0051 - "I Don't Have the Money to Buy a Business" - How This Military Operator Did It Anyway

I didn't necessarily want to settle. And so that's where it kind of sparked the idea of there's something else out there that I could be doing. And, you know, it was kind of born from there. Welcome to Business Buying for Financial Independence. I'm Tim Delaney, and I help young professionals buy small businesses so they can escape the 9 to 5 and take control of their time, income, and future. If that sounds like you, hit the subscribe button and let's get into it. - Today's guest is Elvon Bowman. Elvon is a self-storage operator and entrepreneur documenting the journey of building modern, scalable businesses through systems execution and creative deal making. His content focuses on self-storage operations, entrepreneurship, automation and building wealth through operational excellence rather than hype. Elvon. Welcome to Business Buying for FI. - Yeah, thanks for having me. Awesome. I'm excited to dig into this today because self-storage is something I've always admired from afar. For years I looked at self-storage as a very interesting business opportunity, but it wasn't until I got into the real estate world that I started hearing people refer to self-storage as a real estate asset and not a business. So I'm excited to hear what your take is on that and, and how you got into it in the first place. But why don't you start out with telling us a little bit about your background and where you come from? - Yeah, absolutely. So I was born and raised in Dallas, Texas. After high school, I went to the military, and while I was in the military - I still am. But while I was in the military, I went ahead and talked to my wife one day, and I was thinking about how whenever I start to transition out, I'm going to need to have something else, you know, for us. And, you know, we kind of brainstormed a little bit and said we would do real estate. And after about a year, you know, kind of thinking through what real estate would be, we kind of found ourselves on self-storage, and that's kind of how got into the industry. - Nice. Well, thank you for your service. First of all, especially as we're recording this on Memorial Day weekend. How, you know - I guess some people go into the military and look at it as a lifelong career. Did you realize early on that you weren't going to be in forever? Is that why you started thinking about next steps? - Yeah, I would say I kind of I was kind of like one foot in, one foot out for, for a lot of the time. Like I said, I've still been in for seven years now, but I already kind of knew that I wanted to do something else. But I said I would make a career if I needed to - you know, I was fine with that, but I didn't necessarily want to settle. And so that's where it kind of sparked the idea of there's something else out there that I could be doing. And, it was kind of born from there. And, it was kind of born from there. - Yeah, I feel like it's almost like a military strategy thing of like, always have an exit option and escape route. And because I've talked to I've had a number of military people on the show that were looking for businesses as they were, in the middle of their career, military careers, thinking about what they were going to do next. So you started looking at real estate and you ended up on self-storage. Can you talk us through what was going through your mind when you were looking at real estate and, and how that decision went? - Yeah, absolutely. I know, like I said, we were quote unquote real estate. And so at first we were looking into the multifamily areas and trying to figure out exactly how to break into the industry, especially because when most people say real estate, they're thinking, let me go buy a house and house or let me go do this or that or whatever it's going to be. As far as, like I would say, the residential side of real estate versus we kind of already knew if we were going to do something, we wanted to do it either at scale with like multiple units, so small multifamily anywhere from 2 to 4 units, or we were going to go bigger, of course, and try to get like an apartment complex, maybe 16 to 32 units, something like that. Just start off and then kind of go from there, scale it up. We kind of already knew that we were going to do multiple units. It was just a matter of okay, what with the multi units look like. So then that idea morphed into it starts off the small mostly family. And then we're like, well, we can actually go bigger. Might as well go bigger. Because a lot of the the people that we talked to or videos and all these books or whatever, the person would say, well, we're going to have is I wish I had started bigger. It takes the exact same amount of work to go and get this, this property, whatever it's going to be. So why not put that exact same amount of work into a 16 unit or, again, bigger units. So we eventually kind of turned that and that brainchild and becoming self-storage after a while. But yeah, it definitely started off. We knew we wanted multiple units. - Yeah, I love that that mindset as well. I was actually just talking to my mastermind group about this the other day, is I have never met a successful person that says that they wish they would have started smaller. It's always, I wish I would have gone bigger, I wish I would have thought bigger, I wish I would have done bigger deals sooner because that's, you realize to your point that it's kind of the same thing. It's just got more zeros on the end of it. But you're doing a lot of the same work anyway. So you're looking at these larger multi families. Did you actually go through and buy any multifamily? - So we were under contract for a I want to say was like a 34 unit out in Texas down south. But we were under contract. And you know we were doing all the due diligence, on site and realized that there was a lot of deferred maintenance that we had not prepped for, if you will. And again, this is the first time looking into everything. And it kind of scared us. And, I had to kind of think and pivot a little bit and say, okay, this may not be where we want to start off. It can definitely be something to to step into later on when cash flows are better. And we have more equity per se to tap into. But what's something that, again, we can still get into today and maybe even a lower value to entry, was the other thing that started to come up. And then that's how, you know, self-storage really, again, just started to speak to us. - Okay. Yeah. So that deferred maintenance that Elvon is talking about is a lot of times with real estate and business as well, there's going to be things that should be repaired. Major big things, whether it's roofs or machinery or various things, kitchens and baths and apartment buildings that the current ownership might be putting duct tape and on and touching up the paint here and there, but they don't actually fix the problem. And that's referred to as deferred maintenance. And it's expensive to deal with. So if the cash flow is not there, right, especially right away when you're investing, it can be hard to catch up. Just because I like to get into the mindset a little bit, like what gave you the confidence going from not owning real estate or not investing in real estate, to putting an offer and getting a 34 unit under contract? - Honestly, when we really, you know, decided that this is what we're going to go in and do, we borrowed that that confidence from Grant Cardone. If anybody know who's watching us familiar. That's where I first, you know, kind of came across all of this. And I said, “Well, if he can do it and he sounds so excited about it, I can do it too”. And so it just again, you know, went to go learn everything that we needed to learn. And from there it just kind of work. And I was able to step in now with my own confidence and say, okay, well, this is all it takes is just as simple as figuring out, you know, whatever the numbers are, NOI, divided by cap, and then go from there and then figure out all the, you know, deferred maintenance and things and calculate all of that. Does it still work? If it doesn't, then we're not getting it right. And it kind of I think just honestly, to sum it up in one word, repetition. You got a lot of reps in and figured out, okay, not only does it work on underwriting on a, you know, a spreadsheet, but can it work in real life and from there that really build confidence to say, yeah, this is this is a doable thing. - Yeah, I love that. So first of all, getting the reps in, whether it's looking at multifamily or whether it's analyzing business deals or self-storage, like just the more you analyze, the more you look at, the more you're going to know when the right thing comes across. That's I was just listening to an interview with somebody talking about Charlie Munger and Warren Buffett and like, that's the same kind of thing with investing just looking the more you look. Warren Buffett was looking at deals when he was a teenager, just reading about companies, reading about businesses. He got his reps in before he ever even started investing. So that's a powerful tool. And then, you know, and then that, you know, so you boost your confidence and then you also have the confidence to walk away during due diligence. Like that's a big step and a big skill in and of itself. Like a lot of people would be nervous about hurting somebody's feelings or ruining ruining their reputation with that broker. What gave you the confidence to do that? - Well, I mean, yeah, we definitely had to, you know, hunker down, if you will, after we stepped off and, you know, broke up the contract because we actually put we first and foremost, we really thought that we were going to get this. You know, we were already kind of emotionally tied to it. You know, how it is in the first like, yeah, I can get this. And so we thought we were going to get it. And so we actually agreed to 5000 nonrefundable MD as well too. So not only did we lose the first nonrefundable piece, but then of course, you know like you mentioned broker, you know, not really liking that you stepped away from that deal, especially since everybody is coming together. You know, we get out there and we met him. We met, you know, his people that he brought out there to take a look at some things and try to renegotiate based off of all of that. And so yeah, it was a lot to, again, you know, muster up the courage to say, you know what? We just do not believe that this is going to be the one for us. You know, with all the trim, you know, was rotten and things like that, that we just said, no, we cannot, you know, step into this confident and say, yeah, we'll take it on today because that's a lot that we're going to have to do, you know, after we take over. So you know, definitely just for sure we had to muster that up and then step away cleanly because again, you know, you don't want to get into a bad deal just because you just super anxious or excited to step into that deal. It's not worth it. - Yeah. Sometimes the best deal you ever do is the one that you don't do because yeah, it can sink you. All right. So you walk away from this deal for good reason. What kind of what were the next steps there? - Yeah. I mean, it was it was really quick, honestly. It was about a month in between that we were under contract from. So was February of 25. We're under contract. We cut the contract there. And by March we had found a facility that we liked. And we actually were negotiating and talking for a little bit. And we actually went under contract in April, but it was about a month that we found the next deal. So that was the self-storage facility by the way. So yeah, it was really quick. - That was a good recovery too, because some people would go kind of go into hiding and rethink their whole life philosophy after a bad deal like that. Absolutely. So good for you to get right back at it. Why the shift to self-storage? What did you see in that deal that made you more confident? - Honestly, it was - So I came across AJ Osborne as I was, you know, reading just a lot of different things, watching a lot of different videos. Again, still about just underwriting in general. And then I came across AJ and it was a lot of talk about how a lot of these small multifamily are roughly the exact same price that you could buy a small, you know, facility for. And so after I kind of did a little bit more research on that, I was like, well, he's actually right, you know? And so we started looking at some of these because I would already see him on, you know, Luke net and Greg. See, I already see these types of facilities. But I was kind of pass them by because they're, they're not inclined to control garage door roll up. I'm not really thinking about that. It doesn't even look cute and sexy. You know, it's not like a big box store, you know? But I see a lot of them. I said, you know what? Let me take a look and pull them up. And, you know, the numbers just started making sense. Especially since I already, you know, built up the confidence with the repetition of all the multifamily. I was like, I know exactly what I'm looking for, my investment thesis. So just apply that now to a different asset class. And again, just looking through all of these self-storage deals, I was like, wow, this actually makes a lot of sense. And it's a lower barrier to entry for sure. So it made a lot more sense for us to step into that. - Yeah, yeah. So what did this deal look like and where was it. Close proximity to you or somewhere else? - Yeah, it was farther from us. So like I said, I'm in Houston, Texas, but this one was in Niceville, Florida, which is just outside of Destin, Florida, if you know where that says so. About ten hours, 8 to 10 hour drive, depending on how fast you drive. - Okay. So what - You know what? Walk us through the steps from the time you saw it online to, you know, what did you do first and then what was your first first step after seeing it online. - Yeah, I mean, we came across it. And by this point, this wasn't even the first deal that I came across for self-storage. It probably been at least the hundreds that I had come across and underwrote. And so when I was starting on the right, this one, I said, yeah, this is this is pretty good because I'm already seeing the patterns of what a good deal looks like. And I said, yeah, this is way too good. So the deal, it's a facility out in Florida. It's 196 at the time. We did do some adjustments to it, but 196 units, 650,000 was what we paid. Of course they were asking 675 at the time. So me again just sounds like a killer deal at the time. NOI was pretty low. Was about half of what the market. But the rest of the market, when you look at, you know, all the same, you know, comp sizes of facilities and so on and so forth. And I was just really making half of what it realistically could make. So we did a lot of research on it, probably spent about a couple of days looking through this one. I said, yeah, this is probably this is probably the right one. And so we called with the broker and almost immediately he had answered. We talked to him and we worked on it for about a week or so, getting that low over to him. And then from there it was under contract and we were kind of moving through it. - Wow, quick, I like it. So NOI for those that aren't familiar as net operating income, because this was a, you know, probably I don't know size wise like medium ish. Was it owner operated at the time? - On the opposite, I like to call it. - Yeah. So with it being a mom and pop was the NOI affected by like kind of discretionary funds that they were using for personal use or was it - - - Well, the books’ pretty clean. No, it was definitely not clean. There was a lot of like you said, discretionary. I mean, you know, the owner she was using. I remember one of the things that I caught, she was taking some of her funds and putting it towards her apartment or something like that. So, you know, I mean, again, just the books were not clean. It was like just kind of moving across, you know, everywhere. - Yeah. Okay. And so did the broker try to add some of those back into the, the NOI, or were you just looking at the NOI as they were on the tax returns? - Yeah. Well so on the tax return I definitely took tax return for face value. But we plugged in a lot more of the stuff like delinquency. And well, the main thing was the literacy that broker was trying to inflate on the, on the Om. And so we did catch that. I would definitely say we kept the rest of her, you know, other discretionary spend because it was still a part of the deal. And, you know, her, her mortgage was a lot lower, of course. So it really didn't necessarily affect the in a while when she took it out. So we did decide to count that as a part of what the NOI would be, because, you know, she's paid out and you think about, okay, this is still what's coming in. You know, minus the delinquency. Of course, this actually still basically looks exactly like what it's supposed to be. So yeah. - Okay. Yeah. So the broker was trying to inflate the revenue by adding in the delinquency, which wasn't actual real cash because the owners weren't getting it. So yeah, you know, so as a new owner, you can't really count on that, you know, phantom revenue that if the tenants aren't paying it or the customers aren't paying prior to you owning the business, they're not going to just magically start paying when you own the business. So you can't really count on that in the early days. So you worked out a deal. You had a little bit under asking price. What - in that LOI, What were some of the key points that you that you laid out? The price? Was the terms in there? Was there any seller financing or was it bank finance or how did you work that? - Yeah. So we laid it out pretty much we would do SBA financing for our first and more into the SBA later. We didn't necessarily do seller financing at the very beginning, but we did have an amendment, if you will, came in later where we did need to use some sort of financing. But low was plainly put that we would use the SBA financing with our 10% down. Of course, 90% is covered for the loan. It was pretty much for the most part, just give us about 30 days or so to do our due diligence. And then from there we close. And at the time, even then, we thought we were going to close in 60 days using SBA. And it was just our first time we didn't know. So we, you know, we kind of bootstrapped, if you will, the LOI, thinking that this is what it would look like and then, you know, it did not go to plan for sure. - Yeah. Yeah, the SBA can take a while. It took me seven months, eight months to close on my wine and liquor store with SBA financing. I mean, it's a licensing stuff in there too. But yeah, the SBA takes a while. So you get the LOI, you lay out 10% of your money, 90% SBA loan was this was it a seven day SBA or 504? 78? - 78. - Okay, due diligence, 30 days. What did that look like for you? What were you looking at? How did you do it? - So at the time I was actually in El Paso, you know, doing things for the military. So I wasn't even, you know, nearby per se, but I had to fly out, of course, get out there. And matter of fact, I actually skipped an important piece of this. We didn't even get to go to contract until somebody had saw the facility. Well, like I said, I was in El Paso and my wife was with me, of course, at the time. So not much that we could do in El Paso even further away from Florida. But we actually had a guy go out there who was at a military base nearby that we pretty much a friend of a friend, was able to get him to go out there. And so he did take a look at it. And so from there he gave us all we needed, especially pictures and that kind of stuff like that. And so now we're looking at our pictures and say, okay, what does it look like? You know, based off of this and that, pretty much looking at, you know, normal things like it had rain recently, you know, is it or things leaking and that kind of thing like that. Are we seeing any rodents, anything around that? Because self-storage is, you know, sometimes can be known for those kinds of things. Are we seeing, you know, resting on the metal? I mean, normal stuff like that. What is the condition of the building? For sure. That was the main thing. And then the books, it was more of the the due diligence on the books. And that's where it kind of just got tricky because, you know, with the owner, the owner being, you know, mom and pop style, the books were not as, again, as clean as they could be. And so, you know, not having that type of sophistication, we had to, you know, figure out a lot of different things when it came to their books. - Yeah, that's - I love that tip for anybody that is looking at a business or real estate long distance, like finding somebody in your network that you can leverage and have go put eyes on something for you is a fantastic idea. You know, like Elvon said, it's a friend of a friend, but at least it's somebody you can trust a little bit more than the broker or the seller. Because, you know, that's a great tip for anybody out there that's scared of long distance investing. But eventually you did jump on a plane and go out there before you bought it? - Yeah. So it was during our 30 same 30 days. We were actually able to go out there and do everything like I said. - Yeah. And this is like, you know, again, you'll hear a couple times about spending money that he's not getting back throughout this process that, you know, from the $5,000 he lost on the multifamily deal to now plane tickets and presumably some type of hotel or accommodations while he's in Florida, plus time, vacation time or, you know, something away from the military. So these are all kind of investments in yourself and in this new business that you're going to have to take at some point. And he could have gotten out there and realized that something was majorly off in the due diligence and ended up walking away again. But obviously that didn't happen. So what - Were there any key things that you knew when you went out there that you were definitely you definitely needed to look at? You mentioned leaking and rodents and rust like anything else that you yourself were super interested in seeing when you went out there. - For sure. I was definitely it, you know, contrary to what a lot of other people would do, especially because you mentioned, you know, self-storage being a business. And so I was also taking my business mindset with me and saying, okay, well, another thing that I'm looking at on the books especially is that know. I is a lot lower than what it could be. So either he's under charging or maybe the market doesn't support higher rates of what we realistically thought it could be. So another big thing that we were looking as what are the cops doing? And so we did some secret shopping while I said we, I did some secret shopping while I was out there. And I went around to other facilities and kind of walked in and had the whole tenant experience and said, hey, can I move in? How soon can I move in with the availability? Like that kind of stuff? What units are on the top floor, the bottom floor, that kind of stuff. Cause some of them are also climate-controlled. But we did try to find a lot more of the non-climate. Yeah, we pretty much got the whole today experience to kind of figure out, okay, what are the other facilities doing and trying to understand what they're like so that we already have a better idea of how we can run or necessarily how we can run it, but what can we do differently if it's not already being done? Because this is kind of what the market already sees from these other facilities out there. - Yeah. And that that is why I have always considered self-storage more of a business than real estate. Is these things like market, you know, market research, market conditions and finding ways to increase your offer, to increase your revenue and reduce expenses is makes it a little bit different than just a straight real estate play. And then super important, being willing to go and do that secret shopping like this comes back to the fact that any business evaluation, any real estate evaluation for that matter too, but especially in business, it's not just about the spreadsheets. It's not just the numbers. It's not just the analysis. Like there are a lot of other factors in play with a business, and one of them is competition and looking and evaluating what your competition is doing and understanding what you're up against and what the market can tolerate. So, you know, maybe her rates were low because that was all the market would possibly bear. But you need to figure that out for yourself. And the best way to do that is boots on the ground and go, go knock on doors. So good for you for doing that. How, so - All right. So you do the due diligence. You're out there, meet the presume you meet these sellers as well and kind of get to know them and how they operate and any other major things during due diligence that you were looking at or questioning. - Honestly, it was just a lot of that. I think we had been talking to everybody for a while, and so it was good to to get in person and talk to them, see them face to face. The seller, she was amazing, honestly. You know, she definitely was, you know, her mom and pop. So on her way to retirement and she just wanted to get this thing done. So, you know, she was like, you know, whatever you need for me, I'm here. So she was there to provide it. So it was definitely nice to have that on the first go around for sure. But for the most part it was really just understanding the books, understanding the condition of the facility and then getting to understand that that market, that area that we were about to say step into. - Yeah. Did they have employees? I know it's just her. - Okay. We'll come back to that in a minute then. So during the due diligence period, were you already starting to work with the bank or banks? - Yes. Yeah. So again with understanding what AJ Osborne, you know, talking about, he was also mentioning this bank called Live Oak. So we found them and said, yeah, we're going to partner up, you know, work with them. And we already had them kind of understanding, you know, in knowing that this is what we're going to look at. And they were kind of giving us those pointers, those things as well. - Nice. Yeah that's a good a good bank in your corner is can also be very helpful. Another set of eyes on your numbers. And they've seen a lot more deals than you have as well. You know to getting those reps in. So what was that process like with the bank. - Yeah, it was definitely again, it was an SBA financing. So we had one, you know, understanding of it and then realized SBA is a lot slower than what we thought it was going to be. So it took I think total of four months. I want to say to close and, you know, we had closing dates again for 60 days out. So we thought we would be able to go close in June. And, you know, they kind of just kept getting pushed back and pushed back because underwriting me to go back and take a look or I believe at some point we had no insurance, no, no lagging, if you will. The lawyer wants to take a look at it. So it was all kinds of different, you know, things that came up. But for the most part, it was a pretty much straightforward process of we're going to do like discovery with you. And then they hand off to underwriting and then they hand off to believe it was like the closing rent or something like that. So it's pretty much that process, the kind of back and forth between everybody. - And you mentioned at some point you had to go back and add in some seller financing. What caused that or what - Why did that change? - Yeah. So we got to pretty much, you know, the and we're about to close. I think it was like a couple of weeks away or something like that. And then the, the closing rent, she came back to us and said, hey, we just got the appraisal back and it came in 50,000 or 47,000, but let's write it up. Came back $47,000 shy of what the market was supposed to be. And, you know, we're like, well, you know, what are we going to do? You know, we don't have the extra to put, you know, towards this. There was a bunch of different ideas that were kind of floated around. One of them was to get life insurance policy and just attach that there. And I thought that was actually pretty smart and it did not work. They came back and said, since it's tied to death benefit, that kind of deal, we could use it. So then the seller and I, we had to we really had to work that out because again, she didn't necessarily want to, you know, go back, and renegotiate. And we were hitting that deal fatigue. You know we had been in this for four months already just slowly dragging it out like, when is this thing going to close? And yeah, again, we talked it out and we negotiated that last little bit to be dancing. We were going to bring harp and then they would bring me or you know seller finance the other half of that. So like 23,000 or whatever. But at least we got to figure out, okay, this is what the financing looks like and how that could actually be powerful leverage to use later on for some people who get, you know, all the entire deal seller finance. So you - the contract price was around 650, you said. And so then the appraisal came in closer to 600. And you were going to put down 65,000, 10% roughly. And so the bank wanted to reduce their loan portion by 50,000 roughly? Is that? So then you had the seller - So the seller did a seller's note for that instead, or for half of that or all of it. - Yeah, for half of that. And then we just bought the remaining extra cash. - Okay. On that seller's note, are they are you paying them concurrently with the bank, or do you have to wait a certain amount of time before you're - - Yeah, we worked it out with her, deferred all of the payments to the back end. I believe it was a two year note for her. So all of that gets deferred to once we finish with our value add. - And so all in all for the seller it's not terrible. Assuming she didn't have a massive mortgage left on it herself. She gets most of the money at closing and then you know, less than 5% for, you know in two years which spreads out her tax obligation a little bit. Which can be advantageous for sellers sometimes the this so sellers know little piece where and then where did you come up with the cash for your portion for the 65. And then for that additional 25 or so. - Yeah. So we kind of over honestly, I feel like we overdid it. But we, we did a syndication for a $650,000. You know, facility is not crazy. You know, big for syndication. But we did it. We probably paid more than we needed to, but we brought in those investors. We pretty much all of our all of our portion was to take care of fact more, more the foundation probably like the structure. So we brought, you know, our VA's to take care of, you know, work those kind of things like that. We paid the lawyer fees, all of that stuff like that. And then our investors covered all of the equity to go in for the for the actual down payment for the facility. - Okay. So syndication for those that are not familiar is as a term where essentially you're just creating a pool of people's money, of other people's money. You can syndicate real estate, you can syndicate businesses, you can syndicate racehorses. You basically you can syndicate anything you want. It's where one person is kind of in charge of the deal as the general partner. And then they bring or a group of people or the general partners, and then you bring in passive partners, which are the limited partners who contribute financially to the deal, and then they get a piece of equity. And, you know, to point the lawyer fees, because there's a lot of documentation that goes into this process can be pretty expensive. So most people shy away from doing it on, you know, sub million dollar deals. But if you don't have the cash in your bank account, it's a great way to get into a business with limited amount of cash out of your own pocket. So, you know, I run into people all the time who, when I talk about buying a business or buying real estate, the first thing out of their mouth is I don't have money for that. I don't have money for that. It's like, I get it, you know, a lot of us don't just roll around with tens or hundreds of thousands of dollars in our bank accounts, unfortunately. But you didn't let that stop you. You figured out a way. That's awesome. Yeah. So I guess where you first heard about that process or that solution to not having the cash? Was that from AJ as well? - No, it was actually I'm trying to work with where I heard supplication, but it was a lot of people just saying other people's money go borrow their money. And so I said, well, I mean, I guess it could be like something like JV, but it didn't really seem had to get more of more of an understanding. So after all these people saying this again, I went ahead and figured out, okay, what's the best way to structure it? Where again, I feel like a lot of people may want to have all of nothing versus some of, you know, a little a big pot, if you will. And so once I understood that, that concept, then again, I feel like syndication kind of came around. I was like, this is another way to do it. Especially since, again, our capital was enough to cover things like the fees and that stuff that we couldn't do all of it. So we said, well, we'll take care of this and run the deal. And you guys come in and meet us here with the capital to actually go and close the deal. - Yeah. And that's, that's a great way to do it. When you don't have enough capital yourself. It's, you know, other ways include, you know, getting all the seller financing, which the SBA doesn't really like anymore anyway. But you could go 100% seller financing, but even then you still need some cash and ideally some working capital as well. After you close, you could do the other thing. You mentioned there was joint venture. So a joint venture is when you partner with people, less legal paperwork, but everybody in the joint venture needs to be active in the deal, in the operation of the of the business. So you didn't necessarily want a bunch of active partners. I'm taking I'm guessing okay. - That and again they just they didn't really understand really what we're trying to do. And so it's like really trying to work with that many active people and say okay, let's get a meeting together. Everybody's to understand this is what's going on. You do this, I do that, you know, that kind of stuff. And that's where it just gets messy. - So yeah. Yeah, exactly. So when a syndication Elvon controls the whole deal, he's in charge of operating the deal. The other people are just silent partners in the true sense of the word. They, you know, they can voice their opinion. He can go to them for advice if he wants, but they don't get to vote necessarily and say, hey, let's raise the rates tomorrow or let's fire that person. That's all Elvon's responsibility as the general partner. My friend Bethany was on episode 44. She's an SEC attorney who runs a lot of these syndications, but she also has a syndication herself to buy a motel or hotel down in Belize. But, you know, it's. And then actually, just recently, episode 48, another military guy was talking about Syndications and the same thing that you mentioned with that small piece of a big pie is better than having the whole pie, but it being a little bite sized thing that you don't get anything out of anyway. So I like that mentality. I love that you were willing and able to pull this off for your first deal, and for a deal that most investors would say, that doesn't make sense. But to your point, you did the reps, you saw enough deals, you knew that this one would work. Any tips and tricks for finding investors that are willing to that were willing to go in on this with you? - Yeah. I mean, the first place that we looked was the people around us. They always say, you know, go talk to friends, family, those kinds of things like that. A lot of our investors are actually all of our investors are people that I worked with. So, you know, that was the first place that I thought to look. I did talk to family. Nothing against the family, but most of them told me, no, you know, so and I get it, you know, people are going to, you know, family's going to feel like that, especially when you start mixing bloodlines and money. But it's, you know, really just you kind of look and you kind of ask, you know, you're going to hear the NO a lot. And eventually you get the yes. And the ones that we got yes from were the ones who saw the value in it. They understood it. They took the time to, to really, you know, hear us out and said, okay, this actually sounds like something that I could do, you know, or something I'd be willing to, to be involved in. - Yeah. That's cool. So you get to the finish line, you close on the business, that's it. And the story? Everything's golden. I'm sure nothing, nothing else went wrong. But. So what did - How did how did that work now? So you close on the business. Were you out there for the closing? And you mentioned she didn't have any employees. So what what happened from that standpoint? - Yeah. So actually during the due diligence we actually had to talk to there was a tenant there who was always pretty much there every day helping her out. And he was kind of just doing it just to do it. And we had really worked it out with him to go, especially because he wasn't in it and said, okay, well, you know, in turn, for storing, you won't pay, you know, for being our boots on the ground basically. That way we, we are not just kind of like handshake deal, you know, just show up and do whatever, but versus let's structure it out and you come in and take care of things while I, you know, don't live there. Of course. So he's still to this day helping us out with different things whenever we need it. But that was definitely something that we had to work out in structure before we close. And then of course, we closed, right? I just said no problems. It's kind of funny because it was a - I remember when we get there that day, we had been waiting, like I said, for a while, I kept getting delayed on us daily. They would say, okay, tomorrow, we'll do it tomorrow. But we finally get close that day, that morning. And then we walked into the office after we closed. We had brought her coffee like we were doing every day and we said, yeah, we did it. And she was like, awesome! She was super excited. She had her backpack when she was sitting at her desk and she had her backpack. So she just got up to back and said, okay, it's been great, gave us both hugs and walked out the door. It was like, that's it. You know, that's what we're doing now. So it was like that pretty quick. And it was I guess a lot of the mental shift had already been taking place because we were already kind of getting paired to be owners at that point, but it was almost again, just light switch off and on just like that. Well, now you take over. And so all the prep work, it's good that you do that stuff. You know, especially due diligence and all that. You have to do it right. Because all that prep work got us prepared for instead of feeling lost as soon as that happened, now we're like, okay, well, let's get to work. You know, we got things to do, you know? Yeah, yeah. - Great tip there. Like use that due diligence period not only to be looking for problems and solutions, but like to start preparing yourself to be the owner. Like think about how what systems you need to put in place what employees you need to be hiring. Because if Elvon hadn't been thinking about that all of a sudden, he could have found himself with the keys and nobody to run it, and having to go back to Houston and or El Paso or whatever he was at the time and be like, oh, okay, now what are we going to do? So that's a good, good tip. Before I bought the wine and liquor store, I spent weeks, you know, the SBA kept delaying it anyway. But I would go in there a couple times a week and talk to the owners and and look at the store and think about the product selection. And so day one, I was more prepared to kind of do some of the things that I needed to do. What else? So operationally now - So it's been about a year now that you've owned that one. - Yeah. We're closing in on once it was eight months okay. It's just been a whirlwind and an eternity. Yes. Any other - what did you do? You know, operationally, any major changes early on or after a few months or how did you how the operations going? - Yeah, almost immediately we went - We've been working with our investment of course, told them that, you know, the three things that we definitely were going to do. Were, you know, modernizing. So at a gate that was automatic, adds a better security features, security cameras and lights included, and then bring it into the 21st century with a website. So those are the first three things that we did. So we probably spent the first week or two with the with the company that we use, Tenant Inc., and we were onboarding everybody because it was all on paper. Of course, she was mom and pop, not sophisticated. So we had to digitize everything. That was the first couple of weeks or so that we had just taken over and website was live, and we were good to go. And then back in, you know, our ops, if you will, for our PMS, our property management software. We were able to do all of that. After that, I would say within that first month, especially to the next couple of weeks, it was this the gate was being installed. You know, we had the guys out there doing electricity and running new lines out there for electricity and installing the new gate. So they ripped out the old one and put in a new one. All that's good now. And we actually, you know, to save a little bit of cash, especially since I was already there. I said, well, I'm handy, I know how to install security cameras. So I went up there and I was, you know, popping them in on all the corners that we wanted it on. So and we, we end up going with a lower budget option for the called NVR cameras or something like that. But they're pretty much Wi-Fi cameras, so it's really easy plug and play cameras. And you know, we got them all installed. So it was a lot of that. And then my wife was also out there. And you know, she was doing another one of the things that we said we wanted to do was paint new numbers on all the, the, the doors. So she was making sure that every door was numbered properly. So it was those couple of minor things that we did at the very beginning, within that first month. And then after that - Truthfully, that's actually been the last time since we've been there. So that's how almost hands off it has been for us to really have to go out there, because a lot of the things are almost taken care of other than the boots on the ground, doing the things that we need them to do. - Yeah, that's fantastic that you've got it up and running and to the point where you don't need to be there very often at all. What about cash flow and returns? Have you been able to pay give any money back to your investors yet? - Not yet. So we talked to them and we worked out again. Everything gets deferred while we stabilized. That was the first thing. So yeah, we're not paying out any distributions right now. We said we take the first year is our goal was to do it all in 12 months. It's still, you know, something like that we were talking about earlier, right? Business happens. So sometimes that's stuff delays. So we're closing in September will be the full year. Of course since we close we may not hit that mark and we're going to have to work out with them and say, hey, we will push it back to lay it by, you know, a month or two or maybe a quarter, right? But it's definitely one of those things that again, now we're learning that the operation is also just as important as, you know, acquiring the deal. But I mean, just it's always a learning curve for sure. - Yeah. That's yeah. And that's still not bad. When you go into a deal like this where you know, that you're going to be upgrading, especially with a lot of capital expense, it's going to take some time to to return money to investors. And with that much leverage as well, you know, you're over 90% levered. You've got some debt payments I'm sure. Anything else about that deal that you think the listeners should know. Any other lessons or fun stories or experiences that are important to know? - Honestly? I mean, the biggest thing on everything is, is for sure, you know, if there's anybody out there that wants to get into it, just go out there and do it. You know, if you have to bootstrap it together like we did, you know, syndication, JV, whatever it's going to be, especially if you don't have the capital to do it yourself. Go out there and do it, you know, especially if you're going to take the time, learn what it is to operate it. Take the risk that the money, if you will, all of that will come together, because if you find a good deal, it'll work, right? But yeah, just get out there and do it. Don't be too afraid to get your hands dirty if you need to put up some cameras, that kind of stuff. Don't be afraid to do that. But it's definitely - it's taught me a lot. And so I wouldn't trade that for the world. - Yeah, I couldn't agree with that advice more. Just get out there, start analyzing deals, start looking at them. The more you look at, the more you'll feel comfortable and confident when you do find the right one. And that comfort and confidence will carry over to when you talk to other people about investing with you as well, because you'll feel like you know what you're talking about and you're comfortable doing it. You're - what about future deals? Are you actively looking for more self-storage or for another asset class? Or what are you what are you into now? - Yeah, we're still going to do self-storage. Or actually, our goal is to really build the foundation on self-storage since we found it to really just cash flow a lot. And then as we upgrade, if you will start to pull out more equity on the back end, maybe if we need to put it into, you know, holding things, if you will, then we can put it into stuff like apartments and probably go more, you know, passive if you will. But for the most part, we're looking in self-stores for right now. We're going to stay there for the next few years or so, especially since self-storage, the more we do it, the more we learn about it is like it's one of those that has not fully institutionalized yet. So that asset class has a lot of compression to do as far as you know, cap rates lowering and you can always push your knowledge, of course. So we're finding it that it's going to be one of those that over the next 5 to 10 years, especially as the baby boomers are on their way out is one of those where we can definitely come in and, you know, try to sweep up as many as we can. - Yeah, that's a good plan. Did you join - I know AJ has a group for self-storage investors. Did you join his group or any other group like that? - I have not. No, I was actually working on trying to get my own for other people like myself early on, but, yeah, I've not joined anything yet. - Nice. Yeah. So then why don't you talk a little bit about what you're doing now in terms of social media I see you. Super active on threads because that's where I've been hanging out lately. But what's your message to other investors besides just go do it? What else? What else are you talking about out there? - I mean, for sure. One of the bigger messages for sure is go to do. But I would definitely say don't be afraid to start for sure. And another one, especially on threads that you'll probably see every now and then. And I'm pushing it out there, is that, you know, be careful. These like the beginner mistakes that I could have easily fell into these traps. But I was looking around, I was looking at these things. So don't make these mistakes, right? Stuff like over inflated occupancy, that's not a true thing, right? Or it's not a true revenue, those things like that. So definitely trying to educate others on what to be looking for when they do it. And then at the same time, just be that that voice, if you will, for other people who are in the exact same space as me, because, I mean, a year ago I was there; I had not had a facility. And, you know, the only difference that's separating me from somebody else is I did it. You know, it's only been eight months for me, right? But I did it. So just kind of getting people, if you will, just to understand you can go out there and do it too. Don't be afraid. You know, for anything like that, just go make it happen. - Yeah, that's great advice. I definitely second that. Just go, go try, go do something, especially if you're younger. But even if you're older, like it's worth a chance to build, take a step for yourself and build a life of financial freedom that can be quite amazing. And the earlier you start, the better off you'll be because those assets will just keep appreciating, especially if you're operating them well. And you'll be able to turn that into more cash in the future for future investments or go travel the world, whatever you whatever you want to do with it. Yeah, absolutely. Yeah. Where can people find you? I mentioned Threads, but is there anywhere else that you you like to connect with people? - Yeah. I mean, everywhere that I'm on, you know, Twitter or Instagram and Facebook, all of it, it's always going to be EV_theinvestor. - All right. I will put those links in the show notes Elvon. Really appreciate you being here today and sharing that story of self-storage. Like it's incredible, I think for a lot of people to hear because like I said, I run into this all the time with people like, I can't go buy a business, I don't have any money. I don't, you know, I don't know what I'm doing. I don't know what to look at. It's like, well, just, just start looking. And the more you look, the more you'll figure it out. And once you figure it out, you'll figure out where to find the money. So Elvon Story is a fantastic example of that. Really appreciate you. Thanks for being here. And to everybody else out there thanks for listening. If you have a minute or if you're interested in making an investment, you're interested in learning about yourself as an investor. I have a new tool on my website called the Buyers Profile. Series of Questions. We'll give you a kind of where you stand as an investor or potential investor to help kind of frame your mindset into your next steps. So go check that out. It's at PowerofBiz.com/buyersprofile. Elvon, thank you and see everybody later. Cheers. Thanks for listening to Business Buying for Financial Independence. If you're serious about owning your time and building long-term wealth, make sure to subscribe so you don't miss the next episode.