Conquer Your Fear: Transform Self Storage into a Recession-Proof Asset

John Harcar (00:01.838)
All right. Hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Guy Varble. And what we’re going to talk about is, besides his real estate and business experience, we’re going to talk about self storage and why it’s maybe overlooked, but a good investment. Remember guys, Investor Fuel, we help real estate investors, service providers, I mean, all real estate entrepreneurs, 2 to 5X their business by providing tools and resources to grow the business.

Guy Varble (00:09.163)
you

John Harcar (00:31.511)
they wanted to have and in turn live the life they want to Guy, welcome to our show.

Guy Varble (00:37.058)
Great to be here, John. Really appreciate you having me on today.

John Harcar (00:40.342)
I’m excited to talk about stealth storage. It’s something I’ve always wanted to get into. But before we talk about all that and get into the weeds, why don’t you tell our audience a little bit about you, kind of your background in real estate, business, and kind of what got you to today.

Guy Varble (00:55.918)
Sure, so I mean, I was working for Procter & Gamble back in 2000 and they helped pay for me to get my MBA and then came a business commercial lender for a little bit and then we moved to Iowa 21 years ago and our kids are now 18, 19 and 21 and we’ve been here and it’s been a really great move for us. Bought one of those learn how to flip houses with no money down programs and it was Fortune Builders. Yeah, yeah.

John Harcar (01:20.302)
Who was it by? Forza Builders. Okay, all right.

Guy Varble (01:25.324)
It was in 2010. I tell everybody I bought a duplicatable business model, but what I got was a life transforming process. And what I learned is that I had to change. I had a lot of internal hurdles that needed to overcome. So I did fairly well with that. And then they asked me to coach for them. So I coached for them for about four or five years while I was building a business and flipping houses and things like that. And then I…

bought some rental properties and things like that. And then we really started to look at self storage and in 2018 we bought our first facility. And then from there we have just decided to sell everything else off. Last year we divested our last presidential property. We don’t flip anymore and we’ve done about $220 million in transactions in the last seven years. Yeah.

John Harcar (02:23.874)
incredible. Let’s go back a little. Yeah, let’s go. Let’s go back a little bit. If you watch any of my old podcasts, I like to I like to go back. What was your MBA in?

Guy Varble (02:24.846)
that have been hidden already.

Guy Varble (02:30.894)
So it’s Masters in Business Administration and there’s no emphasis specific to anything. But I will say that I use ManBea a bunch when I was as a banker, but more now that we’re doing equity raises and looking at discounted cash flows and the other processes involved with creating value in each of the facilities. I use that a lot.

John Harcar (02:35.628)
Okay.

John Harcar (02:59.822)
Do you? Yeah. And I just want, asked that for the reason to kind of find out like where you said you found a do it yourself course. So you found the fortune builders course prior to that. Was there any interest, any family influence, anybody you knew, anybody doing any type of real estate that kind of planted maybe a seed that at one point bloomed into an idea.

Guy Varble (03:21.612)
Well, actually it was the exact opposite. My parents had some rental properties that I managed to help manage them in my twenties. And I knew that’s exactly what I didn’t want to do. You know, the repairing of them, this is in California, so California is a little bit more tenant friendly and having to deal with tenants who didn’t want to pay, who didn’t have to pay.

John Harcar (03:29.814)
Okay.

John Harcar (03:34.382)
Why not?

John Harcar (03:45.71)
Mmm.

Guy Varble (03:50.626)
and then you eventually pay tenants to leave so you could get the unit back so you go ahead and fix up their damages and then go ahead and rent it. And it was such a small dollar amount from my perspective because I was being paid as a manager as opposed to really seeing it as an owner. And so it was then that I realized I didn’t want to do that. And then when I started having kids,

I knew that real estate was a good idea because I had seen my parents do it. And then I started to see it as an owner perspective. And then that’s when my wife and I said, yeah, let’s start to get into

John Harcar (04:30.03)
Okay. So as you got in and as you found this course and you started learning and doing stuff, I what were some of the struggles for you in the beginning of your real estate journey?

Guy Varble (04:40.472)
Yeah, the single biggest hurdle was fear. I was afraid and it was, hey, start marketing. So I would start marketing the phone with me, but I wouldn’t answer the phone. And then I would listen to the voicemail and then I would do a desktop analysis and I would say, I need to buy it for X. And then in my mind, I would say, well, they would never pay that. They would never sell it for that. So I wouldn’t call them back. Right. I had all of these fears to overcome and really what it was at the end of the day,

is I had to get over my belief that I knew more about those people and what was good for them than they did. And I had to start listening to their needs, listening to their desires, and finding the people that I could help who needed to move forward with their life. And they needed somebody like me, an investor, who could help close the property, close it quickly. They didn’t have a bunch of people traipsing through their house. They had their own things.

And so overcoming those fear and hurdles, they were big for me. And so I had to come up with a couple of rules. One was if you visit the house, you have to put in the offer. If you go and you did 90 % of work, you got to put in the offer.

John Harcar (05:54.446)
good. Yeah, well, I mean, most people think that’s kind of the no brainer you should but it’s it’s amazing how people so many people don’t do that.

Guy Varble (06:03.758)
It is and it was this fear of being judged this fear of being wrong or seen like I was trying to take something from them or all of these things and I really had to overcome the the mindsets that I that I took into that industry into that

John Harcar (06:24.376)
How did you do that? know, you know, did you listen to podcasts? Did you, was there a book or an author that you dove into that just changed your thoughts?

Guy Varble (06:36.718)
And so I think part of it was, I think you overcome fear with action. First of all, I think that that’s one of the things that has to happen. Fear is always a future tense, right? It’s never, oh, I’m afraid about what happened yesterday. It’s afraid I’m going to bring what’s going to happen in the future. And by taking action, I was able to then experience the reality of things. And some people did get upset. And some people did cry and say thank you.

Right? I didn’t know what the future held. Yeah, I think Jim Rohn, right? Jim Rohn’s, pretty much anything by Jim Rohn is really good from the perspective of just knowing that you do have a skill set that is going to be valuable to other people. I think one of the properties I bought, I think I was probably the 13th investor to look at the deal, and nobody else could make it work.

John Harcar (07:12.942)
Mm-hmm.

Guy Varble (07:35.062)
and she needed to sell her house to move to another state so that she could be with her sister while her sister was dying. Nobody else could make it work. And so I was able to do that. I made some good money in the deal, right? And she got to move forward with her life. And so once I really started to grab hold of those things, I gave up on this fear that was driving me.

John Harcar (08:02.936)
Got it, got it. Now I’m curious, 13 other people looked at it and you worked out the deal. How were you able to work out a deal that they weren’t? Give us a quick little skinny on this.

Guy Varble (08:12.716)
Yeah, I don’t know what they did or didn’t do. All I know is I said, hey, here’s the dollar amount I can pay. And I think what it is is I probably did a deeper due diligence on the property to find out what the reality was of the needs. A lot of times, house slippers will go through a house, and they’ll just guess. It’s probably going to be about this dollar amount. Where I took the time to actually go in,

and look at the attic and look in the roof and look in and really calculate out what I thought it was going to cost building a buffer for mistakes and errors and that type of stuff and then build in an appropriate profitability. I think one of the things that you would ask before which is how do you overcome it? You lose money on a couple of deals. That’ll help you overcome that’ll help you overcome those fears, right? So

John Harcar (09:02.35)
Real world, that’s how you overcome it. Get smacked

Guy Varble (09:08.902)
The first two deals I ever did, I lost some money on it. It was right before I bought the Fortune Builders product. And you know, had I bought the product beforehand, I may have still made those mistakes. But at the end of the day, when you know that there’s a way to lose money, then you need to make sure you build enough buffer so you actually make money.

John Harcar (09:35.692)
Why was it important for you to seek out a mentorship or a guidance or a program or the Forge of Builders? Why was it important for you to do that versus, mean, there’s enough other information out there that you could have done it and you could have maybe learned on your own. Why was it important for you?

Guy Varble (09:51.832)
Yep. I think that time, right, you’re going to pay for it one way or another, right? Time is one of the things you pay in. Another thing is mistakes, right? We all go to high school. We all do education. We don’t know what it’s good for. Like when are you ever going to use algebra, right? That’s the question you ask in algebra class, but we’re told it’s important, right?

John Harcar (09:59.79)
He

John Harcar (10:15.777)
Right.

Guy Varble (10:19.182)
I think I know myself well enough to know that I could go learn, but I also am the kind of person who will get paralyzed with analysis, like in that paralysis of analysis type of thing. And so I looked at a local guy, a local investor, and looked at paying him to train me, a guy I respect very much, I’ve learned a lot from. And I thought that…

John Harcar (10:30.648)
Hmm. Yeah, no, I could definitely.

Guy Varble (10:48.072)
my needs probably outweighed his ability to help. And it felt like finding a program that I understood had sort of an encompassing process. The coaching was good, right? Sometimes it was a kick in the butt. Sometimes it was a holding of the hand. know, sometimes it was a crying on the shoulder, right? That kind of stuff. It worked well for

John Harcar (11:13.976)
But got it. I love it. So let’s get to today. So what does your business look like today? I what does your team look like? Is it just you? Fill us in.

Guy Varble (11:24.088)
Yeah. So with COVID, we sent everybody home, bought them laptops and dual monitors. And then when it came back time to come to the office, nobody wanted to go back to the office, not even me. And so we sold the office, right? And so we have a distributed company right now. We’ve got two parts to our business. One is we raise money through equity, equity fund stuff. And the other one is we do exclusively self-storage.

So we’ve got a pretty good bench of underwriting. So we’ve underwritten about 1,000 deals in the last 11 months. So about 20 deals a week is what we do. And the aspirational goal is to underwrite every deal in the market in this country. That’s easier to do than you think because it’s a small industry and there’s not like millions of properties for sale. So it’s easier to do. But that’s the goal, right?

John Harcar (12:16.524)
Right, right.

Guy Varble (12:22.83)
the technology and the manpower and we’ve got virtual assistants, some of them that are end of India. As a matter of fact, my executive assistant was on our underwriting team and he sits in India and he’s my executive assistant and we slack huddle all day long. Like we’ll go through emails, we’ll manage schedules and all that kind of stuff. Then the CEO of our company is my wife, Nikki, and she also has an undergraduate degree in economics and business and

She was helped through all the process of the flipping as well as the conversion to self storage and that type of stuff. And so she does work with the team more often than I do to help build skill sets and those types of things. We’ve got a director of marketing, a vice president of investor management and growth. he handles all of the, if you ever notice, we’ve got.

Instagram and Facebook and LinkedIn and YouTube channels and like just all of those things that are Interesting to me, but I’m not great at so somebody else is handling all of that We have at the facility level we don’t manage our facilities anymore We’ve got third-party management companies that that manage that so we’ve got us on that our team We manage those third-party managers to make sure that all the things are happening

John Harcar (13:21.782)
Mm-hmm. Mm-hmm.

Guy Varble (13:48.5)
Because at the end of the day, we know what we need to do to go from here to there. We know how to get there, and we just need to make sure people are executing.

John Harcar (13:58.784)
Awesome, awesome. Did you use any specific tools to put the people in the right seats? Like, you know, when you’re hiring, did you use like the predictive index tests? Did you use any of type of things?

Guy Varble (14:04.718)
Yeah, predictive index. Yeah, predictive index. So love predictive index. I think more than anything, it gives the team a vernacular, a nomenclature, a method of communicating that says, hey, here’s how I am. So just because they don’t fill out an expense report by this date doesn’t mean I’m lazy. It just means you’re asking me to do something that’s extremely detail oriented that is really

John Harcar (14:32.462)
That’s not my personality. Yeah, yeah.

Guy Varble (14:34.828)
Yeah, yeah, right. As opposed to just because you’re so picky or retentive, shall we say, on things doesn’t mean that you’re a bad person. It just means you’re extremely detailed and your job is not to be the head of marketing and thinking outside the box, right?

John Harcar (14:52.45)
Yeah, just because I’m friendly in the office doesn’t mean I’m comfortable in public situations speaking. Yeah, I love it. love it. So then let’s talk about kind of what our topic was self storage. mean, I know you mentioned that you’ve done everything single family, multifamily, all this other stuff. Why did you make that flip to self storage exclusively?

Guy Varble (14:58.04)
Absolutely. Yep, exactly.

Guy Varble (15:13.592)
Well, I think at the end of the day, think of it this way. So we’ve got about 4,200 units right now in the portfolio. So when we get to, let’s call it 10,000 units, which should probably be end of next year, middle of the year following that, so 2027-ish. It depends on if we sell. You always take advantage. I mean, I’m a big proponent of taking chips off the table.

So if you’ve got a great opportunity to recognize the goals that you set for that specific investment, then take advantage of that and then move on. So, but at 10,000 units, well, just use 1,000 units because it’s just easier for people to understand. 10,000 seems so daunting, 1,000 seems like somebody, right? Some 1,000 people can really grab their hand around. So if you raise the rents by $15, people are not gonna move out. It just doesn’t happen.

John Harcar (16:00.992)
The same as 1000.

Guy Varble (16:12.75)
Right, you know, some do, some don’t, but at the end of the day, you’re raising rents. So that’s $15,000 a month, which is $180,000 a year, which at a six and a half cap is $2.7 million in value. So the question is, how many times do you want to raise your rents by $15 over the next 10 years? Well, as many as possible, right? mean, at some point in time, you start to recognize

that if you raise the rents by $10 a year every year for the next 10 years, you’re going to increase the overall value of that portfolio by $27 million. When I grabbed hold of that, I said, all right, I’m out. Like everything else, I’m like, let’s just go. Let’s go. Let’s go. And that’s driven us. And we knew very little going into this. Very little going into this. But we felt extremely confident.

And I say we I mean I had other business partners in the deals and we built a business together We’ve grown this right and now we’ve gone our own separate raise and we’re doing our own things But at end of the day It’s a very basic business I like it because it’s pretty simple. I like it because it’s got a built-in recession resistance so if if you know

Unfortunately, when people lose their houses by the droves like we saw in 2007 and 2008, self-storage industry goes up to 100 % occupancy because they need to store their stuff. And the other side is when people are making a lot of money, there’s a lot of houses that buy and sell. So that’s a good component of our tenants. But there’s also business owners and there’s also the emotionally attached. People also buy more toys. And so they keep a C2 in one and a snowmobile in the other.

John Harcar (17:47.458)
They store their stuff, yeah.

John Harcar (18:03.32)
Yeah, I think the more more money more toys. Yeah.

Guy Varble (18:07.702)
Right? And so we see on both extremes a built in value there. And I’ll just say this across the country, COVID was great for so.

John Harcar (18:20.078)
Do you build ground up or do you buy existing or both?

Guy Varble (18:26.894)
Yeah, so we’ll buy, we don’t like to buy lower than $2 million. Labor’s a major component. If you’re too small of a facility, yes, you can do remote management, but at the end of the day, you need somebody to take the locks off and put them on. There’s always a need for a human to interface at each facility. We’ll go down as low as maybe a couple million. We’ve got about three deals right now, I think, under LOI.

one at three, one at 2.2, one at two, right? And then we’ll build brand new class A, 100,000 square foot facilities for 15 million all in. And those are great. they’re, you you’ve got to raise $4 million and three three and a half to $4 million of equity. you go out and you build that thing and it’s worth 22 when you get CFO and 28 when you get to stabilization, right?

John Harcar (19:19.256)
Mm-hmm.

Guy Varble (19:23.064)
But the best part and the thing I like most about building, aside from working with professionals, is that, let’s say you spend $10 million in hard cost. About half of that is labor. So we can put $5 million of labor to work in this country, in a local area where they get to buy houses, where they get to buy food. I mean, we get to be part of that system and process.

John Harcar (19:44.12)
Yeah.

Guy Varble (19:51.598)
We get to make some great money at it. We get cost tags that help, you know, defer income taxes and stuff like that. But we get to be part of that engine, that job generation process. And that’s what I really get excited about.

John Harcar (20:07.084)
Love it. So are you partnering with folks right now? I mean, do you have deals that you’re looking for investors with? I mean, do you teach people how to get into self storage? What does that all look

Guy Varble (20:13.474)
Yep.

Yeah, so I’m very open with my time. My executive assistant is less open with my time. Because he’s like, look, you got to get this other stuff done. I just had a call today with a local guy here in Des Moines. And he said, hey, I was interested in thinking about how to do self storage. So I spent about half hour with him talking about how I got started and the key components and how he could grow his knowledge and experience.

John Harcar (20:30.199)
Right, right.

Guy Varble (20:46.542)
We have an equity, we have what’s called a customizable equity fund, which allows people to invest into the fund, but choose which deals they do and don’t want to be part of. Right? So it’s customizable so that they can say, Hey, I don’t want to do business in Texas, or I only want to do business in Texas. Right? They can choose the deals that we’re doing. We have a pretty good pipeline, right? We’ve got a really good pipeline because of our underwriting process.

We say no to a lot of deals So we don’t we only say yes to the deals that we really want to do that makes sense So so yeah, I always look in what that very high level we want to double the limited partners investment in five years or less Right. So if they invest 200 grand we want to give them $400,000 some in cash flow and and the rest of the sale over a five-year period

John Harcar (21:24.59)
Right, yeah, that’s a thing to have.

John Harcar (21:45.742)
Okay, cool. If folks want to get a hold of you, they want to talk to you about self storage, they want to kind of talk to you, know, kind of get you an idea of how they get started. How do they reach out to you?

Guy Varble (21:58.606)
So you can email me directly, Guy is the GUI, and then MomentumWealth.fund. So Guy at MomentumWealth.fund. That’s it. Sure.

John Harcar (22:11.406)
Perfect. We’ll put all your contact information down in the show notes. Any last information you want to leave our audience with? Maybe some advice as far as if they’re getting into self storage, advice of overcoming mindset, know, anything.

Guy Varble (22:25.198)
For sure. I tell everybody, find something to live for that’s bigger than yourself.

Whether that’s God or religion or your family or your whatever something that’s bigger than yourself Because we’re all gonna live this life and die in this life We’re probably not gonna take it with us depending on how you think see things, but I don’t think I’m gonna take it with me, Done wrong you can give too much to your kids So find something to live for it’s bigger than yourself. So then you always have a reason to be valuable

John Harcar (22:48.846)
Right.

Guy Varble (23:03.576)
Right, so would say that. And know that you can really do more than you really, you’re your own limiting factor, right? Get outside of yourself and go do and be more. And that’s what we need in the world.

John Harcar (23:24.248)
Love it. Words to live by. Guy, thank you so much for coming out and sharing all this information. I hope, you know, guys that are listening out there, you guys had a great show, took some good notes. And reach out to Guy if you have any interest in talking about self storage. I mean, this is the gentleman you need to speak with. Thank you again. And guys, we’ll see you guys on the next show. Cheers.

Guy Varble (23:37.368)
Thank you.

Guy Varble (23:47.438)
All right, thank you, John.