?

Andrew: Yeah.

David: Yeah.

Andrew: So they said we're going to have lawyer up and go and try to get an exemption. So I did, I got- I spent a whole year, audits, meetings in the insurance commission in Montgomery and we changed it. I got an exemption from the law to join the board at 25, 24.

David: Wow.

Andrew: So I got on the board.

David: Nice. That's crazy.

Andrew: Yeah so that was kind of fun.

David: Yeah, and you're still on the board?

Andrew: Yes, still am.

David: Nice. How often does it meet?

Andrew: 4 times a year.

David: Nice.

Andrew: Yup, in Montgomery.

David: That's very [inaudible].

Andrew: So we- so anyways I'm 23, I'm in this moment where I made my first mistake and I had my billionaire mentor tell me that I'm, you know, good at a lot of things but not great at anything and that was a turning point in my life where I said alright Andrew like what are you gonna be known for? What are you gonna do? So I took Gary Tharaldson model of- I knew that real estate was my thing, you know that- this is what I was good at, so I went and I said okay, so many people in the world they try to find the idea, right? Like they sit around till they're 50 like yeah someday the sun will shine just right and the idea will fall on my lap. I'm a believer that there isn't 'the' idea, there's simply an idea that you make the idea out of, right? So I just took a list of real estate, I'm like what can I print like Gary? What can I develop and just make a printing machine of a certain real estate class? And I was down to self storage and assisted living facilities, I thought both were good markets but to be a simple farm boy like I am, I thought gosh assisted living, that's more employees and a little more- a little whoosh above my head a little bit.

David: It's a lot more expensive.

Andrew: Yes and that's just too much for me.

David: The day to day, managing a bunch of people and-

Andrew: Yeah.

David: People are gonna be dying in the home and you're gonna have to have nurses, you're gonna have to have doctors.

Andrew: Yeah but we don't-

David: Essentially you're gonna have tenants and toilets and yeah it's just a lot, right?

Andrew: Yeah and we dealt with that with our HUD building, that was assisted living HUD buildings. We only the dead- you know it was tough and so anyways I picked self storage, you know. You can build a $13 million facility and it'll be worth 20 once it's stabilized, these Class A facilities, and you need 1 and a half to 2 people to run them so your revenue per employee is phenomenal, there's one toilet in each building, and they're just a good asset class. It's 95% of storage is still mom and pa, and only 5% owned by the major REIT's and I like fragmented industries because it's a lot of opportunity to come in and someone like myself to consolidate it. So that's what we've been doing and we went and we kept the equipment dealership because that makes sense, right? We can use the equipment from there, vertical integration was our new business plan. Helicopter company was gone, everything outside of storage for real estate was sold. Our insurance company, we're trying to figure out how we can do our own tenant insurance but if that doesn't work we'll sell and put that in our development pile. We have a garage door dealership now, we bought a construction company, we're looking at starting a title company. So just to make it easy for you, for the numbers, a facility's about 13 to 13 and a half million and that includes cash for the negative run rate once they open.

David: Okay.

Andrew: And the bank on that let's say at 35%, easy numbers, they need about 5 million cash. Well our vertical companies profit about 1.2 million, and when I say vertical companies that's the equipment, garage door dealership, construction. All combined, they profit on each project about 1.2 million 'cause we do it in house. So we'll go and say alright so we need to give the bank 3.8 million but we have an instant equity credit of 5, and then so once- so we're- the cool thing is we go and make you know, 27% before the doors open, and then that 13 investments worth about 20 each building in about a 2 to 3 year time frame and we focus only on major cities, 100,000 population, 3-mile radius, 100,000 income, which leads us to the- we're in the sunbelt so like Phoenix, you know, Southern California's got a lot of good population density. And right now we're averaging 3 a year, so 36 million, but we have the funding in place to do 12 a year so about 200 million roughly, 180 million of development annually and there's $4.6 billion annually spent in the US for self storage development so right now we do half-

David: How much?

Andrew: 4.6 billion annually in the US.

David: Is what's spent on storage?

Andrew: Per development.

David: Now wait you're not saying like just people coming in with their-

Andrew: This is building.

David: -mattress and box full of baseball cards that are doing- you're talking about development, building stuff.

Andrew: Yup, 4.6 billion because everybody's- like cost per foot for rent or buy is going up and people still want to live in certain areas and they'll pay the same price but their houses are shrinking a little bit to compensate for that extra cost per foot, so we're building these dense areas where they can drive to our beautiful 3-story looks more like a hotel facilities, public storages who we build for. So public storage and extra space storage, when we build them, they brand them and manage them for us fee on revenue so it's all so very nice you don't have to manage them after. So they'll come in like these facilities are 96 to 100% occupied, it's insane and we're getting $1.70 a foot in Phoenix and we'll be getting about $2.80 a foot in Southern California for storage. So right now we're doing about half a percent of the annual development in the US comes from Abernathey Holdings and we have the funding today to ramp up by 2025 we're expecting to be doing 5% of all development the US will be done by Abernathey Holdings.

David: Wow dude that is amazing. Holy cow that's so crazy. So 4.6 in development annually.

Andrew: Yup, [inaudible].

David: That is a wild number man, that is a crazy big number.

Andrew: Yup, and that might fluctuate but-

David: Yeah of course of course but I mean it's not like 100 million in development, it's 4.6 billion. That's 4 thousand 600 million dollars annual going in to develop these big storage facilities. Holy cow. So you said a second ago that you build for Public Storage, now when you say that, you're not building and then selling to them, you're building these facilities, maintaining the ownership, and then you bring them in as a manager right?

Andrew: Correct so basically-

David: They brand it with their stuff and do you have to pay for that or do they?

Andrew: They pay for everything, we just gotta pay about 6% annually on revenue for a fee and then we have to like you know, the cost for- we pay pro rata share for advertising in the region and regional manager we'll pay pro rata share direct for that but overall it's not bad. So Marriott, so I look at the storage industry kind of like what hotels used to be. Hotels in the 80's were very fragmented, Bob's hotel, Jim's hotel, Jeff's hotel, right? And then as the Gary Tharaldson's in the world came in and helped consolidate the industry, they would pay Marriott 12%, they still do, 12% of revenue and they have to manage it by themselves. We're sitting here paying Public Storage which is equivalent to a Marriott in storage, we're paying them 6% on revenue and they manage it which is crazy to me.

David: So wait you're- is there- this is kind of a dumb question but you're saying that there's still hotels to this day that have the Marriott sign on the building but it's still a mom and pop that's running that basically?

Andrew: Well I wouldn't say those are mom and pop but that- but like Gary Tharaldson, he owns 100 Marriott's, he owns them, runs them, pays Marriott 12% on revenue for their brand.

David: Wow, that's crazy.

Andrew: Yeah but back in the 80's-

David: So he owns them and he runs them and then he's paying 12% of gross?

Andrew: Just for the name.

David: Man so that's crazy. I used to own a restaurant that was a franchise.

Andrew: Yup.

David: Not anything compared to a hotel let's be honest but the point that I'm trying to make is I was paying 6% of gross and in a restaurant it's razor thin margins so 6% of gross ended up being almost 50% of net.

Andrew: That's insane, so you're net's about 12%.

David: That's insane.

Andrew: Wow that's nuts.

David: Isn't that crazy? So I'm curious to see- I mean maybe you know, maybe not, but 12% of gross in that case what do you think that equates to in the net numbers?

Andrew: Good question. Well Gary and I don't- I don't know much about it so I won't speak too much on it but I know Gary says that the extra business that they get is more than enough to cover the 12%, that's what he says, that's all I know.

David: Okay, well then that's all that matters then, that's all that matters.

Andrew: But a good question.

David: If- yeah being a part of that makes- ‘cause like to me I was like resentful, I'm like man I'm giving these guys 40% of the net profit just for this stupid name, I can have my own name Dave Subs, you know? Like come on. Right right, holy cow. Okay, let's stay on task man, that's my bad I like to kinda sometimes take the random road here. So they- you build it, you own it, they actually come in and brand it, and then you have to pay them 6% plus some of the annual advertising, is that right?

Andrew: Yup and regional manager pro rata share things like that, yup.

David: Okay, so it's a little over 6% which is extremely low. Now, we talked a little bit a second ago about you know, having all of these things when it came to the senior living, right? You're dealing with nurses, you're dealing with doctors, you're dealing with insurance companies and Medicare and Medicaid and wow, I mean there's probably 20 other things that you're having to deal with. With Public Storage it's pretty simple, I mean you still have to deal with certain things of course after this and I'm talking post build. It's built, you know, Public Storage comes in, they manage it at this point, what are you having to deal with?

Andrew: Nothing.

David: Nothing.

Andrew: They sent us a check every single month and their new build so you don't have any issues there. I mean obviously it's some renovation costs after 15, 20 years but we haven't hit that yet and it is easy and that's why we've been able to attract you know, so- remember I told you I raised 12 million by 23? We've raised 100 million to date. So the last 4 years we raised another 88 million.

David: Wow.

Andrew: And I did that all myself. It was me, no placement agencies, no nothing.

David: Just you.

Andrew: Yeah.

David: Holy cow man, that is super super impressive. That is [inaudible].

Andrew: And then banked that too on top of that but yeah that's just equity.

David: That's just equity, holy cow awesome.

Andrew: And I was able to retain control still so my wife and I still have control of the company even with raising 100 million.

David: Yeah that is- that is wild man. That is awesome, super impressive and how old are you Andrew?

Andrew: 27.

David: 27, holy cow. I'm 37, I got 10 years on you.

Andrew: We're all[inaudible].

David: And man holy cow, you've done some crazy things man. So why would somebody want to do storage? It's kind of a simple question.

Andrew: Yeah.

David: I think we kind of already answered it but let's just clarify. I mean obviously the barrier to entry would probably be the biggest reason that's going to limit those doing this because these storage facilities are big and you need a lot of land and you're gonna need a lot of capital to get into them and obviously you could bring in leverage and debt but you're still gonna have to put down what? 20, 25%?

Andrew: We do 35 just to be safe but yeah you can probably get it at 25. I mean the biggest thing is there's different classes of storage, there's Class A, Class B, Class C. Class C for example, so we're Class A, you know, we'll spend 500,000 to 1,000,000 dollars an acre on dirt, we can build 100,000 square foot facility on 2 to 2 and a half to 3 and a half acres, but each of our projects total is about you know, 13 and a half million. 10 build, 3 and a half dirt. If you go into Class C storage, you're probably on the outskirts of the city and your rents are lower and you're going to go buy more acres for cheaper but you're gonna do single story drive up you know, like the storage has been around since the 80s. The issue in my mind is this: why do I do Class A is the big question Andrew, why don't you go and do a bunch of Class C or conversions or all that? Well the obvious reasons is with all this capital I've raised, scalability is a big issue, putting this because we're winding to a point where we do 200 million a year in development. 200 million in Class C storage? That's a pretty- that's scalability issues there, right? How do you get that much money to work in that class? The other issue is there's a company coming out, it's been around for 5 years, they've been getting a lot of funding, it's Neighbors and it's basically Airbnb's for storage, and I think it's a cool model. So they basically just rent out a closet, shop or garage, whatever it is just like Airbnb. I think that that's going to be really hot in the areas that household incomes are like 50 thousand and less ‘cause let's face it, those regions are gonna wanna save- they wanna save 80% of their storage costs, they don't care if it's in Jeff's closet, who cares? I feel that families and households with 70 thousand, 80 thousand plus are gonna stay paying that 150 a month for the beautiful Class A climate controlled light-

David: Climate controlled, security, that's the business, that's what they do. It's not like it's Jeff's basement or Jeff's garage or Jeff's you know, closet in his spare bedroom.

Andrew: Right.

David: Wow, okay. I 100% agree.

Andrew: I think Neighbor's gonna be a cool business, I just think that they won't be a competitor of ours due to our income criteria where we build. And then the second thing is I'm a big believer and it's already happening, this isn't just the future, it's today: Amazon is a virtual mall. So back in the day you have malls and you'd have people in the malls as tenants and they would sell their goods to customers. Well Amazon is basically a virtual mall and they have individuals like anybody can go and buy a bunch of stuff and sell it on Amazon, they're an Amazon vendor.

David: Oh man I feel like everybody I know has like got any Amazon store.

Andrew: Yeah exactly, that's the new thing.

David: [inaudible] do with that.

Andrew: Yeah, and so-

David: I have nothing to do with that but you're absolutely right, absolutely right. Anybody can go use that virtual store to buy and to sell, right.

Andrew: So the cool thing is we cater to that. So if you walk up and down our hallways, you'll see garage doors open and you'll see people in there with their desk and racks or whatever, all their inventory and that's their store. That's where they box everything up and then what I used to see is people would box everything up as an Amazon vendor, bring it to their car, bring it to a local FedEx, UPS, whatever it may be and ship it off through Amazon to their customers. So what we started doing is we started putting shipment centers, Amazon lockers in their lobbies so now it's a one stop shop. So people can come in, use our facilities, they can rent a unit for their Amazon vendor business and then they can bring their stuff to the lobby and ship it instead of loading it in their car and driving it to the local shipping center. So we love- that's- I'm so bullish on storage because we're basically I shouldn't say the new mall but kind of, I mean all the stores are in our facility shipping things out through Amazon. I just think it's the coolest thing.

David: I think that's really cool, I didn't even know that was a thing. So do you- you guys don't have any sort of hours that people are not really allowed, it's all 24/7 right?

Andrew: 24/7, we'll have someone there full time all day but then it's 24 access with codes and all that.

David: But you- but- it won't necessarily be you, it'll be Public Storage right?

Andrew: Yeah.

David: Cause they're the manager but still you at the end of the day so somebody is typically at these bigger places 24/7 then?

Andrew: Humans are probably there till about 8 to 10 and then from still call it like that, 8 in the morning till 10 at night and then the rest of the time is 24/7 just like security codes and it's all very very secure.

David: Okay yeah yeah no that makes perfect sense. Okay so I'm sure there's somebody thinking this right now because I know I'm thinking this right now, do you ever have people that like try to sleep in these storage units?

Andrew: I knew- I knew- that was a good question. So no because when you go into our facilities, it's timed, you're following your app, it has tracks so it'll- the time, the machines, the technology knows when you come in and if you- and if that phone or whatever it is doesn't leave in a certain amount of time 'cause they know in and out and there's cameras, then the alarm would be sent to our manager and they would show up on site so it'd be pretty tough to sneak in one of our facilities and not leave.

David: Wow okay that makes perfect sense, so there's something -

Andrew: 60- sorry 68%-

David: [inaudible] people from being there for too long but you guys don't have a problem with somebody coming in and working an 8 or a 10 hour shift at one of the units just as long as they're not there for 15 or 18 hours at a time.

Andrew: Totally, totally.

David: Got it.

Andrew: And there's relationships that are made, I mean the manager on site's there every day so if there's an Amazon vendor that is just really literally working and could not causing any harm and there's camera's to prove it, I'm sure they work things out. It's just kind of that random dude that comes in and doesn't you know, they're very- 'cause 68% of what people want in storage is safety and the reason that is is because 65% of storage is leased by the women in the household, 65%.

David: Wow, I would have never guessed that.

Andrew: So we build- and so we build- and 85% of storage is by drive-by's, that's why it's leased, not by online, 85% is by drive-by's.

David: Like people drive- so it's very important to have these storage units next to major intersections or highways or anywhere somebody could drive by it, right? There's a lot of traffic right.

Andrew: Yup.

David: Wow I never would have guessed that. So the advertising that you do is to supplement anybody that may not be driving down that road basically, right?

Andrew: Correct.

David: Okay.

Andrew: And then another thing is since we cater towards women of the household which we all know they're the boss, my wife is anyways. Groceries or some- 65% of groceries are bought by women, 71% of kids that are at school are picked up by women, 52% of gym goers are women, so we build by those 3 places. All of our storage are by schools, grocery stores, and gyms.

David: Man that makes- so you're saying the majority, schools, grocery stores and gyms are all used and/or trafficked by women in the majority.

Andrew: Yup and that's who we need, that's who signs the leases, I'm like-

David: And that's also who signs and that's also the majority of the people that are that are signing up for storage. Holy cow that's crazy. Okay so what- this is another good question, what would be the average duration that you- and I guess may vary from market to market, it may vary on size as well, right? But do you have any sort of figures in terms of the average you know, lease in terms of how long it lasts?

Andrew: Yeah so it is fun, the exact numbers do vary so I'm going to be kind of you know, an umbrella here but so the average when the per- so storage is kind of like airplanes, the price for our storage units at every site varies hourly with algorithms, okay? Which is another reason to use public extra space 'cause they have algorithms that mam and pops- mom and pops might change their price every 6 months, we change them hourly. And so like when you go on a plane, you don't ask the guy next to you like hey what'd you buy your ticket for? Right? 'cause airplanes do the same thing.

David: Never.

Andrew: So every unit's different, we just keep them filled. And in the algorithm also if you're there for 5 months, the algorithm increases your price by 5 to 10% in the market because after 5 months the odds of you being there for 3 or more years is like 80 plus percent or something like that. So that 5 to 6 months is really when they say oh okay algorithm, boom. And if you're paying 150 now all of a sudden you're paying 160, 165, you're not gonna go rent a U-Haul and spend a weekend moving stuff to it.

David: Not for $15 a month, not at all. Yeah that makes perfect sense but I like that though, they're there for 6 months, they're typically gonna be there for about 2, 3 years, that's about right?

Andrew: Yep, plus, yeah.

David: Plus or longer, holy cow man that's so crazy. I know that whenever I was just graduating high school, my dad passed and we had this whole house, right? Of furniture and all this- all this stuff and we threw it in storage and man it sat in there for like 4 years before we even got around to it. I like left and went to college.

Andrew: Forget about it.

David: Forget about it, right. And then I come back and I'm like man we're spending like $400 a month on this big 30 by 20 unit or whatever it was and I'm literally like hey we gotta cut this off, we gotta stop this bleeding, but what I'm saying is because it's like years can go by and people just don't even realize.

Andrew: Yup.

David: Though I would imagine that you know, that's something that happens as well. I love that, holy cow.

Andrew: Yeah it's not a sexy business but like it's consistent and a lot of- so storage has been around since 300 BC back in China and obviously in the 50s and the 80s, the single row stuff really started booming in the US, and then 5 to 10 years ago, the Class A started so people are always like saturation and this and that. I just think between Amazon vendors living in less square feet and the new style of storage that was just introduced only 10 years ago which means you have a lot to replace with the old stuff and then there's 333 million people in the US today, okay? In 2050 they're projecting 404 million roughly, currently 83% of the people in US live in major cities and they're projecting in 2050 that 89% will live in cities. Well that's an $80 million influx of people to the cities. At 6 square feet on average per person, that's 500 million square feet of storage that needs to be built and developed not including depreciated items that have to be replaced. So that's just a quick 30 year.

David: Wow that's- that is crazy though but yeah the population is growing, more and more people are buying stuff and that means that more people are going to have to store stuff.

Andrew: Yup.

David: Holy cow that's crazy. How many years have you been in the storage game?

Andrew: I'd say hal- I'd say 4 years, 4 and a half, 5 years, so half of the Abernathey Holdings existence. We've been farming since early 1900s but our family from me first time ever did something other than farming and that was 9 years ago and half of that has been in storage so 4 to 5 years.

David: Nice, man that's amazing, holy cow. And you've already raised over $100 million to date all by yourself. Andrew, wow, bro that is super impressive.

Andrew: Thank you.

David: Very very cool. That is so crazy. So tell us a little bit about the way in which you raised money and I know that there's probably some people that are going to be listening to this and they're gonna say you know what? I got some money laying around, I'm interested in talking to Andrew about investing some of this money as well. I think that would be a good way to kind of wrap this up.

Andrew: Yeah. So we do things a little differently and maybe I'm leaving money on the table but I think it's fair. So a lot of companies out there, I'm not saying it's wrong, I'm just saying a lot of companies out there what they'll do is you have a construction company that's owned by one person and they'll go and find a piece of dirt that's raw and they'll buy it for a million, and then that person will zone it and get ready for building something, apartments whatever it may be and then they'll put it into an LLC and they'll get- they'll give themselves a $2 million credit on that saying hey it's developed, it's ready to go so they'll double their money on that investment right out of the bat. And then they're gonna bring in basically syndicating, they'll bring in a bunch of investors to that one pool to build this facility but then their construction company will build it for a fee. There whatever they do vertically will charge it and 100% goes to that person. So what I did is different, I opened up Abernathey Holdings, an LLC, and I went and I put everything in it so Abernathey Holdings owns the construction company, it owns all the facilities, it owns everything. Andrew Abernathey just owns shares in that that I've bought just like everybody else for the same price for shares and that's what's raising money. So why we can make 35% on average a year in equity is because all the vertical integration is shared amongst all of our partners, it's not hoarded to me or another partner of mine which is very unique. Another thing is we don't do profit carry, so a lot of companies after a 5% hurdle will take 20% of the profits or whatever it may be, we don't do any of that. We take a simple 3% management of raised capital so about a 100 million raise, that's 3 million a year that covers my salaries, everybody's salaries in the company, travel, office, everything and there is no other carry. The only way myself and my team will become wealthier is by owning units that we pay just as much as you and it's common share, there's no A or B, and we'll get wealthy on our unit valuation just like you, and that's very unique. So again, am I dumb to leave money on the table? Maybe but I'm a farm guy, I'm just like it's simpler, it's fair and obviously we've raised a lot of money so people must like it.

David: Yeah, oh absolutely absolutely. And if somebody wanted to connect with you, you have a website, andrewabernathy.com and for anybody that's listening or driving for example, I'mma spell this out for you guys. Andrew is pretty easy, that's A-N-D-R-E-W. Abernathey is a little bit more challenging, it's A-B-E-R-N-A-T-H-E-Y.

Andrew: Don't forget that E, it's silent.

David: That's right, that's right. andrewabernathy.com and guys you can also check out Andrew on Facebook and LinkedIn, he's got some information over there as well but really just head on over to his website if you want to learn more. I mean this guy is incredible, I'm so impressed when I got to meet him in person a couple weeks ago down in Tampa, I was just like wait what? You did what? And you did that and you're how old? And I was just like holy cow I need to know more about this so I invited him on the show today and Andrew I'm so happy to have you on the show, I'm so grateful for your time and again anybody that's interested in investing with Andrew, check him out, go to his website andrewabernathy.com. Andrew thanks for coming on the show, do you have any parting words for anybody that's listening to the show right now that's thinking you know what? I just need to do better, I need to be better and I'm probably stuck in this job that I hate. You know, what would be some good action things that somebody could take away from this?

Andrew: No I appreciate it. First off, it's an honor to be on the show. I mean my biggest things are just always think bigger like 1000 times, I know there's 10x, do a 2000x, like go huge 'cause even if you miss it, you're fine and focus. Gosh if I could go back and just start with storage 9 years ago and not have to have the helicopter company hiccups and all that, I mean it's probably the best thing that happened to me but focus, be the best at something, and in a world of instant gratification and short term mindsets, if you can be different, if you can think long term and you don't need instant gratification, you will succeed just by the simple- just by the formula of your business model. So just think longer, focus and think bigger.

David: Man you nailed it. Think bigger, focus, be the best at something, be different and think long term. Man you nailed it. Andrew, thank you so much for coming on the show today. Guys thanks for listening, don't forget, check out Andrew's website andrewabernathy.com and with that we're going to be signing off. Andrew, thanks for joining us today brother.

Andrew: Thank you, appreciate it.

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