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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Aaron Caudell, a seasoned real estate investor who has transitioned from convenience stores to self-storage. Aaron shares insights on his journey, the importance of embracing technology, and the challenges of scaling his business. He emphasizes the significance of understanding market dynamics and the value of mentorship in navigating the complexities of real estate investment. Listeners will gain practical advice for starting their own investment journeys and learn about the evolving landscape of the self-storage industry.
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Investor Fuel Show Transcript:
AARON CAUDELL (00:00)
I just really like the value add opportunities that it presents. you know, really looking at our cycles in a big picture in the macro kind of, lot of baby boomers are retiring. So the smaller independent self storage facilities, which still make up a very large segment of the entire industry are getting out of business.Along with that, our industry is kind of pivoting towards a more digital platform. So those of us that are able to market digitally, process payments, process rentals, different things online, you’re really kind of able to really leverage what you’re doing versus that old style of operation.
Michelle Kesil (02:12)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone that I’m looking forward to chatting with, Aaron Caudel, who is a real estate investor who has invested in convenience stores, multifamily and self storage. So excited to have you here today, AaronAARON CAUDELL (02:33)
Glad to be here, look forward to talking to you.Michelle Kesil (02:35)
Yeah, definitely. I think our listeners are going to take something away from how you’ve pivoted across different asset classes in your business. So let’s dive in. First off, for those who are not familiar with you and your work yet, can you share what your main focus is?AARON CAUDELL (02:52)
Today, our main focus is building self-storage. Initially, we were in the convenience store business and scaled out to three locations. And I mentally found it hard to continue to scale out in that business, the financial constraints, the reliance on others, which I seem to have an issue with. ⁓We kind of got into multi-family, single-family, and I’m still involved in that. I have approximately 24 properties there. But I really like self-storage, what it allows me to do, and just the autonomy to really be the guy in the phone. Scaling is a lot easier. There are a lot of sub-industries that help support self-storage, and it really is where I want to be in the future.
Michelle Kesil (03:40)
Awesome. And are you operating in specific markets?AARON CAUDELL (03:45)
Yeah, right now I’ve kept everything very close geographically. We’ve got four locations. They’re all smaller locations, but we also have ⁓ some value-add opportunity at each location to continue to expand. We’re in the process of a development at our fifth location, which that single location will probably double our square footage as a company once it’s fully built out.And that is in central Indiana, Grant County. Yeah, the local town is Marion is probably Marion and Anderson, Alexandria are larger towns near us.
Michelle Kesil (04:11)
What is, ⁓ yeah, central Indian? Okay.Awesome. And why are you focusing on self storage? Like kind of what has been the journey to get to this place where you decided that that’s the area you want to focus on?
AARON CAUDELL (04:38)
I just really like the value add opportunities that it presents. you know, really looking at our cycles in a big picture in the macro kind of, lot of baby boomers are retiring. So the smaller independent self storage facilities, which still make up a very large segment of the entire industry are getting out of business.Along with that, our industry is kind of pivoting towards a more digital platform. So those of us that are able to market digitally, process payments, process rentals, different things online, you’re really kind of able to really leverage what you’re doing versus that old style of operation.
In addition to that, you can create a hub and spoke model and run things remotely. So now I’m not just geographically limited to
my drive radius, I can put some things in place and hopefully scale out throughout the Midwest, throughout the country eventually.
Michelle Kesil (06:23)
Awesome. What do you feel are some of the main keys that have made the biggest difference in allowing your business to be able to grow into scale?AARON CAUDELL (06:33)
Embracing technology, embracing AI from the technology front. We went from a person answering a phone, sending out mailers on an Excel spreadsheet, logging in payments, may or may not collect a check, some chasing cash all around the county to only accepting digital payment through our website. Andyou know, that really has sped things up. We were able to now put in fees for late fees, auction fees, different things like that. And we’ve also adopted a variable pricing model for our storage facilities. So you know, as our product, our storage units become scarce, then the price of those units go up very similar to a model of a hotel. So that also generates additional revenue. that way
And from the AI side, advertising is really been key for us. you know uh Jim and I creating Facebook ads and things like that. Sora doing ⁓ stupid little video ads and different things like that, just kind of getting us in front of the public. A lot of them have been kind of fun, not necessarily intentional, but just trying to get us out in front of our customers and be known.
Michelle Kesil (07:46)
Yeah, and are you also like operating the storage facilities when you buy them?AARON CAUDELL (07:52)
Yeah, right now I’m wearing a lot of hats and as we scale that is one of our biggest challenges. So within the last month we developed a partnership with XPS Solutions, which is a call center. So that took a huge chunk off of my plate. So they’re able to integrate with our software, which we also converted from easy storage solutions over to storage. SoThose two companies are able to integrate and kind of tie together. Also with that software, Next our build out will have gates. So the open API is within that software allows us to communicate with the gates. We’ll have all our security systems. We’re looking at possibly climate control. So the doors will be controlled through that process as well. So it’s really, it’s really been pretty cool to.
kind of develop those partnerships. I am literally still mowing yards, checking locks, cleaning units, doing all the leg work. I’m still doing the same thing to my single family, multi-family. I do have a full-time manager at my convenience store, but I’m still kind of the top end of that, you know, paying bills and looking at revenues and margins and things like that. I’ve, yeah, I’m getting to the point. That’s what I really like about storage. It’s…
You can rely on those outsourced people that are professional in that specific segment versus trying to hire someone off the street and train them specifically and kind of paying for hours you may or may not need. Whereas the call center, you’re just kind of paying for what you actually use.
Michelle Kesil (10:01)
Yeah, definitely. That’s a lot of different, work that you’re taking on.AARON CAUDELL (10:07)
Yeah, it’s been fun. And educational as well. And on top of that, we started a management company. So we’ve got our first facility under contract. We’re actually managing a 300 unit facility for a gentleman out of Utah. And that’s been really fun as well, just kind of trying to build that out and put some of those pieces in place and get that roll.Michelle Kesil (10:10)
Yeah, totally.Totally. What are you most focused on solving or scaling to next?
AARON CAUDELL (10:40)
it’s really about doing the math of kind of where I want to be at retirement or at the end of this cycle. I really want to, the single family, multi-family, I want to kind of pare down, hopefully do some 10 31s into some additional storage facilities and just kind of get to where I can focus a little more. It’s been, it’s been nice having,different industries in different segments like we talked about earlier with COVID and some of the threats that presented our retail side on the community store side was we were threatened, but we had enough income streams through our single family, multi-family and through our storage that, you know, I slept a little bit better at night, but I have realized that I can’t wear all these hats continuously because it’s creating a mental burden and I’m not doing things as well.
in the storage side is what I could if that were my only focus.
Michelle Kesil (11:35)
Absolutely. So are you looking too like higher out or how does it look like when it comes to streamlining all of that?AARON CAUDELL (11:44)
Yeah, the next phase will probably be more of a boots on the ground type of individual, which actually my daughter is going to be my first employee probably this summer. She’s getting her license. So her first job is going to be checking locks and cleaning units. So from there, I’m looking for probably more of a maintenance oriented person. Someone that can maintain properties through.through lawn mowing, landscaping, some basic construction skills, still be able to check locks and kind of go through all those processes. we’ll start with one person and that’ll be, some geographic limitations. But if we scale out outside of our geographic boundaries, then we’ll look at some subcontractors, 1099 type people to be able to assist us with that. And that’s really my goal is creating our system and process to where we’re not limited geographically.
It’s completely out of my comfort zone and I haven’t done it but I am going to force myself to do it. That way we can look at the best deals instead of the best deals within your market. It really will open things up for us.
Michelle Kesil (12:47)
Definitely. What has been a obstacle or challenge that you have faced, where now looking back in hindsight, you can see the lesson and the reward of it.AARON CAUDELL (13:00)
Probably doing everything myself. I’m hard-headed and I learn slow. It’s taken 20 plus years to realize I can’t do everything myself. And it’s only been within the last five years that I’ve become accepting of that. So, you know, I am starting to outsource and get some more 1099 contractors on board and, rely on other people a little bit more to do things.I physically can’t be as many places as I used to be. You know, I had told you earlier, I’m on county council, so we’re doing that on the side. also coach football and track for my children. So you know, time is valuable. And, you know, I’m not one of those people that ever want to scale out to the point where I’m on a jet and somebody else is doing my schedule. I don’t want to do that. I want to be able to still enjoy my family and things locally and control my own schedule. ⁓
I can’t do that continuing to do what I’m doing, so I’ve got to kind of branch out and get some people working with me.
Michelle Kesil (14:46)
Yeah, definitely it’s important to hire the right team and to focus on your zone of genius.AARON CAUDELL (14:50)
Yeah.Yeah.
Yes.
Michelle Kesil (14:55)
What advice do you have for investors that are earlier on in their journey and maybe just starting out?AARON CAUDELL (15:00)
Just do it. Get the first deal under your belt, whatever that is, whatever industry it is. You can’t research too much, but don’t get analysis paralysis at the same time. You just kind of got to go for it. But you do have to understand scale. You really do. I mean, whether it be single family, multi-family, if you buy two houses and two furnaces go down and two tenants trash the houses,you’re upside down for about five or six years. If you’ve got a portfolio of 20 or 30 houses, that’s not as big of a deal for that to happen. So you really have to understand scale and try to get yourself there as quickly as possible. I’ve never taken outside money. That’s something I’m considering. Again, another one of my control issues, but sometimes to get to the scale that you need to.
You need to go get outside money and that’s something we’ll start looking at in the future, I think.
Michelle Kesil (15:52)
Yeah, absolutely. And when it comes to finding the right deals, is there like a certain strategy or approach that you take?AARON CAUDELL (16:03)
I am staying within my geographic circle still, but I’m starting to branch out more. I’m not big into using VAs or anything and writing letters. I get 100 every couple months of people wanting to buy my storage facilities, writing letters to me. They go straight to the trash. I personally feel like that’s wasted money. I specifically target facilities.that kind of check the boxes of what we talked about earlier. They don’t have an online web presence. The ownership has been in place for a very long time. And then you start have to, you have to drill down into demographics and things like that to make sure it’s going to be a viable purchase. And I don’t undercut people. I give them as close to what they’re asking as I can, as long as it’s still a good deal for me, I want it to be a good deal for that person. And that I believe has allowed us to.
to get a couple of deals that other people are not able to get. I’m not greedy with it. just, I see the opportunity. You know, I have a margin I have to stick to, but we go after that.
Michelle Kesil (17:06)
Yeah, absolutely.AARON CAUDELL (17:08)
It’s all about relationships too. It’s not just one phone call and hang up. You can have to stay after things and kinda stay in people’s minds as well.Michelle Kesil (17:17)
Yeah, relationships are everything in this space. Are you doing any like networking or relationship building strategies?AARON CAUDELL (17:27)
I don’t do a lot of that now other than County Council, coaching, things like that. Gives me a lot of contact points with a lot of people. So I have a little bit of a network through there. I’ve not done a lot of professional stuff networking wise, but it’s really through some social media groups and different things like that. Just kind of watching, listening, paying attention, things.things of that sort.
Michelle Kesil (17:52)
Yeah, absolutely. And as far as I know you started out in convenience stores, was that something that you had mentorship on or learned? Or how did you take that first step?AARON CAUDELL (18:05)
It was kind of interesting. I was at Ball State University and I was actually working in a Marathon gas station. ⁓ I was one of last people to close that store up. It converted from an old three base service station to a modern day convenience store. At that point, I actually got into manufacturing for about seven or eight years, moved to Michigan from Indiana, was working at a Japanese firm that built injection molding machinery andI wanted to move back to central Indiana. There wasn’t a lot of opportunity and I kind of relied back on some of that earlier knowledge of the convenience store industry. I knew it was something people had to have. Some of the things about it scared me, environmentals and things like that. But I knew it was a continuously cash flowing business that was never going to dry up. You know, I looked at different franchises and things like that. And the one thing about all of those, one is you’re paying all those fees. But two,
Some of them are just sketchy. You know you can only do so many oil changes and different things and the competitive pressures could be a little bit different. But the convenience store and steady cash flow and you know I started listening to different people. Really there’s two companies there. There’s a real estate business and your operational business. And that’s kind of how we set things up and that’s how we’ve moved forward. Our storage facilities, our property company owns the dirt.
and we have another company that does the operations and everything we have is divided up like that. So you’re really looking at two things, your property values and appreciations on one side and then your actual business value and how you grow that side, goodwill and things like that.
Michelle Kesil (19:42)
Yeah, it makes sense. I think the operational piece can be a big challenge for people.AARON CAUDELL (19:47)
Yeah, yeah, for sure. So yeah, it’s a, we had some great mentorship early on in that business. It was a, it was kind of a crazy environment. They, you know, it was still a small convenience store. We fixed cars, we had a tow truck company, we sold cars on the side. So I kind of got that fever for a little bit of a chaos atmosphere and, know, wanting to do multiple things.That’s kind of why I diverged out into all these different segments, I think, I kind of thrive on that. But, you know, as I get older, it’s also becomes more difficult to manage to keep all those balls in the air. So we’re kind of starting to pare back a little bit now.
Michelle Kesil (20:30)
Yeah, absolutely. That makes sense too. Know your limits and when to focus on.AARON CAUDELL (20:36)
Yeah.for sure.
Michelle Kesil (20:43)
Awesome. So before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you and connect with you?AARON CAUDELL (20:53)
Sure, I’m on Instagram and Facebook. We’ve got two pages, Hometown Express Storage ⁓ is one Facebook page and Hometown Express Convenience Stores are the other. I also have personal Facebook page. You’re welcome to email me at [email protected] That’s spelled G-R-O-O-T-S-C-A-P-I-T-A-L at gmail.com. And I would be glad to…get on the phone with anybody at any time. Just give me your contact information. I love talking about storage and businesses and young entrepreneurs that really wanna get things going. I think it’s pretty awesome.
Michelle Kesil (21:34)
Absolutely. Thank you so much for your time and your story. Appreciate you being here.AARON CAUDELL (21:39)
Yes, ma’am.Michelle Kesil (21:40)
Awesome and for the listeners that are tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Aaron who are building real businesses and we will see you all on our next episode.
