DNRE85 - AJ Osborne: Generating Income with Self-Storage Spaces
Here’s a snapshot of a few things we talked about…
Who is the Clark Kent, When It Comes to AJ Osborne? [00:02:03]
How Did He Become Paralyzed? [00:06:14]
Two Ways That You Have Value [00:12:53]
How He Has been Able to Start Multiple Companies? [00:31:45]
Would He Recommend Self-Storage Space to People Starting Out? [00:43:23]
Levers That You Could Change in Self-Storage. [00:47:15]
How to Get Financing for Self-Storage Facilities? [00:57:05]
App For Self-Storage Industry News and Analysis [01:05:44]
One Thing He Wishes He Had Implemented Sooner to Accelerate His Journey? [01:07:01]
In This Episode You’ll Learn:
In this episode, Casanova and AJ talk about everything related to self-storage, one of the most profitable niches in the real estate market.
Behind the scenes, AJ is a family man, who like spending time with his four kids. He is a very result driven, goal-oriented person, who likes processes that can make change and wants to see things happen. What makes his story unique and interesting is the fact that he became fully paralyzed, quadriplegic due to a rare condition called Guillain-Barré.
Within a short span of time, AJ became completely paralyzed. His journey to recovery took him over four years, and he still hasn’t fully recovered. AJ says that him wanting to be the dad that he wanted to be with his kids kept him going and doing things. He started up three different companies out of his wheelchair.
Since then, his wealth has exploded. Now they have product businesses, and service businesses. AJ develops, converts, bankrupt office buildings, retail centers, turning those into self-storage facilities.
Recalling the time when he was working with his dad, he just made money off whatever they sold to our clients. This was an invaluable experience as it was ingrained in his mind that revenue comes from action. He says that this is something many entrepreneurs and businesspeople understand.
Talking about how living on 30% of their income, AJ says that this taught them the importance of saving. He also learned the important life lesson that they have to have income that is not tied to his time. AJ talks about another light bulb moment that he had, that if he can't stop, he can't compound. And if he can't compound, his growth is limited and that he could not handle, as he can't compound his wealth, because his time is limited.
Then, AJ and his father started acquiring self-storage units, and he started loving them. They turned out to be a great investment as they aren’t real estate assets, they are a business. He could buy bad performing units and turn them around, and this appealed more to him as he was a salesguy.
Talking about the two ways to get values, AJ said that there's given value and there is earned value. When he first started looking, he was obsessed with given value. For him, the Margin of Safety is important when investing, buying businesses, and everything.
AJ adds that you have two types of knowledge, you have static and dynamic. Static knowledge is something you read out of a book, dynamic knowledge is when you do, it's learning. As he gained dynamic knowledge, he looked for the next one; created value. Once he started doing this, his returns exploded.
AJ says that as a business owner and investor, you have to get comfortable with operating on the revenues of a business, not off a paycheck, and those fluctuate. He says that it is fine if you know how to control money and capital.
AJ recalls the painstaking process of tirelessly working while he was recovering from his condition, after losing his job, but that ended up saving me and my family's life. He adds that you want to get yourself off that earned income, but you also want to make sure that you're protected against downsides.
Talking about his real estate acquisitions during the recession, people thought it was not a great idea. He says that the way that money and fundamentals work is simple, and the process is always true. AJ adds that because he made sure he had a margin of stupidity, he was able to learn and make it big.
AJ faced a lot of difficulties in school, as he is dyslexic. When he took and scored super high on like equivalencies and IQ tests, he realized that it was the system that was failing him. It is important getting comfortable and knowing that it's okay to not know to be wrong and to have faith, but that it doesn't mean that's who you are.
He adds that markets care about one thing, and one thing only they care about price, they care about value, they care about service. And as long as you can deliver that to them, you'll be successful.
AJ says that first and foremost, when you're truly starting out, you need mentors because what you need to learn to do, you can't do at school, and dynamic learning is a way of learning how to learn.
Talking about the two types of people you can find in every organization; AJ says that there are implementers and then there are visionaries. He talks about how surrounding himself with implementers helped his companies achieve great success.
AJ says that when you start out, you usually don't have a lot of money, so, partnering is the best option. You need to partner with somebody that is good at the things that you aren't. Then, put the right people in the right positions by identifying them and create processes so you can measure their success.
Talking about people starting out, AJ says that if you want to end up in self-storage space, just start there. He says that it gets a lot harder to find commercial assets and other industries like retail, that you could start small, learn, grow and compound.
AJ adds that the revenue management side of self-storage is very dynamic, and you can market it very efficiently by identifying the high-paying customer.
“You don't need to be a superhero to have massive results and massive change…”
“Revenue comes from action…”
“If you look, so many entrepreneurs and businesspeople, so many of them are salespeople…”
“I am playing the greatest game on earth with the coolest people, and I get to do it every day, what a blessing…”
“It also, taught me the most important skill ever. I have to have income that is not tied to my time…”
“I do mergers and acquisitions. I buy brokerage firms and we take in our technology and skill, turn them around…”
“If an asset, for some reason, isn't performing at a market level and that's usually dependent on operators…”
“Dynamic knowledge is much more valuable because dynamic knowledge has to do with forced value…”
“I understood that how money really works instead of disillusion of the paycheck…”
“The people in the economy that are the biggest and the best are the ones that survive…”
“As long as I knew I needed a margin of stupidity, I could be stupid and do it. And you can do that in every industry, in every asset class…”
“Start small, start with margin of stupidity and be okay with your own stupidity. Get going, start building those small things…”
“That is how entrepreneurs work. You're building something in the future that doesn't exist…”
“If you're starting out, go find mentors…”
“I'm big on self-auditing. I shouldn't be doing this. I'm not very good at this. We need to get somebody that is great on this and implement…”
“The revenue management side of self-storage is very dynamic. We look at ourselves like hotels or airlines, they're always changing…”
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