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Dec. 13, 2022

Why Service Based Businesses Are A Great Path To Freedom (59 Self-Storage Facilities) w/ "Sweaty Startup" Nick Huber

Why Service Based Businesses Are A Great Path To Freedom (59 Self-Storage Facilities) w/ "Sweaty Startup" Nick Huber

Nick Huber sold a service business in college for 7 figures and now owns over 59 self storage facilities with 1.8 Million sq ft of storage.


http://sweatystartup.com
http://boltstorage.com
http://recostseg.com

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Transcript
brian:

All right. Nick Huber, the biggest fan of Sweat and Startups that I've ever met. How are you

nick:

doing buddy Brian, Thanks for having me. Doing great, man.

brian:

Glad to hear. Got two Georgia boys here on the podcast. Followed the Twitter account. Huge fan of that. You have had multiple tweet storms and threads and different topics that you talk. A lot that I wanna bring up in the show today. But I wanna start with going back to August. You had a meetup with Sam Par, Sean, Mr. Beast, and a lot of high net worth individuals over in North Carolina, and you put out a newsletter about it with some of your top takeaways, including a text to your wife about some realizations that you had about changes that you needed to make. I'd love to start there and then dive deep into that before we get into the

nick:

business. Yeah. I've been blessed and in a unique situation to get access to a lot of really neat people. And as I meet more and more people, I think it's just so rare for a human being to be what I consider to. Balanced, and maybe it's because my interests are all over the place, but I've, I always thought that, as a kid looking up to back then it was professional athletes or famous people, I always thought, Man, they must really just have it together. They must be spectacular in all areas of life. They must be just on another level. And I think my rise, I don't feel like. Uniquely brilliant or smart or outgoing or brilliant business mind by any means. I think it's just a testament to the fact that you don't really have to be spectacular to make really incredible things happen. A lot of it's luck. A lot of it is just being in the right place at the right time. And then being a 10 X Xer in one area of life, which everybody at that, camp. Spectacular in one area or more. Very few of us were well balanced and me included, right? I don't know. I just think, business is part of it, but once you make money and once you get that part situated, you realize that you wake up in the same body, next to the same woman in the same house with the same 12 hours, before it gets dark as everybody else. And what you do with it and how you enjoy it is open ended.

brian:

So you had a few key points there that I wanna dissect a little bit with you because I thought that they were very interesting. The first of which was Mr. B's obvious obsession with his one thing with the YouTube channel. And then I noticed that was a commonality around the group. Like you said, it's like instead of being good at a lot of things, everybody was. At one thing, and I know for you that's storage and these service based businesses. , I'd love to hear your perspective on that, and then maybe how you go about finding your one thing to be great at.

nick:

I wouldn't, That's where I think from the outside looking in, you might. Be surprised to know that, okay, I don't, I never have worked more than 60 hours a week in my life, and most weeks I work 35 hours a week and I really enjoy exercising and I really enjoy pissing people off on the internet, and I really enjoy playing with my kids, and I like going hiking and playing golf and these other things that. Everybody, hustle, culture online is , work 80 hours a week and nonstop, high speed overload, outwork everybody. And I'm more of the fact of okay, what's the easiest way that I can make a lot of money so that I can do whatever I want with my time? And once you start making those decisions and getting that leverage and separate your time from your money, you can get very wealthy, not working very much. I was really surprised to see that among the group up there in North Carolina. I don't think the rich, famous, successful entrepreneurs are that much different than the people who aren't. Yeah.

brian:

It's just, they're more consistent with it and then they're better delegators at their time and high dollar productive activities.

nick:

Yeah. People are like, Nick, what do you do when you wake up in the morning? To kick so much ass. And I do the same thing everybody else does. I roll outta bed and get my phone, and I lay in bed with my phone and I check it and scroll Twitter when I probably shouldn't. And then my kids start screaming and it's a mad dash to get my kids outta the house. I take 'em to school and it's, then I take a meeting and go about the day, right? , brian: I put my leg, I put my pants on one That's what I do. Dude that's a perfect segue. I pulled up a picture from one of your blog. I love that you put this and then this actually segues perfectly into what we're talking about. So you have 40 employees currently, is that correct? It's up to about 50. 50 to 50. Yeah. So I actually lost counts 50 to 52. Okay,

brian:

cool. So this was, Yeah, this was from a blog before. So you put in here mind blowing stuff. Can't believe how fast we've grown and I'm the one writing this message. The struggles. I don't have a job at my company. Actually, I can't. If , if something is required of me, that means it'll soon be a bottleneck because I have a ton to worry about. Not just a small task, but the small task 30 other people are doing. So I have to delegate everything I love. , and that's such a huge struggle for people, especially as they're beginning their businesses. Can you talk about your process going through that and figuring out what to delegate and how to delegate? Yeah.

nick:

I think it's a shift that you have to make as a business owner, because early on, when you have no money and you have no revenue and you have no business, you have to do everything. , I think more often than not, the people who are too damn early in their journey are trying to make processes and delegate and think about the systems and build the business. No, you go out and you sell and you make money and you get after it. That's what we did for three years. I was driving the box trucks. I was a terrible delegator at the beginning. Now, once you do that and so half the people are not willing to actually do the early work. They wanna delegate it. They wanna have no job. They wanna work three hours a week. They're not willing to do what it takes to actually get a business off the ground. Then there comes a point where, okay, I've got 10 employee. Three to 5 million in revenue. I've got a good business here. I got a business here that I know the business model is really good. That's another big problem most entrepreneurs go after. Shitty business models. A business model that one out of a hundred people who try that business model get rich. Okay? Period. There's just a

brian:

shiny object. Yep. Yeah. You

nick:

think, Oh my God, I wanna do the next big thing. I go after the next big thing. I look at it and say, Okay what business can I get in? Where half the. Are rich. Okay? What business? Half the people are rich. It's real estate. . What business? Half the people are super wealthy. What business? Where the top 10% are stupid Wealthy. It's real estate. Okay, that's probably a darn good business. Let's go there. Now when I'm growing and when I learned, when I was at a point where, okay, we learned that this is a really good business, we don't have to be brilliant to make a lot of money doing real estate. Not saying it's not hard. I'm not saying I don't have to make really hard decisions all the time. We'll talk about some of the struggles that we're going through now before this is over, I'm sure. But then I shifted and I said, Okay, if I'm doing something in my business, it's a problem. My job is to make sure all 50 employees are doing their jobs. And if emails came to me that required my action I changed that and I made that job somebody else's job. And it's been. The only way that we could really grow as fast as we did, because if I had a task in my job where I had to do it, I would have no life a and a lot of stuff in my business would start and stop with me. If every banker knew Nick Huber's cell phone number, and we have loans with 12 different banks now, I would never be able to play around a golf without getting a call from a banker. If every contractor who was doing work at one of my properties had Nick Huber's cell phone number, that'd be a problem. If any of my tenants had my cell phone number, it'd be a problem. You. So many people are so hard to, they struggle to let a couple things go inside the company. So what

brian:

you're telling me is for that advertisement where I put the billboard with your cell phone number for this podcast, I need to take that.

nick:

I don't think anybody have any clue who I was. Luckily they'd be like, Oh, that guy on Twitter who's a real jerk . brian: I love it, man. But yeah it's a point of conversation that keeps getting brought up on this show because a lot of people that listen to this have, they've grinded, they've done the work. We're the Action Academy podcast, so people on here take action. But then what ends up happening is they get so used to the idea of, I work my ass off. That means I make money. Therefore, if I work harder, I make more money. And then they build themselves into this golden cage and they build themselves into this freaking bottleneck that they can't work themselves out of because now they're wearing all these hats and now they have zero time. Their marriage falls apart. They're an absent father, and their health is failing. So that's why I love getting the perspective like, like you had there and like you have, and you offer and you put on Twitter as well because it gets ahead of the eight ball. And it helps people to avoid making these problems like we all have before in our businesses where you're working. Delegation is really hard. It's really uncomfortable, and there's only one way you can become a better delegator, and that's actually do it and get practice doing it. So many people listen to podcasts. They read self-help. They take these courses, they do all the things to learn about delegation. But until you put yourself out there and make the hire and get somebody working for you and go through the stress of that person messing up and go through the stress of that person quitting and go through the stress of that person costing you money you're not.

brian:

Anywhere. Yeah. And there's a term that Sam and Sean use, and Cody Sanchez too, who I know you're friends with mental masturbation where . It's and I know people listening to this podcast, but you guys take action for you listening. I know you're gonna take action on this, but I wanna use that as a little bit of a segue here as well, because you. Our famous slash infamous on Twitter because you keep going viral accidentally and getting in the wrong sides of Twitter where everyone's gonna rip you apart about your hiring processes. . Yep. Yep. So you do things. The best way that I think people should do, and that I recommend to entrepreneurs is starting with the virtual assistant. That's a hell of a way to learn delegation. Walk us through that process and your whole battle with the society at large with your hires here.

nick:

Yeah, so we have 20 employees in the Philippines. They make anywhere from four to $500 a pay period, which is eight to a thousand dollars a month. And we hired 'em all through support she.com. Marshall over there is a great guy. But yeah it's It's a no brainer. These folks are competent. They're eager, They want to, be there. They want to be at work. They're thankful for the job. They are kind to our customers. They're super competent when it comes to decision making. So inside of our storage business, we have a. Customer service. And this is not just customer service. This is renting units and guiding customers around our properties telling them how to solve problems on the ground. Arguably better than an American could, giving them street directions on how to get to a property to collections, to underwriting, to backend data entry. And yeah when I made the first hire over there about 18 months ago, it really opened. It unlocked a lot for us as a business. And we when you go on Support Shepherd and you set up a ticket, they give you three candidates. They, you make a job description, they help you with the job description. They'll go out and vet candidates, and they'll bring in people who they think are perfect for the job. We hired all three of those candidates just because we of blown away by who and how they were, and we were growing really fast. Wow. Then we just kept, kept going from there and it's been an amazing thing. But yeah, the, I think the. And things are changing now. The other way, like for the last five years, the employee in America has had all the leverage. And I think that's a great thing overall. I think it's great that an American worker can call the shots and they have the leverage. They're gonna change jobs, they're gonna be able to ask for raises, they're gonna be able to ask for more time off. They're gonna be able to ask for things because they're in hide demand. I think that's an amazing thing. We still hire a lot of Americans. We support a ton of, internal employees. But when. That is the dynamic for so long. It's really hard on a business owner. It's really hard on a business owner. So to find and unlock a labor force that was eager and excited and not necessarily as quite as entitled it was great for us. It's a cheat code,

brian:

especially in a service based business. Because you don't see that often. , that being a MA major bottleneck and that's why I was interested in what you did. I have multiple virtual assistants myself. I went through like Upwork and doing 'em myself and having to figure out how to tailor the titles and the job descriptions. So for you, Are there any differences between when you first started hiring and the hiring virtual assistants versus or remote workers versus now that improvements that you've made throughout the process?

nick:

Yeah. We've done Upwork and we've tried pH jobs, but you just get overwhelmed with the number of people. I think the Upwork is tough because those folks are kind of freelancers. They know what they can do, they know how to find more work. If you go through the pH jobs, you'll get overload with 150 resumes that you gotta sort through and you're not necessarily sure how to interact with them, how to grade their English, to do a lot of work to get the person right. So yeah, that's why we use Shepherd. But I think the main takeaway is just, you can afford to overhire a little bit and make yourself less stressed out. We've gotten virtual assistance for a lot of our people on the ground in the States, which is an unlock, like our construction manager, he's traveling a lot. He doesn't have time to be in his email all the time. He's meeting with contractors. He's got a super competent, basically administrative assistant in the background at all times. So if he needs something, he's sending messages on Slack. It's been just like if you have a really competent employee in your. Tack on an $800 a month employee and watch it get even.

brian:

That's amazing. And I had another guest on that was talking about different grades of activities and he was like, You have A grade, B grade or C grade. A grade was like revenue producing B grade was, it's gonna yield revenue production. And then C Grade was just like, What the hell am I doing? And so he hired that admin assistant like you're talking about, and he was like, I will give you a bonus. You can get 50% of my schedule. More just the revenue producing activities. And if you could take away everything else, I will pay you even more money. . So I love the concept and I love what you're doing. So let's go into, let's go into your wealth building journey here. So you started with Storage Squad and your entire brand and everything that you preach is your sweaty startup on Twitter, and that's your brand. So yeah. Talk about all about service based businesses. Walk us back through your beginnings there and what got you into service based businesses to. Yeah, I

nick:

think the ask you go on the street of any city in America and you start asking people, what does entrepreneurship mean to you? Or what's the first thing that comes to your head? When I say the word entrepreneur they'll say things like, Shark Tank. They'll say things like Steve Jobs, Mark Zuckerberg Bill Gates. They'll talk about these kind of unicorn events where somebody has a story that's inspiring enough to draw media attention and draw like the allure of the dream the entrepreneurship journey. Like a lottery ticket. That's right. And, but when you go in your town, and I don't live in necessarily a super wealthy neighborhood, but you go across town to the really wealthy neighborhood in my town, or you go to the country club in my town and you start asking people what they. They'll say one of two things. They'll either say, I started a company. Or they'll say, Somebody in my family started a company that I work for that's the super wealthy people in every single town. And then you start asking them, Okay, what company is it? It's not really anything special. We just started buying shopping centers and releasing them out and fixing them up. And we had a unique way to do the business model, or we started an H V A C company, or we started a plumbing company, or we start an electrical company, or we start a lawn care landscaping company, or we own a dis distribution building around town. Any number of things that these people do to make massive wealth and absolutely none of them are new ideas. Absolutely none of them are groundbreaking. And I, my story's the same When we started our comp, when we started our company, there were 20 other companies doing exactly what we were doing. We just did 'em all, took the way they did it and did it a little bit better and carved out a piece of the pie. People think, Oh, if I'm gonna start a company, I need to have no competi. I need to have the Blue Ocean Book is the biggest scam that ever hit entrepreneurship in America that made you think, Oh, I need to go into an area where there's no competition. It's a blue ocean instead of a red ocean, which is a lot of competition, people eating each other, whatever it might be. There's a lot of really good businesses that make really good money that operate with fax machines and don't know how to do business very well at all. And that's much, that's where I would prefer to compete person. If I can choose to compete against the Stanford graduate or the venture backed company in New York City, or I can choose to compete against the person down the street in Athens, Georgia, who uses a fax machine, has a ninth grade education, and doesn't have anything special, who I, which one of those two people am I gonna compete with? It's like saying, Nick, would you rather play basketball? Football against the Georgia Bulldogs or the local high school. Yeah,

brian:

exactly. Now, you did start for your company storage squad, did you guys start that from scratch or did you buy an existing business and then fix it up?

nick:

Yeah, we started from scratch. We learned a ton about. Logistics and hiring and delegation because we did student storage that did pickups all in, one time a year. And we had a lot going on. And then we just of grew that and went from school to school. And before you know it, three to five years later, we were doing 2.5 million a year in revenue and clearing, three to $500,000 and not spending any money. So we stayed very lean and. By 2017, we had the cash set aside to build a self storage facility. Actually, this was about 2015, 2017. We got that storage facility built and opened and it became clear very quickly that we could make a lot more money in real estate. So we began pouring all of our proceeds from our service business into real estate. I moved out of the student storage business in 2017, full time into the real estate. We bought another property 2018. We bought three more, 2019, and then we sold our. Student Storage, Business storage squad in January, 2021. And now me and my partner are full-time real estate.

brian:

So Walkers. So I want to get into the self storage because we have a lot of self storage guys on here. So I wanna really dive into the numbers, what you're seeing in the market, what struggles you're having. Cause I know some of them that you've listed. But I'm curious, going back to Nick in college and your friend. What the hell? What what switch was flipped to where you guys were like, Oh, hey, we feel like doing storage here. , walk me through that thought process and getting this thing off the ground, especially as a college student, cuz you guys expanded to what, 25 locations? 25

nick:

schools? Yeah. I think the difference is that I was an energetic, excitable person. I try to like, okay, what is the difference between an entrepreneur that does it and gets a business going and one that does. And 99 out of a hundred people would not have been excited about the fact that somebody reached out to me after my Craigslist post, said, Nick, can I store my stuff in your house? Most people would've taken that stuff, put it in their house, got the $300, went out and bought some beer and forgot all about it. I was excited and eager to go scrap and make some money. So we got after it and we got excited about it and we were gonna build it and have a ton of fun and it was a ton of work. And looking back I would never be excited about starting that company cause it was freaking hard.

brian:

But you're glad you did, man. Yeah. But you're glad you did. All right, so let's walk from the storage squad. And then you got sold for seven figures and then you started doing the real estate full-time. So walk us through where you are today and then let's of break through the acquisition of these units that you have right

nick:

now. Yeah, so we bought. We now own 59 self storage facilities, 1.7 million square feet of storage. We've deployed over a hundred million to acquire all those assets. We've raised net operating income significantly. The portfolio before the recent crash was we probably could have sold our entire portfolio and put 10 or 20 million each in my partner and i's pocket. That's all changing quickly now, but yeah, our plan is generally buy a self storage, so that's mis. Raise rents to wherever the market takes rents. Lease more units. Have a Google My business location, answer the phone, run a decent pair set of software, buy it for a million bucks, increase net operating income, and then it's worth 2 million bucks or it's worth 1.5. You refinance it or you sell it and you hold it. And that's how you make money in my business. Yeah, we started raising money. I got on Twitter, started tweeting about my deals, met a lot of people with cash. Ended up raising a lot of investor capital. We syndicate, so that means we kinda raise a limited partner capital, a silent partner, and then we get a chunk of the upside and we co-invest some of our money as well. And we started going really well. And they, and I think real estate's really cyclical and there's small windows in time. I, I say that real estate's kinda like hunting and imagine you're a lion and you're out in the desert or the, jungle, wherever you're hunting and most of the time you're laying on a rock. You're just laying. But sometimes you see a gazelle out in the field and you gotta go get off your rock and you gotta sprint and you gotta chase it down and you gotta get it. We saw window in time from 2019 to 2021 where it was a really good opportunity to buy a lot of storage. So we stressed ourselves out. We worked like crazy and we bought a ton of properties and they were great assets and they're doing really well now. And frankly we made a lot of money doing that over the last two years. Now, Everything's changing. Interest rates have went way up. The economy is changing drastically and we're seeing less people move into units. Our occupancy is decreasing. Street rates are dropping and frankly, if. Weren't good operators or, we didn't go in low leverage with low debt on our buildings that we bought. We'd be really nervous right now because it's pretty crazy time.

brian:

Taught me through your debt strategies here, because it's great that you did what you did, but I know that's not normally the status quo when it comes to self storage acquisition. You see a lot of seller finance low to no money down, kind of interest only payments. How did you structure your debt terms and what was your debt strategy going into this?

nick:

We knew that we had made enough money in our lives that we didn't want to keep pushing it all back on the table and risk it all. And I think this is another thing about real estate is it's an addictive game. Doing a deal is addictive. It feels like you're at the casino and you can buy it for X and then it's worth y and you can make shitloads of money and you just get addicted to that thrill of the chase and so many investors. Were worth hundreds of millions of dollars before they went totally broke in 2008 during the last recession. How can you explain that, Brian? How can we explain that somebody had more money than them and their kids could ever spend living reasonable. And they still found a way to put enough risk on the table to go broke during the last real estate recession. How does that make any sense? It's pretty darn easy when you, when times are good to just keep going and going and going, and assume that they're gonna keep being good. So we raised a lot of, more equity than we were comfortable with. We took just de-risk, frankly. We had made a lot of money and we were ready to not risk it. Really lucky we did that. So when

brian:

you're positioning, like what percent equity are you looking for whenever you're taking down a deal?

nick:

It kept dropping early when the deals were really good in 2018, 1920, we were fine to use 70, 80% leverage because we knew that they were really underpriced and frankly, we didn't have as much to lose. Then now beginning of last year, we were, we went down to 60%. Now for the past nine months, we've bought everything with 50% leverage and 50% cash. Partly because we were really good at raising equity through Twitter and through all of our network. We have 300 LPs and 1200 on our email list. But yeah, we're lucky.

brian:

All right. So I love your strategy now and how you're going about it. Because I see that in multifamily as well. With a lot of the guests that are coming on here, they're doing like a 40% equity, a 40% cash down when it comes to their properties to even make the rates work because of how high the interest rates are. So I want to, I would be remiss if I didn't take you on a pivot to Twitter because Is Twitter the one that you're most successful on? Cuz I know you've got YouTube and everything.

nick:

Let's say Twitter's top of funnel, like Twitter is where I get the most eyeballs, and then people watch my YouTube video or listen to me on a podcast and they get to know me a little bit more than they get on my email newsletter and they really see how I think. And then, it's a, But Twitter, yeah, is definitely the most successful as far as eyeballs go. It's 20 million impressions a month. Okay, perfect.

brian:

Walk us through your content strategy because what I've tried to tell people is that there is such a missed opportunity, especially for operators just like yourself, where they're operating with these businesses that aren't necessarily sexy, but there's a place for them online and they can use that to leverage and scale. And that's one of the reasons I do this podcast. And the reason I'm on Twitter, I we're having this conversation because of Twitter. So walk us through the creation of that account and how you maneuver and think about what you put up and how you format it before we get into the rest of the numbers here, because now a lot of your LPs are directly a result of your Twitter, so it's a productive activity. Yeah,

nick:

my life changed when I got about 5,000 followers. The rest was just icing on the cake. So it really didn't take much at the very beginning to get the initial follower slug or to get like a life changing influence within the real estate community on Twitter. And I think the main difference between me and every other content creator is that when you talk about real estate, aside from the bigger pockets crowd and some of the other stuff, like for the most part, the people who make real money in commercial real estate, they don't talk about it. They. Post pictures of their profit and loss statement on social media. They don't talk about how they're making millions of dollars. And I came on Twitter slinging and posting profit and loss statements and just showing people how or what we were doing to make millions of dollars in real time. And anybody who's followed me for two years on Twitter has seen all that happened. And when you're out doing something interesting, it's really easy to get followers on social. Everybody wants to get the followers before they do something interesting. Nobody gives a shit. Nobody gives a shit about you if you're not doing something interesting. It's like social media's a very selfish place. I'm gonna follow somebody, I'm gonna follow somebody because they're gonna make me better, or they're gonna show me something, teach me something. So yeah, we were out building a real estate private equity company. We were hiring a ton of employees and we were buying 50 million worth of self storage over 12 month period. And I was just tweeting all about it and that made me an interesting.

brian:

I think, I love that you said that because I think people have everything backwards to where they're trying to pull everything outta thin air. They're like, Oh, here's 10 takeaways from this person. Here's 10 takeaways from that person. But they're not actually doing anything. They're just trying to build an audience, but they're not doing anything. So it's like Sam has this quote where he is Do interesting shit. . . It goes and document it. Just document what you're building, document what you're doing, and then that's what builds the audience. And it's I just went and traveled around the world for five months, quit corporate America, and now I'm traveling and I documented it. So that's why I was able to grow mine. So it's, I just love reinforcing this idea over and over again about. This for people that are listening. Cause there's so many entrepreneurs listening to this that are at that seven figure mark. Maybe they're at like 6 million, 7 million, $8 million net worth and just simply documenting what the hell you guys are doing will get you into that eight figure mark. Walk me through that funnel that you just talked about. So you said Twitter is essentially the top of your funnel, and then what's the rest of your funnel? Yeah.

nick:

So let's even look at Twitter as a funnel. Sure. Let's look at Twitter. Let's just start. Let's only. 60, 50% of my posts are not about self storage or not about entrepreneurship, not about business. They are life self-help, money making thoughts and philosophies. That's the, everybody's Nick, you got 250,000 followers on Twitter by tweeting about self storage. Give me a break. I, no, I did not get all those followers just by tweeting about self storage. My goal on Twitter is always to do, to tweet something that will make interesting people or smart people think about something a little bit. Every tweet, think, make smart people think a little bit harder about something. Whether it's business making money self storage, whatever it might be. So the top of my funnel is the self-help business tweets. Then you go a little bit deeper and you talk about threads like the deeper threads on okay, how you think about making money, how you think about risk, how you think about life. Then below that there's the self storage tweets that are talking about our portfolio, self storage in general, simplifying concepts around real estate. And then at the very bottom, there's the complex shit that 99% of people on Twitter don't understand. That is me posting how a cash out refinance worked on one of our deals with pictures of our profit loss statements like, so Twitter itself is a bigger funnel where I'm gonna get the. I might only get 150 likes on that thread that I do about my Erie, Pennsylvania self storage portfolio that I bought and how we raised rents and made the property better and improved it and made occupancy better and ended up making $900,000. And you can't even really tell that I made $900,000 unless you know what a cap rate is and how we refinanced it. But those hundred likes on that one tweet are from the people that I'm after on Twitter. Does that make sense? Like I don't care about, I don't care about the 5,000 people that like my. Tweeting some engagement thing about hiring people in the Philippines. I don't really care. Those people are not high value. They don't care about Nick Huber, the people that read my thread with only a hundred likes on, what we did on one property and something we struggled with, or something we built or something very interesting or unique. Those are the really valuable people on Twitter that end up building relationships with me in the dms.

brian:

So it, it's almost like a two-pronged approach. Like you wanna get the eyeballs and then you wanna provide substance for whenever one of those eyeballs happens to be a high a value set of eyeballs. A hundred

nick:

percent. And you got it right on money. Okay, perfect.

brian:

Yeah. And that's a mistake that I've made sometimes because I go too general and then all of a sudden I spit out something like super specific and then it gets like nothing. It's like we don't give up

nick:

on the specific stuff. Don't give up on

brian:

it. Yeah. Cause you, you almost get frustrated cuz then you'll make this thread and then it's just Oh, okay, let me go super in depth, into detail about how I did all of this. But then what I'm also learning is like the art of it. There's the science of it, and then there's the art of it where it's just hey, like your hook is. That's why people aren't listening and just too much information. You need to format it like this.

nick:

Yeah, you gotta be really good at writing copy. Yeah. All the time. No matter what you write. And most people suck at writing good copy. That's engaging. And then you also have to be doing interesting shit. There

brian:

you go. There's the formula. Everybody right there follow that formula and go get to work. And it's about the

nick:

consistency. I think. Just a general one last comment on Twitter. I think there's a lot. Twitter is candy for your brain, period. Instagram is candy for your eyes. Twitter is candy for your brain. So the business people hang out on Twitter. They get news there, they follow financial accounts, they follow smart people. They know they can get smarter on Twitter if they follow the right people. So there's tons of people with NFT profile pictures and six followers that are worth tens of millions of dollars. And they do deals on Twitter. They meet people on Twitter, they lurk on Twitter. Just understand that Twitter's where deal makers hang out, there's a lot of really valuable people there, whereas I did work on Reddit for a year and a half, and I met exactly zero people who did anything with their lives on Reddit.

brian:

That make the math checks out. I have to ask, I have to ask. I was gonna move on, but I gotta ask, what are your opinions on Elon and Twitter right now? Because he's just going off.

nick:

I love it. The idiots are so mad at him because he's gonna do a masterclass on how to make a business that has been worthless for 20 years. Twitter has been a losing money. Twitter has been worthless from a business standpoint for so long, and he is about to make a shitload of money, and it's gonna be awesome. He'll go public again and make billions of dollars. And the employees who don't actually do anything at the office going on the news and talking about how they were mistreated unfairly, Get the hell outta.

brian:

Love it. I love it. So now we are getting into the business. So you'd put another thread out there that I really liked about how you started and operated your first business. You did a bunch of stuff wrong. Like you said it was super hard, super difficult, but the three things that you got right, and you said these are the three things that you need to get right in business and that's operations, the asset class, and getting your projections right. Can you dive a little bit deeper into.

nick:

I'll say that our projections were way off on that first one, but we were,

brian:

All right, hang it up. Everybody. . No, I think

nick:

in real estate there's, This is the thing about real estate and the folks need to understand like there's a thousand variables and any real estate deal. No real estate deals the same and there's. Everybody's Nick, how do you know if you have a good real estate deal? Is it square foot per capita? Is it the amount of renters? Is it average income? Is it the amount, the population in five miles? Is it traffic count? Is it the quality of the asset? Is it all these different things that you gotta look at to try to predict how well a property's gonna do? And. It's really hard to guess which ones are gonna matter. But if you get a couple of the ones, if you get a couple of them right, and you get the big ones, right? Hey, where can I take revenue? Is revenue a month right here? And where can I take it? If you can get that you're gonna, you're gonna be fine. So yeah, you can, it's very easy to get in the weeds. And I know this is probably just confusing the hell out of people, but there's a ton of. There's a ton of nuance around this stuff, and there's no real way to have all the answers. There's no way to have all the answers when you do a real estate deal. People are asking me all the time Nick what's, I'm about to buy a storages facility, and they'll write, a paragraph on their property that they're about to buy. Do you think it's a good deal? And I'm always like, Holy shit man. We need to talk for half an hour for me to know if it's truly a good deal. But if you tell me the revenue per month and what you're paying for it, I can get pretty darn.

brian:

Yeah, there was a, One of my buddies is a massive do you know Chris Benson? I've

nick:

recognized the name. Is he on Twitter?

brian:

He's not on Twitter, but he's reliant self storage. Okay. Yeah. So he does self storage. He's a, he's another self storage syndicated in Georgia. So he's in one of my mastermind groups. And so he was talking about how when he was like presenting to a group and he was, had this like concept like swag. He like wrote swag and we're like, Chris what's swag in your projections? And he was like, Oh, that's scientific. Wild ass guess. He's We can't be able to tell because he like you is like all. So we can forecast and predict to the best of our ability through our decades of market knowledge. He's But we can't forecast everything. You can't

nick:

forecast interest rates. You can't forecast interest rates from three and percent, and you can't forecast twice as many people up. Half as many people renting storage units month over month because no houses are selling. You can't forecast the REITs now dropping street rates significantly for the first time in five years. Delinquency doubling, you can't forecast that stuff. This is all happening right now. You're asking me six months ago is self storage and asset class where we could see distressed sales, meaning like foreclosures and bankruptcies? I'd say no, I don't think so. I think it's too good of an asset class for people to go wrong. I've totally flip flopped on that opinion. And I think that some people who bought real estate bought self storage, especially people who bought it on 90% leverage with an SBA loan. Think Me in Big Trouble. So

brian:

You put another one of your quotes that I really liked is how you think about investor capital and how you think about managing your deals. You're not trying to give people this insane irr and you're not talking about, Oh, here's all the upside that I'm gonna give you. It's gonna be the sexiest thing ever. What you care about is, hey, here's every possible way that this deal can go wrong and go sideways. Here's how I'm going to mitigate your risk through my operational pro. And I love that. Can you talk about some ways that you're some leverage that you're pulling to stabilize these properties and mitigate the downside risk going into this next environment?

nick:

Yeah. I'm of the opinion that the old sales method of, Hey, this is, these are all the reasons why we should do this deal. These are the things you're gonna love. This is why I'm so great. This is amazing. When I get on a call with an investor, my instinct is to do that, to sell myself. I'm a good salesman. I wanna tell 'em all the ways that were phenomenal. Why we've been able to have success is because I get on an investor call with a high net worth individual and I say, Hey, how would you feel if interest rates went to the moon? How would you feel if we missed all these projections for five years? How would you feel if we went through a severe real estate recession and instead of a three year time frame or a five year time frame, this turns into a 10 year deal and you can't get your money out and it's stuck with me. How would you feel about that? And then I say, Okay. And then I say, Okay, they wanna talk about, and then they start selling themselves on the deal and saying, Okay, don't need the cash. They start resetting expectations. They're resetting their expectations. And in my opinion, stress in the real estate business, stress in anywhere area of life is misaligned expectations. If you tell somebody you're gonna be here and you actually are here, you're gonna be stressed. If you tell somebody you're gonna be here and you're right here, guess what? You're not. So the bottom line is that investors don't pay me the big bucks and my fees are high and we take a good chunk of the upside. They don't pay me the big bucks to be a bull and buy everything and just let the tailwinds of self storage carry, They pay me the big bucks to protect the risk and make sure I don't lose any properties.

brian:

I love it. And you, Yeah. And you make sure that they don't lose any freaking money. So what are you doing with your operations? Obviously besides how you're acquiring the properties and how you're structuring your debt, is there anything in particular that you're doing to make sure that this is mitigated from an operational standpoint? Because a lot of people that are listening to this own self storage. Yeah. I

nick:

think if you just own one self storage facility and you're the one managing it, if you care about the property and you answer the phone, you're gonna be fine. At my level, when you're syndicating deals and you're raising a lot of outside capital, we made sure that we had a fee structure so that I could support my employees and we could pay good people to run our company, even if deals dried up. And that's gonna be something that's very surprising in this cycle, is that even if you don't lose any buildings, and even if your loans aren't expiring, if you are running a real estate private equity shop with 12 employees and you only have $300,000 of management fees coming, Tell me how that's sustainable for five years. It's not. Yeah, so people are undercharging, drastically undercharging for management fees, especially of self storages because it's really involved. There's a lot of work to manage self storage facilities. The REITs, you're gonna pay Cube Smart direction space towards 12, 13, 15% of revenue to manage an asset for you. You're gonna pay me 10, 12, 13% of revenue to manage the self storage asset for me or for you. A lot of these people who are buying self storage with investors are charging 5%. It's not nearly enough to pay good people to manage the properties. And so when you stop doing deals and you stop getting acquisition fees and you stop getting refinance fees and you stop getting liquidations of selling an asset or cash out refis or these big liquidity slugs, when those stop coming in a really hard period and we gotta go, Let's say the next time rates drop down to where we can have some liquidity advances. 2024, 2025, 2026. Real estate shops go hungry and it gets really hard if you don't have the correct amount of fees to, to manage your property. So that's one thing I would say as a takeaway.

brian:

I love that. And for people listening, that's something that you can apply right now. Go back. Go back, look at your business, look at what you can cut, look at what you can increase. And you can do that right now, because right now is the time to do it before everything starts getting even wild. Because right now we're in the very beginning stages of this, and I think that this could go over into the next 24 months and ongoing. So on that point, what is your strategy? What's your plan and vision moving forward over these next couple of years to the best of your ability? Obviously you don't have a freaking crystal ball, but what's your plan? What's the sweaty startup prediction

nick:

and plan? Yeah. I think when times are good. We make money when times are bad, we acquire great properties. I am so I've I have come to the conclusion that, okay, we're not gonna make big chunks of money when we can't refinance or sell properties. That's just not gonna happen. But we can go in and we can do the work, and we can buy properties that five years later we'll provide that opportunity. Yeah I think the plan I don't know what's gonna happen. And again, if you're just getting started in your real estate journey, The problem with getting a lot of advice from guys like me is that when you make your money and you put your net worth in and you all of a sudden have a portfolio of self storage worth almost $200 million, your risk tolerance changes. You shift from, Okay, I need to make money to, okay, I need to not lose money. The problem is a lot of folks who are very early on in their journey go around to really rich people and get. Hey I'm just starting out. I don't have any money. What would you. I don't know. I've had money for a really fricking long time, so what I'm about to tell you is not at all applicable to what you should actually do.

brian:

Yeah, I've had that problem on the podcast sometimes where I was like, Okay, I've had too many hundred million dollar guys back to back. I'm like, Alright, let me bring it back down to the

nick:

choice. Oh, if I was just getting outta college, if I was just getting outta college and I didn't have two kids and a mortgage and a big net worth to protect, I would be very, Bullish and I'd be out mixing it up and I'd be getting after it. And we wouldn't be afraid to buy properties. And I hope this comes off as, I hope I don't, I'm not coming off as a complete arrogant asshole here. I'm just saying it's very hard to be what do you say, laissez fair. Like cavalier? Yeah. When you have something to.

brian:

No there, it's a great point to make because there was a quote somewhere where it was like, why would I risk what I do have for something that I do do have a need for something that I don't need? Like I'm already good. So why would I risk a good thing for the possibility of something that isn't even gonna marginally increase the quality of my life anymore?

nick:

Yep. So if I had to predict what's gonna happen realistically, I think maybe three or four months ago, I'd say a 20% chance the real estate market melts down to really bad recession. Now, I think maybe it's 35% that the real estate market melts down to a really bad recession. If I was a gambling man and I had to say, What would Vegas odds be on this? But I'm focused on not letting that 35% tail event ruin. Whereas there's a 65% chance that things just keep rocking and rolling. And if we don't see a recession that's real estate led and the Fed does reduce, and interest rates go back to 5% and we can all make money for a while and it just goes back a little bit closer to normal. But if interest rates stay right here up near seven to seven, 5%, if it stays here for two or three years we will have carnage in the real estate market, complete carnage. And that's why frankly, we are not buying anything right. I I, over the past 18 months, from late 2020 to April of this year, that 18 month period, we bought 75 million worth of storage and the four month period. This time last year, the end of 2021 to the beginning of 2022, we bought about 40 million worth of storage over four month period. That same timeframe this year, we're gonna do one deal worth, 1.65 million, one deal. Wow. So we're doing 90% less volume right now than we were last year. Every developer that I'm talking to, and let's put it in context. It's November 8th. It's election day 2022 right now, if you're listening to this in the future, so you'll get to see whether or not I was an idiot or whether or not we were smart. We don't know, but we are not doing any deals right now because I don't think. Of the pricing, the sellers are not aligned with the buyers in what market price is right now. Got it.

brian:

No, it makes a lot of sense. But I like what you're doing where you're operationally, like your boots on the ground. You're like, Okay, cool. Let's mitigate here. And that's what a lot of people that are coming on this show, and they're talking about, especially with their multi-family and with all the different asset classes, like they're hunkering down, they're cutting down the like they're. Cut and loose. The dogs of their portfolio, their C-class stuff, they're selling it. They're 10 30 wanting it into diff something else. . And so they're, everyone's taking like defensive measures, but it also goes back to like your particular activating system. Like you're always gonna see what you want to see and what you're focused on.

nick:

So six months ago, you were, six months ago, those assets were trading? They're not trading now. Yeah. Today, Tuesday, November 8th. We're still closing a couple deals that went under contract three or four months ago and somebody had locked debt on. But I'd say over the last month, we've seen. Five 20 million plus portfolios go out to the market that did not sell. Did not sell. Wow. We've seen, transaction volume and self storage is probably 10% what it was last year, this quarter. Wow. Nothing selling like brokers are listing shit. They're calling me saying, Nick this is probably not gonna sell. We told the guy 5 million. Can you get anywhere near that? I'll say, Nope. And he'll be like, All right, If you're not distressed if the asset's not distressed and you're not ready to take a big loss, you are not selling right now. Got it. So it's getting it's getting a little dicey out there. We just gotta

brian:

navigate

nick:

still. I'm still bullish though over time. I We're ready to start buying soon. I know the opportunities will start to come and I would guess if I had to predict that 2023 will hopefully be another 50 million year of acquisitions for us. There we go. We're just gonna be at we're just gonna buy a lot more square footage for that. Love it, brother.

brian:

I appreciate you coming on, man. Where can people find you?

nick:

Following me on Twitter at Sweaty Startup, I release a weekly newsletter where you get a lot of in depth thoughts on my life, my business our self storage, and how I think about real estate and that you can sign up for that at Sweaty startup dot ck do page. So love it. Actually, it's just sweat startup.com too. There we

brian:

go. Sweaty startup.com. Sweaty startup on. Nick, appreciate you coming on Brother

nick:

Brian. Thanks for having me, buddy. I really appreciate it.

brian:

Anytime, man. And with that, that has been Nick Cuber and Brian Lube with the Action Academy Podcast signing off.