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Scott Meyers and his affiliated companies focus on the acquisition, development, and syndication of self-storage facilities nationwide. He currently owns and operates over 2,400,000 square feet and over 14,000 units nationwide.
His education organization, SelfStorageInvesting.com, provides courses, tools, live events, and mentoring to help others launch their own self-storage business. His various companies fund and build 4 – 6 houses each year in Mexico by taking his family, staff, and clients on an all-expense paid short-term mission trip.
Scott understands the importance of a balanced life and has successfully leveraged his knowledge in real estate to achieve time freedom while building wealth. He is an expert at outlining strategic visions that create multiple pathways for financial independence – allowing him to enjoy both professional success and quality family time.
Scott reveals how investing in self-storage can be a sustainable, profitable venture even amidst today’s tumultuous economic climate. He delves into the operational aspects of this investment and provides insight into gaining an edge over competitors.
In this episode, Scott dives deep into an exciting realm of innovative business models. Don’t miss out on the opportunity to expand your knowledge!
In This Episode
- How it all started for Scott.
- A walkthrough of Scott’s foundation and mission field.
- Scott’s vision and wealth strategy.
- Specifics on Self Storage and how it’s a sustainable investment.
- Scott’s experience on elevating your wealth trajectory.
Welcome to today’s show on Wealth Strategy Secrets. We’ve got another exciting episode for you today. We’re joined by Scott Meyers, whose affiliated companies focus on the acquisition, development, and syndication of self-storage facilities nationwide.
Scott currently owns and operates over 2.4 million square feet and more than 14,000 units across the country. His education organization, SelfStorageInvesting.com, offers courses, tools, live events, and mentoring to help others launch their self-storage businesses, allowing them to enjoy a lifestyle he has coined as “free from tenants, toilets, and trash.” Additionally, his various companies fund and build four to six houses each year in Mexico, taking his family, staff, and clients on an all-expense-paid short-term mission trip.
Scott, my friend, welcome to the show!
Thanks for having me, Dave. It’s great to see you again!
You bet, Scott. It’s always a pleasure to connect, and I always enjoy our discussions. Since we last connected last year, can you share with our audience how it all started for you in this space?
Sure! Like many people, my journey into real estate investing began with single-family houses. I watched the Carlton Sheets program on how to invest in real estate many years ago, bought his home study system, and then purchased my first single-family house, which was, of course, a fixer-upper. We assumed the mortgage on the property, fixed it up, renovated it, rented it out, and then refinanced it—essentially doing the BRRR method before it even had a name. After that, we bought two more houses using the proceeds from the first one, and we were off to the races.
However, my wife and I realized that we didn’t have the cash flow and freedom we wanted from that side of the business. So, we thought we just needed to work smarter and a bit harder, believing economies of scale would help solve our issues. That’s when we got into multifamily investing.
Initially, we thought multifamily projects would improve our situation, but instead, they just increased our headaches. We ended up with even less free time and less cash. At that point, we were looking to pivot. We still loved real estate for all the reasons everyone loves it: the ability to leverage purchases, appreciation if done right, and tax depreciation. There’s no other investment like real estate.
However, we wanted to avoid dealing with tenants and toilets. As we looked around the investment landscape, we considered parking lots and self-storage. The more I researched self-storage, the more I liked what I saw.
If people don’t pay, we lock them out and sell their belongings. Unlike residential real estate, we don’t have to adhere to habitational laws. We operate on the warehousing side and lean laws, which protect us. When someone moves out or if we have to auction their unit, what we get back is essentially a metal box on a concrete slab. We clear it out and move on to the next person waiting for our units.
Looking at the life cycle of self-storage, it performs exceptionally well—better during a recession than during inflationary periods or boom times. We see a hockey stick effect in our growth because when the economy turns sour, businesses downsize and put their extra inventory, office furniture, and other goods into storage until things improve again. The same goes for individuals; they often move in with family and store their belongings until circumstances change.
Surprisingly, we tend to do better during recessionary periods. As a result, self-storage has the lowest loan default rate and loan loss rate in the industry. That led us to pivot and sell off all our houses and apartments. Now, we only invest in self-storage. Since then, as you mentioned, we have surpassed 4 million square feet of self-storage with over 25,000 units nationwide. We’ve had a massive year and significant growth in the last couple of months.
We syndicate our projects because no one can grow to this level without bringing in private equity. We are also seeking opportunities not just in the United States but internationally as well. That’s a brief overview of how we got to where we are now.
That’s impressive, Scott. Before we dive into the specifics that will help investors understand this asset class better, I want to acknowledge the charitable work you’re doing. Can you share a bit about your foundation?
My wife and I initially got into real estate because we wanted the freedom to raise our kids and do things our parents couldn’t do for us when we were growing up. As we launched our business, especially in houses and apartments, we realized that our success in self-storage allowed us that freedom.
We don’t have tenants or toilets taking up all our time, which means we have the cash flow to spend several months each year off the grid, doing mission work around the world. This eventually led us to build houses in Ensenada, Mexico. We take two trips a year—one in early spring when school is out—and we host family-friendly mission trips. We cover all costs, from transportation to building materials. All our participants need to do is get to San Diego.**
Over the years, we’ve built roughly three to four houses each trip, totaling around six to seven houses per year. Our goal, once we ramp up buying more storage facilities and possibly sell off or refinance in four to five years, is to flip the script. We plan to spend about 80% of our time on the mission field and only 20% managing the business.
That’s excellent, Scott. I was going to ask about your vision and wealth strategy. It sounds like you and your family have gained clarity about where you want to go. Can you elaborate on your current vision and wealth strategy?
I think it’s crucial to have a plan, though we do see some folks flying a bit more by the seat of their pants. As entrepreneurs, we’re naturally optimistic and may not always have a clear plan. But since day one, we’ve had a strategy, although we’ve made some pivots along the way. Every time we come up with a long-term plan—whether it’s a 10, 15, or even 20-year plan—something often diverts us in a different direction.
And so we just follow that and have been obedient to it. The ultimate goal right now is that we plan this to be our last hurrah if you will. We’re looking at a 5 to 7-year mark where we anticipate going through another economic cycle to ramp up our acquisitions and developments, stabilize those assets, and then either refinance and hold them or sell them off. We will systematically evaluate the exit strategy for each project, whether it’s a $2 million project, a $20 million project, or a $100 million portfolio. That is ultimately the plan.
Whenever we embark on a project, we always enter it with our exits in mind. We have a target number that we feel we will reach by the end of this next economic cycle. Currently, my kids are scattered all around the world—one is in Amsterdam, another is in Costa Rica heading to Africa, and the third is in Phoenix, where I am right now. We’re not sure where she’s going to end up.
The plan is to have the ability, resources, time, flexibility, and finances necessary to travel wherever our kids are. Additionally, we aim to continue upgrading and enhancing our current mission efforts.
I love that perspective. When you peel back the layers of building wealth and finance, it’s not just about the numbers. It’s deeper than that. It’s about having the financial freedom to pursue the things you want to do, having the freedom of purpose to align your mission with your goals, and enjoying the freedom of time and location to be where you want to be and with whom you want to spend your time. It sounds like you’ve architected a nice plan for that, and I think that’s inspiring for many folks.
Thanks! That’s the goal right now, and we’ll see what the next 5 to 7 years hold.
Let’s shift our focus to storage for a bit. At the time of this recording, it’s mid-February, and there’s talk of a potential impending recession. Self-storage has traditionally fared well during prior downturns, such as in 2008 and other economic cycles. Can we discuss why this asset class performs better than some other private equity assets during tough times?
In our industry, we often say we’re in the trauma and transition business. We serve those who are in transition or experiencing trauma—like death, divorce, bankruptcy, or recessions—which often necessitates a move. When people prepare to move, whether they’re upgrading their homes or relocating, they usually stage their houses by putting their belongings into storage to declutter and make the space look larger. This helps their home show better before a sale.
Additionally, once they are ready to move, they typically use storage to keep their things until they reach their final destination. Over the years, we’ve also seen that baby boomers have done quite well financially, creating more demand for storage as they maintain homes in two different locations—one in the north and one in the south. When it’s time for them to return home from the south, they often rent out that property.
They will put their belongings in storage, and sometimes those items just stay there a little longer as we head into a recession. If they’re getting ready to sell their house, they often have two storage units at both locations. Whether this is due to necessity or choice, we have the industry covered, and we’re equipped to handle both recession and inflationary periods.
What we observe is that, yes, we do experience hard times, and the pandemic was a perfect example of that, Dave. It mirrored exactly what happens during a recession, and I’ve been through two already. This will be my third, and we go through this phase where, when Lehman Brothers collapsed during the last recession or when the lockdowns began during the pandemic, many businesses went under. As a result, they had to put their excess inventory and furnishings—like office furniture—into storage while they lost their lease or subleased some space.
Individuals also find themselves in similar situations during tough times. For example, if someone moves back home with their parents or cohabits with someone else, they often put their extra belongings into storage until things turn around again. Meanwhile, lenders typically put their pencils down during such periods. They step back and are reluctant to take on more risky or speculative projects, like self-storage development or any development until they see how things unfold.
Right now, we find ourselves in this inflationary and high-interest-rate environment, where many lenders aren’t considering new projects. At today’s interest rates, some projects have been paused or abandoned altogether. However, we’re still experiencing increased demand for self-storage, which is leading to rising occupancy rates and rental prices. This creates a perfect storm during a recession, where demand for storage rises alongside economic challenges, while supply is constrained due to a slowdown in new projects.
Additionally, we have a very transient society. During the pandemic, employers realized their employees could be productive working from home, so many are now working remotely or have reduced their office spaces. This flexibility allows people to move to sunnier states, like Florida and Texas, or back home to be with family.
Moreover, during a recession, many individuals feel compelled to start their businesses. For those entrepreneurs, the most affordable space to operate—whether selling on eBay or running an Amazon dropshipping business—is often their garage or basement. Once they outgrow that space, they’ll typically turn to self-storage.
These factors explain why self-storage performs so well during recessions. It’s a trend we’ve seen consistently, and we’re starting to observe it as we head into the next one. Is there anything different about this current situation, particularly regarding the interest rate environment?
Yes. Every recession has its characteristics. For example, during the dot-com crash in 1999 and 2000, unemployment wasn’t as high. The GDP dipped significantly, but that was a relatively quick turnaround, primarily caused by the tech sector when the bubble burst.
At that time, to stimulate the economy, the Community Reinvestment Act was implemented, which meant loans were extended to individuals to promote homeownership. This led to relaxed lending requirements, allowing people to obtain government-backed loans to buy houses.
For us, our tenants left our houses and apartments in droves to buy their own homes because they could for the first time in their lives—who could blame them? Fast forward to 2008. To make a long story short, if you’ve watched The Big Short or even just paid attention, you know that the Community Reinvestment Act and all those loans led to people obtaining mortgages they shouldn’t have qualified for, along with some questionable projects. We saw defaults, Lehman Brothers collapsed, and the economy fell into a recession as the housing bubble burst.
Adding to that was the impact of September 11th, which caused unemployment to skyrocket, GDP to decline even further, and led to a longer, deeper recession. This time around, the situation has been a slow burn driven primarily by high inflation. We’re currently seeing very low unemployment, but the Consumer Price Index is rising, contributing to a slowdown in the economy. I think once new numbers come out regarding the Consumer Price Index, and we assess the results of Black Friday—even going back to November 2022—we’ll see further economic slowdown.
And, of course, we are also dealing with external factors: there’s a war in Ukraine, natural disasters, and other events that make financial markets skittish, prompting people to pull out investments. We are very close to one of those situations that could take us down a troubling path, where consumer confidence plummets, leading people to withdraw from the stock market en masse, pushing us into the next recession. So that’s my crystal ball perspective on where we are headed right now. The difference this time is that it’s more of a slow burn, with rising interest rates being a significant factor, along with the Consumer Price Index and consumer confidence drawing us toward this next recession.
That makes sense. From an operational perspective, help listeners understand two things. First, let’s talk about competition. It’s interesting that if you drive around any high-growth market, you’ll see self-storage facilities popping up on every corner—sometimes literally right next to each other. What’s the logic behind where you place these facilities? What markets are you targeting, and so on?
Probably the most common question I receive when people learn what I do is about competition. It’s a very valid curiosity, Dave. I often think I need a better tagline for when I’m at a cocktail party or on the sidelines of a soccer game. When someone asks about my work, the first thing out of their mouth is usually, “Oh, really? So do you mean you buy them and sell the contents, like on Storage Wars?”
I explain, “No, we own the facilities. We buy and develop self-storage facilities all over the country.” Then they might say, “Oh, I see them everywhere! Is that one down the road yours?” Sometimes yes, sometimes no.
They often express surprise at the competition, saying, “Every time I turn around, there’s a new one popping up. Are you making any money at this?” To which I reply, “We wouldn’t be doing it if we weren’t making money.”
Nobody ever asks that when a new Starbucks or McDonald’s opens. When someone says they’re a doctor, nobody questions whether they’re making money, or if there are enough doctors in the world.
In self-storage, we’ve seen a huge boom. It has been the fastest-growing sector of real estate for the past 30 years. We develop more self-storage facilities than any other form of commercial real estate. Yes, we see them going up all over the place, but that doesn’t mean there aren’t developers taking on the loan risk, construction risk, and lease-up risk. If a project doesn’t work out, it’s critical to have solid numbers, a feasibility study, and market data. That’s everything we ensure is in place before we buy or develop a facility.
It is driven by a solid feasibility study, a market study, and a plan for moving forward based on our historical track record, market conditions, existing facilities, and extensive underwriting. We approach these projects conservatively to ensure their success. To that point, we’re not doing this for fun or simply building in hopes that people will come, as was common in the ’70s or ’80s when the industry was young. Nowadays, there’s too much at risk. Any appraiser, feasibility study consultant, or lender would reject a project if the numbers didn’t work, and we would also pull out if we saw any issues.
The reason we’re building so many facilities—and why you see so many, Dave—is that there’s a strong demand for them, and we’re fulfilling that demand. In a market with a roughly five-mile radius, the equilibrium is about seven square feet of storage per capita. You can drop me anywhere in the country, and I can conduct a market study within an hour or two to determine if it’s worth pursuing. In many cases, we can quickly decide to move forward if we find a suitable plot of land that makes financial sense.
As for particular markets we favor, we’re fairly market agnostic. Once we develop or acquire a facility in a specific area, we try to blanket that area to achieve economies of scale. This approach helps us optimize our marketing efforts and allows our direct management staff to oversee multiple properties in that market. By consolidating operations, we can reduce overall costs.
There are, of course, certain market factors to consider. We avoid areas experiencing significant population decline, such as Flint and Detroit, Michigan, where populations have dropped by 40-50%. Conversely, we focus primarily on the Sunbelt states and the Southeast, including Arizona, where we currently have projects underway. These regions benefit from migration and population growth, which is favorable for a service-based real estate investment like ours.
From a business model perspective, many investors are familiar with multifamily syndications, especially those that focus on value-added opportunities. Talk to us about how that compares to the self-storage projects you’re working on.
It’s quite similar. I transitioned from the multifamily sector to self-storage because there are more opportunities to create value in self-storage than in other asset classes. We can add ancillary income streams, such as tenant insurance, eBay services, packing and shipping, document services, and retail sales of moving supplies. Adding a 10,000-square-foot building with 100 units is much easier than increasing a multifamily property, which typically adds only a few units at a time. Additionally, we can raise rates every 30 days if needed, unlike apartments where rate increases generally occur once a year upon lease renewal. This flexibility allows us to create additional profit streams and adjust rates regularly.
In some cases, we’ve raised rates by 20-25% upon acquisition, followed by regular increases every three to six months until we reach market rates. The low loan loss rate in self-storage also contributes to our stability; when tenants move out, we can often sell their belongings to recover back rent and late fees. By adding multiple income streams and optimizing our facilities, we can make significant progress faster than we ever could in multifamily housing.
Do you have a preference between acquiring existing facilities from mom-and-pop operators and developing brand-new projects?
We like both approaches. The greatest value add occurs when you buy a piece of land, build a facility, and create income streams from scratch. However, the quickest way to achieve cash flow is by acquiring an existing facility and introducing retail sales, implementing a one-time admin fee where there wasn’t one before, and offering truck rental services without incurring costs. We simply act as agents for those services.
Additionally, we layer technology into our operations. We can run our facilities unmanned with kiosks and use electronic key fobs and locks to manage access. This setup minimizes payroll costs, as our staff may only need to visit the facilities once a week for maintenance and oversight.
The facilities operate primarily through kiosks, allowing them to run unmanned without human interaction. There are many ways we can enhance a facility’s performance by reducing expenses while increasing the existing income streams. Additionally, purchasing a facility often allows us to achieve these improvements more quickly than developing a new one. However, on the development side, that’s where we typically see a bigger impact—where we can achieve 2x to 3x returns. It does take longer to get a project fully built and stabilized at 80-85% occupancy, with all concessions burned off and ancillary income streams established.
We engage in both strategies and appreciate the benefits of each. Having a diverse portfolio is essential. If you’re looking for cash flow, a value-add strategy might be more appealing. Conversely, if immediate cash flow isn’t a priority, investing in development can lead to greater equity gains. Essentially, the investor is taking on more risk in that scenario, which justifies the higher potential return.
One aspect I love about this asset class is its operational efficiency. Anyone who has run a business can appreciate that it’s incredible to manage a 200+ unit facility from a command center, thanks to technological advancements. This setup results in a light operational footprint in terms of expenses.
Moreover, it provides multiple levers to adjust income and expenses and optimize overall performance. As you mentioned, a significant difference between self-storage and multifamily is the ability to adjust rents monthly in self-storage, compared to the typical year-long leases in multifamily.
For all these reasons and more, we love this asset class. It offers a straightforward, predictable business model, which is appealing. It’s crucial to treat it as a business, rather than a hobby. Many people mistakenly view it as simple, but any serious business requires active management and engagement to create value.
We have been in the real estate industry for 30 years, with 18 years specifically in storage. We understand the metrics and know how to effectively pull the right levers to enhance value. We’re confident about how much change we can implement and what it will cost, allowing us to predictably affect the value of our facilities through strategic moves.
Having experienced a couple of recessions, we can anticipate market shifts and challenges that others may not see as clearly, giving us an edge. This experience enables us to maintain our returns and prepare for potential issues down the road. Our nimbleness allows us to make faster decisions compared to larger REITs, despite their experience.
We also operate with a vertically integrated model. When we develop facilities, the only outsourced component is construction; we manage property operations, fund management, and investor relations internally. This structure ensures that we’re fully invested in maximizing the value of our investments and controlling costs better than third-party managers could.
In terms of exit potential, we focus on institutional-grade facilities, aiming for those 55,000 square feet and larger. We often look to purchase Class B or B- facilities and elevate them to Class A or A- standards. Our developments are strictly Class A institutional projects that attract institutional investors, whether they are funds, REITs, or regional players interested in acquiring portfolios or individual facilities.
We have successfully exited several of our projects and gone full cycle over the years, with the last two years being particularly active for us. As many, including Davey, noted during 2020 and 2021, self-storage became a highly desirable asset class heading into a recession. We executed multiple exits, selling some of our development projects at the certificate of occupancy stage. We sold these properties for a price significantly higher than our initial five-year projected exit value, even before the projects were fully leased and stabilized.
We made these exits for obvious reasons—to take advantage of the opportunity to reinvest that capital and achieve high internal rates of return (IRR) for our investors. We intend to continue this practice while closely monitoring market conditions. The goal is to maintain a strategy where we can exit with multiple projects at a higher price tag.
Typically, we see that institutional investors prefer to deploy their capital in larger transactions involving multiple facilities, and they are willing to pay a premium for the speed and efficiency this offers. They are looking to grow with minimal effort, making it our objective to package these properties for sale in a way that aligns with this demand.
Another significant advantage of our industry is that self-storage remains one of the last asset classes with a “Wild West” quality. Other asset classes, such as mobile home parks, multifamily properties, assisted living, dental practices, retail, and hospitality, are roughly 80% owned by REITs or institutional investors, with only 10-20% still held by smaller, individual operators.
In contrast, the self-storage sector is predominantly owned by individual investors, with only about 20% of the industry under REIT control. While these major players are increasingly entering the market and competing with us at the lower level, they also serve as our buyers.
As we expand our portfolios—whether by acquiring three or four projects within a single geographic area—we can package them for sale individually or bundle them into larger offerings. Our approach includes having a fund, various private placements, and direct investments that may involve a single property or multiple assets.
The specific exit strategy depends on the project and our overall strategy. That said, if you could give our listeners one piece of advice on accelerating their wealth trajectory, what would it be?
First and foremost, I want to clarify that I don’t give advice, as I’m not compensated for that, and people generally don’t want unsolicited advice. Instead, we focus on sharing our experiences. What I’ve seen aligns closely with what many others have experienced in the industry.
It’s when everyone else is running out that you should consider running back in or, at the very least, looking to get back in. This should be done with proper due diligence and by surrounding yourself with advisors or mentors. Whether you’re investing passively or actively, as we head into this next economic cycle—many would argue we’re already in a recession—it’s important to recognize that more millionaires have been created and more successful businesses started during recessions than at any other time, for a multitude of reasons.
Typically, this is because many things are on sale, including real estate. The projects we are bringing on right now are exceptionally strong, and the returns we anticipate on the other side will be incredible. For any active or passive investor, I would suggest that sitting on the sidelines may not be the best position.
Again, I want to clarify that I don’t give advice, but just look at the math. Depending on where you get your data, the current inflation rate could be reported as anywhere from 6% to 9%, but the real numbers may be closer to the mid-teens—15% or 16%. If you are sitting on cash right now, you are effectively losing money. Eventually, you need to invest to generate returns and combat inflation.
The longer you remain inactive, the larger the hole you’ll have to dig yourself out of to recover those returns or make up for the losses incurred by keeping cash on the sidelines. If I were to share any advice from my experience, it would be this: whether we are at the bottom of the market or not, there are investments out there producing returns that you shouldn’t wait to pursue based on your perception of the bottom. In my opinion, that’s never been a smart strategy. I’ve made money in high-interest-rate environments. When the roller coaster goes up and then comes down, the key is to get your money into play—period. That’s my experience.
I don’t give advices because nobody wants to hear them. WE have a rule where we only share experiences.
That’s great, Scott. I appreciate your wisdom. It’s been fantastic having you on the show today. If listeners would like to connect with you or learn more about what you’re doing, what’s the best way for them to reach out?
For everything related to self-storage, you can visit selfstorageinvesting.com. We have a variety of white papers on the industry and information about our passive investing opportunities. We focus on education, mentoring, joint ventures, and syndications, as we’ve discussed, as well as partnerships for active investors. So, all things self-storage start at selfstorageinvesting.com. If you Google “Scott Meyers and Self-storage,” you’ll find around 40,000 impressions related to me and my brand. We’re active on all social media platforms, so you can find us anywhere.
Awesome, Scott. I appreciate your time today and your insights for our listeners. I look forward to connecting again soon.
My pleasure, Dave. Thanks so much for having me.