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In today’s episode of Discount Property Investor Podcast, David Dodge brings Alex Pardo to the show and talks about his transition from one asset class to the next. Alex Pardo grew up in a middle-class family in Miami and started flipping baseball cards. Worked at GE for 2 years and then moved to Atlanta. Been in the game for 16 years. Listen to this episode and learn more about the people and marketing business in real estate.
Things that will cover in this episode:
- Marketing for Deals Bootcamp with Dave Lindoff
- It’s all about relationships
- Attention grabbing headline
- Interest (peak)
- Action (Call to Action)
- Problem Solver
- Mastermind and Coaching Community
- Ascend Mastermind
- Transition from one asset class to another
- New Venture – Self Storage
- Storage Coaching and Mastermind Community with Mike Wagnor
- 350 Units coming in Jackson Mississippi
- Easy Storage Solutions – Management company
- Payment provider, payment collector
- Call center
- Hire a local part-time boot on the ground
- SBA Financing – Put down 15%
- SBA Approved Banks
Welcome back to the Discount Property Investor podcast. Our mission is to share what we have learned from our experience and the experience of others to help you make more money investing like a pro. We want to teach you how to create wealth by investing in real estate, the discount property investor way. To jumpstart your real estate investing career, visit freewholesalecourse.com, the most complete free course on wholesaling real estate ever. Thanks for tuning in.
David: Alright guys, welcome back to the discount property investor podcast. I am your host David Dodge and today I am joined by a friend, a fellow real estate investor and a very, very impressive individual. Very grateful for his time and we are going to share some gold nuggets with you guys. So today, I am bringing on Alex Pardo and he is going to talk to us about his transition and we were just chatting before we started this live, this podcast, and he was telling me a little bit about it and guys, he’s got some really cool stuff to talk about today. Alex, welcome to the show.
Alex: Mr. David Dodge, always a pleasure my friend. Thank you so much for having me back on the show. Always excited to connect with you and just deliver as much value as possible so thank you.
David: Hey, I appreciate you man. I’m grateful for your time today and again man, wow, you- before we jumped on, you were telling me about you know, some really cool stuff so yeah man, this is going to be a great episode. Before we jump into that, Alex you’ve been on my show before and I’ll have to throw in the show notes the other episode that you were on I believe maybe once, possibly even twice. But for anybody that hasn’t heard that previous episode and/or you know, that’s watching or listening that doesn’t know who Mr. Alex Pardo is, give us a you know, quick you know, who I am, how long I’ve been in the game and maybe even throw in you know, what got you in the game just cuz I’m curious.
Alex: Yeah, absolutely. So I’ll try to give you the brief modified version though.
Alex: So if I violate what I’m saying now, just cut me off dude.
David: You’re good.
Alex: You know, my entire family’s Cuban, my sister and I were born in Miami, you know, middle class family. I wasn’t- I wasn’t born into wealth and riches but I also you know, fortunately I didn’t struggle to get the next meal and so I don’t have that rags-to-riches story but what I did find was that living middle class, my parents just kind of busted their butt to provide for my sister and I, and we were comfortable and I knew at an early age that I wanted more than that. I wanted- I didn’t want to- I didn’t want to have to work a 9 to 5 just to provide for my family and live week to week, month to month, so I- yeah man I you know, at the baseball field, I’d buy baseball cards and flip them for a dollar, and I got kind of exposed to buying low and selling high and I really liked that. Fast forward about a decade, I got into college. Something switched where I wanted to kind of climb the corporate ladder for whatever reason and I ended up getting a job with General Electric. 3 months into that, quickly found out that that is not what I thought it was going to be, you know, working 70, 80 hours a week and just ultimately knew that I wanted to- I wanted to kind of blaze my own trail. I wanted to be an entrepreneur. I wanted to be in business for myself, I just didn’t know what that looked like so I started reading books.
David: I gotta interrupt for one second. You took a job at GE for 3 months?
Alex: No no, it was a 2 year program.
Alex: It was 3 months into it, I realized that that was not for me.
David: Okay, so then you stuck it out for another year .8?
Alex: Yes, correct.
Alex: Exactly, exactly. And so I had been a big commitment. This was the first time that I had- I wasn’t living at home with my parents. I was what? hmm, 20 years old at the time.
Alex: And so- and so yeah, I moved. I moved to Atlanta and I had given- I told myself hey this is a 2 year program, I’m going to finish this. But while I was working at GE, I started the process of getting educated on entrepreneurship and real estate and wealth and freedom and all that kind of stuff. So I read a lot of books, I remember buying Carleton Sheets’ ‘No Money Down’ and thinking that real estate was all about assuming loans. Anyways, didn’t take any action, I was just more on consumption mode like I think a lot of people are these days. Quit that job 2 years later, went backpacking around Europe for 3 and a half months. I was in Ibiza, a friend of mine sent me an email and it was inviting me to a boot camp on how to market for deals. Keep in mind David, I had funded this backpacking trip on my credit card, I was like 7 grand in debt and I was about to move back to Miami to live in my parents house at 25 years old. Not a good look my man, not a good look. So that was a motivator for me. I’m like, I gotta get- I gotta figure out what I’m gonna do. I knew that getting a job wasn’t going to be the answer.
David: Alex, I feel you and hear you and I understand you because when I started this business full time 7 years ago, I was 30, you were 25 so you had a jump on me. I had 62 thousand dollars worth of credit card debt and I put a coaching program and my first 2 months marketing on credit cards because what do you got-what do you got to lose? Go from 62 to 70? Like come on, it’s not that much different.
Alex: That was a different [inaudible], right.
David: So I get it, I love it, I feel you. Thank you for sharing. I didn’t- I’ll stop trying to interrupt you. Please proceed.
Alex: No no, you’re good. I’m about to wrap it up man. So I went to this boot camp. I remember not really knowing that there was things like motivated sellers. I remember it was such a mental hang up, like why would somebody sell me their house at 56, I couldn’t- I couldn’t wrap my head around it. But anyways, I’ve always been pretty good at just kind of like firing and then aiming.
David: Me too, me too.
Alex: And so when I got back- when I got back home, I plucked out of pre-foreclosure letter from the manu I got and dude, it was- it’s one of those things you never forget. I remember going to Kinko’s and I was making photocopies of the letter and it was so ghetto because you could still see the black three-ring binder in the photocopies.
Alex: I’m not even kidding you, and I start mailing pre-foreclosures, calls started coming in, didn’t know what I was doing, fast forward about 2 and a half months later, ended up closing my first deal. I brought on a partner, we made 44 grand on that deal.
David: That’s awesome, that is awesome, very cool.
Alex: And that’s it man, I haven’t looked back since then. That was late 2005 so January 2006 was when we closed that deal.
David: Holy cow man. You’ve been in the game for 16 years.
Alex: Just about.
David: Holy cow, that’s awesome. Who was the- you don’t have to say if you don’t want to but the, you know, what- who was the event? What was the guy that opened your eyes? Was it group? Was it-
Alex: Yeah, no, I’m happy to share man. I’m an open book, I’ll share anything. Dave Lindahl.
Alex: Dave Lindahl who’s an apartment- he’s really an apartment investor and educator and at the time, he had a boot camp called ‘Marketing for Deals’. So he was the one that kind of got me started and then I started learning from several others, Than Merrill became a really good friend of mine and you know, I have- one of the- I’ve done a lot of things wrong and I’ve made a ton of mistakes, I continue to make mistakes. One of the things I think I’ve done right is surrounding myself with the right people, getting around the right- getting the right circles whether it’s coaches, masterminds, things of that nature. I’m sure at some point we’ll talk about that and that has been a huge catalyst to I think my success and more importantly my growth because I still have a long way to go. You know, I think we’re all a work in progress.
David: Man I agree completely and I love everything you just said and I am blessed to have you on the show today Alex.
Alex: Thank you so much man.
David: You are the man my friend. Thank you so much for coming. So wow, what a cool story man. Had a job, knew immediately that you didn’t like it, you stuck it out. That’s what everybody typ- or that’s what most people do for 40 years guys, so the fact that you did only 2 is awesome. I think I made it 10 months at a corporate job right out of college so I’m with you, you know, pretty similar, didn’t go 40 years with, you know, like the most, you know. Moved to Atlanta, you go on a trip for- was this- this workshop on how to market for deals, was this back in the States or was this in Ibiza?
Alex: No no, this was in Atlanta.
David: Okay, got it.
Alex: So when I was in an internet café in Ibiza, it was September of 2005 and then that marketing was the next month in Atlanta. Ironically back in Atlanta, I moved to Atlanta and then I got my first exposure to how to market for deals back in Atlanta.
David: Awesome. All right, I got to challenge you here real quick. This is 16 years ago.
Alex: Bring it.
David: But I know you- I know you’re going to know, that’s why I’m going to ask. So 30 seconds, what’d you learn in this marketing for deals boot camp?
Alex: Wow, I learned a lot. First thing I learned was it’s all about relationships.
David: Boom, love that.
Alex: Relationship capital. It’s about connecting, it’s forget the X’s and O’s about marketing for deals, that I learned but specifically I networked. I made relationships with people that there’s a few of them I still stay in contact with to this day. To me, relationship capital is probably the most valuable currency you can have, it’s not money.
David: You know what I learned a while ago that stuck with me is that the most- how do you word this? The most- the best resource is to be resourcefulness.
David: Right? How awesome is that? Very cool. So it’s all about relationships, I know you got one or two more nuggets for me.
Alex: Yeah man, it’s all about relationships. To this day I learned about the acronym AIDA, if I’m saying that right, A-I-D-A. And when it comes to marketing, you want to grab people’s attention, you got to get their interest, you got a pique their desire. So A-I-D-A and then it’s about action. There’s gotta be some sort of call to action. So that’s one of the first things I learned in that marketing for deals boot camp is attention, interest, desire and action. So when I- I was fortunate that I could just pluck out that letter, I didn’t have to recreate it but it had those principles. It had an attention grabbing headline, it piqued their interest and their desires, and then there was a call to action, hey call me, right? And so that’s what I learned about marketing. To this day, I kind of use that formula with everything I do whether it’s copy or whether it’s anything I’m doing online, whether it’s on my own podcast so yeah that’s what I would say.
David: Dude that is awesome. Thank you for sharing and I agree with everything you just said man. That’s awesome, very cool. This is definitely a relationship business. Well I mean, first and foremost and most businesses are, you know? The products that we buy and sell so what was the business doing, either your typically is a product or a service business, right? So in the wholesaling real estate business specifically, we- I look at it more of a service business than a product business and the product is real estate but the business is marketing, it’s people, it’s relationships, it’s just there’s a lot that goes into it. Real estate is the smallest little piece of it.
Alex: Yeah yeah yeah.
David: Which is kind of crazy.
Alex: You’re not in the house business, you’re in the people and marketing business.
David: People and marketing business, nailed it. Love it.
Alex: And David, the last thing I’ll share with you man is that I didn’t realize this but as real estate investors, you know, everybody listening to this show, you’re an entrepreneur, you’re a real estate investor or you’re on that path, at the end of the day you have to see yourself as a problem solver and that’s probably the third most valuable thing I learned at that boot camp is that you’re there to solve somebody’s problem, you’re there to be a solutions provider and when you stop thinking about the money and you start focusing on how to solve people’s problems, the money will come. It’s just inevitable, it’s a byproduct.
David: Dude I just came up with the title: ‘The People and Marketing Business’. I love it.
Alex: There you go.
David: It’s exactly what it is. It’s very cool. Awesome man. Well thank you for telling us, you know, where you came from and who you are. Again, if you don’t know who Alex is or you hadn’t listened to that previous episode that we did, very, very, very cool. Alex I’ve been tracking you online, you are one impressive SOB with all due respect. I love it man, you’re always doing cool stuff. One of the things that I’ve seen recently that you’ve been- not recently, you’ve been doing this for a few years at this point, but you have a mastermind and I believe it’s called ‘Ascend Your Success’, is that correct?
Alex: Yeah. Ascend Mastermind. It’s a- it’s a mastermind and coaching community that my good friend and partner, Steve Kavanaugh, and I put together back in 2019 and what we found is you know, I’ve gotten so much value and growth and perspective and insight and relationships from being around the right people like I said earlier, coaches and masterminds and yet I never really could find it all under one roof, right? Where you got- you got the benefits of masterminding but you were also able to connect with a coach. In fact, the [inaudible] organization is the first time that had something that kind of resembled what I always felt was needed in our marketplace, right? And so Steve and I got together and you know, we wanted to create something different and unique from what was already out there and so yeah, we launched Ascend which was you know, it’s a community for entrepreneurs and real estate investors that it’s not just about building the biggest building in town or making as much money as possible, that’s important but it’s first about life. One thing I find David is that too many people are focused on their business and focused on making more money and yet what happens often times is that other important areas of their life suffer, whether it’s their health, whether it’s relationships. I know many many millionaires that are going through divorce or have been through a divorce or don’t have a relationship with their kids or maybe their health is out of balance, like to me, that’s not success. Like who cares how much money you have if you’re sick or if you don’t have meaningful fulfilling relationships in your life? And so what Steve and I have done through Ascend is we always start with the vision. What do you want your life to look like? And then it’s so much easier to tweak and modify your existing business or a new business to help support and enhance that vision you have, that desired lifestyle that you’re seeking. Does that make sense?
David: Absolutely it does and I agree 100%. Absolutely. Love it.
Alex: And for those listening, you know, if- I don’t pay attention to what people say, I pay attention to what people do. I can look at somebody’s calendar on their phone and/or their bank account if I could actually see it which in most cases, I can and that’ll tell me where your priorities are. So if you question yourself, don’t fall victim to believing your own stuff, right? Your own BS because we’re all guilty myself included of telling ourselves be a stories that don’t service.
Alex: So you might say one thing, but look at your bank account, look at your calendar, look at where you’re spending your time and are your actions aligned with what you say is important, right?
Alex: And sometimes I think entrepreneurs now, we tell ourselves a lie that hey we’re working all these hours or we’re grinding, we’re hustling, we’re working 80 hours a week for our family but what they don’t realize is the irony of that is that your family needs you.
Alex: Do you know what I mean?
David: They don’t necessarily need what you’re working for, they need you. That’s such a good point.
Alex: Yeah man. So anyways, these are things that I’ve kind of learned the hard way throughout the years. I certainly don’t want to come across like I know it all because I don’t. I make mistakes and I fall just like you and everybody else and like I said earlier, we’re all a work in progress but these are things that I’m hoping to kind of shine more of a spotlight on because I don’t- when I interview people on my podcast, it’s- sometimes internally I feel for them because I know they’re successful in the outer world but internally, they’re broken, you know, and oftentimes it’s because they prioritize the wrong things.
Alex: It’s money and business but what about everything else in your life?
David: So speaking of life on air, I went to a 3 day life on air event. It’s probably been 2 or 3 years ago with my wife and we loved it. It was such a cool event but what it was missing was the how. Talked about the why, talked about the when, a lot about the when, talked about the who, didn’t really talk a whole lot about the how. I feel like I was kind of let down a little with that because they hyped you up real good, you know, live this lifestyle, your dreams and no offense to any of the life on air people by all means.
Alex: They’re great people too.
David: They’re great people, yeah absolutely. But at the end, it was like okay guys, sign up for this group mastermind, whatever, coaching and I’m like wait, we just sat here for 3 days and you didn’t tell us the how at all and you know, but the takeaway was is that it was very aligned with what you were just talking about. There is way more to life than just business, you know, and you said it, I’m gonna- I’m going to actually repeat it. Your family doesn’t need your business and I’m going to reword it but it’s similar, they need you.
David: And that’s just such a really, it’s just a such awesome point. So your guys’ group is I would imagine mostly real estate investors or is it just entrepreneurs?
Alex: Your- no, you’re right. It’s probably about 80% real estate investors just because of the audience that Steve and I have.
Alex: But we do have some entrepreneurs that have real estate holdings but that’s not their primary business.
David: Got it.
Alex: And we find that man, the perspective and insight you can get, let me back up. Sometimes real estate investors when it comes to marketing, when it comes to building a real estate investing business, we’re so tunnel-visioned and we only know how to do things like the way everybody else in our space does things and when you get around other entrepreneurs, that’s why I’m a big fan of joining BNI, getting around other entrepreneurs because they can see things that you can’t see. When you get the insight and perspective from other entrepreneurs, they know business, they might not know real estate investing or how to scale a wholesaling operation or you know, fixing and flipping but they can give you perspective that maybe you haven’t considered. So we find that hugely valuable but yeah, the majority to answer your question are real estate investors.
David: Awesome man, very cool. And how big is the group?
Alex: We have 52 members but it’s only 30 seats so it’s very, you know, it’s limited. We are- our vision for this David was never to be a mastermind that you see out there that has a hundred plus people and the reason is that’s very intentional because of the vulnerability, the transparency and the intimacy of the topics and conversations that are discussed at our retreats. It’s not something that most people are going to want to share in front of 50, 100 people and so we really vet people on the front end to make sure it’s the right fit and that they match our core values because brother, in there, you know, sometimes there’s a lot of tears shed and there’s- you got brothers and sisters that are walking alongside you and it’s not just about hey how do I- how do I scale my company? Or what marketing is, you know, working best these days? Or how do I convert deals? But sometimes it’s about real stuff that’s holding us back in our personal life and you can have all this strategy and X’s and O’s in your business but if you have something that is really holding you back in your personal life, dude it’s just going to get in your way, you know? And what- here’s what we find is that sometimes you think you have a business challenge and sometimes it is truly a business challenge, but many times, it’s a- it’s a personal challenge disguised as a business challenge.
David: Man isn’t that the truth?
David: I agree with that man. It’s most of the time, it’s a personal challenge disguised as a business challenge.
Alex: That’s right.
David: Dropping these gold nuggets, I knew you were gonna do this to me man.
Alex: Oh man, thank you. I’m humbled.
David: No I love it man, that’s really cool. I’m in a couple masterminds and the ones that I enjoy the most are not about business. It’s really wild man.
David: Because here’s the thing: the business still gets discussed in the hallway or on the beach, I mean it depends on the location, right? Or you know, at dinner when you’re with the group, but the coolest groups that I attend are about the life and the person and the relationships and the fact that you probably are struggling with a lot of stuff and you think it’s business and in all reality, it’s not. So I just you- what you just said resonates very deeply with me and I love it and I respect it and again, thank you for coming on today man. Very cool.
Alex: Yeah man, yeah.
David: Very cool.
Alex: Definitely. One thing I will piggyback on this conversation is- and I think dude you hit the nail on the head. So much business happens outside of the boardroom or outside of the conference room.
David: The majority of it does.
Alex: When you’re building those relationships, and then if you’re intentional about watering those relationships, you know, you plant the seed at these events and then if you follow up and you water and you reach out to people with the intent to give, not with the intent to receive, business just happens dude, joint ventures happen, deals happen, but when you go where you just genuinely want to give back like you man, you reached out to me 3 weeks ago, a month ago and you’re like dude, I see what you’re doing like I want to have you back on the show and let’s just talk and I want to talk about what you’re doing and I want to share with my audience like dude you weren’t asking for anything, you just wanted to pour into me. And now I’m looking for ways how can I impact David and his bus- how do I help you? And it’s just, I want to do that, you know, it’s just because it was genuine.
Alex: And to me, that’s the way you got to approach and build relationships with people. So I just want to underscore that because I see too many people going about it the wrong way. They have their hand out asking for something and that’s just not the way to build relationships.
David: You know, it took me 10 years to learn that. You know, lead with value, the money will come. Don’t chase the money because then the value goes out the window, right? So, man I love that, I agree. Well hey, very cool, ascendyoursuccess.com guys if you want to learn more about Alex and Steve’s Mastermind, it’s called the Ascend Mastermind. 30 seats and then 52 members, does that mean people are encouraged to bring their spouse or their partners?
Alex: We encourage people to bring their spouse or partners.
David: I know a couple things.
Alex: Yeah, you know a lot more than you might give yourself credit for my friend.
David: I love it. Awesome. Guys, check it out. Very very cool. I can personally vouch and pledge for Alex and his partner Steve, I know both these guys. Awesome, awesome, awesome humans. They really care and they’re going to help. I love it, very cool. All right Alex, we are going to shift gears here.
Alex: Let’s do it.
David: We are going to talk about what’s new in your life and what’s new in your business and how you are actually transitioning from one, still in real estate of course, but one, what would you call this? Sector or-?
Alex: Yeah, yeah. Niche.
David: You know, type or-
Alex: Asset class.
David: Asset class, that’s the best way to look at it. From one asset class to the next, and I am all ears my friend, please please please tell me because I am excited and I personally am also looking not necessarily to shift completely but to add this particular asset class to my portfolio as well.
Alex: Yeah, so let me kind of- I’ll give you the- let me fast forward and then I’m going to rewind and kind of get-
David: You got it.
Alex: Provide some more context but-
David: However you wanna do it.
Alex: After 15, 16 years of being in the single family business with wholesaling being my bread and butter. While I’ve done many many types of deals throughout the years, wholesaling was always my bread and butter. 2012, I started building a team and so for the last, you know, the previous 8 years, I had a team, you know, ranging from anywhere between myself and a partner all the way up to 9 people, acquisitions managers, dispositions managers and we were doing deals focused here in South Florida. Well, I think I shared this on the last time I was in the show so I won’t dive too deep into it but something felt like it was missing. 2018, I saw- I started seeing people on social media posting checks and talking about their offices and their teams and scaling and doing multiple deals a month and I was like, dude I can do that, I know I can do that. And so I started building a team and in an attempt to scale because I felt that’s what I needed to do, and what I realized about a year later when I was I don’t know, my overhead was 40 to 50 grand a month. We had to close 2 deals a month just to break even, 3 to take care of my team, 4 to be like really profitable and man that’s not what I signed up for, you know. The business is supposed to serve you, you’re not supposed to serve the business and while I was the one that wasn’t doing the marketing, talking to homeowners, meeting with homeowners, dis- you know, the disposition side of the business, I wasn’t doing any of that technical work, right? The technician work like Michael Gerber talks about in the e-myth, but I was spending a lot of time managing the team, running sales meetings, putting out fires and man that’s just- that vision for that business just didn’t fit what I wanted anymore and so I had a- I had a decision to make. It’s like, do I keep doing this just because we’re making money? But it wasn’t giving me a whole lot of fulfillment. The podcast was giving me fulfillment and joy, Ascend was doing that, but not the wholesaling operation so man I made the decision right before covid, about 2, 3 months before covid came that I was going to start the process of unwinding this team that I had built and you know, and it was about a 5, 6 month process to do that and then I took some time off and one of the things my coach told me which has served me so well just because he knows who I am he says, Alex don’t be so anxious to jump into the next business and tackle the next mountain, you know? And so I took some time off, I just focused on the podcast, I focused on Ascend, I still have some rentals, I still do some lending but dude in December, I had a- I’ve been interested in the self storage space for a long, long time and that’s a business that fits my vision from a fact that you don’t need a lot of overhead, you can certainly build wealth, generate a lot of cash flow. I started researching that asset class relative to multifamily, relative to office and other asset classes and I found that you know, in the recession, storage does very very well and in a great market, storage does very very well. And so yeah man, I put my money where my mouth is, you know, so not only do I run a coaching and mastermind community, but I joined a storage coaching and mastermind community through Mike Wagner, the storage rebellion. And dude fast forward to today, I don’t know when this is going to get released but early to mid September of 2021, I’m about to close on my second storage facility, 358 units in Jackson, Mississippi so really excited about that. It’s a 43 thousand square foot facility and yeah man, it cash flows from day one and we can get into the details if you want but now I’m doing something that is challenging me in a new way, there’s a lot of excitement around it and most importantly, it’s aligned with my vision and the direction I want to go in.
David: So you already have one unit or one storage facility?
Alex: No, so I ended up wholesaling the first one. Yeah, so one- actually one of our members in Ascend contracted a property, had never wholesaled before, brought me in along with somebody else and we ended up marketing, finding a buyer and so we ended up wholesaling a self-storage facility. But this is going to be the first one that we actually you know, put in the portfolio.
David: I love it. So tell me a little bit about that wholesale. Why did you not keep it? Was it because-
Alex: Yeah, it was too small, it was too small for us.
Alex: So it was about an 11 thousand square foot facility and so man, one of the things that people when they get into self storage and even multifamily, you know, you’re people in multifamily, they’ll buy a duplex which is not even considered commercial, right? But like they’ll buy a 4-plex or maybe a 10 unit, a 20 unit and when I talk to really successful commercial real estate investors, whether it’s multifamily self-storage, it’s the same amount of work on the front end to underwrite these deals and oftentimes it’s so much easier to raise the capital on big deals with juicy fat margins than on small deals. So when I got into self storage, right out of the gate I said, I want to start looking for a self-storage facilities that are 20 thousand square feet and up. And it’s interesting David when you focus on something and you’re intentional about it and you then put your nose to the grindstone so to speak and you get to work, how things happen. So to me, it’s no coincidence that my first one is double what I was targeting, you know, 43 thousand square feet, but this first one that came across was just too small and we ended up splitting a $95,000 wholesale fee three ways on a storage facility so yeah.
David: Awesome, very very cool. So the 350 units that you got coming, did you- did you use any of the information that you had learned in the marketing for deals boot camp?
Alex: Hmm, good question. Good good good question.
David: Cuz I would imagine you did, at least some little pieces of it, right?
Alex: Some pieces of it yes. Now, to be totally transparent, my storage coach is the one that found this deal and he had too many storage projects going on at the same time so he ended up wholesaling this one to me.
Alex: So while I didn’t- you- look, you always use marketing strategies, like I’m always thinking about how to gain more attention and you know, drive up people’s interest, desire. There’s always a- like, you’re- we’re always using marketing, right? But I think more than anything, what we talked about earlier, coaching, masterminds, the relationship capital, the fact that we had that relationship, the fact that I invested in myself, I was first in line to get dibs on that deal and that deal would have gone like that because it cash flows from day one and there’s a value add component to it. So yes, to answer your question, there’s always some marketing being used but if anything, the relationship and you know, is what really came into play here.
David: I love it, very very cool. So you live down in South Florida, Miami area, right?
Alex: Miami my man.
David: And this is in Jackson, Mississippi.
David: And so obviously you’re not as scared of investing out-of-state or somewhere that’s you know, not necessarily in your backyard.
Alex: Not at all, not at all. So yeah, the way that I’ve learned the storage business through Mike Wagner, it’s a three-prong approach where there’s a company called Easy Storage Solutions which is essentially a third-party management company that can handle- they can be your payment provider, payment collector, they have a call center in place, like basically they can be your management company. You don’t need an on-site property management company. The second part of that is well, I already talked about the second part is the call center and then the third part is you hire us. So we hired a local part-time what’s called like a boots-on-the-ground person, somebody that can do lock audit checks, unit cleanouts, things of that nature. She’s not even really dealing with customers, she handles the auctions online, you know when people don’t pay which by the way is another reason I really like storage is that they have lien laws. So unlike, you know, for the landlord’s listening to me, you know when somebody doesn’t pay your rent, you know, you have to go through a process to evict them, not in the storage business. In most states, you have a lien law which means that in 30 to 45 days, you know, you can essentially auction off the contents of that unit.
David: And you don’t have to go to court or anything, right?
Alex: Nope, everything is done online.
Alex: Now this is where- this is where the part-time local boots-on-the-ground person. So anyways, it’s a three-prong approach between Easy Storage Solutions which is the software third-party management company, their call center and the part-time person. You can run this business from anywhere in the world with a laptop, a cell phone. As long as you got those three components, you can do this virtually and remotely.
David: So the three components are call center, payment provider and then the local boots-on-the-ground.
Alex: Correct, yeah Easy Storage. They’re a lot more than just a payment provider and collector.
Alex: But they essentially are the ones that deal with the customers, handle customer service, collect payments, all that kind of stuff.
David: It’s a management company.
Alex: That’s right.
Alex: That’s right. Cool, yup.
David: So then are you going to be- so this is just a random question but is it going to be Alex’s storage? Or is it going to have a big national name on the front of it? Or will it be Easy Storage Solutions? How does the branding work and/or is it already branded?
Alex: Yeah, it’s- this one’s already branded, we’re actually keeping the name. That’s a great question though. Sometimes if they don’t have you know, usually we’re looking for mom-and-pop operators. In other words, we’re not going out there trying to buy you know, like the Public Storage’s of the world and CubeSmart’s.
Alex: Those are owned by REIT’s, real estate investment trusts. I mean those are the big boys with deep deep deep pockets. We’re targeting secondary and tertiary markets which is why I didn’t start focusing in Miami. So we’re looking at secondary, tertiary markets and we’re looking for mom-and-pop operators that you know, might not have a website or might not have any marketing or branding in place, they don’t have a Google presence. These are the types of opportunities we’re looking for because we can jump in, implement this three-prong approach and so sometimes to answer your questions, you can just inherit the name if you think it’s a good one and you think it has brand potential. Otherwise, you can just go ahead and do a complete rebrand. In this case, we’re keeping the name.
David: Very cool. When was it closed? Couple weeks?
Alex: September 8th, so I’m not sure when this is-
David: Oh man.
David: Yeah, this will launch probably Thursday or Friday so like next week you’re gonna own this thing.
Alex: Okay. So in fact, you might- if you follow me on social media, I’m going to be documenting the process but we’re flying out to- myself and my partner to Jackson next week for the closing and then we’re going to spend 3 days there at the facility, just kind of implementing some things, working with the part-time boots-on-the-ground person and getting up and running man.
David: Dude, that’s awesome. So did you have to syndicate this type of deal or just got to the bank?
Alex: No no. Great question. So we went with SBA financing, SBA7A.
Alex: So with SBA basically small business administration, we had to put down 15% so this is a 1.6 million dollar purchase price and so we went with SBA and so I brought on a money partner to fund the 15% and in addition to some of that capital expenditures that the facility needs. You know, we’re putting in a brand-new gate, it’s got some roof repairs, things of that nature so I didn’t syndicate as far as I wanted to go out there and just raise a bunch of capital from a bunch of different people but I brought on one partner to get a piece of the deal. So essentially I’m getting into this deal with zero money out of my own pocket.
David: That’s awesome. So is that SBA financing through you and that money partner? Or just you?
Alex: No so SBA, there’s a bank out there so there’s SBA lenders, there’s SBA approved banks that can essentially work with us via provide SBA financing. So SBA’s providing 85% of the funding for this particular purchase and then we have to put the 15% down so I brought on a partner to fund the 15%.
David: Okay, gotcha. So I’ve done an SBA loan before for a restaurant that I owned.
David: Also for 10 months and decided that I didn’t want to do that either.
Alex: I didn’t know that about you, interesting.
David: I’ve done quite a few- quite a few businesses, failed a lot, failed a lot but you know, that’s okay, I’m still here. So I guess the- I guess I asked the question wrong. Are you personally guaranteeing the loan or is you and him personally guaranteeing the loan?
Alex: In this particular case, both of us are personally guaranteeing it.
David: But you found it, therefore it merits the fact that he needs to bring the 15%, so on so forth.
Alex: Correct, correct. Now this-
David: Very cool.
Alex: This particular deal after the debt service just to kind of give people some perspective, this will cash flow about a 105 thousand dollars a year. After that we pay the debt service so it’s a pretty healthy deal.
Alex: 105k a year after the debt service.
David: After the debt service.
Alex: After yeah, after we pay the bank. Now, the best-
David: So 105k net plus you’re getting depreciation plus somebody else is paying this thing off plus it’s really cool.
Alex: So the best part is not just the cash flow but the equity.
Alex: With raising rents and decreasing expenses, we expect this thing to be worth about 2.5, 2.6 in a 12 to 18 month period so at that point, we got multiple exit strategies. You know, do we want to exit? Do we want to sell? Do we want to refi, take some cash out and keep the cash flow? I mean there’s numerous things you can do here.
David: Wow, that is so crazy. I love it. Dude I’ve been looking for storage units and looking for little plots of land to start building something small. I’ve been looking for, you know, some storage units that are small already but have land to where we could essentially grow. I haven’t pulled the trigger yet, but it’s probably the next thing that I’m going to start jumping into. I love the idea. Everybody has a bunch of junk. I’ve personally had storage units over the years. When I- when my father passed, I had to move an entire home worth of stuff into a storage unit and it sat in there for probably 18 months before we got around to going through of it. Most of that stuff we sold off and/or threw away and there’s just such a need you know, for it.
Alex: There really is.
David: Everybody’s got bunch of junk they want to store.
Alex: And David, I-
Alex: Oh go ahead, I’m sorry.
David: Oh, I was just going to say one last thing. And you had said something earlier that I really really liked. It does very well in a recession, it does very well in a great market, so it’s not necessarily a cyclical type of business, the economy doesn’t necessarily dictate you know, the success of the business. It’s a people-to-people business of course and people have stuff to store. Now there could be businesses that are also renting these units.
David: But I’d imagine the majority of them are just people just moving you know, needing some place to store because they’re moving, they’re downsizing. I mean really it’s all the same things that we face and we’re looking for these motivated sellers. So earlier you had mentioned, you know, going to this boot camp about marketing for deals, right? Lots of different ways to market for deals but when you’re marketing for deals, you are going to spend your time and your money and your efforts marketing to people that would presumably be motivated.
David: You’re not just going to go put up a billboard in the nicest part of town saying we buy crappy houses because there’s no crappy houses in that part of town, right? You are going to be marketing to people that have presumed motivation and I think that that’s awesome. So you’re doing the same thing with this business and finding people that are the mom-and-pop operators, secondary and third, you said a different word I don’t even-
Alex: Tertiary markets.
David: Tertiary, I’ve never even heard of that before but learning something new every day, very cool. People that don’t have a website, they’re not doing any type of marketing, they’re not doing efficient marketing and there’s value add. I love it. I think this is the coolest thing ever.
David: Very very cool.
Alex: And think about the explosion of e-commerce over the last what? 5, 7 years, people are just- I don’t know about you man but my wife’s got something from Amazon coming like every day, every other day, like people are just constantly buying stuff online and sometimes people need a place to store that stuff and you know, when somebody’s paying 30, 35 bucks all the way up to a 120 bucks a month, in many cases, this is kind of a nuisance expense. It takes- it’s a process to move out stuff from the storage unit and so many tenants, like in this particular facility there’s numerous tenants, many tenants that have been there for years and just continue to pay month after month after month. You don’t have to deal with toilets.
David: Some of these people don’t even know what’s in those units at this point.
Alex: Yeah yeah, it’s crazy man. And it’s- man, people don’t want to get rid of little Billy’s you know, second- you know, second grade school certificate or the little trophy from soccer, like people want to hold on to that stuff.
David: Dude there’s just so many reasons, you know, like I’m thinking of just 10 different reasons in the back of my head right now, like one or two that come to mind would be you know, you got a nice house with plenty of storage space but your basement floods so you have to take all that stuff out and your garage is already full with two cars so you gotta go stick it in a storage unit, replace the basement. I mean, there’s just so many different reasons that somebody would necessarily need a storage unit. So, a couple quick questions for you Alex before we wrap up today buddy and again, I’m just I’m thank- I’m so grateful and thankful for your time today and for all the value and gold nuggets that you’re dropping, not only on the audience, I always learn stuff on these podcasts and the other day, one of my buddies said dude why do you do the podcast? And I said, I kind of thought about it for a minute, I already knew the answer but I thought about for a minute and I said, you know what? It’s a trojan horse and he said well what do you mean? And I said, dude if I were to call Alex up randomly right now and be like hey can I pick your brain for an hour? He’d be like no, maybe not to me but to the average individual, right? But I can say hey let’s do- let’s jump on a podcast, let’s talk about you, let’s promote, let’s provide value and everyone’s always like yes, let’s do it, this is awesome, right? So very very cool. So question that I have though for you about this new venture and this new deal, specifically these 350 units. Are there different sizes of units? Are some of these units, you know, climate controlled? Can you drive a truck into a unit? Like I would imagine there’s a bunch of different types of scenarios.
David: It’s not all just a 6 by 8 foot box, right?
Alex: No no yeah, so great question. So that you’re talking about the unit mix. So there’s a variety, we have 5 by 5’s, 5 by 10’s, 10 by 15’s, 10 by 20’s, all the way up to 10 by 30’s and even 10 by 35’s.
Alex: So yeah.
David: You could drive a camper in one of these things then.
Alex: Yeah absolutely. Now, the facility that I’m buying is non-climate controlled. It’s not a climate-controlled facility. Those usually, you know, can be more expensive.
David: Yeah, but you’re also going to be having more expenses, more headaches, more-
David: The air conditioner is not working, more issues.
Alex: Yeah yeah. Now you can command a premium on rent obviously and those can be- tend to be more desirable depending on you know, the area that you’re in but yeah, so mine is non-climate controlled but we got a variety of unit sizes and yeah dude, there’s some units where you know, people can park- can park things in there so for sure.
David: Dude that is awesome. Alex, give me some parting words for the audience and then also tell us how we can connect with you. What’s your preferred method? Are you a social media guy? Are you wanting people to go to a website or do you have an email? So on so forth.
Alex: Yeah, I would say you know, these days I just- I really- I get so much joy and satisfaction out of being able to speak to people through my podcast.
Alex: So I have a podcast that I’ve been hosting through- since 2016 called the Flip Empire Show. So if you go to flipempire.com/podcast, I release two episodes a week and David which reminds me, we got to get you back on there again my man, so we’ll make that happen. So yeah, flipempire.com/podcast and you can connect with me, Alex@flipempire.com. And then again, if you- David, I really appreciate the opportunity to speak on it. If you have any interest in Ascend, ascendyoursuccess.com.
David: I love it. Guys, he just gave you some awesome nuggets on this show. I’m going to recap really quick here. So connect with Alex through his podcast, it’s flipempire.com/podcast but really just go check out flipempire.com too, all types of cool stuff over there and then of course, he’s got a killer group of people and it’s a mastermind, it’s not necessarily even directed towards real estate investors which is cool because that’s what most of our audience is. It’s really more for entrepreneurs and you know, just being a better person and focusing on living your life and you often think that things aren’t what they are and like you said earlier, you know, like your family doesn’t need your business, they need you and very very cool. All the things that I see coming from Alex, they resonate with me very deeply and I just- I love to see what he’s always up to and just respect the hell out of this guy. You can also connect with Alex directly at Alex@flipempire.com. Alex, thanks for coming on the show my man, much appreciated. I know the audience is going to find great value in this. Any parting words for us today?
Alex: Yeah no again, I want to thank you for the opportunity to speak to your audience and I think, you know, if you just- if you just wake up every single day with the desire to be 1% better in one particular area of your life, the eighth wonder of the world is going to take its course and that’s- I think it was Einstein that said compounds, you know like when things compounding interest and that’s if you could just be 1% better each day, pick a certain area of your life that you think is going to really move the needle. It could be health, it could be your business, it could be relationships, whatever that is, what can you do that day to just be 1% better? And I think if you have and you adopt that mindset, that mentality David every single day, dude how do you think you’re going to wake up- like you’re not the same person on December 31st that you were January 1st if you adopt that mindset cuz it’s 1% improvements each and every day over the course of the year. So I’m hoping people really latch onto that.
David: I love it. I agree. I concur. I think it’s awesome. Alex, thanks for coming on the show. Guys, thanks for listening. Signing off.
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