I have a unique approach to talking to potential investors about trusting me with their money on a self-storage deal. I don’t roll out the red carpet and hype things up and brag about potential returns and the tailwinds in the self-storage space. For me, a better approach has been to gain trust in a unique way. I’ve made hundreds of sales calls, I’ve raised millions of dollars of people’s money, including $500K at dinner tables of friends and family for our first deal. And I’ve found that the best way for me to build trust is to start out talking about the downsides.
If an investor has reached out to me, they probably already have ideas as to why they like self-storage. They may believe in the industry, or like the idea of diversifying, or the simple management compared to residential properties. The odds are that the investor already has an idea of why they might want to invest. So my approach has been to immediately lay out the negatives off the bat; I talk about risk, I manage expectations, I let them know what we’re scared of. Our markets have property tax risk from shrinking populations. We can’t control investor appetites in these markets, meaning it could take a long time to find a buyer when we’re ready to sell. There’s interest rate risk in any kind of real estate deal, and we may go through tough times if interest rates rise; we may not sell as soon as we expected.
Investors appreciate this honesty. They like that I give them the straight-up truth about the world of real estate, and it’s a good way to build trust. The beautiful thing is they end up talking themselves into the deal. They mention the things they like about the deal, or about self-storage, and why they’re long-term investors. We bond, we form a connection, we build trust, and they sell themselves on the deal. I don’t need to apply a pushy sales approach, I form relationships and make them feel comfortable with me. An investor who is skittish, who doesn’t like the idea of holding for over a decade in a downside case, isn’t an investor that I want to manage anyways.
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