RG 297 – Self-Storage: A Disruptor Asset Class with Ryan Gibson

Sitting down with us today in the Intelligent Investor Real Estate Conference is a brand new guest to the show—Ryan Gibson of the Spartan Investment Group! Join us on this live interview where he shares how he built his self-storage business from the ground up.

A little bit more about Ryan: he is the CIO of the Spartan Investment Group, a fast-growing investment firm that focuses on commercial real estate investments. He has extensive experience in many aspects of real estate, including self-storage, finance, sales, marketing, and investor relations. All that said, we’re very happy to have Ryan share his knowledge with us today.

Interested in becoming an Investor with Reed? Click here to join his Investor email list.

In this uncut episode, Ryan walks us through the particulars of the self-storage business, including spatial requirements, market-based demand, and pricing, among many others. Of course, Ryan also tells us all about the growth of Spartan Investment Group; their scaling strategies; their culture; their structure, and so much more.

Ryan lays down some sound advice on how to scale your business in the best way possible, so don’t miss out! Tap that ‘Play’ button now and learn all about self-storage, business scaling, the Spartan Investment Group, and more.

Key Takeaways

• Having your processes down from the beginning is one of the most important keys to success.

• Self-storage is based on life events; it’s a disruptor asset class.

• Invest in your values. It will make it easier for you to find people that fit well into your culture.

• Most of the time, the right question to ask is “who?” not “how?.

LINKS
spartan-investors.com/
www.linkedin.com/in/ryan-gibson-21784b5/

Be Bold, Be Brave and Go Give Life a Crack!

Remember to join my Investor Database for the latest Investment Offerings!

Reed Goossens (00:00):

Good day. Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the us worth over half a billion dollars. And in that time, my passive investors have received fantastic double digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to Reedgoossens.com to find out more that’s Reedgoossens.com. Now back into the show,

Ryan Gibson (00:40):

Self storage is based on life events. So age relocation, downsizing, putting all your stuff and hitting the road in an RV death in the family, expanding your family, job relocation, et cetera. It’s a disruptor asset class. It’s not just because Americans have too much stuff. Americans have too much stuff for sure, but it’s not just us, that it is the world happens. And when there’s bad things in the world that happen, like COVID, people are going to use self storage more because there’s more change in their life.

Speaker 3 (01:24):

Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market, join Reed as he interviews go-geters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (01:45):

Good day. Good day, ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host Reed Goossens good as always Abby with us on the show. Now I’m glad that you’ve all tuned to learn from my incredible guests and each and every one of them are the cream are the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created their businesses here in the US, how they’ve created financial freedom, massive amounts of cash, and ultimately created extraordinary lives for themselves and their families. Life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.

Reed Goossens (02:31):

If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. If you do like to show the easiest way to give back is to give us a review on iTunes and you can follow me on Facebook and Twitter by searching at Reid goons. You can find the show, every you podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to Reedgoossens.com, click on the video link, and it will take you to the video recordings of these podcasts, where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me, let’s get cracking and into today’s show. Welcome to investing in the US. My name is Reed Goossens and we’re coming to you live from I, I R E C the intelligent investor real estate conference here in Manhattan beach, California. And today I am sitting down with Ryan, Ryan, welcome to the show. I haven’t seen you in, I haven’t seen you in a little while, but you haven’t not actually been on investing in the US podcast. So no, I haven’t yet. So

Ryan Gibson (03:38):

Welcome. Thank you. Thank you, re appreciate you having me

Reed Goossens (03:40):

Mate. We’ve, uh, we’ve not, I’ve known Ryan for a little bit of time now here’s with Spartan investments, they are self storage operation. Uh, we’re gonna talk a lot about how they’ve scaled from nothing over the last couple of years and what they’re going to be doing coming here in 2022. But Ryan, for those people who don’t know who you are, maybe give us a bit of a background on where you’ve come from, how you got into the, a real estate spice and, and, and you know, what, what you sort of have built to this point.

Ryan Gibson (04:03):

We started as a residential developer and I have a previous background as an airline pilot. And so worked in, lived in DC for, uh, a number of years and met my business partner there. And we started in scaled Spartan investment group, focusing on development as a or competency. And eventually we picked an asset class, uh, which is storage, uh, that we could scale our business from. And, uh, that’s really been a nice asset to be in.

Reed Goossens (04:29):

And when you say development, what were you doing in that space? Because I also was in develop, a structural engineer, went to, oh, nice. Went to, went to work for a developer here in Los Angeles. But yeah. What was your background in, in, in, in the working in the DC area?

Ryan Gibson (04:43):

Scott, my business partner had some background in building houses and some in development, uh, but really we just dove in and we started building houses from the ground up. We did some land entitlement deals and just sort of worked our way through the process, uh, and got into condo development where we would take a townhouse and converted into multiple condos, etcetera. Uh, but really, you know, when we started thinking about storage, you know, we’ve gone on to develop thousands and thousands of units of storage. And we focus now on buying existing self storage and then adding on to those units, but we also do ground up development. So when you ask, uh, kind of our, our background and experience has been to surround ourselves with people like you who have a structural engineering background who are a civil engineer, who are an architect. And we assembled a professional team of, you know, trades to come together to help us design the project in a way that conforms to the underwriting and the best, highest in use to build the, the, the best, most profitable storage facility we can build.

Reed Goossens (05:45):

And I’ve said a little bit, a few times on this show for those people who have listened for many, many years, I always think of investments like the food triangle. Right. So yeah. Think of the good foods on the bottom, the, the, and then as you go up the stack, you know, development being at the peak being the highest risk. Um, but it’s also a part of the portfolio, but as a good foundation, you always wanna be putting in cash flowing assets. So sure. Having that background in, in, in development, I, and knowing your personal story, obviously your development is, is just one arm of what you do. Right, right. But having that good foundation of cash flowing assets or buying existing assets, talk to me a little bit about that, because that seems to be where you’ve really scaled. Right. That’s where a lot of groups, including myself, we’ve been able to go out and build a company quickly to then go and do cool sexy stuff. Right. Like those, like the construction at the top, which is high risk takes longer time that doesn’t yield. You know, it yields a lot of money, but just, it’s not cash flowing from day one. So talk to me a little bit about the, the existing

Ryan Gibson (06:40):

Blind. You, that’s interesting you say that because I feel like we, we ate the dessert before the, the main.

Reed Goossens (06:45):

Food groups. Right,

Ryan Gibson (06:45):

Right, right. Uh, we started with development and then got into cashflow.

Reed Goossens (06:49):

Got it. Okay.

Ryan Gibson (06:50):

So, you know, it’s tough. I mean, you know, for a new developer, who’s thinking about building a new storage or holding anything from the ground up, you’ve gotta have the cash and resources available and what a lot of people don’t think about it. And you, we know this in the syndication space is you’ve gotta fee that you’re, you’ve gotta charge a developer fee for that project. Yep. Or you’re gonna end up working at Starbucks on the weekends.

Reed Goossens (07:12):

Yeah. Cause it’s so capital it’s. So labor intensive, you have to have a payroll, correct. Very quickly yes. To deal with the cities, to deal with the GCs, to deal with entitlements and that’s before you even put a shovel in the ground. Correct. And that can take years. Yes. Right. So you’re only one person. And I, I just know from experience, I was employed in a former life as an entitlement person. Right. I would work for the developer to go running around to the city, hassling them to say, Hey, come on, let’s get the, this project going,

Ryan Gibson (07:39):

Hey, you know, we’re hiring for that. Yeah,

Reed Goossens (07:40):

Yeah, yeah, yeah. Right. Right. Yeah,

Ryan Gibson (07:41):

Exactly. Exactly.

Reed Goossens (07:43):

Here’s your W2 back. Yeah. No, thank you. No, thank you. Um,

Ryan Gibson (07:46):

We’ll put you into some deal. Yeah.

Reed Goossens (07:47):

Yeah. So then talk to me about that. Transition into the we’ll call it the foundational food group, uh, because that, I think that is where people and they want get into your scaling and what you’ve built today. Sure.

Ryan Gibson (07:59):

Getting into the cash flowing assets has been very helpful to producing monthly reoccurring revenue for your business so that you can continue to scale and hire. And, you know, it’s very difficult to start with ground up development, to do that again, charge the fees, make sure that you have some kind of reoccurring revenue so that you can fuel your company to be successful. I always, when I look at somebody who’s doing ground up development, I always make sure that that sponsor is charging fees. Cause I want to know that that person’s paying attention has the resources to pay attention to that project. So our pivot to cash flowing assets came when we met Ben laps. Got it. Ben had a strong financial background, really understood, uh, cash flowing businesses, uh, kind of more M and a merges and acquisitions. That’s kind of what we’re doing, right.

Ryan Gibson (08:47):

We’re buying a self-storage business, we’re taking it over, you know, we’re bringing it into our portfolio. And I think that transition really comes with, uh, the requirement to have a strong financial background. You’ve gotta have a very strong finance team. You’ve gotta have great CPAs, great accountants, great, uh, you know, cost study companies, you know, and you’ve gotta have a good year end process for your taxes. And, you know, are you sending out monthly distribution for that? Because if you’re getting into cash flowing assets, investors are gonna expect some kind of a frequency of distributions to be interested in our cash flowing deal versus somebody else’s, you know, due to your in investments, quarterly or distributions quarterly or monthly. And I think having those processes down really helps, um, you know, get, get into that base and be successful at it.

Reed Goossens (09:36):

I’m gonna pivot it back to, um, the self storage niche and Jen from a high level, just, just for the podcast, just for the listeners out there, give me a 32nd to a minute pitch of what you are doing and why self storage is a thing in the United States. I know we spoke about it yesterday, where it first came from. Yeah. But in a way it’s come to, and, and I wanna get back to the scaling of your business cause that’s really important. And, and, and part of what I love talking about, but let’s just for the listeners. Talk about why invest in self storage,

Ryan Gibson (10:07):

Because self storage is based on life events. So age relocation, downsizing, putting all your stuff and hitting the road in an RV death in the family, expanding your family, job relocation, etcetera. It’s a disruptor asset class. It’s not just because Americans have too much stuff. Americans have too much stuff for sure, but it’s not just that it is the world happens. And when there’s bad things in the world that happen, like COVID, people are going to use self storage more because there’s more change in their life. My example that I give is I don’t like self storage. I don’t like using self storage. I, I mean, I don’t mind it, but I use self storage right now because I have a growing family I’m renovating and expanding my house and I needed to clear out my belongings and put them into self storage. And I thought it’d only be a three, three or four months, but like any development, um, there’s always mission creep.

Ryan Gibson (11:02):

And so now my stuff’s been there for like six months. Uh, but you know, there, people are always going to use storages and businesses use storage. So probably 30% of our customers are furniture, staging companies, contractors, little league teams, you know, know chamber of commerce, whatever it might be. People need self storage, not just for stuff, but they need it for business use. There’s a lot of HOAs and covenant restrictions now on new home developments. So you can’t put your utility truck in your driveway anymore. You gotta put it in a storage facility. Interesting. So I think it’s, um, it does really well when the economy is booming and people will have a lot of things. It does really well when the economy is to be being disrupted. And that’s why I think if you look over the FA the last four dips in GDP, selfstorage occupancy has been perfectly consistent. Hasn’t dropped, hasn’t followed GDP at all. It’s completely uncorrelated asset.

Reed Goossens (11:55):

Let’s talk a little bit about the investment side of it and how, what makes a good selfstorage. You and I were speaking yesterday about the correlation of the square footage availability in a sort of 1, 2, 3, 4 mile radius. And, and maybe talk a little bit about where you are investing around the country. Like, are you invest in Los Angeles or are you investing in secondary and tertiary markets?

Ryan Gibson (12:15):

Right? So we stay in the tertiary and secondary markets, because if you’re going into the primary markets, you’re typically gonna run into saturation problems. There’s overbuilding a lot of competition it’s expensive. And if you get past all that, you’re gonna be to head with a re public storage, extra space, life storage, whatever it is, and they’re gonna be better capitalized than you. And they’re gonna, they’re gonna basically eat your lunch. So as a smaller operator, you know, even with our size, with a half a billion under management, you know, we don’t like competing with those and you might just say, well, okay, well, why don’t you just hire that property management company to run your business? But we all know that property management companies is just an acquisition scheme. They control your facility and that they control the value. Right.

Reed Goossens (13:03):

And, and just say, I’m just gonna jump in. Cause for those people listening, what do you mean by that? Because the, the majority in the multifamily space, we go out and hire a third party property manager. Right? Sure. In what you are telling me yesterday was that self storage. If you went and out out and hire a third party party, property manager, it nearly sounds like predatory lending that they’re sort of yeah. They, they, it, it sounds good. Great. You’re gonna ma you’re gonna manage my asset for me, but actually tell the example that you were talking about.

Ryan Gibson (13:30):

Yeah. So, you know, and I’m not talking about, you know, smaller property management companies and, and, you know, and the kind of the one off stuff, there’s definitely property management companies out there that are well intentioned. But what we saw through the pandemic, a very large self storage company, I won’t name ’em by name, uh, you know, cut their rates by 50% and artificially lower the revenue on a lot of these properties during the pandemic where we had rising rates, the highest occupancy of the exper the industry has ever experienced and self, self storage was extremely successful. Why were they cutting rates at all of their stores? And the owners had no control over it. So we saw a lot of those facilities, those flag facilities go up for sale. And then we bid on even one of them. And at the last second that property management company came in and made an offer on the property because they knew that the T 12 had been beat up for so long.

Reed Goossens (14:24):

Because I controlled

Ryan Gibson (14:25):

Them cuz they control it. Wow. So that, that they could come in and immediately add value through having the, the, the rate increases. At the end of the day, we do our own property management. We have our own because it’s a risk mitigation strategy. We, we focus on NOI, you know, a property management company. There might be a little bit of misalignment because they focus on a percentage of gross revenue. So it’s just a strategy. That’s why we chose one of the reasons why we chose self storage as a vertical, because we knew that we could build a proper, you know, propco inside of Spartan to do that. Right. Um, and, and other than that, you know, I, I think it’s just, uh, you know, we control the whole process and it helps with the investor experience because we have a little bit more, you’re

Reed Goossens (15:04):

Very,

Ryan Gibson (15:04):

Exactly.

Reed Goossens (15:06):

Talk to me about the metrics of that self storage we were talking about yesterday, about the price, oh, sorry. Not price per pound, the self storage requirement per person in an area. So when you go into these secondary tertiary markets, what are you looking for in that metric?

Ryan Gibson (15:20):

Sure. So the easiest way to explain this is in the United States, the average square square foot per person is about 5.2 or 5.4 per, per, uh, per person. So, so let’s just use some round numbers to make us easy. Let’s say there’s a hundred people in the room and you have a five square foot average utilization in that room. That’d be 500 square feet.

Reed Goossens (15:42):

Yep.

Ryan Gibson (15:42):

Right. And let’s say that there was a, you know, there was 300 square foot facilities around that room. Well, your unmet demand is a hundred square feet.

Reed Goossens (15:52):

Right.

Ryan Gibson (15:53):

So then you have to look at, okay, how many square feet do I want to build? And do I have the demand to go into that market? So when you look at self storage, if you’re in Indianapolis, you know, or Indiana where they have basements, the square feet per person, maybe a little bit lower on the saturation. Right. But if you go down into Texas where there’s no basements, the saturation number might go up into the twenties. Right. Right. Right. So when you look at a property, you can’t just say, well, the national saturation is five. You know, you’re saying it’s 20 down here. Or that seems very oversaturated. Right. It really depends on the market. So you’ve gotta look around at the surrounding cities, get benchmarks that provide you with the demand and then see what the demand is at your subject site and what people are using in your market to determine an over or undersupply of storage. Uh, but really we look at we mystery shop all of the competitors, we look at all the pricing, we try to make sure that we understand the whole market, do a whole feasibility study to make a conclusion, you know, that, that demand number, isn’t just the conclusion. There’s many factors that play into that number. Um, other, other than just the saturation number, it’s just a good, you know, kind of pulse.

Reed Goossens (17:01):

Sure, sure, sure. Sure. So just to repeat it for the, for the, for the, uh, the listeners, if you’re in an area, if you’re looking, let’s just choose anywhere in a five mile radius, you have 10,000 people who live in that and you might have 5.2, uh, need of square footage per person. So you’re gonna have 10,000 times 5.2 50,000 square feet need you then would go in and look at all the self storage facilities in that five mile radius. And you would deduct and then see whatever the Delta is. If you had four, 10,000 square foot storage facilities where you know that there’s alter there of a 10,000 square feet that needs to be filled. So with that being said, are you building, or are you buying existing when you look at that? If there’s a discrepancy. Sure.

Ryan Gibson (17:45):

So no matter what we do, we always do the study. Yep. And I will say that we’ve done the study and we’ve found that the study didn’t match reality on both sides. Wow. We have so much unmet demand in this market. We’re gonna just, we’re gonna kill it. And it goes, okay, okay. Sometimes we say, oh my gosh, we wouldn’t do that property because it’s got bad numbers, bad demand numbers, and we’ll look at it and we’ll find a story. Maybe it’s a really bad operator or just a really, uh, you know, maybe we just don’t have good data. You know, sometimes there’s gaps in data. It’s not perfect. So if you can find a story, sometimes it works out a little bit better. So that data is just kind of a, where are we at? And there’s a million different ways to manipulate that data.

Ryan Gibson (18:31):

And I really wanted to stress that. Right? You mentioned radius, you know, one mile, three mile, five mile radius around a storage property. That’s not that’s as the Crow flies. Right. So what we do, what makes us unique is we actually paint a drive time map. I like that. Right. Because if there’s a lake there, you can’t capture those customers on the three mile circle. Cause it may take ’em an hour to go around the lake or half, you know, whatever it might be. Right. Yeah. Yeah. So, you know, that number is, so if you, if you shift it to a radius, look versus a drive mile, look,

Reed Goossens (19:05):

Your

Ryan Gibson (19:05):

Numbers are gonna change. Right. Right. And if you use, you know, well, what, which cities should I benchmark? Should I use those three cities are these three cities that city’s like way over here, the city’s way over here. So again, it, it, it makes small little adjustments to the data and you could get a wildly different result. Right. So we’re, we’re constantly looking at that, you know what you know, well, so we center our team there. I mean that, that you have to have your team, you have to have boots on the, around you do the desktop study, sort of get preliminary look, and then you go see what’s happening. You go look at the vintage of your comparable, uh, facilities. There’s all these different things you have to do to make sure that, Hey, this matches up or this makes sense.

Reed Goossens (19:43):

Sure, sure, sure, sure. I, I love that. I’m very data driven. So what other coming from the multifamily spaces, a lot of data out there co-stars of the world, ICME I assume they have that in self storage.

Ryan Gibson (19:54):

Absolutely. We’re we’re CoStar customers. You can look at radius. Plus as, uh, as a metric, you know, Yardi even has a lot of reports. They’re kind of getting into the self storage space. There there’s tons of different software and data. And a lot of it crosses over with multifamily. You know, we’re looking at, at drive time, data, population, data growth data. And we look, we only look in markets where there’s population growth, right? So we looked at the 4,500 metropolitan statistical areas in the United States. And we said, okay, which ones have the highest population growth, the best rent, their best rents for self storage. And generally a net migration of jobs and income come and, you know, positive things. And we narrow that down to 150 markets it’s on our website. And, uh, that’s where we look. So, you know, we don’t look in Michigan.

Ryan Gibson (20:41):

You know, we don’t look in, uh, most of Ohio with the exception of maybe Columbus, because most cities are shrinking population, interesting state. Um, you know, we don’t look in, uh, you know, New York, you know, or, or, or Jersey. I’m not saying that that’s, there’s not a good, you know, product there, but you know, most of our properties are in states like Texas, Tennessee, Georgia, Florida, uh, we’re in Wisconsin, but we’re in the highest net, highest net, uh, positive, uh, counties in the state of Wisconsin, you know, Wisconsin’s growing. And then we’re in Dan, in, uh, Wisconsin county, which are the two highest net migration of people. So we’re looking where people are going because people are what drive self storage businesses. Yeah.

Reed Goossens (21:24):

Yeah, no, I love that. And thank you for explaining that

Reed Goossens (21:28):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multifamily value, add deals, then head over to Reedgoossens.com and sign up for my monthly newsletter. By signing up, you will automatically be notified about my new up and coming investment opportunity. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to Reedgoossens.com and sign up date. Now back into the show,

Reed Goossens (22:03):

Let’s now pivot into the growth of the business of Spartan investments. Sure. Uh, I’ve own you guys for, for, for many, many years. I, I know Ben quite well. One of, one of your founders, talk to me about the growth. Cause you’re at half a billion right now. I know in the beginning, maybe like all of us start a little slow, right. But now you’ve got a lot of employees. You vertically integrated, you got your own property management company, you got your own construction company. How has that been in and what investments have you had to make over the years were talking yesterday a little bit about your acquisitions team, but, but maybe just from a, a 30,000 foot level, how’s the growth been over the last four or five years?

Ryan Gibson (22:37):

Yeah, so I, I would say there’s been a couple of ingredients. Uh, the number one is culture. Yep. You know, mission, vision values, and focus on culture and, and making a, at the number one important thing. So whatever that might be, you know, at our company, we have a saying invest in our values and our values are driven by our grit. And our grit is defined as growth, respects, integrity, tenacity, and transparency. That’s great. And every week we recite the values as a, as a company and our team wide meeting. And we ask about how we’re adhering to those values. And we, we try to live those day in and day out. And it makes it easier to identify who would be a good fit as an employee for a company. Yep. You know, we ask them, you know, how do you identify with the values? You know, which value do you maybe at least identify with? Sure. Um, and you can really tell a lot by somebody who, if they’ve really done their research on the company and really wanna work, uh, for a Spartan, you know, we can tell if there’s, if they’re a great fit that’s

Reed Goossens (23:35):

And I think it’s so important as you’re going out into the marketplace to hire good people. Yeah. Um, to, to, to have that being at the forefront, or if you don’t meet these sort of criteria or you don’t, you’re not on board, you’re not, you’re not gonna get the job. Um, but talk to me a little bit about the, you know, all, all of us are entrepreneurs listening to this, you get to a stage where you think I need to scale this business, which will require money. And it also money comes from deals. Right. I might not have all the deals yet. Right, right. But I can go do more deals with more P people. And so there there’s this dichotomy of like, where you’re, you’re sitting going, should I spend my, my hard earned cash on employees to help me go, instead of riding a tricycle, you now, you know, in, in a car or from a car to a jet plane in terms of how fast you’re moving down the highway. Sure. Talk to me a little bit about that. And, and that, that decision in, in, in your, uh, organic growth. Yeah.

Ryan Gibson (24:25):

So I’ll speak about it personally, and then as a company. So for me, I’ve always been a deal guy, you know, and that’s how, that’s how we all are. Right. We get into this business because we hear about somebody buying a multifamily building and making lots of money or whatever it might be. And you and you’re, and you just have this endless pursuit of doing a deal and you do all this work, and maybe you do a lot of work for a couple years and you don’t get paid very much. Then finally

Reed Goossens (24:46):

It pops,

Ryan Gibson (24:47):

It pops. And the last thing you want to do is go, okay, here you go, employees, you know, and then, and then try to get more in scale. So it’s ex you know, it’s really difficult and there’s a lot of friction among your business partners, your employees, your work, home life balance. I mean, it’s not, it’s not easy, you know?

Reed Goossens (25:08):

Yeah. No, I know.

Ryan Gibson (25:10):

And, and it’s a real, it’s a real struggle. So I feel like, you know, with this syndication model and the way we’ve structured our businesses, it’s really helpful to have acquisition fees. Yep. Because, you know, you’re spending your acquisition fees on making strategic investments in your company, which hiring people, it’s, it’s building an office space, it’s, uh, sending people to conferences it’s advertising. Right. So all those things that you spend money on, it’s no longer about you being savvy and multifamily, it’s you being savvy in making strategic decisions in your company that will fuel its next growth, you know, think about, you know, we just read the book, the whole company, read the book who not how, you know, that was kind of our, our, our latest book. And, you know, my, my biggest struggle is, well, how do I do that? How do I, you know, how do I go about, you know, building a big capital program or finding lots of deals or hiring lots of people, but really you gotta be, that’s not the right way to think. You need to be thinking about who, you know, who do I need to find to help me build my HR program, which we brought, we just brought on a, an HR, uh, specialist to help with our hiring, you know, our marketing, you know, who do I need to help? You know? So we brought on a director of marketing who has experience, you know, building brands, but

Reed Goossens (26:24):

This all costs money. Right. And in the beginning, in the beginning. So, so tell me, have that first dollar that you reinvested,

Ryan Gibson (26:30):

Uh, we invested the first dollars into, uh, accounting. Okay. And marketing.

Reed Goossens (26:35):

Yep.

Ryan Gibson (26:36):

So we had operations already in house. Right. So we had, you know, Scott and I, uh, you know, Scott being our CEO, setting our strategic vision, building the company, having that focus and on development and building stuff. He’s really good at that. So, so Scott was, that was kind of his thing. Ben finance, CFO, underwriting, acquisitions, you know, sort of that whole more of like a CIO and a multifamily space, just kind of that whole well rounded asset manage, etcetera. Yep. We had Jackie who was focused on operations and, you know, hiring people and, you know, monitoring, this is,

Reed Goossens (27:09):

This is in the property management side. Yes,

Ryan Gibson (27:10):

Yes, yes. Yep. And then we had Lindsay in the business intelligence side and then I was in the capital raising side. So now we’re like, okay, we kind of had that, that

Reed Goossens (27:19):

Say tool filled full, I should say.

Ryan Gibson (27:21):

Yeah. Sort of at the leadership side. Right. And then it was like, okay, what do we need help with? And it came very clear that we needed the finance, you know, bookkeeping, and you have two types of finances in this business, you know, corporate finance and property level finance. And you need to make those delineations very quickly and delegate, you know, okay. We need a property level, account accountants and account receivable and payable, maybe even a controller. And we also need corporate finance, you know, how are we doing as an organizational unit? Cause that becomes very important when you, when you scale employees sure. You need to have payroll and you need to make payroll. Right. So, um, I think that strategic investments in employees that are in finance and accounting is very beneficial. I think that’s the foundation, because think about it. If you don’t have clean books, if you don’t have tax returns done, if you don’t have reconciliation, correct.

Ryan Gibson (28:13):

You can’t get loans. Right. Right. And you know, when somebody’s looking at a company to invest or whatever, you really can get messy in a hurry. So once you have that down, you have some operations and uh, you know, deal finding and the next person is marketing, marketing at the property level, marketing the company. Yeah. So, uh, and really, you know, we made, uh, you know, more, um, you know, as we started it and then, and then it kind of scales from there. You start putting the building blocks in place, right. Like, okay, now we have all this. Now we have more property in our portfolio. Now there’s more of an operations need. Okay. So needing to focus there, you know, now we have more properties in our portfolio. Uh, now we need more, uh, now we need more lenders, right? So now maybe your focus shifts to capital markets and who’s gonna help me there.

Ryan Gibson (29:00):

The who right now, how am I gonna get all those loans? Who can I hire? Who can I contract? Who can I partner with to get those loans? Yep. And then now you have the loans of the properties and now you gotta start building all these things and who’s gonna help me build these facilities. So we brought on a director of construction, uh, to build our construction company. And this person had, you know, Aaron Saunders, who’s our director of construction, you know, 20 plus years experience building industrial for Casey industrial, very, very talented individual, very sharp guy. So we started building out the construction company and he leads that effort with, uh, Garrett bondman. Who’s, who’s our project manager. So those two have built the construction company. Right. And, uh, that’s, these are

Reed Goossens (29:41):

All w two employees, right? Correct.

Ryan Gibson (29:43):

Yep. Yeah. And, you know, partial owners as well, you know, we , we share in the ownership of the business and also in, uh, you know, perhaps equity and deals, you know, we, we’ve really focused on, you know, incentivizing, motivating and making, you know, making sure that everybody’s in alignment to move forward together. And that’s important, especially in the beginning. Right. You know, those first few hires have to be, you know, really good. So I think that, and, um, you know, and then it’s like, you have all this construction then acquisitions, all of a sudden becomes more successful. And now instead of raising 50 million this year, you’re raising 120 million. Wow. So now, so now what do you need? You need more deals, invest. Well, more investor relations. Yes. Right. We’re acting to the deals, right. Deals are coming in now and it’s like, oh wow. We’ve got all these investors and we need to take care of them and we need to give them an experience. So then you start building out your capital team. And so you just, you know, at the beginning of the year in December, when you’re thinking about planning your next year, think about where is the biggest gaps in the organization. Yep. And the number one way we’ve helped kind of shape that is through Scott’s leadership. And also we’ve added advisors to our company and a business coach and not a, not

Reed Goossens (30:54):

Who who’s a business

Ryan Gibson (30:55):

Coach, uh, rom Le point. Okay. Yeah. Through

Reed Goossens (30:58):

Traction,

Ryan Gibson (30:58):

Like, yeah. Uh,

Reed Goossens (31:00):

What is it called? Um, EIEOS

Ryan Gibson (31:02):

Yeah. Yeah. And, and so he helps, you know, everybody’s got ideas and everybody wants, you know, they’re, they’re cut at it, but really, you know, what are you guys gonna, what is gonna be the number one thing that changes the business. And we do rocks every quarter. We do company wide rocks. We do departmental rocks. You know, what is your department going to achieve this quarter? When we do a company wide rock it’s it’s, uh, you know what, that’s the rock that’s really important that goes across the organization and needs everybody to pitch in, right? You might need marketing and you might need finance. You might need Diar acquisitions to pitch into that. So I think, you know, having a planning, meeting and strategic planning for the year to identify gaps is what’s, it’s helped us. And what we did in 2000, uh, 20 was we identified that we had the investors, we had the operations team, we had the marketing, we had everything, but we didn’t have enough deal flow. Right. So we made it a,

Reed Goossens (31:55):

Which would, which would, you’re just gonna jump in, which would be a cash flow issue if you’ve got payroll.

Ryan Gibson (32:00):

Right,

Reed Goossens (32:00):

Right,

Ryan Gibson (32:01):

Right. Yep. Exactly.

Reed Goossens (32:02):

So, so you have these paper, you have this team, but

Ryan Gibson (32:05):

Then

Reed Goossens (32:05):

You are like, oh crap, I’ve gotta pay ’em right. I’ve got where the the deals. Right? Yep. Like, so, so you need to be like, oh crap. So, so, so because the, where I’m going with this is that you don’t wanna then be, have to do deals to pay your overhead. Exactly. Very, very, as a, as a growing company, got very careful with that because, you know, particularly in the see occasion space, you don’t just wanna be shoving another deal down the, down your throat just to get the fees to pay everyone.

Ryan Gibson (32:29):

Correct. And so we had a very important milestone at Spartan in 2020, where we were profitable at, you know, all our investments are profitable, but our, at the corporate level, we paid all of our salaries and overhead and, and made a profit. Fantastic. Which was great in 2021. Uh, same thing. We, we, we hit our revenue goals. We had a companywide goal at the Spartan level, not the portfolio level, what the spart level, to, to make 10 million in revenue. And I think we ended the year with like 12 or 3 million revenue. That was a, that was stretch goal. Uh, this year acrossed all, uh, business units. We want to hit 120 million in revenue. Wow. That’s construction property, you know, the whole thing. Yep. Um, and you know, one thing that you gotta think about is, you know, when you’re buying a deal, it’s like the bank account fills up with the acquisition fee and then you spend it all on payroll. Yeah.

Reed Goossens (33:21):

And then,

Ryan Gibson (33:21):

And then you buy another deal that you bank account fills up with acquisition fee and you spend it on payroll. And if you’re not selling assets, really the, the general partners not making any money, they’re just sort of, you’re getting,

Reed Goossens (33:31):

You don’t get a pie check. Right.

Ryan Gibson (33:32):

Right. You’re just, you’re just, you know, sort of building this thing. Right, right. And getting the assets under management. But what’s great about having a propco, you know, property management company is you get the reoccurring revenue. Yes. And so at some point you’re gonna scale and be efficient, right. And you, you, don’t gotta really hyperfocus on efficiency, but all of a sudden you’re gonna have the monthly reoccurring revenue

Reed Goossens (33:53):

That can cover your

Ryan Gibson (33:54):

Costs that can cover your costs. So the, for the first time and, and Spartan investment group is starting off 2022 to, with enough monthly reoccurring revenue that we don’t have to buy a deal in 20, 22, and we’ll make a profit. That’s fantastic. That’s fantastic. All, all of our overhead now we’re not just gonna sit back and

Reed Goossens (34:11):

Do anything. Right. Right.

Ryan Gibson (34:12):

So we’re gonna be making strategic investments in new hires this year. And, and it’s a very, uh, you know, one thing you want to do is you want to build out your future state work chart. Yep. You know, okay. Who do I wanna hire this year? And what departments do they need to be in so that everybody’s on board. And then you can kind of roll that up into a budget, you know, and say, okay, if we hire this many people, this is kind of what our payroll’s gonna be. Um, but you know, we’re in growth mode. And I think what’s really neat is in this business of syndication, you can grow without outside capital. I mean, at your company level. Right? Sure. We haven’t sold shares and Spartan, you know, or taken debt on Spartan or anything like that. So I think it’s a really cool model. And, and I,

Reed Goossens (34:48):

It’s a very cool model, but I guess the question for you is how big do you want to grow it? Because obviously a lot of people get involved in this space to get time for freedom. Yeah. Right. And then you don’t wanna ever create yourself a job. Right. So how big is this getting?

Ryan Gibson (35:01):

Sure. So, um, so every day I try to make it not a job because it’s, uh, you know, you’re hiring somebody, you know, if you’re doing a lot of something you should be thinking about who should be doing that instead. Right. So you can stay strategic and you can provide more opportunities for more people. Right. Right. If you’re getting into the weeds on deals or in the weeds on work, you know, you’re not providing opportunity are doing that job instead of just hiring someone to do it and going, creating more opportunity opportunity. Right. So don’t think of it as you know, I gotta do everything. That’s really, it’s hard for me cuz I’m a hard working guy, so I want to do everything myself. Right. And so it’s

Reed Goossens (35:37):

90, 20 rule like, oh, can I just do it myself, time? You so much time to teach you on your, to me, I’ll do it.

Ryan Gibson (35:43):

It and I gotta slow down and tell myself it’s worth it.

Reed Goossens (35:45):

Hundred percent. It’s worth

Ryan Gibson (35:47):

It. Yeah. It’s worth it. It’s very empowering somebody else and it’s worth it for me. So where do we want to go? Our vision is to enrich the, is of anybody that works for us and, and all of our investors, anybody who’s in the Spartan tribe is we’re gonna enrich their lives. And that means many different things to many different people. So it’s, you know, it’s someone buying their first home as an employee, you know, it’s, it’s, uh, an investor becoming, you know, a multi-millionaire, it, it, you know, it means many different things to many different people, but, but we’ve some summarized our big hair audacious goal of of long term is we want to have, we want to touch a hundred thousand investors. Wow. So, you know, self storage is our thing. We’re gonna continue making that our vertical we’re gonna focus on it.

Ryan Gibson (36:33):

We’re gonna be good at it. But at some point a the portfolio might sell, it might turn over. It might turn into something else. We want to go into different verticals. You know, we want to go into private equity. We want to go into, maybe we’ll go into multifamily, our office or industrial or life sciences or what, whatever it might be. And, uh, but we know that having an investor base is what gets you there? Cuz if you have the, the money, then you can, you can build the company. And I think a lot of there’s a lot of debate about what comes first, the money or the deal. Right. And I think hands down unequivocally, it’s the money. Because if you have the money, you can hire these people. Right. If you have the, if you can hire these people, then you can get the acquisitions team. If you have the right acquisitions team, you can, you can,

Reed Goossens (37:18):

You, you can, you can support the team. You can buy more, people, get more people on more.

Ryan Gibson (37:21):

Exactly. So, you know, it’s not, you know, I was talking to some people at that conference this week and they say, yeah, I got all these investors, but I don’t have any deals. And I was like, well, how, how much could you raise? Yeah. Right now. And they’re like, well, I don’t know. I’m like, okay. A billion dollar portfolio lands in your lap. It’s yours for the taking, can you do it? No. Okay. Well money’s the problem, right? Because what if that deal, I mean, it’s unlikely, but what if that happened? Right. So I think if you just focus on building your investor network and building your company to buy assets and to manage and to run, I think you’re always gonna have, uh, that ability to scale and grow. Yep.

Reed Goossens (38:02):

I completely agree. Yep. Um, as we’re gonna wrap the show up one last piece of advice you can give to everyone listening who wants to get to your level, what is it?

Ryan Gibson (38:11):

So we, we do strategic planning every three years. And if you want to download a copy of our strategic plan, I highly recommend you build one and that will help guide so many things. Uh, Scott, uh, his background in the military, you know, helped us build that strategic plan, uh, through the military strategic decision making process. And you know, he, he put that together. And so if you’re just getting started raising capital,

Reed Goossens (38:35):

Or if you’re not really sure where you want to go, going through that strategic, uh, planning process will help investors come into your network because they’ll see that you have a vision and it’ll help guide where you go over the next few years and keep you straight on the straight narrow. Keep you, keep you focused on what’s important. Love it. And we getting a bit of background noisy. So sorry for everyone on Instagram am and, uh, are listening to the show on, uh, across all the, across all the platforms. Ryan, where do people go? They want to get more involved in your sphere. Where can I reach you? Whatever we go. Yeah, I’m on LinkedIn. Uh, and also our website is Spartan H investors.com, Spartan, hyphen investors.com. We look, mate, I wanna thank you for jumping on the show here. Live at I IREC 2022. I wish you all the best. Thank you. And, uh, I’m just pumped and excited for you to see where you’re growing and to know where you’ve come from, because I think that’s really, really important. So again, thank you guys for tuning in to continue to grow your financial IQ. It’s all all about here on this show. If you do like the show giver five star review on iTunes and I’m gonna it all again next week, remember be bold, be brave and go give life a.