These Properties Make WAY More Than Rentals ($2,000+ Per Month!)

22:01Tony Robinson:They never pick up the phone. Their reviews are terrible because they're never at the facility and everyone's complaining. You're doing great. And there are a million of those markets across America. I promise. Yeah, it's super interesting because that sort of like competitive dynamic is something I don't really feel like exists in the kind of properties I buy. And I like that. If someone builds a new duplex next to my duplex, I'm not really sweating it. If someone built a self-storage facility next to you, I'm sure that would like greatly impact your business. But obviously you're doing it well.

22:28Tony Robinson:Like you found a sweet spot. Same way, I kind of think two to four units, like no one's, it's less competitive. No institutional investors are really going after that in some big sort of way. So like you've found a niche. How hard has it been for you to find deal flow in self-storage? Oh, it's incredibly hard. It's super hard. Like this is the worst part about investing in self-storage. I'm sure it's the same thing. I mean, potentially with Tony with buying larger buildings that are like motels and stuff like that, where it's like, this is literally a needle in a haystack type thing. If you might be a regular rental property investor like Dave, maybe you buy a rental every year, every two years, I've only bought two facilities in the past four years, I've been trying.

23:06Tony Robinson:Now, obviously, there's more cash flow with each of them. But it's like, sellers are still stuck on these 2022 price peaks, which is completely off of what you can get for funding right now with banks. So the numbers just don't work out. And also, it's like, there's only so many of these and this like these middle sized operator guys are buying up as many of them as you can. While you're in a city like if you want to go and buy in Raleigh or Austin or Tampa, any of these strong fundamental markets that have high supply right now, like you're fine. You can buy a property every week if you want it and you'd never run out.

23:33Tony Robinson:So that is the thing. You have to be like hardcore on acquisition and you really have to try and get these properties. And if you do, like they do really well, but man, it's a struggle getting them. It's a good business model because that's kind of what it takes, right? If you need to sort of find the inefficiencies in the market, but that takes a lot of work. And frankly, now I'm back off self-storage. I don't want to do any of the work you just mentioned. challenge. Do you have the same challenge with deal flows, Tony? I think it depends on the single family side. I will say there's probably maybe more of a challenge there to Nate's point.

24:09I think that there's sellers who are a little bit unrealistic around what property should be selling for, given where revenues are at. But honestly, on the commercial side, I almost feel like it's easier right now. Because again, going to my point, there's this, there's an entire generation of mom and pop hotel and motel owners whose kids don't want to inherit the business. They want to go retire to spend time with their grandchildren and they want to get rid of these assets. And we probably could have purchased more. We're just like intentionally trying to scale in a little bit more of a controlled fashion, but yeah, single family side, I'd say there's some challenges, but it's honestly, I found it to be a little bit easier on looking for more boutique hotels and motels.

24:48Tony Robinson:Well, it's sort of the positive side of the cyclicality and volatility that we're talking about, right? Like commercial real estate has taken a hit in the last couple of years. And I think there's a strong argument that assets are the cheapest they're going to be for a while. That's why personally, I'm starting to look at larger multifamily and starting to acquire them. I don't think the market's there just yet, but Tony, you tell me is like, have like prices gone down, I assume in the hotel and motel industry over the last three years. The hotel that we bought, they'd initially listed for, I think close to 3 million and we bought it for a million.

25:20Oh, right. Oh my God. Now, part of that was just them being unreasonable about what it was worth. And it sat for, for a long time. And then they were just like, you know, super motivated by the time we spoke to them, the broker that I was speaking with yesterday, I think they originally listed for 3.2 and he told my partner like, yeah, we could probably get them down to 2.2. So yeah, I think there's, there's a bit, again, part of that is them just being unrealistic about their initial price. But I do think that there's motivation and there's more leverage that we have as buyers right now to negotiate, to try and get the price that makes the most sense for us.

25:55Tony Robinson:Well, you both make very, very compelling points, but I want to talk to you about how practical these two approaches are for just regular investors. And if you think that this is achievable for people listening to the podcast, we do need to take one more quick break. We'll be right back. I wanted to let you know about something really fun Henry and I are doing that I am really excited about. We are taking BiggerPockets on the road this summer, and we'll be driving around the Midwest to multiple different markets, looking for deals, meeting with agents, talking to the BiggerPockets community, attending meetups.

26:29Tony Robinson:It's going to be a great time. We're calling it the Cashflow Roadshow, and it's happening this July, from July 14th to 18th, across three different markets in the Midwest. We're starting in Milwaukee, going to check out some markets around there. Then we're going down to Chicago, ultimately winding up in Indianapolis. And we're going to be doing all the stuff I said, looking for on-market deals and looking at projects that BP community members are actually doing even in this market. And we might even do a deal or two of our own along the way. So make sure to follow along to all the content we'll be putting out about the Cashflow Roadshow.

27:05Tony Robinson:But I'm making this announcement because I want you all to join us. If you live in either the Chicago or Indianapolis area, we're going to be doing free meetups in those areas. The one in Chicago is on July 15th. The one in Indianapolis is the next night on July 16th. Henry and I are going to be there. We're going to be doing presentations. We're going to be talking about local market dynamics. There's going to be great networking. And we even have a few cool surprises planned as well. So if you live in one of those cities, you want to hang out with us. get into the BiggerPockets community in real life.

27:37Tony Robinson:Go to biggerpockets.com slash roadshow to learn more. And these events, they are free, but I should call out that you do have to RSVP because there are limits to the venues and they will sell out. So make sure to go to biggerpockets.com slash roadshow and reserve your spot today. You know, when I first started sharing my real estate journeys online, I didn't have a website. I had a spreadsheet, an Instagram account, and no idea how they'd ever connect. I remember thinking a real website was going to cost me thousands of dollars and take a developer weeks to build. So I kept putting it off. Then I found Hostinger.

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32:41Tony Robinson:Welcome back to the podcast. I'm here with Nate Weintraub and Tony Robinson talking about non long-term rental strategies. We're having a little bit of a debate. It's been very fun. These two have been very compelling as I'm not surprised, but I'm curious about how achievable these things are, Tony. Like, you know, do you think the average person listening to this can go out and buy a small motel? Or is this kind of like something you have to build up to? Or just tell me about how people could potentially get into it and who it's right for. I think, echoing what Nate said earlier, we bought our first one for a million bucks.

33:14And I guarantee there are people in this audience right now who have looked at other properties in that price point. But depending on what market you go to, you could definitely find something cheaper than that. You could find a motel or a hotel for half a million bucks for$600 ,000, which is the purchase price for a lot of single family homes that people are buying. So I don't think it's a matter of, am I capable? It's just, you have to choose markets that support your budget, that support your resources, that match with what it is you can deploy to go buy an asset. So can anyone who's listening do this?

33:47Absolutely, you just gotta find the right market.

33:49Tony Robinson:Okay, yeah, good advice. What about you, Nate? I'll tell you a little story real quick. A few weeks ago, I had a friend of mine who was talking about the new self-storage facility we bought. And he was like, man, man, I just wish I could get into that. And I was like, what do you mean? You can do it right now. I work like 50 to 60 hours a week. I have a marketing business, calicocontent.com. I'm working a fair amount. Like I don't have a ton of free time, but I've partnered up with two people who also work full time. One is a teacher. One is another marketing professional. And it's like, we're doing this in our spare time.

34:18Tony Robinson:I probably spend 30 minutes a month on the first self-storage facility that brought in$23 ,000 last year. The acquisition is a pain. You're getting wholesaler emails and you're always analyzing deals. But it's like self-storage really is the most boring, unsexy, but repeatable and financially freeing asset class, I think, for regular people in real estate. And if you like running a business, you like doing like treating customers well, like getting good reviews. I mean, this is very similar to Tony's too. Like we're running businesses. They're not just properties. Also, owning a bunch of rental properties is a business, whether you want to say it or not.

34:52Tony Robinson:It is. Absolutely. But it's a super doable, super repeatable strategy that any regular person with a W-2 can do. I mean, I bought the first facility for$350. I bought the second facility for$660. And there's 200 units combined between those two. It's like, those are house prices we're talking about. And the cash flow is great. And it's fun, man, because these owners, the mom-pop owners, they treat their old customers like dirt. They don't do anything. They never fix up the facility. They never respond to those phone calls. And you have the chance to make a service better for someone. And I really, really like that.

35:23Tony Robinson:Yeah, I totally buy that. Can you be honest, Nate, tell me like, what are the risks of self storage? The risk is you get addicted and then you eventually get super rich. I'd say the risks are this. You have to do serious market research. This is again, like a business and there may or may not be a bunch of other competitors in the market you're buying. You have to know there's more demand than supply. And that means calling other facilities secretly and checking if they're full, looking at their waiting lists online, like keeping track of this type of stuff. Because if you buy a facility, and I've seen people do this, like they're like, I bought a 200 unit facility in a 1000 person town.

35:57Tony Robinson:I'm like, Oh, that's great. 20 % of the people have to rent from you for you to like, make a profit like that doesn't make any sense. Risk is buying an oversupplied under demand market where the rents are falling or population is low and people are moving out. That's a super big risk. And I'd also say the other risk is that you this isn't really a risk. But it's like, if you buy one of these, it's running a business, someone has to be answering the phones, someone has to be responding to the emails, someone has to be taking care of the property. It's not a set and forget it is relatively passive, but it's definitely not passive income.

36:25Tony Robinson:You have to take care of it like a business. Yeah. So this, your, your toilet argument is falling apart here. Like you, I still don't want to deal with it. You can't convince me on toilets, Dave. This doesn't sound any more passive to me than hiring a property manager for a long-term rental. I'll give you the cashflow argument. That one I buy. But I don't know. I think hiring a property managers similar to what you're doing, you're still going to have to manage someone. And I also want to introduce one other idea here, at least, and I moved from the US to Europe for five years, I was sort of like forced to become a more passive investor.

37:00Tony Robinson:And it's, you know, why I now like about a third of my my portfolio and passive investments. That's the other thing that you could do. Like if you want to be a buy and hold investor, you don't want to be doing the toilets, You can either be private money. You could be a partner for someone who wants to be an operator. You can invest in syndications or funds like I do. So there are definitely ways to buy long-term rentals that aren't as time intensive as it can be if you buy highly distressed properties and are self-managing. Tony, what about you? Can you tell us a little bit about the risks in your approach?

37:37I think there's like the macro risk and then there's like the micro risks that are individual to each person, right? Like at a, at a macro level, when you're talking about buying an Airbnb or buying a small boutique hotel or motel, we're, we're talking about discretionary income, right? The people typically spend to, to go enjoy these assets that you own. And because of that, we are subject to where the economy is going and how much people want to spend on vacations and what that looks like. Now I will say even during like the depths of the recession, people were still going on vacation, right?

38:10Like it's not like vacation travel goes to zero even during a recession, but obviously people are tightening up their budgets and maybe spending a little bit less. So I think that's one piece is you got to recognize that there is some, some ebb and flow with just the macro. The other thing, and this isn't necessarily specific to like the entire economy, but more so to just like the short-term rental market is supply and demand also influences how much you can charge. We saw nationally supply levels increased pretty dramatically post-COVID, like an insane amount of increase year over year in the number of people who are listing their properties for rent on Airbnb.

38:46That growth has tapered off pretty tremendously going into the last like 12 months or so. So I think we're starting to see supply and demand stabilize. But I think that was a challenge for a lot of operators is that they underwrote on these like post-COVID numbers, not realizing that this kind of imbalance between supply and demand was going to pull those figures down. So I think those are the risks, right? You've got discretionary spending and you've got to keep a really, really close eye on supply versus demand in your specific market. The last thing that I'll add to you, Dave, is just on a personal level.

39:17I think a lot of people jumped into the Airbnb space hoping to strike gold. It was like the gold rush of the real estate investing industry. And much like the real gold rush, most people didn't make a lot of money. I think a lot of people jumped in underprepared, undereducated, buying bad deals. And you've got to ask yourself, do you actually have the skill set to be a good short-term rental operator? Can you put together the right design? Can you manage guest expectations the right way? Can you manage pricing the right way? Maintenance, both your long-term maintenance and those short-term issues that pop up.

39:55So just asking yourself personally, can I actually do a good job managing this type of asset.

40:01Tony Robinson:Yeah, that's a good way to put it. Well, last question. Do you think at any point in your career, Tony, you'll switch around? Would you ever go back to long-term rentals or try any strategies, self-storage or anything else? Absolutely. I know I've like earned this, you know, label of being the short-term rental guy. And it makes sense because we've been so heavy into that. But the backstory here, guys, is that I lost my W2 job in 2020. and one of the decisions that we made as we were figuring out what's what's next for us was okay what are we going to focus on because what i didn't want to do during that time of being freshly unemployed was dabble in a lot of different things and do each one to 50 of what it's actually capable of achieving so we made a very conscious choice of hey for the next five years we're just going to focus on this one asset class and we're going to try and get really really good at that before we start dabbling in other areas.

40:52And it's actually five years now, right? And me and my wife are having these conversations around, well, what do we do next? And I think more hotels are on the horizon, but we definitely want to try other things as well. I love the idea of co-living because I think you get the blend of both traditional, stable, long-term, but also kind of that element of like, hey, you've got people that you're catering to in a slightly higher way like you would with an Airbnb. I do love the idea of self-storage. We actually have a self-storage facility attached to our hotel. I didn't even mention that. Really?

41:23We do. He's doing both. You're doing the hybrid. It's over. Oh my God, you win. It doesn't make a ton of money, right? But we're kind of dipping our toes and we're learning some of that as well. So yeah, I definitely want to expand, but I think it'll be the same thing. Whatever I choose next, it'll be a five-year roadmap of saying, hey, let's go really deep on this strategy so we can get really, really good at it. And now I've got two strategies that we're super confident in.

41:46Tony Robinson:What about you, Nate? self-storage for life? As of right now, it's like the three points. There's also a part of the return I didn't mention before. The first facility we bought in 2022, we bought it for 350. It's now up$150 ,000 in equity. It's worth 500 ,000 just because we ran it well. For me right now, it's like the cashflow is great. The equity upside is great. And they're just fun to run. I don't like, this is a podcast. We're talking about money, but at some point you have to enjoy the things that you're investing in. And I legitimately enjoy self-storage. I enjoy running a business. I feel because I've talked to Tony before.

42:18Tony Robinson:I feel like he legitimately loves what he's doing and the assets he's investing in. It's just it's fun at some point. Listen, the goal for all of us is parking lots. No utilities, no structures, just asphalt. That's it. So thank you for bringing up the liking the business, too, because, yes, that is super important. And being passionate about what you're investing in is going to give you longevity and it's going to actually get you what you want. like financial freedom is sort of meaningless if you're miserable while you're doing it. It kind of defeats the point. I will just say last thing, Nate, to give you credit is right now, literally as we speak, my wife is meeting a mover, getting all of our stuff out of a self-storage facility.

42:59Tony Robinson:And I am so glad to stop paying the ridiculous cost, but I needed it. And I paid so much money for it. So I do understand why you make a lot of money, because man, when there is a need, you are willing to spend the money on it. Dave's a customer. Dave can't even talk. He's paying my energy. Thank you so much, Dave. Thank you for your service. Yeah, you are very welcome. And I am so glad to cut it off, even though I still have to keep paying them for the end of the lot, of course. All right. Well, thank you guys so much for being here. This was a lot of fun. I enjoyed it. And hopefully you all learned a little bit about the differences, different pros and cons and trade-offs between a couple of different strategies, whether that's short-term rentals, buying boutique hotels, self-storage, or any of the other things we got into today.

43:44Tony Robinson:Tony, thanks for being here. Yeah, thanks for having me, Dave and Nate. Great job defending self-storage, man. I'm thinking more about it myself now. Yes, thank you, Nate. You did very well on the other side of the camera here. Well, we might have to have you back just because you're comfortable giving me shit and that makes the podcast more fun. I still love you, Dave. I still love you. CalicoContent.com. All right, and thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you next time. Brussels clean up nicely at Sweetgreen. Maple glazed, roasted, and edges perfectly caramelized.

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