This is my interview with Chris Powers from his podcast The Fort, which I highly recommend. I met Chris three years ago, we’ve become good friends and always have valuable conversations together.
In his latest annual letter, Chris shared that his firm made $290 million in acquisitions last year, making him one of the top private real estate syndicators in Texas, if not the whole country. In his words, it happens slowly, and then happens very quickly, which is similar to my journey. Around the time I met Chris, I had one self-storage property that had gone over budget but was saved by the market; today, the portfolio has grown to over 30 properties, and we’re still growing.
Student Storage to Self-Storage
Student storage was a hard business. We didn’t realize it at the time, because we didn’t realize that business could be easy. We had to be in a college town during a busy period, with a truck, with staff that didn’t care, dealing with impatient parents, and everything could go wrong.
There are no emergencies in the self-storage business. It’s stressful, but still a lot easier than the service space. One key to easing my stress has been charging the right level of fees so that I can afford a great staff to handle operations. Doing big deals in the past six months has been a lot easier than the small deals we started with because our scale has made the operations a lot easier and a lot less stressful.
There have been a lot of tailwinds to make self-storage easy too. Demand has been sensational; things seemed risky at the start of COVID, but people continued to go out and buy stuff. Rents have been able to increase, which drives our growth. Unlike residential units, we don’t need to invest in property renovation to make our units operational. A lot of properties in the rural areas that we operate haven’t raised rents in a decade and are at full capacity, so in year one it’s an easy win for us to go out and raise rents to the market level.
Nothing we manage is on-site either. Our pre-close team works remotely on deal sourcing, underwriting, and the lead-up to closing. Our operations team answers phones, handle collections and arranges for auctions, and organizes maintenance. The maintenance team sets up vendors at each facility to handle maintenance, lawn care, snow clearing, and having a laborer come in to sweep units and handle basic tasks. We’ve been able to achieve a lot without needing to manage the logistics of handling things in person, and usually anybody actually doing work on our properties is a vendor.
Maintaining Focus
It’s very easy to make a lot of money and get distracted by new opportunities when things are going well, and we had a lot of success early on by saying yes to everything that we could. But at a certain point, all you need to do is focus and execute. We say no to a lot of things. We know what we’re good at, where our wheelhouse is, and we stick to it because we know if we keep it up for five or ten more years we can achieve life-changing wealth. So our attention remains on acquiring, leasing, and maintaining a portfolio of self-storage units.
A simple business can get complicated overnight if you let it, but 20% of your efforts will drive 80% of the results. It’s easy to get greedy and think that past success will propel you forward when you start acting reckless, the key is to stay disciplined and let the market come to you. We’re still conservative with how we value and underwrite, and we don’t get caught up in bidding wars that escalate beyond a property’s value.
I have no magic wand, I’m not a wizard, but I’ve found tremendous success by honing in on a good idea and being relentlessly focused on it.
I’m also not afraid of sharing what’s helped me find success in my businesses. People ask me if I’m worried that I’m creating more competition this way, but I haven’t seen that happen. If helping somebody puts your business at risk, you don’t have a good business. I’m about to do my hundredth consulting call, and of my clients so far more have turned into LPs than have bought their own facility; in a way, it’s helped me more often than the clients themselves.
Recently on Twitter, I posted a challenge to see who could earn $500 in one weekend, and nobody did it. I wouldn’t make money as easily if people weren’t afraid to jump in, period. A lot of people want to take the leap, but won’t pull the trigger; it’s risk-takers vs conservatives.
The Current Social Media Landscape
It’s a hard truth that we have to accept that everything you say on social media can get taken out of context, to the point where nobody wants to be a public leader anymore. I saw extreme reactions to a tweet that I posted about hiring workers in the Philipines, which is common practice among big companies for customer service and administrative work. This allows us to hire competent employees at $5 per hour when they would be making closer to $1.50 per hour at a local employer. This tweet quickly made it to the dark part of Twitter, and I was met with aggressive replies and messages.
Positive encouragement was shared, and I understand that it was a small minority of people diving in and attacking, but it’s also creating true fans on the other side. I still think Twitter is a net positive for people in the business, and use it as a top of funnel to let people find out who I am. But I’ve never tried to change somebody’s mind on Twitter, because it’s not the place for that.
The Sweaty Startup Philosophy
I’ve preached it a thousand times before, but blue-collar work needs to be rethought again. This was true when I started in entrepreneurship and it’s true now. Service-based jobs can be profitable from day one, have low barriers to entry, and offer huge markets with lackluster competition. If you’re looking for an opportunity to jump in, learn operations, make money, and get experience as an entrepreneur, then there’s no better place to start.
The problem is that most people picture entrepreneurship as internet businesses and tech moguls. A lot of money can be made here, but chances of success are insanely low as you compete against venture capital firms and Stanford graduates. To me, it’s not about trying to become a billionaire. My brother has a lawn mowing company with one part-time employee and is netting himself six figures after taxes while working 32 weeks a year, that’s the power of sweaty startups.
Business is about momentum, and sweaty startups can give you that. There are thousands of ways to make six figures in this country, just check out my Businesses I Love list for a few ideas. Look up from your computer screen, look at what people in your neighborhood are willing to pay for, and find out how to make money.
P.S. If now is the time to start your own journey, the real estate community is for you. I weigh in on almost every post, and there are a lot of people smarter and more accomplished than me.
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