LUR Ryan | Self-Storage Investing

 

Speculations are flying around that the pandemic might cause another recession. Ryan Gibson, the CIO of Spartan Investment Group, explains why investing in self-storage is still safe. In this episode, learn the ins and outs of this asset class as Ryan breaks down the math behind this investment opportunity. He goes into detail about the three things you’ll need to keep your eyes on if you want to be a passive investor of self-storage units. Ryan also emphasizes on the importance of learning and education whenever you decide to dive into investing. He gives a reminder that it’s best to learn all you can before taking action. Also, learn all about backing up the numbers of investing with the proper market study before making a decision and the impact a demand study can have on your investment.

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Passive Investing In Self-Storage With Ryan Gibson

I have yet another amazing guest. His name is Ryan Gibson. Ryan is the CIO and Cofounder of the Spartan Investment Group. Ryan’s company owns and operates self-storage facilities throughout the United States. For SIG, Ryan is responsible for investor relations and raises capital from investors for projects. To date, Spartan Investment Group has placed over $25 million in private equity and has over 4,000 units of self-storage under management. Ryan also has a career in aviation as an airline pilot and graduated from Mercyhurst University with a Bachelor’s Degree in Business and a concentration in Marketing Management and Advertising. Awesome. Welcome to the show, Ryan.

Thanks for having me, Lisa. We met at a real estate guys meet up at some point, right?

Probably. I know for sure that you were at the Best Ever Conference. I was there and that’s when I met your team and I learned about self-storage and your business and stuff. I’m excited to have you on to learn about your history of how you got started in real estate investing, given that you are a pilot. How you play now, diving into self-storage so that my readers on the show can learn what self-storage is all about. Why should they invest in self-storage? Let’s get started. How did you get started investing in real estate?

Initially, it was pilot housing. I found apartments that are around an airport and I provided accommodations for pilots that lived out of the base. They had to fly to their base the night before and they needed housing. I organized that we call them Pilot Crash Pads, but then the first foray into real estate was flipping houses in Washington, DC.

Were you living in DC? I’m not sure where you live.

Yes. I live in Seattle now. Our company, Spartan Investment Group, we’re headquartered in Golden, Colorado, which is outside of Denver, but we got our start in DC. We got our start building condos and flipping houses and doing some land development there and then moved the company out to Colorado and started focusing 100% on storage.

Let’s break this down in pieces. You went to school and then ultimately decided that you wanted to take the path of being an airline pilot.

Yes.

While you were a pilot, you saw the opportunity to invest in real estate for housing specifically for pilots.

Yes.

Was that in the DC area or was that in another city altogether?

Having good mentors is life-changing. It's the most important thing ever. Click To Tweet

In two cities, Philadelphia and DC.

When you made those investments, how did you get started? You’re flying. Did you hire property management to help manage the project?

No, I did it all. I was young and energetic and I had time. I was hungry to make some extra money. I put them all together and put up my advertising. I did partner with another pilot to do both of them, which is fun. We ran it ourselves and managed all the pilots that stayed there. That worked out good.

How did that move from that real estate to then flipping or did flipping come simultaneously?

The housing for pilots, it’s an entrepreneurial bug that I have. When I started flying, I was like, “This is fun.” I enjoy flying. I got bored. I could do other things. Flipping houses started when Spartan started. When my neighbor Scott was walking down the street, we became friends then we became business partners. We started having a similar mindset of being entrepreneurs. We wanted to get started in real estate. The first thing you can sink your teeth into is flipping because you hear about it all the time. We realized that we want to build a business that improves lives for real estate and has the opportunity to bring on investors, hire employees, and make a good work culture environment.

That made us think about asset classes like which asset classes we should be putting our focus on. There are many you can invest in multifamily. You can invest in storage or office retail. We looked at the best performing asset class during the last two recessions and that was self-storage. We liked the fact that in storage, you can put a lien against the belongings that are in the units. If there is nonpayment of rent, there is the auction process where you can recoup your cash from the storage unit. Storage tenants tend to be sticky and stay for a long time. We liked the ease of operation. I have those four things. It’s what attracted us to it.

Before we dive into self-storage, I imagine there are lots of lessons that you’ve learned along the way. Your business has evolved from providing housing to pilots to then flipping to then figuring out what asset class you wanted to zero in on. Could you talk a little bit about the lessons you learn and the impact that those early experiences have had on your journey?

The biggest lesson that I’ve learned is don’t be obsessed about a deal, getting a deal, doing a deal, jumping in and taking action on a specific project. It’s taking action on getting an education in the space and learning about all the things that you can do in the space before taking action. A lot of people tend to want to do a deal. You can spend a lot of time learning while you’re working another career. That’s the road that I took, which was learning from podcasts and books and webinars and what other people did before deciding how to get into space and be the most effective with it. I also learned that a lot of people are willing to help and share their experiences and ideas. That is something that people should be open-minded to. Whether you’re experienced or starting out, be open-minded to it, either helping somebody else or not being afraid to ask somebody who has more experience in the business.

Going from there, moving into self-storage, you spoke a little bit about the fact that you saw it as an asset that performs well in the last couple of recessions. I feel that’s what stood out to you in terms of why you decided to go with it. Was there anything else that made you decide that this was an asset class that was something that you wanted to go deeper in?

The fact that automation is a huge somebody can pull up and they can book a unit and get access to the facility without talking to anybody, that’s huge versus your typical multifamily or you have a leasing specialist and they go to the office and it’s a big event. You got to sign a lease and they got to look at the unit, the dwelling that they’re going to be living in. You open up the storage door. There are no surprises. It’s always the same thing. The ease of maintenance. The fact that we have to replace, we have 300 units, we don’t have 300 water heaters. Chances are, we don’t have any water heaters. No toilets, no cabinets, countertops, appliances, carpet, paint, or fixtures. It’s basic business. When you boil down the rent, sometimes you can be getting as much as you are in multifamily per square foot. It’s an attractive business to be in from an operational standpoint. We do the whole facet of the operation. We do all the property management and construction management. We wanted to have an asset class that was easier to manage so we could get into doing the whole value chain in the business.

Do you then develop self-storage units too?

Yes. We broke ground on 40,000 square feet where we bought an existing 80,000 square feet for this cashflow and then there are lands and demand enough to build another 40,000 square feet. We’ll oversee that process and hire the contractors to get the project built. We’ll add on additional units from the ground up.

LUR Ryan | Self-Storage Investing

Self-Storage Investing: You can put a lien against the belongings that are in a storage unit. If there is non payment of rent, there’s the auction process where you can recoup your cash from the storage unit.

 

Why the focus on one asset class as opposed to tackling several asset classes?

Our thesis is easy to own, easy to manage, easy to evict. We didn’t want to be in the business of having to evict people, especially the place where they live. It’s a cultural thing. We don’t want our company to be in a position to be evicting people. We don’t like that. There are auctions, but you’re not kicking somebody out of their house. You’re working with them to try to make it as efficient as you can. We look for asset types that meet those criteria. Easy to manage, easy to evict, easy to maintain. We are in another asset class. We own RV parks and those are long-term extended housing. It’s a little more difficult to manage than storage. We like the fact that we don’t have to maintain any buildings. We have a couple of buildings, an office, and in one of the places we have a convenience store, but otherwise, there’s not a lot to maintain other than the utilities. We liked that aspect of it. We self-manage those as well.

For my readers, could you talk about the difference between an RV park and a mobile home park?

Yes. A mobile home park, you’ve got your utilities, so you’ve got all your water, sewer, and electric. The tenant will buy a mobile home and move it into your park and they’ll live there and pay you to rent. There’ll be there for decades potentially. If they move, they have to move their trailer or move their mobile home out of that park. It’s a big ordeal. It could be anywhere from $5,000 to $15,000 to move. An RV park, you have the same utilities, but they could start it up and drive away. You have different types of RV parks. You’ve probably been to maybe Disneyland or Disney World.

They’ve got the RV parks that are super nice destination-themed RV parks you can stay in and game rooms and dining halls and things like that. That’s one type. There are four types. You have the off the side of the highway where you’re going on vacation with your RV and you want to pull off and sleep and hook up really quick and keep going. You have things campgrounds where you go on the weekend to go camping. That could be an RV park. You have housing. That’s what we have. We have long-term extended housing. We have office, showers, mailboxes not necessarily at the units, but we have a master mailbox in the front. We manage the mail and we sell propane. That’s the RV park that we’re in.

One of our longest tenants was there for 4 or 5 years. We’ve had people that stay 4 or 5 weeks, but generally, they’re on a 30-day lease. That’s the main difference. I think both are good. RV park cap rates are high. They’re in the mid-teens. You can get a lot more cashflow potentially and every deal’s a little different than a mobile home park where the cap rates are pretty compressed, especially for the nicer, more institutionalized ones. You also have the risk again on people driving off. You trade a little bit but RV park living is increasing in popularity, with more and more retirees buying more affordable housing, which is an RV, and they can travel around and see the United States. It’s becoming popular.

Going to the way you invest, what are some of the markets that you choose to play in? Why do you choose to play in those markets?

Our primary focus is on storage. Storage is population-driven. Growing population, growing jobs, growing incomes are important ingredients for making a storage facility have a lot of demand. We look at markets that have those characteristics. We also look at markets that have rent per square foot of at least $6 a square foot. That way, when we do add on those additional units, we can justify the new construction costs with the rent. If the rents too low, you can’t justify a new build because it may be as expensive to build in that market as another market, or maybe slightly less expensive, but the rents are far lower. We publish all the markets we look in. On our website, if you go to a Spartan-Investors.com on the homepage, there’s a map.

We look at 154 different markets in the United States and that’s not due to lack of focus. It’s the opposite. We looked at 4,000 MSAs in the United States and we defined what makes a good storage market. On a macro level, we look at those markets for their overall trends. Storage is a micro-market. It’s a three-mile market. You couldn’t say, “Is Houston, Texas, a good market?” I don’t know. It depends if you drop in and go 3 miles around or a fifteen-minute drive time around to potentially where you are. That’ll tell you how much demand there is in that local market. People don’t drive an hour to their storage facility. They go to the one in their neighborhood. It depends on the other competitors that are there and things like that. When you’re like, “We can look everywhere in the United States, how do we get down to narrowing our focus on a particular market?” That map is our guide. I know that we don’t look for deals in Cleveland, Ohio, for example. If we got a deal in Cleveland, we wouldn’t look at it. We would look at a deal if it was in Columbus, Ohio, because I know that’s a market that we look in.

These days, how would you say you generally find your deals?

We’ve got a pretty extensive list of storage brokers. If they’re in the business, they’re on our list and we send a monthly newsletter to them and we’d say, “We bought three more facilities. We closed on one.” In our newsletter, we closed on a facility in Denver. We keep up with those people. We keep a relationship. We do what we say we’re going to do. We have a 100% contract to close-ratio, meaning that we haven’t put anything under a contract that we haven’t purchased, even under extenuating circumstances like issues with inspections and loans and things that. We’ve pursued everyone and that gives you a reputation and then people will enjoy liking to work with us. We tend to get broker leads before they may go to the market. We’ve bought a lot of facilities that way and then we find them off-market. We send thousands of letters, either emails or letters to existing property owners. We try to work with them at a fair price to get the property off-market. The other way is we build from the ground up. We’ll buy land that’s vacant that has good demand and then we’ll build our own business.

Development is one side, but coming from the apartment space, which is the space that I play in primarily, I’m curious about the typical business plans, if there’s such, for when you’re buying already developed self-storage.

The things to look at if you want to passively invest in self storage are expense ratio, rental rate increases, and the underwriting file. Click To Tweet

There absolutely is a business plan. There’s got to be a reason why we want to buy the property. In multifamily, you might look at a C-plus building that’s in an A market or B market. You look at the rents and you say, “The rents are $200 to $300 a month below market.” I can take off 50 units offline over the course of my business plan, put a new kitchen package and put new flooring in and put those back on the market for a higher rent premium based on what the market does. Storage is no different, except that we don’t have to do the renovation of the units. We might find a facility that’s 100% occupied.

It has a waitlist a mile long and you look at that facility’s rent and that rent is 20% or 30% below the competitors in the market and everybody’s full. You might ask, “Why is that owner not charging market rent?” That might be because they’re absentee, they live out of state, they’ve owned the business for 30 years and they have no interest in chasing rent collections are pushing the envelope. Maybe they don’t have a big marketing budget. They don’t have a lot of sophistication adaptation to new technologies. Some facilities that we purchased don’t even have an internet connected to them. We’ll come in and we’ll add security cameras. People love security at their facility. We’ll add better lighting, better paint, and better doors.

We’ll put in revenue management in place. We’ll set up a call center. We’ll set up vending or propane services and notary services. We’ll look to optimize raise revenue following through on collections and the auction process, creating a newsletter for the business so that we can better advertise our auctions. Some facilities don’t accept credit cards. We buy a lot of facilities that aren’t on automatic payments. We’ll come in and we make it efficient and easy to pay. We bolster marketing. We’ll do a full suite of social media, online business listings and we’ve done billboard advertising. We work with the Chamber of Commerce. We work with local apartment communities. We do sales training for our staff and we hire a professional team.

We have uniforms, policies and standards, and quality control training so that we’re converting as many customers as possible that call. We boost SEO. There’s a lot of things you can do through online Google AdWords and advertising so that when we do raise those rents, we’re still getting an inflow of customer churn. For example, we have a deal it’s 5 or 6 C’s Like I talk about it. Rents are at 32% under the market. We know that. We mystery shop all our competitors. We know that if we’re buying this facility, it’s cashflowing day one. We can add a lot of value by bringing the rents up to where they should be. It’s making good on collecting the rent that the storage tenants are supposed to be paying on time.

What do the typical returns look like for investors and what’s the typical whole period as well?

I can probably say generally, multifamily. Mid-teens IRRs, five-year holds, double your money in five years. It’s pretty typical. Cash-on-cash out of the gate could be anywhere from 5% to 9%. IRR could be anywhere from 14% to 17% depending on the market, deal, and risk. I would say it’s similar to multifamily. I invest passively in multifamily syndications. It’s similar. Different asset classes and diversification.

The structure of the deal. Do you generally use preferred returns or usually don’t do preferred returns and why?

We always do pref. Our prefs have been anywhere between 8% to 10%. That doesn’t mean it will be 8% next time, but generally 8% to 10%. We do a rolling pref. Let’s say we’re a facility that doesn’t cashflow and there’s an 8% pref that’ll accumulate and be owed to the investor at the time to sell on time of sale. We do a pref on every deal.

Do you do any split classes like Class A or Class B, so you have your debt investors preferred equity?

Yeah. We typically do a two-tiered structure. We do Class A and Class B members and sometimes we’ve done three classes. This offering that we’re doing we’re going to offer multiple classes where if you invest a certain amount and you’re a first-time investor with us, if you invest a lower amount, you get the lower pref and a lower bump. If you are returning investors, you get a little bit of a higher bump in IRR. If you’re over an amount, you get a bump even above that of an IRR. We do multiple classes depending on investment amounts and things like that. That’s to incentivize fund to funds. Sometimes people rate to have a capital raising business. If they bring more money to the deal, they’ll get a higher preference, higher preferred rate of return, and a higher split for bringing a bigger dollar amount.

To talk a little bit about the underwriting aspect, as a passive investor, there are things about investing in self-storage projects, either the ones that are scheduled for value add or for development, even though they’re both two different beasts. Can you talk about the things that they should consider, either asking or understanding about when it comes to underwriting, especially in this current environment?

This is going to be a little bit of a long answer, but I’ll be thorough and insightful, hopefully. Number one, expense ratio. You take your total expenses into your total revenue. That’ll give you your expense ratio. That would be one of the first things I look at. When I underwrite a deal, I would look at the expense ratio. If it’s anything less than 25%, I would throw a flag up. For example, for every dollar the storage facility takes in you should be paying $0.25 in expenses before that service is paid. We see anywhere between a 25% to 40% expense ratio. The biggest wild card in that is property taxes.

LUR Ryan | Self-Storage Investing

Self-Storage Investing: In the beginning, you might be buying a property because it’s below market value, but you have to have a market study that backs it up.

 

If you have high property taxes, you’re going to get closer to a 40% expense ratio. If you’re lower tax expenses, you’re going to be closer to 25%. Payroll weighs heavily into that. The next thing I look at is the rental rate increases. We’re underwriting about a 1% stabilized rent increase year over year. Simply you could look at the operator’s annual P&L pro forma. I would look at once the business plan is completed, we’ve added our advertising and everything’s built out and painted and fixed up and everybody’s in place. What is your year over year rental increase? If I see more than 1%, I’m like, “Let’s come into this market that you know about that is causing a more than a 1% rental increase.”

I would look at that. I would divide the previous year into the subsequent year and that would give you your percent change in rental rate increases. That would be a driver in that. The other thing I’d look at is, you have your business plan. When you’re first starting out, I would look at the underwriting file and say, “What’s your current rents? What’s your trailing twelve?” How has the operator implemented those rental increases and what have they used to justify them? It’s one thing to raise rents more than 1% a year after it stabilized. In the beginning, you might be buying that property because it’s below market value, but you have to have a market study that backs it up.

I want to see that the operator has gone to all the facilities in that market and understands what all those rental rates are. I would look at that operator’s due diligence and see what Bob’s Self Storage is charging and see what those rents are and make sure it makes sense with the quality of the facility and the rents that the operator is performing to jump up to. That would be a big thing. Those are three things that I would look much straight away. Probably one more, and this would apply to any deal, is the leverage. What leverage are they putting on the property because your net ordinary income after your NOI is going to be your distributable cashflow? I would understand how much distributable cashflow is left over in their Pro Forma and how it got there. Are they being light on expenses? Are they being too aggressive on revenue? That would be the quick things that I would look at.

At this point, is there anything else that I didn’t ask you that I didn’t touch on that you think would be beneficial to share with investors or with the readers, the people who are potentially thinking about investing in self-storage?

Everybody says this about their asset class, but I do think it’s the asset class to be in. COVID has not impacted our operation. In fact, COVID will create a lot of disruption in the market and that usually creates storage events. Storage relies on life events, which is why it was the least foreclosed upon asset class in 2009 because when people lose their jobs, unfortunately, they have to move or they lose their dwelling and they have to put their stuff in storage. Job relocation, marriage, divorce, job changes, upgrades, or death in the family, those are all storage events. When you renovate your house, you might put your stuff in storage. It’s one of those things where I think no matter what happens, life will keep happening and storage will be part of it.

Do you have any advice you would give to people reading who might be interested in taking the path of investing in self-storage like the way you have done? Maybe they’re not interested in investing passively, but they would to actively invest in self-storage.

There are two organizations called the ISS, the Inside Self Storage Association, and the SSA, the Self Storage Association. Two separate associations are the powerhouse for everything that you want to learn. They do two conferences a year, which I don’t know if that’s going to be a thing for a while, but they do two national conferences. They do one in Vegas and one in Orlando and they do local conferences. You have your local chapter, so you have your local SSA chapter. There’s a Seattle chapter that meets down by Sea-Tac Airport. They have a conference. I would start there and I would go to those conferences or go to their website, the ISS or SSA website.

I would download or purchase. Maybe there’s some of their training videos and things like that. I would give yourself at least a year before we bought your facility. If you found one in your backyard, I’d be skeptical because you have a little bit of bias to it being in your backyard. We look in 154 markets. We look at about 1,000 deals a year and buy about four. We look at a lot of deals before deciding on one. The only other advice I’d give, and if someone is seriously looking at doing this actively, I would make this your top priority is, understand how to do a feasibility study for demand. Self-storage is not a build it and they’ll come. It could be a build it and you have a $50,000 loan now and no customers.

A demand study is huge. Make sure that you partner with an experienced feasibility provider. You can get a study anywhere between $500 and $10,000, depending on how extensive you do. Make sure that you understand the market because it’s not housing where you can say, “This is a hot market and everybody’s moving here.” It’s a feeling sometimes. Storage is a numbers game and a data game. You have to understand, how much population is there? How much growth is there? How many building permits are in the pipeline for storage that is going to eat up that demand? I would make sure you understand how to do a market study and put a lot of weight on that when you’re going through the process.

Last couple of questions here before I get into the level up is when you were starting out with your partner, I’m guessing at this point you invest full-time or do you still fly or no?

I fly part-time, but I’m a full-time investor.

Advice that you’d have for as they’re thinking about building a business and finding those partners, as you found your partner and how important is that in terms of building a business?

Storage is population-driven. A growing population with growing jobs and incomes are important ingredients. Click To Tweet

Find somebody, not like you. If you want to buy everything, find somebody who doesn’t want to buy anything. Of course, they want to buy something if they want to be in business but find your opposite. That’s what I did. It was a little serendipity. He was my neighbor, but he is everything I’m not and I’m everything he’s not, and that makes it good. You got to be able to get along and advance the conversation, but have a nice argument and then, “This is the plan. Let’s go.” In summary, it’s helped us grow. It may feel like it holds you back all the time.

At the end of the day, when somebody has a strong opinion, another person has a strong opinion and you have the ability to work it out, you can have a balanced view of something and make good progress. This in commonalities, we both entrepreneurs and both focused on being successful but finding somebody who’s not going to think that everything’s an opportunity and approach something with a hefty amount of skepticism is important. I’m the go buy everything guy. Scott, my business partner, is not that. You can build your team from there. You get the good ingredients and then you start adding team members to it. That’s important.

The next three questions are my Level Up questions. The first one is what are you grateful for in your life right now?

I’m grateful that I can have my family during the Coronavirus. Thankfully, it hasn’t hit me all that hard and I know it’s disrupted a lot, but I’m happy that we’re still here and everything’s good.

What has attributed to your success and continuous growth?

Good coaches starting in high school all the way through college. I coached for a bit and having good mentors was life-changing. It’s the most important thing ever.

Have you used coaches in terms of building your self-storage business?

Other people have helped us as a company get to where we are. They’re not necessarily coaches. As far as a coach that focuses on getting businesses coached up, but many people along the way have helped. Hour-long conversations or, “What would you do. How did this deal go? Tell me about.” Whenever somebody says, “I’m a self-made business,” I laugh. No, you’re not. Everybody helps everybody. You don’t learn this stuff from nowhere. I consider going on a podcast and listening to someone talk about something to be a coach. They’re giving you advice, you’re listening to it and you’re taking bits and pieces of it or all of it and applying it somewhere. There wasn’t one person that helped us build our business. There have been many people along the way, many friends and great people that have helped us do that.

Lastly, what do you now know that you wish that you knew at the beginning of your journey?

Raise money? Here’s the thing. I always say to people, “Are you going to stop raising money when you have a lot of money?” I was like, “No.” Does Amazon have shareholders still or their business have enough money to run his own? If you think about it, big corporations have multiple investors because they want to do more. We don’t want to be the biggest company in the world or anything, but we can diversify our risk and we can reward those that come in with us on specific deals and help them. There’s no regret. I’ve loved every minute of it, but it’s saying, “You should get into this capital raising thing a little bit quicker and learn about it.” Understanding the concept of capital raising earlier on in my life would have been life-changing.

If my readers would learn more about you, Spartan Investment, or self-storage, what is the best place they can go to find information?

My email is Ryan@Spartan-Investors.com. Spartan-Investors.com is our website. Everything’s up there. Our portfolio, where we look, and our strategic plan. We share everything.

LUR Ryan | Self-Storage Investing

Self-Storage Investing: A demand study is huge. Make sure that you partner with an experienced feasibility provider. Make sure that you understand the market because it’s not like housing.

 

Thank you for coming on. I appreciate it.

Likewise, Lisa. Thanks for all you’re doing the show. It’s a lot of work. I know that.

Thank you.

You’re welcome. Thanks for having me.

Thank you again, Ryan, for coming on the show. I appreciate it. Some of my key takeaways, there were many good things about this episode with Ryan. If this was your first time learning about self-storage, then I’m excited for you because I want people to get exposure to asset classes that they would not have even thought about investing in. If you’ve heard about investing in self-storage before, I hope that you learned and be able to take away some good nuggets from this episode. The ones I took away were the following. He talked about the reason why they focus on investing in self-storage is one, it’s easy to own, easy to manage, and easy to evict.

I thought that was interesting. I love that easy to own, easy to manage, easy to evict. Ultimately, he noted that they’re not in the business of evicting people, but because of the nature of self-storage, you’re dealing with personal belongings and the process regarding that surrounds that. The next item that he spoke about was the importance of how self-storage is dependent on numbers. I already believe that it’s super important to make sure that you’re looking at the numbers when you’re looking at investing in a deal, but he mentioned that for self-storage, from his perspective, it’s important. How important it is to have good, strong population growth in the areas that you are trying to buy that self-storage unit or if you’re passively investing in areas that have strong population growth historically. A strong population growth projected based on the publicly available information is important as well.

The other three items I thought were also critical was when he talked about what you could do as a passive investor when looking at that deal that comes to you. The way you could look at the numbers. The first thing he looked at was looking at the expense ratio, which was taking that expense over revenue. Noting that if that guy is greater than 25%, understanding what is going on. If it’s less than 25%, still understanding what is going on as a red flag to be like, “The expenses are too high or expenses are maybe artificially too low.” To understand what’s going on.

He also mentioned looking at the rental increases. He noted that if rental increases greater than 1%, after the business plan is implemented, that raises a red flag to understand, what the operator is anticipating or seeing to take place in the marketplace that result in such drastic increases in revenue? Lastly was the leverage. He talked about understanding what that leverage looks like. The financing and the terms and the amount of loan that is being taken out on that particular deal. That was some of the key highlights that I got from there. There were many more. I hope you enjoyed the episode. Thank you for reading. I will see you next time. Keep leveling up.

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About Ryan Gibson

LUR Ryan | Self-Storage Investing Ryan Gibson is CEO and co-founder of the Spartan Investment Group (SIG). Ryan’s company owns and operates self-storage facilities throughout the United States. For SIG, Ryan is responsible for investor relations and raises capital from investors for projects.

To date, Spartan Investment Group has placed over $25M in private equity and has over 4,000 units of Storage under management. Ryan also has a career in aviation as an airline pilot. Ryan graduated from Mercyhurst University with a bachelor’s degree in Business, with concentrations in Marketing, Management, and Advertising.