In this episode, Scott conveys a personal perspective, intertwining his individual and professional aspirations for the year ahead and placing a strong emphasis on the value of relationships and deliberate actions.
A significant point of in this episode is the prospective influence of Artificial Intelligence in the self-storage sector. Scott sets an ambitious objective of substituting 15-20% of costs with AI technologies. Amidst economic unpredictability, he maintains a confident outlook on the market, intending to intensify investments in various facilities and ventures.
WHAT TO LISTEN FOR
2:19 Adapting to Changes in the Market
5:05 A Strong Investor Pool and Fund Structure
13:10 Embracing Technology and AI in Business
16:18 Optimism for 2024
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This is the Self Storage Podcast where we share the knowledge and skills from the industry’s leading investors, developers, and operators to help you launch and grow your self storage business. Your host, Scott Meyers, over the past 18 years has acquired, developed, converted and syndicated nearly 5 million square feet of self storage nationwide with the help of his incredible team @ selfstorageinvesting.com, who has helped thousands of people achieve greatness in self Storage.
Scott Meyers (00:43):
Well, hello everyone, and welcome back to the Self Storage Podcast. I am your host, Scott Meyers. And on today’s episode, we are going to be doing a little dive into 2024 and what the year holds for us here at Self Storage Profits and passive storage investing.com and also for me personally. And so yes, I know that other folks are having their New Year’s resolutions and then they have their New Year’s podcast with all their resolutions and that their goals, and I like to say that this is different because it is, so I’m not going to share everything that we have on my personal to-do list, but kind of big picture macro focus because many folks are asking, a lot of folks are writing in, certainly our mentoring students are asking, okay, where’s your head, Scott? How are you approaching the market? What does the business look like for you?
And as we’ve come out, it’s been a little while now, but as we’ve come out of our planning sessions in our various businesses for 2024, I’ll dust off of those notes. The plans are already in place and we already have our measurements, our KPIs, our key performance indicators that we’re marching towards and around here. I think many people know that we do follow traction. So Gina Wickman’s system, based upon his book and his entrepreneur operating system or the EOS system, our level 10 meetings are already in place with our quarterly rocks, the things that we’re shooting for. And we have our to-do items as well as items for a discussion. And we’re having, as a matter of fact, our level 10 meeting today. And so as we hit into this year, I thought I waited at the very least because so many folks have been asking touch on some of the highlights.
And I think it’s really important really to kind of start with the mental side. And coming out of 2023, we’ve had kind of a banged up year coming out of 2023. The folks in real estate have really kind of covered the spectrum from the folks that I talked to. Some folks have had a record year in 2023 in real estate. Others have had a horrible year, others have been well kind of sitting on the sidelines. They were taking a step back just to see where the market was going to head. I’ll tell you, we doubled down. We didn’t really slow down. I think the market slowed us down and a couple of projects that we hit the pause button on and one that we actually just went away altogether and that was probably for good reason. But we are certainly bullish on self-storage and as most of us know and we’ve seen in the past, more money is made during a down cycle in a recession or when the market is maybe taken a hit or when interest rates are high because our models are stronger.
And if things are penciling right now and are underwriting at the cost of capital where it is, where interest rates where we’re sitting at today at somewhere around seven and a half to eight and a half versus at 4%, well then guess what happens when interest rates go down and our cap rates go down, we’re really going to be sitting pretty. And so we haven’t slowed down, our model hasn’t changed. As long as the property makes sense from an underwriting standpoint at today’s cost of capital going into it, then we know that we’re going to be in good shape. And so from a mental standpoint, we haven’t shied away from and we haven’t bought into. And by the way I’ve, I’ve been on a media fast since 2006, which means that I stopped watching the news. I don’t read the newspaper, cancel the subscription. I do keep an eye on things from a financial standpoint, from an economics standpoint, and I know what the Feds are doing, but I can look at that up anywhere else without having to turn on the news and listen to all the negativity because we know the negativity sells and everything else, if it bleeds, it leads.
And so going through listening to all the other negative hype about the economy and everything else that’s bad going on in the world, to get the information I need to be able to move forward and to be able to make money and go a positive direction in my real estate investing career and quite honestly in my personal life, so standpoint, I would say so from a mental standpoint on the investing side, coming off a strong year on the personal side, to be completely transparent, this has been the hardest year that we’ve ever had to face. Lost a good friend in January from Cancer, lost my father this year as well as my wife’s stepfather and had one of the bigger tax bills that we’ve ever had land on our lap. And we knew one was coming. We had no idea what size that was going to be.
And of course it’s always, if you have a big tax bill, that means made a lot of money. But this one, after we moved some things around and worked with our advisors, we still didn’t shelter enough. And so Surprise had a tax bill that was a little larger than anticipated and then also someone very close to us went through a divorce and we all went through it together. And so we’re kind of glad to put this year about 2023 behind us. But outside of that, it’s been a stellar year from an investment standpoint. We did exit some properties last year. We filled up two funds without a whole lot more stress and time than it normally did. Our investor pool is a very strong and they’ve seen the results that we have presented to them and provided for them. And so we really didn’t miss a hitch developing facilities, converting facilities, acquiring and doing all those within the fund structure and then moving forward into other markets, new markets as well.
From that standpoint, it’s just been a stellar year. And so we’ll share more of those stats a little bit later. But also on the personal side, some fun things. I think most people also know that I’m a big racing fan and so I had the opportunity to, well, yeah, it’s not really racing but kind of is One of our house builds down in Mexico. We built six houses in Ensenada, Mexico last year. That is a huge win and an upside for us. And on one of those we got to build alongside of Ivan the Ironman steward. So Baja Racing’s most decorated sportsman and it was just an honor to be able to, well, we invited Ivan to come out with us just on a whim and thought, well, why not? This is the city Ensenada where we build that has given so much back to him in his racing career where the Baja 501,000 starts and ends.
And so we thought, well hey, if you’re going to be down here, why don’t you build, come build a house with us the weekend before the Baja 1000. And he did. And so that was an incredible time for all of us that were on that build and for me personally. And then later in the year, I was able to attend the Baja 1000 with some friends live out in the desert, not at the start line of the finish line, but out in the desert. And that was just an incredible experience. And then also visited a vintage international race overseas that was just incredible. Got a chance to watch some 1970s Formula one cars almost like I was transported back into the 1970s to watch a full grid of 20 formula one cars cruise around the track. That was pretty cool. In addition to that, we did have a little bit of a travel and just a great year with family and friends and even coming alongside of all the challenges that we faced personally, that was a good time to reconnect with a number of our friends and family as well.
So all in all, 2023 was we can’t look back on it with all its challenges and say that it was the absolute worst overall, but it certainly had the most challenges. And as we looked at 2024, I certainly can’t say that it would be worse than 2023, but from the momentum that we have from a business standpoint and a personal standpoint and where I’m at mentally, I’m excited. It’s been a great break. I spent time in the woods time spiritually as well as to just sit and think about what I want for myself, what I want for my family, what I want for the business. And the word of the year is reconciliation for me. And that’s a reconciliation with my maker, with my God because last year we spent a long hard year not leaning on him as much. And so it’s a time for that.
It’s a time to reconcile with our family, my family members who because we were so busy grieving and going through all the other challenges with the deaths in the family, that we didn’t have time to really lean in a positive manner. And so it’s reconciliation with the family and also my friends as well. I recognize it. I heard in another podcast, we all know that we are the sum total of the five people that we spend the most time with. And put another way, I heard a gentleman talking about the fact that he wasn’t looking for a whole lot of new relationships. He wasn’t looking for any new relationships or to reach out, but that he looked at the five people that are life-giving to him that mean the most to him. And his goal is to spend more time with those people. And I thought that is something that I really hadn’t thought of to be intentional about, but I am, I’m going to be in 2024 because there’s certainly, I recognize that in the challenging times that we’ve had those people, the ones that came around us are the ones that we want to spend the most time with.
And rekindling that is what I plan to do in 2024. And of course there’s the physical side of it and really I don’t have a goal every year to just fall off the wagon from Thanksgiving on only to turn around and make a goal to lose those 10 pounds that I gained and then celebrate. For me it it’s a continuation and stepping into that phase right now with regards to my health that I recognize that everything rises and falls on my health and really how I feel about everything from the personal side to the business side is really a reflection on how I feel. And so sure that involves a weight and being at a certain level and clothes that fit well and then also just feeling fit and knowing that after I came out of the gym that I didn’t just slog through something or I didn’t just show up and say, well, that’s half the battle because not, but to crush it each and every time and to reach new heights.
And so this is the year for a continuation of that. But no excuses. I think I used some excuses last year to not do cardio as much as I should because I really don’t like to do cardio. But even on the days when I just did not feel like exercising no matter what, that’s not going to happen this year because it is more important than ever. And especially during those times when you realize that, boy, I can use a boost of energy or even from a mental standpoint to have those endorphins popping and moving through your body throughout the rest of the day after having a great workout to start the day.
That is going to be the focus in 2024 with regards to health, also a couple of nagging injuries that I’ve held off taken care of because I know it’s going to be time consuming, but to be at my optimal level to return to optimal level, I do need to address just a couple of areas that I’ve neglected over a while and just thought, well, it would go away or I’ll just manage. And so I’m going to take care of some of those as well. And so I don’t normally set a weight goal to take off the 10 pounds that I gained when I went off the rails from Thanksgiving to New Year’s and then celebrate with a victory. But what I am going to do this year is our church is going to participate in 21 days of prayer and fasting. And I think not only is that going to be a good thing, certainly I, I’m going to take that seriously, probably going to fast a little more than most of the folks.
And fasting can mean anything just depending upon either your belief system or just how you interpret it. But I’m going to take it very seriously and I going to take a, well, I’m going to fast from food for the most part during that timeframe, but fasting also means from a few other things, some bad habits that may have crept in or just some things that I think I need to do without. So caffeine being one of them and stay tuned. I’m not sure if I’m going to go full bore on caffeine. However, some of those things that I use as a crutch and things that are in my life that distract me from well, focusing on the things that I need to be focusing on or the people I need to be focusing on, I’m going to be fasting from those as well. From an education standpoint, I am a voracious reader of books, both the audio and I still like the paper version when I’m on planes or in the gym or different places.
To me, there’s nothing better. And I think I retain more as I read a physical book, but I’m going to continue that. I am consuming anywhere from one to four books a month. It just really depends. I don’t have a goal set out because every book is a different length than some are a deeper dive than others, and sometimes there’s more going on than others. But this year’s focus is going to be on ai and I know that encompasses a lot of things, but it’s not just learn about it or just to say that I know about it because getting up in years and I don’t want to allow, use that as an excuse to just say, well, I need to lean in and I just need to learn it. So I don’t feel or seem as if I’m old. It’s because we’re going to implement it in our business.
And so we already are in many areas, but we’ll probably do a podcast on this. So I don’t want to take a deep dive into it right now. However, we’ve got a goal right now that we’ve set, and it’s not hard and fast, but a goal is that somewhere between 15 to 20% of our expense, and that could be in the form of payroll or other areas or even other technologies that we’re paying for that is going to be replaced by ai. We’ve already identified those areas. It’s not just a swag number, it’s a realistic number. It’s one that has been well thought out, we just need to commit to a final number and then the final areas. But we’ll be sharing the results of that probably multiple times throughout this year because it is going to affect several areas of our business. But I’m excited with what we’ve seen so far, especially on the technical and financial analyst side or analysis side if you will, the speed at which we’re able to turn around our underwriting and at least get a headstart on certain projects.
That has been probably the biggest impact and other areas as well in terms of HR and some of those redundant tasks that we just, gosh, that we used to pay people for, we just don’t have to do that anymore. So we’re looking forward to once again, as we continue to see other areas in which AI is going to infect and impact our business for the better. That’ll be interesting to see just exactly how we’ll be able to implement that in our business to run more efficiently. So what does this all mean with regards to the economy? And if you’re looking for my crystal ball on whether we’re going to hit a soft landing and a strategy for that or a hard landing, honestly it is still up in the air. I do. I would say I lean more towards a soft landing just because of what we’re seeing already with the interest rates.
We’re seeing our costs, our construction costs are staying pretty solid right now. We’re seeing interest rates maybe coming down at least at no more hikes for the time being. There’s still a demand for storage. And if we can budget from where we are right now without any wild swings, we feel that there is going to be a softer landing. And so it’s not going to upset our model one way or the other. And quite honestly, if I know the rules for the game, I know how to play the game. It’s when it goes up and down where sometimes we get caught out, many investors get caught out. So borrowing that, and again, that’s why I say my crystal ball, I don’t know, it’s broken. It’s in the shop, anything could happen. We see a lot of turmoil in the world right now with wars going on.
There’s conflicts in the Red Sea and every time we turn around, there’s another issue. The impending, depending on whether you subscribed to this or not, partial apocalypse that’s going to occur in April when something happens that’s going to affect the power grid. Any and all these things could come to fruition. And also the unforeseen that we just haven’t prepared for could throw the economy interest rates and bring things to a screeching halt or take it in an opposite direction. And so we do look out a little farther down the road to make good strong projections and predictions. We don’t go out on a limb, we don’t take a chance. We don’t bury our head in the sand, assume everything’s going to stay the same. And so as long as we continue to do that, we are once again very bullish on 2024. But as far as any predictions, projections from interest rates or laying any percentages or laying claim to anything along those lines with hard facts, figures and numbers, I’ll hold off.
I’d rather look in the rear view mirror and then let you know that, hey, here’s how we approached it and here’s how we’re winning and here’s how we’re not while we’re in the middle of it. So stay tuned. More to come as we navigate to 2024. So on the personal side, the goals for this year, as I mentioned before, relationships are going to be the main thing. But then also if I’m firing on all cylinders, which means that I’m going to be infective, my word last year was intentional and I don’t think that you can have reconciliation and great relationships without being intentional. And so the two words for this year are those reconciliation and in intentional and intentionality. And with that comes a desire to move a little faster to also say no to things. I’ve written several things in my own personal journal, well, that is going up on the wall once I finalize my entire plan from a personal standpoint.
But that means just being more effective at work to reach the goals that I have set out for myself, both personally as well as in the business. It requires being intentional. It requires saying no, because if you say yes to something, it means you need to say no to something else. And so I have a tendency to either take back at control of some things that I’ve delegated or that I’ve gotten what I thought I had gotten rid of, or if the new shiny object comes along, yeah, I struggle with that. Still to this day, I do want to take on those good things and things that I think that we can do better, things that I think that we should be doing. And that is, as I found out, and as many of you know, that’s not always a good thing because if you have no priority, if there isn’t one thing, one goal that you have in mind overarching and everything else doesn’t feed into that, then you don’t have a priority.
And instead of you running your business, your business runs you because you’ve just failed to say no. And so this is a reminder once again, this is the year of no. And as I’ve told my staff, this is the year of Scott, and that doesn’t mean that I’m going to be selfish and everything revolves around me. It only means that through the years, we as a business have done absolutely everything, anything and everything in our power to make our students successful. And at times, and that has come from me, from the top and at times that meant a sacrifice that has meant that we have had to give up profits in certain areas that is costly in terms of a time and money. And it doesn’t mean that we still don’t have a focus in the education business on making our students successful. It just means that we’re not going to do it at the expense of everything and everybody else.
And so we’re slowing down on that side as well. We’re restructuring and understanding that we are heading into a time right now where we have a great opportunity in front of us with this market right now where we plan to go full bore 100% in focusing on investing in building the portfolio, some of it to sell, some of it to keep, and anything else is going to be a distraction. So I have multiple businesses that I run. It doesn’t mean I’m going to close ’em all down or that I’m going to take my foot off of the gas on all of ’em. It just means that we’re not going to take on more within those businesses. But because we have our eye on the prize right now and that is on doubling down and investing in as much in as many facilities and projects that we can, which also means with that is a heavier lift and a focus on raising private equity because that is the fuel that is going to drive that engine as well.
And so we are going to be diving into and getting up much better at anything and everything from front to back on how to raise private equity and within the investing model using AI as I touched on earlier, and just getting the best and the most efficient we can with the staff that we have, and adding a few more as well. So you’ll see that and more of that will come out as we are doing our best to be as transparent as possible and sharing that with you. Because if we don’t share it and we don’t go down this path together, then we don’t have an opportunity to partner together or to reach. Our ultimate goal, which we started 20 years ago, is just total self storage world domination. And that we say again jokingly, but truly moving towards that place where within our ecosystem and what we’ve created in our community from our education business to our mastermind and all of our joint venture partners and our business partners and our syndications and in our fund, is that we want to dominate the sandbox that we operate in, which is above the mom and pops and below the REITs.
And we do want to dominate that space. And so that has been the continual goal. We’ll continue to strive towards that. There isn’t a way to say that we’ve arrived or achieved that other than it is that elusive victory dance. It is that elusive victory tour that we will take once we have achieved it. And so like many things that we’ve discussed today, so stay tuned and we will let you know if and when we are. Nah, that’s cheesy. So we will continue to chase what is somewhat an elusive goal because you can’t define it, but just know that anything and everything that we do is going to come out of this operation and our businesses with the excellence as we continue to strive towards that. So for you in 2024, if you Storage Nation are looking to amp up, if you are looking to increase and or improve your operations and looking to grow and scale your self storage business, then stay tuned to the podcast because we’re going to unveil our plans, step-by-step guest by guest podcast, by podcast strategy by strategy in 2024.
And we’d love to have you come alongside of us and come along for the ride. And for those of you that may be new to self storage, come check out our Self Storage Academy. We’re going to be holding up more academies this year to teach more folks about the business, how to get into the business and how to grow and scale it so that once again that we can together as an ecosystem, as a community, dominate in this sandbox in which we operate in. And for those that are looking to really grow and scale at the next level, then we invite you to come be a part of our mastermind. If you’re not already, this is the most active, vibrant, professional group in self storage that is growing and scaling at a very high level. And so if you find yourself not surrounded by enough people to encourage you or that you don’t have enough resources to be able to grow and scale your business or just answers to the questions that you have as you go about your business and sell storage, whether it be your first or your fifth, you need to be in the Mastermind because the Rolodex is strong, the bench is strong, and this is the group.
This is the room you want to be in if you’re looking to grow and scale your self storage business in 2024 and beyond. So with that, on behalf of our entire teams, at our multiple businesses here within the self storage ecosystem, I am looking forward to crushing it in 2024 with you. So stay tuned, we’ll see you all in the next one. Okay. We are looking forward to a very prosperous 2024, and we can’t wait to do it alongside of you. So looking forward to 2024 folks. We’ll catch you on the next one. Take care.
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