Looking from the outside in, finding money to buy self-storage properties can be a confusing and daunting process, particularly if you aren’t keen to pursue conventional financing. When I raise capital for my own deals, I’m looking for investors with whom I can collaborate, not banks from which I can borrow. Though there are many ways to find money, one of the most creative and modern is to hit the virtual “pavement.”
There aren’t many small, independent self-storage operators who take this approach, but it’s certainly a viable option. I’ve done more than $20 million in real estate transactions in the last 10 years, and I haven’t put so much as a dime of my own money into most of them. Let me share how I leverage a virtual strategy to bring in other people’s money for acquisitions.
Getting Started
There isn’t a single investor out there who’ll lend money to you or partner with you unless you look like you know what you’re doing. It doesn’t just rest on your track record, either; it’s also about how you present yourself and your investments.
Once you find a self-storage deal and are under contract, start by creating a folder on Google Drive (or some other cloud-based platform) that includes all the information you’d want to have before making a decision. You can use these items to pitch the property to potential investors. Having these materials at the ready makes it easier to cover all the varying aspects of the deal, and they’re now easy to share.
These are the items I suggest you include:
- Pictures of the property
- A video of you driving or walking around the entire property
- A map of the boundaries
- Transaction analysis including the deal’s numbers
- All owner-provided documents such as unit mix, valuation, rent roll, competitive analysis, balance sheet, profit-and-loss statements, etc.
- An executive summary—essentially an investor’s presentation that includes a market overview and explains the facility’s story
Pitching to Prospects
Once you put all the above materials into your online folder and are ready to pitch your deal, it’s time to plan a virtual meeting with potential investors, either in a group setting or through individual sessions. Whom do you invite? Send an email or letter to everyone who owns a self-storage facility in the same state as your target property. Explain that you’re selling an in-state facility and will be hosting a virtual pitch for anyone interested in buying. Include the meeting date, time and link.
During the call, go over the information you gathered on the deal. Review every aspect, especially the numbers. Then let everyone know you’re open to selling the asset or partnering on the deal.
This is one of the key ways I build my private-money list. Once people have signed up for one of my virtual meetings, I add those contacts to my ongoing email-nurture campaign. We’ll discuss this more in a moment, but once per month, I email my list of potential buyers and investors to let them know what I’m up to in regard to self-storage investments. I’ve used this method to meet many current owners who could become buyers or partners.
Educating Investors
Another key step to raising capital for self-storage deals is to create a website that can serve as a hub for building your credibility. Whenever I talk to potential lenders and investors, I always point them to my website, so they can see what I’m doing in the industry.
If you’re an existing owner, you can do this simply by adding an investor page to your facility or business website. The goal of this page is to summarize the facilities you own and any investing opportunities you have on offer, but also to inform visitors about the advantages of leveraging private money. Per the Securities and Exchange Commission (SEC), you aren’t allowed to ask strangers for money or guarantee any type of returns; however, you can educate them about what you do and the benefits of private lending.
Here are some items to cover:
- Your investing philosophy
- Minimum investment requirement
- Explanation of how you structure your deals, including expected length of terms
- An overview of private lending and its benefits
- How IRAs and pension plans can be used to make real estate loans and the advantages to doing so
- Lender recourse in the event of non-payment
- Expected documentation
- Legal disclaimer
In addition, I include a form that allows interested parties to join my email list. The opt-in function is important since the SEC sets requirements on touchpoints that must be achieved before you can ask someone for money. This is a valuable way to legitimately add people to your sales funnel.
Once someone opts in, I use my monthly emails to nurture them. The first contact is a free presentation in which I go over what private lending is and its benefits. Instead of pitching to them, I tell my self-storage investing story and discuss how I find, fund and run my facilities. I also include case studies that detail some of my previous deals.
I’ve used this system to raise millions of dollars. Using virtual platforms and your website to build credibility is one of the easiest ways to find people who want to lend you money or partner in your investment activities. Surprisingly, though, most people don’t take advantage of how easy this is to set up.
In summary, use your cloud-based files to stay organized when pitching your self-storage deals, and leverage virtual-meeting software (for example, Zoom) to formally introduce yourself and meet with interested parties about the properties you’re actively buying. Use email marketing to nurture prospects and lure potential buyers, investors, lenders and partners. Add an investor page on your website to build credibility and educate visitors about private lending.
I meet with prospective self-storage investors online almost every week because I’ve taken the time to set up these systems and put them into action. So can you!
Stacy Rossetti has more than 10 years of residential and self-storage real estate experience, including acquisitions, construction, financing and property management. She’s owner of the online education and networking platform REI USA, group-coaching mentorship StorageNerds, and investment company Self-Storage Fund of America LLC. She and her husband, Pete, own 12 facilities in Florida and Georgia. To reach her, email [email protected]; visit www.stacyrossetti.com.