Thread by @sweatystartup

Over the last 10 months my partner and I have:

Sourced, financed, and acquired $21MM worth of self storage (439,557 square feet, 13 properties) and raised $6.3MM in investor capital.

And now we operate it with our team of 14.

A thread on what I've learned:

Real estate can be over-complicated to that point that its unapproachable.

When we built our first building back in 2017 we didn't know how cap rates were calculated or what a debt yield was.

We had a basic spreadsheet and a gut feeling we could out-operate the other players.

The lesson:

Get the big things right.

For us it was:

Operations
Asset class / market selection
Lease up / revenue projections

It turns out we were right and it worked.

The little mess-ups didn't kill us because we picked a fundamentally good business and we operated the property well.

We underestimated our expenses by a lot. But our revenue projections were right on the money. The deal still did very well.

We constantly got enticed to do bigger deals with larger players.

But those players wanted to (rightly) own most of the upside and make a lot of cash off of our effort.

We decided to do small deals and play the long game while owning almost all of the upside.

It worked.

If you have no money and you can't raise money you will never own the upside and real estate will be very tough for you.

Because the family office or the general partner you join forces with will (rightly) be entitled to almost all of the upside.

You're just an employee.

The best thing we did was start a service business that spit off a bunch of cash for us every year.

And it funded the first few properties. Which generated more $.

Then we found our own ways to meet investors.

We controlled the capital, so we were entitled to the upside.

Sourcing deals is 75% of the battle.

We work our butts off cold calling and looking at deal after deal.

We underwrote 50 of them before we pulled the trigger.

We send 25 offers for every deal we secure now.

Its a numbers game. Don't get emotionally tied to any one deal.

Financing the deals is 20% of the struggle.

Talking to bankers and partners requires its own language. Know your terms and do "enough" homework.

Here's a thread to help:

https://twitter.com/sweatystartup/status/1398301921212088321?s=20

Operations is the last 5%.

It was easy for us compared to our service businesses.

Answer the phone and make it really easy to rent clean units at a well-kept property. Thats it.

Cashflow is king.

You can chase appreciation or cashflow.

Are you hoping to "add value" and unload it to someone else? Thats risky.

Are you planning to hold on to it for a long time and make money every month? Thats safer.

We focused on cashflow.

Real estate is all about trade-offs.

Hot markets demand a premium and might not cashflow. Are you going to focus on rural markets with cashflow or big cities with appreciation?

Do you want a fixed rate loan or do you want to avoid the pre-pay penalty?

Leverage is our best friend and your worst enemy.

It can supercharge your growth.

And it can take everything from you if cash gets tight when times get tough.

How risky do you want to get?

Time moves in slow-motion and then everything happens all at once.

You can work for 18 months and feel like you didn't get anything done.

And then one day you get $2MM wired to your checking account.

Real estate is a game of years, not days.

If you'd like to follow along and get actionable emails about real estate, sign up for my newsletter:

getrevue.co/profile/sweaty…

An update on the journey with a lot more details from the “how we did it” side: