Practice One: Specialize…Don’t Diversify
The investment world tells us to diversify, don’t put all your eggs in one basket.
I guess that’s good advice if you are a passive investor. However, I am very leery of “investment advisors,” who are usually the ones telling you to diversify.
My research tells me index funds outperform 97% of the financial investment advisors in the US year after year. And the 3% that happen to outperform the S & P and/or the Nasdaq index funds in any given year, are usually different ones each year.
At least for me, I will not pay much attention to what most investment advisors tell me (most likely family of origin issues).
Note: Just my opinion above, and I am not telling anyone to do anything concerning using or not using “investment advisors.”
What I have discovered in my life, and with many of the people I work with, is that if you develop a formula that works in a real estate product type, like self storage, then double down, triple down, put all your eggs in that basket and repeat the process … over and over.
Wealth, if that is what you seek, is, in my experience, built slowly over time by finding your niche and then repeating it. It is a critical component of most wealth building.
Savings for retirement is usually the same way. Put a little aside every month, quarter, or year, then allow it to compound.
Slow and steady, but over and over.
Find a formula that works for you in self storage acquisitions, then rinse and repeat often.
Rural America
I know of oneself storage entrepreneur that focuses on small-town America.
Early on in that person’s career, he decided he didn’t want to compete with the big players in the self storage industry.
Even before kiosks and websites facilitated online move-ins, or “touchless move-in” became a term, this entrepreneur decided he was going to create small, manager-less self-storage facilities in small towns with no REITs or big players.
He usually built or sometimes purchased and rehabbed small, approximately 20,000 square foot facilities or so with fencing, a gate, and a phone. Customers would call a central office and get a code, pay by phone, or be sent an invoice. Their lease was mailed to them.
Maintenance people in trucks had routes, and each facility had someone come two or three times a week to clean up, get vacant units ready, and do lock inspections.
Today, this company owns and operates over 100 facilities.
I admire the founder because he found a formula, a way to get in self storage that worked for him and his goals then did it repeatedly.
The reality is no one or two faculties would drastically change his life or the life of the organization he was creating, but by double, tripling down, and with a specific formula and a specific product type, they have created something very powerful.
They don’t diversify; they do one thing and do it well.
Perhaps the diversity is they are in multiple states and not dependent on any single location’s economy.
Most recent Bootcamp
In the most recent QuickStart Self Storage Bootcamp I ran, we had someone who had gone through an earlier Bootcamp 13 months ago (from when I am writing this) and shared he and his team are doing their eleventh self storage transaction.
Just so you know, I have never done eleven deals in a year. Very impressed.
They created a formula for doing expansions and conversions. They have created a funding formula that works for them, a relationship with a third-party management company they like that frees them up to focus on the next deal, and a way to analyze both expansion and conversion opportunities that cross their desks.
They rinse and repeat. Eleven times in 13 months so far.
Although this person may have started using the formulas I was teaching, he quickly modified them and created his own. That was more a reflection of his personality and aligned more closely with his business strategy and goals.
But the real story here is that he didn’t go in many directions. They were looking for expansions and conversions in a specific part of the country.
In both examples, the storage entrepreneur’s energies were not scattered. They knew exactly what they were looking for and did it repeatedly each day.
They are specialists.
If you are getting into or growing your self storage business, I recommend you take on being a specialist.
Don’t diversity.
Create something that works, then do it as often and as many times as you want until you achieve what you are seeking.
Next week we will discuss the second habit I think is critical today for Self Storage Entrepreneurs To Develop, the idea of “Analyze…But Don’t Overanalyze!”
