Episode 85: From BRRRR to Metal Boxes — How Scott Meyers went from King of Making Mistakes to King of Self-Storage
THE PROFIT FIRST PODCAST
April 25, 2022
The self-storage King is on the show today!
Scott Meyers, also known as the nation’s leading expert in the self-storage business, is here to bring value and share his side of the story. He’s been the architect of several extremely successful real estate transactions. He is always ready to teach others about the business and help them correct their mistakes to achieve a higher level of success. In this episode, he’ll uncover the mystery behind that. Let’s find out how Scott implemented a process plan that made him run his business and leverage his way to the top!
[1:32] When did he first implement Profit First, and how was that journey?
[2:52] People who are passionate about their businesses have to reinvest
[5:02] Having a process and plan in place allows for making better decisions
[6:12] What are some of the benefits of implementing this system?
[10:39] How many storage units do he have, and how long has he been doing storage units?
[13:00] The hardest lesson that he’s learned in real estate?
[16:22] If you haven’t been on a personal journey of self-awareness, you don’t understand what it’s like to know your unique ability
[17:34] Talk to people about investing in self-storage
[19:44] Keep your ear to the ground and your eyes wide open
[3:10] “I am passionate about my business because I know that the leverage that it provides allows us to do more mission work and impact people’s lives.”
[8:50] “It’s also freeing from just a personal standpoint to have that cushion and everything in place, so we can have the mindset to serve.”
[15:36] “Getting an education, surrounding yourself with the right people allows you to move forward.”
The Self Storage Podcast- https://open.spotify.com/show/6l3jf0p0WT9jdEYZ90Q9kZ?si=71HgWYlaR2yj3nHXUg-tHA
Self Storage Investing Website: https://selfstorageinvesting.com/
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Getting education, surrounding yourself with the right people, whether that’s partners in education, mentors, whatever that looks like, to allow you to move forward instead of letting fear, paranoia, or what other people say or think about you keep you from starting to begin this.
Welcome to Profit First REI Podcast where real estate investors master financial management, eradicate entrepreneurial poverty, and learn to be profitable from day one. Now for your host, David Richter.
Hey everyone, welcome back to the Profit First REI Podcast. I’m your host David Richter with another special guest Scott Meyers. You may have heard of him. He is the sales storage investing king. He has a lot of units out there. He teaches a lot of people, has helped a lot of people. He has the Self Storage Investing Podcast. He’s a big giver as well, too. I had the pleasure of being on his podcast and just talking about where he is and what he’s done and mission trips he’s taken. He’s implemented Profit First, so he’s a big Profit First believer, too. So, I wanted to have Scott on here. I know you’re going to learn a lot from him today. So Scott, thanks for being on the podcast today.
David, good to be back together again and share some more time. How are you today?
Yeah, doing wonderful. Thanks for asking. Very excited to have you hear. I really enjoyed the last time we were together.
I did as well. I did as well. Likewise.
Awesome. Let’s dive right into it, the jugular right away. When did you first implement Profit First and how was that journey of implementing Profit First inside your businesses?
Yeah, it was first quarter of last year, first quarter of 2021, so big fan of Michael and the Pumpkin Plan is how I was introduced to him. Then it was really by a series of events that happened concurrently, I mean like one right after another. I heard him, Michael, on a podcast. I can’t remember whose it was and then shortly after that he came and spoke at one of the Masterminds that you and I are involved in. We had the opportunity, the pleasure, of being able to, at least I did. You had already known Michael and to be able to meet him and be able to learn from him in person. At that point it was just like, “All right, I recognize the signs when God tells me there’s an area of my business I need to focus on. There was never a better time.”
And so, bought his book, starting following the plan. I was extremely excited to share this, not only with my wife who’s our controller, but then also with our CPA and our bookkeeper. Once we began to put it in place, I can’t say it was tough and it was also at a time where my controller, who I just mentioned is my wife, also had to state it … We as entrepreneurs, and I hope it’s not just me, it’s other folks out there, but those of us that are passionate about our businesses, we just want to reinvest. Many times that is to our detriment. That’s what happens to many of us. We don’t spend lavishly. We just don’t. We have, as a matter of fact, a responsibility. We’re a socially responsible company that focuses on missions, so we don’t have fancy cars. We don’t have a big house, but I’m passionate about my business because I know that the leverage that that provides, which allows us to do more mission work and to impact more people’s lives.
We invest in self storage and teach people how to do it. I was just plowing everything back into the business. Then, if you do that too long, if there aren’t enough cash reserves or to cover either expenses or to pay yourself, or even to grow if there’s an opportunity that comes up and you don’t have the availability to perhaps dip into that fund just a little bit to pay it back. If there’s a way to be able to do that, the vehicle and a time horizon, then your dead in the water on all those fronts. It’s the same as if you weren’t doing well in your business.
Having that discipline being put in place, I was excited about it until we began to implement. Then when the clamps were put on me as the owner of the business, it was difficult. I’ll be honest with you, completely necessary, the tough love that was required of my staff and those in my inner circle and at the executive level to put the clamps on me. It’s been key. It was much needed and now we are at the place, I am one of the examples that Michael uses where I don’t see it and I don’t know. It’s probably best because at times when I want to do something, or if we need to do something, I don’t even ask anymore because I already know what the answer is and we’ve already committed to that. I’ve been given my marching orders and my parameters, and so it has now become easier because I’m basically ignorant of what the money is and where it goes.
For me, maybe not for everybody, that’s been best. I have to ask for permission. I literally say, “Here’s an expense. Here’s an opportunity, whatever that looks like, do we have the ability to do this?” I basically plead my case, build the business plan for this expenditure that I want to do, and having that process and the plan in place has allowed us to make a better decision and to keep me from just going off and doing things, which was part of the issue where the problems that we had in the past.
So operating from this standpoint right now, it’s kind of freeing to be honest with you, David, if that makes any sense.
Yeah, and that makes a whole of sense, especially for me. I understand that because we’re working with lots of investors, which made me even think while you were saying that, you were like, “I hope I’m not in the same boat. I hope I’m not the only one out here.” It’s like, “Yeah, a lot of people were in that situation.” Just had a call today literally with an investor not paying himself consistently, feeling in the rat race, just spinning his wheels. I think a lot of us get there if we don’t put these in place.
Like you said, it was difficult. It was a new discipline and new habit to instill. At the beginning it feels not freeing, but now I love what you said, now you feel free. Now you’ve got the money. You’ve got to spend to give to do the thing that you love to do. I think it’s on the other side. I love hearing people’s stories.
What’s one of the things through this system that you’ve been able to do or to go on, and I know you go on mission trips and whatnot. What are some the benefits that you’ve reaped from implementing this system?
That was one of the pieces that was a constant. It always has been a constant. When we made this commitment to our mission work it was to take 10% of our profits, so a little different. On the personal level, a tide is 10% off the top. We give that back to God by way of our church before we pay ourselves. That one is easy to do as well.
With the business, if you pay 10% off the top, there’s businesses out there that don’t have that much margin. They would go out of business. On the corporate side, on a quarterly basis we take 10% of our profits. We look at the net, net, net and then take 10% of that and funnel it over into National Christian Foundation. That is our giving arm. Then when we have enough money, or when we have. Depending on how well we have done that quarter, will dictate. We do two mission trips per year. We do house builds. That will determine how many houses we build, essentially. And so, God has blessed that and the more disciplined we get in that area the more houses we’ve been able to build. It started out, we were doing one a year and then we were doing two trips, one a year, and now we’re doing two trips, building three houses each time. So we’re doing six houses a year, roughly five to six.
How that effected? It’s kind of hard to measure to be honest with you, David, but I think the more that you get disciplined, and this is really kind of coming from a spiritual level as well. I think the more that you get disciplined and understand the numbers in your own business, I think the more your business will be blessed. If you’re giving and you have an open hand in your business, I haven’t known of any entrepreneur who has an open hand in their business that allows money to flow through it for the greater good of humanity in the world, that they haven’t prospered as a result of putting something like that in place and in process.
For us, it’s having that freedom, and even before, just knowing that even though there’s 10% net, net profit is setting aside for the mission work, we still didn’t have the Profit First piece in place. We didn’t have 100% confidence and the comfort level that, “Okay, we’re going to build three houses this quarter, but if we haven’t done a good enough job preparing for next quarter or the forecast saying next quarter, we may have funneled some money onto the mission field that we should have kept for our business itself.” That has never happened. Fortunately, that has never happened. There’s been months and quarters that were tight, but now there’s just completely no worry about that.
The minute that we head down the jet bridge to Mexico with our group, there’s absolutely no concern about anything in the business right now. If anything happens in five days while I’m gone, somebody can write a check or they’ll wait until I can come back and we just go and we’re able to be able to do that. It is also freeing from just a personal standpoint to have that cushion and everything in place so that we can go serve and really be in the mindset to be able to serve as well.
That’s awesome I love what you said there right at the very end. The mindset to go and serve, too. It’s one thing if you can scrape the money together to go on a missions trip and then you’re all worried about the stuff that’s happening back where you’ve come from. It’s like that’s where you can’t be fully present with why you even went to a place like that. That’s a great point, too, that not giving yourself that mindset and that freedom and that space to be able to really relish in whatever you’re doing, if it’s a missions trip or if you take that money, like your an entrepreneur, and you go out and do a vacation with your family. You want to be present with them. It’s like that freeing mindset.
Yeah, and if I could just expand on that for a second, that is the leverage point in our business, is that we take 20 to 25 people per house on these trips and we pay for it. We open them up to the mission feel and the mission experience. Like your kids, you can take them to Disney World, but if your the parent that’s sitting on the park bench not riding the rides because you’re still doing emails and taking care of fires in your business, your kids see that.
The folks that we take on these mission trips, if they see that I’m not present or I’m handling fires or whatever, there’s just like, “At what expense is he doing this? Is his heart really in this?” It equally is important. Just want to make that point.
Oh, that is so good. It really is good. There’s a big lesson there for everyone because it’s not even on a trip. What about in your business? What if you’re worried about those fires all the time and can’t work on the higher level of your business? Just going to get stuck in that rat race and that’s what I love. I think the theme of this one, the freedom, that mind freedom, that financial freedom. That’s really that frame of mind space for what you can do. That’s incredible.
Why don’t you tell the listeners, too, just going away for profit just a little bit, but how many storage units do you have and how long have you been doing storage units?
Yeah, we started in real estate business in ’93 and bought a bunch of single family rental house following the Carlton Sheets method, for those that are familiar with him. Buying and rehabbing and refinancing and then renting them. So, the BRRR Method before it was called the BRRR Method. We had about 75 houses and then didn’t have the cash flow and the freedom we wanted or expected, and so we got into apartments hoping to get that economy to scale and really be the springboard to having us achieve our goals of having financial freedom and time freedom to do what we wanted. For us all it did was just kind of compound the problems.
Even if we had management companies in place, there’s just a lot to manage when you have people living in rental spaces and carpeted drywall and heating and air and all that versus self storage, which is a metal box on a concrete slab with nobody living in it. Literally 90% of all our stress and the things that we did on a regular basis and the babysitting, and the issues were just gone. We eliminated the hassles of tenants and toilets and trash and all the employees that were involved in that.
Along about 2005, we sold all our houses and apartments and got into self storage acquiring facilities and then we got into developing from the ground up and then conversions. Taking industrial buildings and all types of grocery stores, old grocery stores and big boxes, and converting it into self storage. As we grew our education business and platform, the more opportunities came and landed on our plate. I speak for the trade shows and I write articles for Forbes Magazine and the trade show associations. They bring a lot of opportunities our way.
So really, in the past four or five years our business has really exploded on that end. By way of mainly development, but also acquisitions and joint ventures, we’re up to now two point five million square feet of storage nationwide. We’re in about 15 states and I think we’ve surpassed, I’m not exactly sure, but I think we’ve surpassed 15,000 doors nationwide as well, and do a lot of that through syndication in our fund in which we raise on private equity from the folks that we’ve met along the way as well.
Okay. That’s incredible, because I want to make sure people knew where you’re coming from and that you are definitely the self storage king here and have a lot of square feet and do a lot of great stuff. Now that they kind of have that background, what would you say is the hardest lesson you’ve learned in real estate up to this point with all your experience and the different types that you’ve done in the past?
Yeah well, I appreciate you recognizing me as the nation’s expert or the king of self storage, but what I’m the king at is making mistakes in relationship along the way. I’d say the king of learning from them. There’s been a lot of lessons learned along the way. Hard lessons are I think, early on, doing it too much and not paying somebody 10 to 15 bucks an hour to do some of the rehabs and some of the work that we had done. Too many people are stuck feeling like they can’t and they have to do all the work themselves. While you’re doing, somebody else is eating your lunch because they found the deals because they were doing marketing and the things they should have been doing. That was lesson number one.
Second was over leveraging. Even though our portfolio was at, maybe, 75% LTB, I think in this game whether the economic cycles from a recession to an inflationary period and everything in between, I think you really need to keep an eye on setting those budgets in place, Profit First being one of them. Obviously at the core, but also just managing that debt level and that debt ratio. That is what caught people off guard, is we lived through the last recession.
Third lesson is partnering. I know you asked for one, but early on I had … doing well on my own and just loved doing things on my own. That’s just my nature, kind of the way I grew up, but then I got into a partnership and it didn’t go so well. It was one of my first and so I just swore off partners and then many years later meeting other folks that were doing successful partnerships by way of syndication and joint ventures and just bringing people in and having solid set of legal documents, operating agreements, that lined out the roles and responsibilities of the partners and what they did. If anybody stepped out of line or out of their lane, it was okay for the other partners to say, “Hey, get back in your lane and here’s your roles and responsibilities. Here’s mine. Let’s keep on going down the path.” I probably could have grown a little bit larger and sooner, and be better suited to bring in people to fill in my many blind spots had I just been open to partners along the way and not just let this one bad experience taint that.
I think those are the areas primarily, and maybe even going back to the very beginning. We teach and we train a lot of people that have come to our self storage academies and our organization. I think fear stops more would-be successful entrepreneurs and investors than all factors combined. So, before people get out of the gate, they’re unsure of themselves because they don’t know what they don’t know or they’ve got a circle of folks that really don’t want them to succeed because it makes them feel worse about themselves.
And so, I think getting education, surrounding yourself with the right people, whether that’s partners and education, mentors, whatever that looks like, to allow you to move forward instead of letting fear, paranoia, or what other people say or think about you keep you from starting to begin with. There’s at least four. I guess I’ll stop there, David.
No, those are great. That’s incredible. Lots of great lessons there. Lots of things that the listeners can take away from. You’ve grown a good size team. You have a lot of units. You’ve got a lot of experience in this area. What would you say right now in your business is the highest and best use of your time, that you get the highest return from personally?
I think that is kind of the question within itself, within the question, David. That is if you haven’t been, and I’m speaking to everyone out there, if you haven’t been on a personal journey of self awareness, to really understand what that looks like to know what is your unique ability, then it starts there. Many, many years ago I went through Dan Sullivan’s program Strategic Coach and just read his book on unique ability and finding out what that is. Everybody knows what it is. It’s what fires you up. What do you like best about your business in the business that you’re doing? If you can figure out a way to make 80% of your time in your business doing that then most likely you’re going to succeed, and then finding the people around you to delegate the rest, the things that you’re not good at, the things that you’ve just been putting off doing or the things that you just don’t know how to do that you can hire somebody to do better than you.
It’s really finding that sweet spot and it’s roughly an 80/20 ratio of if you know what your unique ability is to be able to grow and drive your business, then finding a way to create an organizational structure that allows you to do that 80% of the time, knowing that 20% of the time is the stuff that you just aren’t good at and you have to do and you have to have meetings, and you have to train your people to do those types of things. That’s just inevitable. I think it’s that.
For me, that is, believe it or not, just talking to people investing in self storage, whether it be students, but mostly in our syndications are passive investors, the folks, the individuals, the funds, the hedge funds, other folks that have significant amounts of capital to tell our story and share what we’re doing. They catch the excitement and why we’re so passionate about self storage. If you can get passionate about metal boxes on concrete slabs, but passionate about the industry and the business model and why it works so well, and why we’re the team to work with because we’ve been at it for awhile and our success and the team that we’ve built, and just being able to share that. I think that’s my unique ability. That’s our superpower in the business, so if I could do that all day long I’d never get tired of it. That is just my sweet spot and where I’d like to spend all my time.
Awesome. I love that, just going into you have to have kind of a personal self discovery there. You might like real estate investing, but what’s your super power in the business and what do you like to do? That was really good.
Then, just a few, couple last questions here. What last parting advice would you give to a real estate investors listening to this podcast and any other advice that you want to leave them here?
Yeah. Well, go back and listen to this again, everything that I just mentioned. We’ve been at this awhile. We’ve been at this since ’93 heading into the third recession. I think if you stick to those basics that I give you, that’s one of them.
But as we head into this next economic cycle, there’s a lot of people that have had a lot of success and there’s a whole lot of folks that are proportion to have a lot of success. You see them everyone on TikTok, on Facebook, and everywhere else. Many of these successful folks, and they’re also the gurus, the educators if you will, that have had the wind in their sale of economy like we’ve never seen before and exiting properties and projects at record profits. We’re going to head into a recession. We’re heading into an inflationary period this year. Feds already stated three rate increases. We’ll see a slow down. We’ll see some evaluations in real estate go down and the market’s going to change and shift.
If you’ve got your head in the sand or you feel that you’re better than everybody else and you’re going to whether this better than anybody else, the tide goes up and down and all ships go up and down with it. Keep your ear to the ground. Keep your eyes open. Watch what the economists are saying. Look at the news. Look at all the data and the stats on what’s going on and the particular asset class in real estate that you are involved in and what your business model is and talk to those other folks that are doing the same business model, especially those that have been through at least the last recession, if not two others. Then ask them what they’re doing. Follow them. Reverse engineer what they’re doing. Look at what they’re doing. Talk to them. Ask what they’re doing if you have access to them and do likewise. You’re not immune to the economic cycles because it effects real estate no matter how good you are and no matter how good you think you are and the successes you’ve had in the past several years.
Again, and a little bit of self awareness, you need to be aware of how much of that was attributable to your own personal and best business practices versus an economy that’s done very well. Then prepare accordingly. Have cash. Don’t get over leveraged because through all this, for us personally, we’re selling a lot of facilities off at the top of the market right now. We’re heading into this year that is going to produce a downturn. There’s going to be people that are going to have to get out of their facilities because they can’t refinance at the new rates and the new evaluations and this environment. We want to have the cash and the lender relationships available to buy those properties when other folks are exiting and they can’t make a profit. We want to be that solution and this is going to be the biggest land grab probably in our career in terms of sheer numbers of units and projects this year and next and in this down cycle, is going to be the retirement maker for our organization and those that come along with us.
How’s that? So, I think it’s just being hyper aware of what’s going on around you is the best advice that I can have right now.
Awesome. I love that. That’s incredible. You’ve shared a ton of great things. You gave us four lessons. You gave us what Profit First has done for you. You just gave us that great advice there and a lot around the freedom and the mindset. Now, how can the listeners give back to you? How can they give you some value back? Because there’s been a ton of value here. I know you have selfstorageinvesting.com. You’ve got the courses that you teach and you’re helping people get out of their rat race. So, how can people connect with you?
Yeah, selfstorageinvesting.com is for all things self storage for those that are interested in the business both actively. If you want to learn about the business and how to invest on your own as well as passively through our syndications, that is the place to go do it. As far as giving back to me, we’re in that legacy building phase right now where we just love to see people go out there and implement our best business practices. We share our best business practices and then they go out and implement that and put it in their own, that’s fantastic. Then you layer on top of that, Profit First. Just as educators, the educators and us, when we see people take that information and go out and do that, that’s why we continue to do what we do. Our business is our mission field.
On a larger scale David, how could people give back to me? No matter what you’re doing out there … We’re in a different time right now, and not to get all woo woo and fluffy and foofy, but we all need to get back to a place where we’re just respecting each other. There is in business, and at a personal level, and just to me, personally, just kind of shocking the place that we’ve come as a society and how in business, in real estate, that we just don’t give people their due, their time, the attention and operate from a manner of integrity and also just openness and helping each other out. So, getting back to the place where everybody’s helping out, creating win win situations in business, and just taking time to look at the people around you. We haven’t done that in the past couple of years and there’s just been too much of an excuse not to.
I would like to see, and into the way that we have been treating each other over the past couple of years in light of the pandemic and the lockdown and everybody behind masks, that we just get to a place where we need to stop being negative and stop throwing bombs out on social media and hiding behind a screen in doing so and get back to the place where we’re going to make an intentional effort to get back to loving our brothers and sisters and treating everybody in the way that they deserve to be treated, period.
Preach and stay there for awhile. That was good stuff. I wish, yeah … Could go on and on about that all day. That was really, really good. You can connect with Scott at selfstorageinvesting.com for all his stuff, and then please go out there, just be nice to someone. Don’t throw your issues out on Facebook or whatnot. Go out there and see how you can help someone. That’s how Scott has gotten to where he is. He’s helped a ton of people with their storage, with getting their storage set up like in different areas. So, lots of good stuff here. Thank you so much for being on today, Scott. It was an honor to have you.
Oh, my pleasure David. Always a pleasure and looking forward to seeing you again soon.
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Thanks again for joining us for another episode on the Profit First REI Podcast. See you next episode.