riverside_edit_- jacob & gabe_gabe_petersen's stu

Name: riverside_edit_- jacob & gabe_gabe_petersen's stu
Uploaded: 2026-10-13T17:41:52+00:00
Duration: 33 min 57 s
Channel: The Real Estate Investing Club

00:05All right. Welcome back to another episode of the Real Estate Investing Club. I hope

00:10you guys are having a great week, great day, wherever you are and whatever day it is for

00:16you. As always, it is Friday on the podcast. We're bringing that good Friday energy to

00:21you. And man, it is raining here in Seattle. We are definitely into fall. Come early October

00:29is when the clouds start to roll in. I tell everybody who likes Seattle, a lot of people

00:34when they say they love Seattle, they came during July and I'm like, just wait until October

00:38through probably about April. It's just going to be clouds. But actually growing up here,

00:42I absolutely love it. I love the clouds. So I'm getting all cozy. I got my hoodie on and

00:47everything is feeling great. But it is a good day for a second reason because we have Jacob

00:52Vanderslice with us on the show from Van West Partners. They focus on self-storage. And you

00:58know, I've talked about this many times on the podcast. It's a love-hate relationship

01:02that I have with storage. I've done a number of deals. Some of them have gone well. Some

01:06of them I've just been crushed on. And so it's going to be an interesting conversation.

01:12Van West Partners has 42 facilities, a lot of experience there. So yeah, I'm excited to

01:17hop into it. Jacob, thanks for hopping on the show.

01:20Thanks for having us on, Gabe. And your love-hate goes both ways here, my friend.

01:26Yeah, I'm sure we'll get into some good stories here. So let's start, like I said before we got

01:32on the podcast, we always like to start with stories. We like to hear how people got to where

01:36they are. So take us back to the beginning of your story in real estate and just tell us how

01:41you got

01:41here. Well, I'm starting to feel more old and crusty as I quote this number, but I've been a full

01:47-time

01:47investor for 20 years now. I got in in 2006 and started doing rentals, fix and flips, did a lot

01:56of those. We did like 11, 1200 fix and flips over many years. And I wish we would have had

02:01the

02:02discipline to hold on to more than we did. We got into adaptive reuse retail and commercial real

02:07estate in like 13 and 14. We did some tandem development. We did some multifamily. We covered

02:13a lot of the real estate bases for the most part. We even done some mobile home communities.

02:19And then we got into self-storage in about 2015. And at the time we were concluding that our business

02:25was kind of overly transactional. We were just buying and selling too often and too quickly.

02:30We wanted to ship that thesis into being more long-term cashflow holders and eventually monetizing

02:36when it's appropriate, but not just trading in and out every six months. And we thought the storage

02:40was a good vehicle to do that in. So we did our first project in 2015. And at the time

02:45it wasn't

02:46really an intentional pivot to a new asset class. It was more just try out something new and see how

02:50it goes. And it went okay. So we did some more. And over time we evolved into being pretty much

02:55exclusively a self-storage owner operator. As you mentioned, we have 42 properties. Those represent

03:01about 21,000 units, about 3.3 million square feet. And most of our asset base has been value-add

03:08existing facilities. We've just sourced that we're under-managed, right? Below market rents,

03:13above market expense loads. We'll occasionally do development. Only two of our 42 assets are development

03:20projects. Those are few and far between because the risk reward is just very, very unbalanced these days.

03:31You're not getting paid for that risk. So that's what we're up to.

03:34Nice, man. I love it. A lot of experience to go into here. I didn't realize that you guys did

03:39so

03:39many flips prior to choosing storage as your bread and butter. 1,200, I don't want to go too much

03:46into

03:47fixing flips, but 1,200, that is a big number. Why did you guys choose to steer away from fixing

03:52flips

03:52and instead focus on commercial self-storage?

03:56Yeah. Well, like a lot of things in business, you never know how good you have it until years later.

04:01So we were buying a lot of deals at the auctions, mainly in Colorado. And it was so easy for

04:08so long.

04:09We would just show up in our flip-flops with a stack of cashews checks. We'd buy five or 10

04:13deals a week,

04:14rehab them, sell them. That started to dry up over time. And really starting in, I would say,

04:212015, 16 is when the auctions got super competitive. So we pivoted to doing a lot of direct-to-seller

04:28marketing like a lot of people around the country do, postcards, PPC. We had a sales team.

04:35And we found over time that we're spending a lot of money in overhead. And we're not getting a lot

04:41of deal volume. And we need to get basically a fat deal every month just to break even.

04:48And the P&L just started being less easy to justify. And we were launching our storage platform

04:54simultaneous when we were still doing our direct-to-seller marketing flips.

04:58And eventually, it just kind of ran its course. And we're like, this P&L doesn't make sense anymore.

05:03I like to say that we paused that business, but it's a business we paused like six years ago and

05:08never picked up again. I miss it. I miss the residential world. It was a lot of fun. I learned

05:15so much that I have applied to our larger business today by crawling through flooded basements at two

05:21in the morning, by dealing with unfriendly occupants, post-auction contractors, lean law,

05:30title companies. And I wouldn't trade it for the world, but it's something I miss. It just kind of

05:35adds course. Yeah. Well, yeah. And that is, I mean, there's a valuable lesson in there,

05:40especially in real estate. There is a moment for everything. And people, I've even been,

05:47you know, ran into this issue where so many people on the internet, the gurus all out there are talking

05:53about the X strategy, you know, put whatever strategy it is, just X, you know, self-storage.

05:59It could be short-term rentals. It could be fix and flips. And the strategy is huge. People are making

06:03tons of money. But that is, there is a moment in time when that works and then the numbers will

06:09shift and it could be related, completely unrelated to that specific asset class. It could be,

06:14you know, the economy, interest rates, whatever it is, everything is affected by everything else.

06:19And so if there is an opportunity that exists currently, it is not going to be there forever

06:24and you need to take advantage of it while it's there. It sounds like you guys did take advantage of

06:28that moment after the 2008 crash. And so you really did get some leverage there.

06:34One of the things we would have held on to more than we did, right? Who knew?

06:38Well, yeah. And that kind of goes into the second thing I was going to talk about. You,

06:44you know, I've dealt with this question in my own career and you mentioned it here. You guys,

06:49you thought you were overly transactional. And a big question that I've kind of struggled with and

06:54other investors that I've spoken with have struggled with is the decision as to when you

07:00should buy and when you should hold. You know, there is a return on equity is a big thing and

07:06trying to figure out whether you should keep an asset in your portfolio or sell it for the equity

07:12that you built into it is a difficult decision to make. So how do you, I mean, it sounds like

07:18you

07:18guys realized that decision. You guys were, were overly transactional. You were taking the lump sum

07:24versus the trickle of cashflow. Um, how did you get to the realization that you guys want to stop

07:29selling and just keep everything in your portfolio? Well, I'm going to try to make this succinct. And

07:35while I'm making it succinct, I'll talk out both sides of my mouth. Philosophically, I don't like

07:41selling. I want to hold indefinitely. However, we intend to sell our deals and we've sold a lot of our

07:47deals and there's a time and a place to sell. I would argue that it takes more discipline often

07:51to not sell than it does to sell. And one of the equations that, uh, I was enlightened by some

07:58years

07:58ago with a buddy of mine, he was selling all of his single family residential rentals. And, you know,

08:04you, you read the books and you come up and you try to learn how to do all this. And

08:07one of the

08:08things that you kind of walk away with is you, your rental portfolio is a forever hold, right?

08:12Eventually you pay off the debt. It's a recurring revenue stream and you get your kid's college fund.

08:17And he was selling that because he did a math equation, which he didn't make up, but I've

08:21never heard of it before. And so he brought it up, which is the implied return on equity,

08:25right? Yeah. So I can, I can sell this property today and that the, the proceeds I would get

08:32from that sale. If I take that number that I would put in my pocket and I look at my

08:37current net cash

08:38flow, my, my implied return I'm getting right now is like a 1% return or 2%. I could sell

08:44this rental

08:45today and get $500,000 and I'm only getting $20,000 a year cashflow off of it. Right. And the

08:53question is, can you go out and beat a two somewhere? And the answer is yes, you absolutely

08:57can, especially with what's happening in the markets this week, uh, as well as the bonds.

09:02So we try to balance that opportunity costs on when it, when it comes time to sell versus,

09:07you know, when it doesn't make sense to sell. And we also have a lot of investors and we're

09:11at the mercy of a return metric that I hate, but nonetheless I have to speak to and quantify

09:15and calculate. And that metric is IRR, which most of us listening understand that's a, that's

09:20a return metric based on a time weighted series of cash flows. And a lot of your LPs will measure

09:25your performance based on your IRR. Now, if you hold a deal for 10 years, it could still be a

09:31home

09:31run from a multiple perspective and the returns are generated and just the overall whole dollar

09:36profit the deal made, but the IRR is going to be materially diminished because of that additional

09:40old period. So we try to monetize our deals in a window that maximizes multiple, but also IRR.

09:47But philosophically, again, if it was up to me, which it's not, we have 450 investors and I've got

09:52partners. It was up to me. We would just hold onto everything indefinitely. A lot of the wealthy

09:58folks I know that are older in real estate, I'll ask them how you got there. And I was like,

10:03well,

10:03I just bought and I never sold. Here I am. Yeah. Wow. So easy. Yeah. I know. How hard can

10:10it be?

10:11Yeah. And also something that kind of goes into my mind, the biggest reason that I generally would

10:16like to sell is because of what you just talked, talked about the return on equity. We have, you know,

10:20$2 million of equity in a property. If I took that $2 million and rolled it into another leveraged

10:27property, then it would, you know, we would get more money than we're getting right now from the

10:33cashflow that we're generating. But that does not take into account the, one, the effort that is

10:41required to find, buy and onboard that property. And then two, just the unknown. I mean, this,

10:49a property that you own is, and that's generating cashflow. You know it, you understand it, it's been

10:54working. And if you do, if you attempt to roll that into another property, sure, there is a potential

11:01return on equity that, you know, cap rate that you're buying into, but it does, it's not guaranteed.

11:07There's a lot of unknowns. There's a lot of things because you're buying a new property.

11:10There's a lot of unknowns there. And so there is also risk. So yeah, balancing that is definitely

11:15a difficult decision. But I want to, I want to move on from this. I love the conversation,

11:21but I do want to talk specifically about self-storage. I told you before, you know,

11:25when we were talking earlier, I've bought six self-storage facilities and they have been,

11:31it's been a love and hate relationship. I've, a couple of them have just been slam dunks,

11:36like just the best properties ever. And then the other half have been just nightmares. In fact,

11:42two of them talked about this on the show a few times. We, one of them was a flip. We

11:47bought it

11:47and I, you know, I did what I needed to do. We did the rehab and then I listed it

11:52and we got a buyer.

11:54It was a really small deal. We bought it for like 200,000. And then within a couple of months,

11:59I had it on, on market for like 360,000 and the CapEx was minimal.

12:03Um, but then the weekend before we closed a group of, you know, thugs, whatever came in

12:09and they literally cut through every single door to steal what was inside. And, uh, and I've had

12:15that, I've had break-ins. I've had people living in units. I've had everything. I've had fires. Um,

12:21just so many things have gone wrong for storage, but we own commercial, we own mobile home parks,

12:27RV parks, and we have never had those issues over there. Um, it's always been storage. And so it's

12:32loving, Hey, um, I want to hear your take on that. What, uh, what are the pros and cons of

12:37storage

12:37specifically?

12:38It's so refreshing to hear that perspective. We, we do a number of podcasts and a lot of

12:44misconceptions are out there like, Oh, it's a great business, right? You often hear like no tenants,

12:48no toilets, no problems. And that could not be further from the truth. And as you discovered the

12:53hard way, it is operational and intensive. Uh, we've got 21,000 units and I guarantee you right now,

13:00some bad stuff is happening in our portfolio. Someone's cooking meth. Someone's breaking it.

13:06Uh, a new hall is backing into our brand new $30,000 gate system and taking it off the tracks.

13:13Um, someone's burrowing between units. Uh, it's just burrowing between units. I haven't heard that.

13:19Yeah. Someone, someone will rent a unit and they'll, they'll get a, whatever a K-12, um,

13:25you know, disc grinder, whatever the tool might be and cut into the units next to it. So they can

13:30have the, you know, they can have their door closed and you can't see them going in there.

13:34And then they'll, they'll find the stuff they want to put it on their unit and then pull up their

13:39truck, load it up really quick with the door up and then blast up gate and, you know, off they

13:44go.

13:44And of course we have cameras everywhere, but whenever that happens, you know, the angle just

13:49isn't quite right to catch the license plates. And even if it's a stolen vehicle and the cops can't

13:55do anything, I guess, or we got all this going on. And then we've been, we, we've, uh, you know,

14:02people sign at least agreements, but we've had break-ins, um, completely not our fault. Like we,

14:07we were, did not break into the facility and we had everything that you're supposed to have.

14:11And then the people who, you know, whose unit we were broken into, they attempt to sue us for,

14:16you know, for, for things that they lost. Um, and it's just, so these kinds of operational

14:21issues are specific, I feel like to storage and it's, they are, I think people talk about.

14:26They are. No, it's not. Um, I guess, uh, as we, as we trash talk the business, which is very

14:31easy

14:31to do these days, I think I can talk about a few of the benefits and in theory, one of

14:36the benefits

14:36of the business is it's downside protected. It's been historically resilient, whether, whether someone's

14:41moving up and down, up or down the economic ladder, if they're going through life changes,

14:46the chances they need storage, you know, it's probably higher. Um, we've also liked the

14:50granularity of the revenue stream. So it sounds like you're in a number of different, you know,

14:54commercial illicit deals. And one of the, um, one of the benefits of storage is you're not relying

14:59on one large user to pay you a big rent check every month, like a triple net single tenant deal,

15:06right. Or an, uh, office is easy to sparage or like a 30, 40,000 foot office forklift. We're relying

15:12on thousands of customers to pay us 30 to $300 a month. And the chances that, uh, a bunch of

15:18them

15:19are going to roll over us at the same time are very low. Um, and then said third, and there's

15:23a lot of

15:23reasons we like it, but just one final example. We liked the fact we can dynamically manage our

15:29revenue, uh, so we can respond real time with supply and demand changes. If we have a unit type,

15:34it's really full, we can raise rents incrementally on that with a one month notice and kind of push

15:40our revenue up. And if we have a unit type, it's lighter on occupancy than where we want to be.

15:44We can drop our rents below market and kind of fill those up over time. Um, but like any asset

15:50class right now that you've been in it, you know, that there's, there's two sides to it, right?

15:53There's the operational issues, the theft issues, the break-in issues. Um, but the benefits to it are

16:00it's fairly resilient, durable revenue streams. Uh, not to sound like a dirty capitalist here,

16:06but, uh, generally outside the purview of fair housing laws, right? Somebody doesn't pay,

16:10uh, you can overlock their unit and hopefully get somebody in there who will pay. Uh, but just like

16:15any investment strategy, there's plenty of risks and plenty of, uh, downsides to it. And I think

16:21specifically in this environment, self-storage has seen two sets of headwinds outside of all the

16:27normal real estate headwinds, like interest rates and the economy and all that. The first one I

16:32think has been a lack of American mobility. People are not moving around the country like they once

16:38were. And it's kind of obvious why, but I'll point it out anyway. People don't want to pay off their

16:433% mortgage and borrow at what's now a seven, right? So they're staying put, they're redoing the

16:48kitchen, they're doing an addition, they're, they can do with where they're at because they don't want

16:52to, they almost can't afford to sell, not from a proceeds perspective, but from a monthly dot on a

16:58new house perspective, right? And look at what's happened this week. We're recording this, uh, uh,

17:04the last week in September and the 10 year treasury is at 5.2% today, right? It's terrifying.

17:10Another conversation for another day, but people are not moving because they don't want to pay off their

17:14cheap loans anymore. And I think the housing market's going to freeze up even more than it has

17:19been in the last couple of quarters given where bond yields and rates are going. I think the second

17:23headwind that we've seen in storage is some markets have been supply shocked, especially the sunbelts.

17:29Yeah. Especially in Texas.

17:31In Texas. Yeah. I mean, just ground zero for supply shock. A lot of people got the same idea

17:37at the same time. Hey, fundamentals are good. Let's break ground. It's, you know, summer of 2022,

17:43right? They deliver in 24 and 25 and do a materially different environment. And a bunch of

17:49them deliver at the same time. What happens to supply and demand when you have a finite supply

17:54or a finite, um, demand curve of customers and a rising supply, right? A beaut product. Well,

18:01rents and occupancies are going to go down. So we've seen that in a number of markets,

18:05some that we operate in, others that we don't operate in, but those have been kind of the two

18:09headwinds. I think, I think we've seen overall, aside from theft and break-ins, um, just a lack of

18:14American mobility compared to what's been historically in some markets that are supply

18:19shocked. So risk reward out there. Yeah. And I, uh, uh, I think I, I have talked too much about

18:27the,

18:27the negative sides of storage because, um, just because of the experiences I've had, but there

18:32are, and there are reasons that I actually really, really like storage. Um, something that I don't

18:36think you mentioned, but, um, you know, we talk about how it is operationally heavy,

18:40but it's also at the same time, it is more automated than other, um, other asset classes.

18:47The, the automation, um, available to self-storage, uh, for, you know, automated gates with a, with

18:54their, um, that is connected directly to their, uh, their system in the, uh, in their CMS system.

19:01Um, and just you, we have, I have two facilities that are completely run without any employees on

19:07site. I mean, we have, you know, people that go there, boots on the ground that will help us

19:11maintain the property, but the actual property itself is a hundred percent automated. And then

19:16that is, it's one of the only asset classes that you can achieve that on. Um, yeah. Yeah. And we,

19:21we've got that on a handful of ours too. Um, we're generally more of a staffing model.

19:26And the reason is a lot of our sites are interior climate control units. Uh, sometimes they're

19:32multi-story when a person isn't there, bad things tend to happen. Right. Yeah.

19:37And, and there's also, there's a, there's a customer service human element to it. Yeah. And

19:42there's, if you look at our reviews, um, what, what you don't see on our customer reviews is,

19:48uh, our, our operating companies called Clear Home Self-Storage. That's our property management

19:52company. Um, we, what we don't see is, oh, we, we love Clear Home because they have great AI

19:59or they have a great website or their, their payment portal is really easy. What we do see

20:04is Darlene helped me find my units. Yeah. Jessica helped me locate my lost gate code. They were so

20:12helpful. So there's a human element, even though it, it hurts the P&L by having W2 employees inside

20:18and load and healthcare benefits. There is a customer service aspects to it that there's an

20:23ROI on that's more difficult to quantify. Yeah. So we're, we're on that. We're on the tech forward

20:28side. We've got automated facilities. People can make their payments online, interact with us

20:33exclusively online if they want to, without ever talking to a person. But if they want to talk to

20:37a person, we generally do have staff and a leasing office who can, uh, you know, who could be a

20:43source

20:43to vet to about their bad day. Yep. Awesome, man. Well, I took a peek at the clock. It looks

20:49like

20:49we have run it down before we move on. I always like to, uh, to ask people who do have

20:54a specialty

20:54like yourself. Um, a lot of people that listen to the podcasts are new and they are just getting

21:00into real estate investing. They're looking for something to invest into. They're trying to decide

21:04on an asset class for people who are thinking about self-storage. Um, what, how, how would you,

21:12you know, guide them, coach them to get into self-storage? What are the, uh, you know, one,

21:16two, three steps that you would, um, recommend them, recommend them take?

21:21Yeah. First of all, probably don't, right? We can't see what the world does, but if you,

21:25if you insist, there's a couple of different ways you can do it. One is you can buy a self

21:29-storage

21:30stock, right? The advantage there is you can sell it really quick and get your money out if you need

21:34to. The disadvantage is there's no tax benefits. It's at the mercy of the broader market. Um,

21:40or you can invest, uh, with a third party operator or sponsor like us and many other shops out there.

21:46Uh, the detriments to that is you have no control, but the benefits too, is you're leveraging somebody

21:50else's expertise to do all the heavy lifting and you're getting most of the profit. And your third

21:55option is, uh, to do what Gabe's done and go out and buy your own self-storage facility.

21:59Uh, it sounds like for you, Gabe, about 50% of the time it works every time, right?

22:04Yeah. Yeah. We're, we're, we're not, we're not quite there, but we're, you know, we like to say

22:0820% of the time, you know, whatever, whatever the ratio is, uh, everything works till it doesn't.

22:13So those are the three ways you get into the business. Um, but whatever direction you're thinking

22:18about going, whatever real estate class, your asset class you're thinking about. Um, I hate to bring

22:23this up because we're all talking about it, but I will anyway, throw it into Claude, throw

22:27it into chat GPT. Uh, we are leveraging these so much more than we ever have in the last couple

22:33quarters to make it more intelligent portfolio decisions, to analyze our business better.

22:39If you are not using this as a primary daily tool and your business and your decision-making

22:44process, uh, you were, you were already a dinosaur. Uh, so I, uh, run it, run it through

22:51there. Um, it's what we're doing with it, what my partner's doing with it. He's a big

22:55tech guy. I am astounded several times a week with the information it's giving us and the

23:01analysis it's doing for us.

23:03Yeah. It literally, it's amazing. I, I pay for the $200 max plan and I max it out every

23:09single week. I think I'm at 91% right now. I got my mind refreshes Friday mornings at

23:159am. So I just got a fresh week today, you know, just like, yes, let's go. And, and I

23:22know we're winding this down, but I, I, I am flabbergasted no less than three or four times

23:28a week with what I'm having it do coming back with. It is astounding. And if you're not using

23:33it and whatever your business is, whatever your job is, uh, you need to just go bite the

23:38bullet and buy a hundred dollar a month subscription right now, because it will, it will change.

23:41It will change your lives.

23:43Yeah. 100%. All right. With that, I am going to move us on to the quick question round. Are

23:48you ready? Fire away.

23:51All right. It starts with education. It could be any form, could be a book you've read, movie

23:55you've seen, mentorship program you've been a part of, anything like that. I just need two

23:59recommendations, one for general life wisdom, and then one for real estate.

24:03Gosh, everything I've learned has been by failing, um, you know, failing here, failing

24:08there. But as far as resources go, um, this one is, uh, I don't know, it's a mix of life

24:13and real estate because you can apply life lessons to real estate. Um, but one of my favorite

24:18books is a book called in the kingdom of ice. It's a, it's a, it's a nonfiction historic

24:24book about a, uh, a polar expedition that went poorly. It's a story about survival. It reminds

24:31me of how relatively meaningless our daily challenges are in the U S in 2026, like, oh,

24:37interest rates, right? Oh, that was, well, at least you're not eating the leather off

24:41your shoes and watching all your friends perish. So it's a good book that just kind of puts

24:45difficult things in perspective on us by Hampton sides. Um, I would say you can apply those

24:51lessons to real estate as much as you can to life.

24:53Nice. I, that's, that sounds like something I would pick up. I, uh, just recently I read,

24:58um, uh, the endurance, uh, it's a book, um, Shackleton. Yeah. That's, that's like the,

25:04that's like the, you know, the, the, the gold standard of polar exploration survival stories

25:08because everyone made it back. Right. Yeah. Yeah. Uh, and so what everyone's familiar with

25:12this one is a little bit more nichey and not as many people are familiar with it, but it's

25:16the best, one of the best, I should say, survival stories I've ever read. That's true.

25:21And sold me on it. I'm going to Amazon right after this.

25:24Yep. Handed sides in the kingdom of bites. Uh, I was so, I was so affected by it that I

25:30bought

25:30copies for the entire office. Even our guys in the office who don't like historic nonfiction

25:35or reading that much just tore through it. The prose is beautiful. Uh, it's a great book.

25:41All right. I love it. Next question is for your younger self. Let's go back to the Jacob who was

25:48just getting started. I don't remember the year you said it was like 2010 or something like that.

25:522006. 2006. There you go. Go back to him to start. Look him in the eye. Give him one piece

26:00of advice

26:00moving forward. Uh, have the discipline to hold on to more of your asset base. Don't sell, resist the

26:09urge, resist the urge to NASA. Good advice. And it's a, it's, it's easier said than done. That's,

26:16that's for sure. Yes, it is. All right. Next question is about the U S there is a lot of

26:23opportunity out there. Give me the single Metro you're most excited about investing in today.

26:29No single Metro. Gosh, I wish it could be my hometown, which is Denver. And it, uh, is absolutely

26:35not. Um, I would say our best performing assets and a Metro, I think that's got some upside runway

26:44for, uh, for our asset class. Um, randomly is green Bay, Wisconsin. Interesting. Wisconsin.

26:51Yeah. I would not have expected Wisconsin. Nope. Nope. Um, it's, uh, it's one of the few markets

26:59that's not been picked over by everybody and we've had some good success up there. All right. There you

27:04go. Yeah. All right. Next question is about finding deals. It all starts with getting in contact with the

27:10seller and pen in that purchase agreement. So what is your favorite way to generate leads and find new

27:15deals? Well, the short answer to that is we are not finding new deals. Uh, we haven't buy a deal

27:22since, uh, two February's ago was the last time we acquired a new storage facility. And the reason for

27:28that is not from a lack of effort. It's from a lack of risk adjusted return. We are not seeing

27:34deals

27:34that in our view are paying us for the risk that's out there in the market. Um, however, when we

27:41are

27:41buying deals, we have broker relationships. We do a fair amount of direct to seller marketing that we

27:46applied from our single family days. That's had kind of different levels of success, but we have

27:51gotten self-storage acquisitions, some which are very large by mailing a business letter to the guy on

27:56record, the ownership group on record, and they call us and we cut a deal. Uh, but a lot of

28:01it's just

28:01broker relationships. We'll occasionally buy deals that are widely marketed, but it's rare we can ever

28:06compete, uh, because we want to hire a return target than, uh, a lot of other shops are willing

28:12to take. Yeah. Yeah. And that's actually why, um, I think only two of the deals that I've ever bought

28:19have been through a broker. Um, everything else has been off market and it's not, uh, yeah, it's really

28:25just because of the returns that I, that I, that I'm very picky about. And I, uh, you know, other

28:30people

28:31are willing to put out more money for deals and I'm just not. And so, um, and the only way

28:35that

28:35I've found to do that is through direct to seller. Um, just sending those mailers, doing cold calls

28:41and getting in front of the actual owner of the property. Um, but, uh, there's, that is not the

28:47way that is not the quickest way. That's for sure. Brokers there is, uh, they are, they earn their

28:52keep. Um, that's for sure. And there are, they're a great area to go actually get good deals from.

28:58Um, leads us to the second to last question. This one is about lessons learned. You've done a number

29:06of deals. I'm sure you got a really good lesson tucked away in there. Um, not every deal we get

29:11into goes the way we expect it. In fact, pretty much every single time something goes wrong and

29:15that's when we get to learn a lesson. So what was the, um, the biggest lesson you learned from a

29:20deal

29:21that went a little bit sideways for you? Um, the, uh, the, the impact of new supply on a sub

29:29market

29:30cannot be overstated. Uh, always, always expect the, the new supply to be a lot worse than you

29:37think it's going to be based on the data you're calling because, uh, you want to be wrong in the

29:41right way on new supply. Uh, then secondly, more of a broader statement, um, always respect the

29:50possibility that interest rates can go up a lot higher than you thought they would.

29:55Right. That's a, that's called rear view wisdom there, my friend. Uh, but I mean,

30:00what we went through is rates are rising start in 2022 and we're about, what we're about to start

30:05going through again here as we record this in late September is a, is a stark reminder that

30:11no matter how bad you think it can be on the interest rate side, it could always be worse

30:15and you should expect it to be worse. Yeah. Um, and on the, I feel like the supply, um, thing

30:22that

30:22you mentioned there is another thing that's unique to storage because that one of the issues that I

30:28had is I bought a storage facility in an area where the net rentable per capita was, was great. Um,

30:33and I was like, this is a slam dunk. And then a year later, somebody broke ground on, um,

30:40a massive facility just down the road from mine. And, but they, there was no justification for it.

30:46And that's why it was so surprising to me. Cause I was like, it doesn't make sense. Like why would

30:52you do that? You could never assume that because it doesn't make sense, somebody will, will not go

30:56out and do it. And very briefly here in self-storage, it's not, we all talk about the supply

31:00ratios and square feet per capita. And you know, what it is, is it's important to understand

31:06relative like the national average, but what's more important to look at is where, where are

31:11supply ratios today? Where are occupancies and where could supply ratios go? That's the risk.

31:17It doesn't matter whether they're necessarily five or 20 square feet per capita. If there's a story

31:22for those supply ratios going up materially in a short amount of time, that's where you get the

31:26trouble to go back to green Bay. Supply ratios up there are really high. They're like 18, 20 feet per

31:31capita, depending on the sub market you look at. You think to yourself, why would you do a deal up

31:35there?

31:36Rents are so low, it doesn't make sense to build. And all the facilities are 90% occupied.

31:41So what you want to look at is like where, where those ratios could be going and not so much

31:46like,

31:47are they eight, five, 10 square feet per capita? It's where could they go to in the next 24 months?

31:52Yeah. And that's probably a big reason why your deal was impacted, right? Big explosion in supply

31:57ratios with the bottom of the gap.

31:59Yeah. Well, the other reason, um, and this is very specific to location and I feel like it's another

32:04lesson that I learned, um, especially for storage, certain, you know, municipalities,

32:09certain areas are more strict on what they allow to be built. Um, Texas is not one of those areas.

32:15They will allow storage to go up anywhere. Um, and that's what happened in, for me in Texas,

32:20but, uh, that's not the case for every state out there. Um, every, every city, every County,

32:25you know, they have different rules. Um, and so if you're in an area where it is more difficult

32:29to add, um, square footage, then you, you know, you have a little bit of a barrier there,

32:34a little bit more safe. Um, anyway, Tacoma. Yeah. There you go. Yeah. There are other reasons

32:42why I don't buy in Washington, but, uh, but yeah, that's great. Right. All right. That leads us

32:47to the very last question. This is for the listeners. You've given us a lot to think about. I'm sure

32:52people want to reach out, get in contact with you. This is a two-parter. Where can they find you?

32:56And then what can they expect when they reach out? Always love to talk shop about real estate.

33:01And if you do reach out, you're not getting pitched a deal. Cause we're not raising capital

33:04for any deals. Uh, so just be an organic conversation. Folks can email me,

33:08Jacob at vanwestpartners.com. Go to our website, vanwestpartners.com or hit me on LinkedIn,

33:14uh, Jacob Panthers. Perfect. I'll put that link in the show notes. So if y'all want to reach out,

33:19all you got to do is click a little more in the description. It'll pull down that full description

33:23and in there you can find Jacob's links. All right, man, that wraps it up. Thank you very

33:29much for hopping on the show. Had a blast. Thanks, Gabe. Absolutely. For everybody who is with us

33:34today, thank you guys for showing up. You are the reason we do this. So if you guys have any

33:38questions, reach out to me, Gabe at realestateinvestingclub.com. If you guys want to

33:43support the show, just leave us a comment, review, anything like that. Other than that, I hope you guys

33:47have a great week. Keep rocking real estate and I look forward to seeing you on the next episode.

riverside_edit_- jacob & gabe_gabe_petersen's stu

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