Ep 462: From Flames to Fortune: Ian Horowitz's Journey from Firefighter to $70 Million in Storage

Transcript

hey welcome to today's episode of The Hive with us podcast I'm your host Daniel Martinez today we have special

guest Ian [Music]

harwitz what were you from what part of the country are you from Ian I'm actually just outside of Philadelphia

but our office is in Baltimore Maryland so we are hardcore East Coasters and

you're under snow we are under snow you know that's the one that's the one downside to being on this side of the

country does snow every once in a while but every once a like half the year yeah

no it's not that come on man you guys got the mountains right over there in California and you know that whole region it's snow all year round we were

not that bad but now we're over here this side of side of the country but you know it's uh we're a little bit ahead of

you I guess that's how you could look at it yeah I uh one thing I hate about like the the varying differences is the time

zone change especially for the eastern time cuz I'm like I get up like at 9:00 10:00 a.m. I I start work and it's like

1:00 yep yeah our day is half over you guys are just getting started so sometimes there's good things to it

sometimes there bad because like when you're dealing with someone on the west coast you're like man they're like go like our one investor he's out near San

Diego and he's like can I call you around five I'm like dude that's 8 o'clock it's bedtime for the kids like my day's over bro like I'm mentally

fried so I feel the pain but you know it's all good man so so we're gonna kind

of jump right into it you firefighter to storage investor how long how long you were a firefighter

when did you kind of make that transition was it a hard transition quick transition kind of jump into a little bit of that story Yeah man so we

my business partner and I we were both uh firemen for the city of Baltimore so if you ever watch The Wire all the

stories are true you saw the riots that happened that's where we worked it's it's all true we worked in the heart of

West Baltimore it was an interesting time you know but we traded we traded making money in exchange for security

and doing a job that we love right so we get hired in O 07 and 08 respectfully uh

respectfully and you know within I think by 2009 we were getting furloughed they

were shutting companies down they were attacking our pension system they changed our schedule our benefits like

all these things just kept getting thrown at us and we're like dude we want to have kids we can barely afford to

live there's no overtime like this is not sustainable by any means and um I

would say 2012 2012 is really where I got the itch I bought my first house in 2012 my

business partner started wholesaling in 2013 we eventually came together in 2014

and created Equity Warehouse what it is today you know just grinding away on properties but a lot of it came from you

know we were firemen for 15 years you we built some of our business while we were still firemen you know and it was it was

a great learning experience there's a lot of traits that carry from being a fireman that carry over to being a real

estate investor you know one of them is you know when it's on fire we keep going at it and we we don't leave until the

fires out well it's the same thing inside of our business there's a dumpster fire going on we keep going at it over and over and over again because

we're too dumb not to right people are running out right we start buying in 2012 presumably the bottom of the market

people are running out of a burning building we're running in because we we're going to save people well we didn't know that was the bottom of the

market but people are running out we're running in buying real EST State people like you're crazy like you know I don't know any better I'm going to go do my

job those were some of the competitive advantages we learned by being a fireman I know I kind of jumped all around there

and gave you a quick overview but that's really uh what we did for the last 15 years or so so first of all I want to

say thanks for thanks for your service to to to the the community I think a lot of people that that run towards fires I

think were they're a little nuts but I think I think it takes a certain kind of person to do that so I I I appreciate your service in that in that

aspect well thank you but it required me to be cleanly shaven so I'm kind of glad I'm out of them days and can grow a

beard but yeah it's uh you know it's appreciated because there is a yeah I could go with a mustache I don't look as

good but it's a tough it's a tough life man but you know here's the thing is that like a lot of people in that

Community is like it's where you start to see like bad landlords you start to see how people treat other people and

you're like dude like you know like politically I'm not on that side of the fence but like in the same sense people

deserve a quality place to live they be they deserve to be treated in the right way and we started in Section 8 housing

right like you got remember like I'm at work and these dudes are talking I don't know if I can curse on your podcast but

they're talking they're talking to me they're like you're gonna be another slum Lord you know that house we

were at the other week that was on fire that's going to be you and I'm like n man I'm going to do it different even

though we're servicing Section 8 tenants at that time man like it just it really oped your eyes to the way of life

working in those communities and the people of the street are appreciative of the service that you provide no it's

a it's one of those things where like everybody has their own varing opinion but you have to like peek through the

noise and make your own standard because you as an individual investor create whatever standard you want yep yeah 100%

And you know if you're not going to I think too many people look at it you know you talk about building a standard

and like what type of house that they want to create or what type of service or product that they want to create and

deliver to other people too many people think with their pocket one thing that we knew in the fire department it was always like keep your

eyes open keep your ears open keep your mouth shut so like for us it was always like let's just do the right thing keep

our heads down and don't brag about it on Facebook there's not many posts that you can find of us bragging about assets

that we've bought or houses that we made six figures on we didn't do that we just kept our head down and did our job and

created the right standard that we believed in and just kept going at it and like I said we were too dumb not to

not continue to go at it and that's how we built what we have today so 2013 is a

long time ago I know that's a a lot of time it's passed since then you you kind

of started in Section 8 how many units did you get in Section 8 how many do you have now currently yeah so we started

flipping houses well that's a lie I I built a 10- house portfolio my business partner uh he starts wholesaling you

know gets out of the six figures of debt We join forces and we uh we wholesale a

package off in flip house then we wind up flipping a bunch of houses and then basically from like 201 15ish to about

2019 we built a 100 house portfolio of Section 8 housing we directly own about

40 of them still today we're Partners in another 40 or 50 we just started selling

those single families off but it's because we've gone up in the asset class

chain right like those properties don't serve us the same way that a 76 unit apartment building or a 44 unit an

apartment building serves us today so we're just starting to sell those single families off the ones that cause us the

most headaches but as of today we have about 250 residential units between multif family and single family in the

Baltimore metro area yeah I talked to a guy who builds multif family in Philadelphia and they like you can buy

those eight plexes little strip row home they'll they'll build all that stuff into I think it's really I think

Philadelphia and Chicago has it too and New York has it too has these little like little little really cool multi

family houses you don't really see anywhere else well it's the older it's the older building stock that we got out of here like we were joking about East

Coast West Coast right like you got to remember our building stocks completely different out here like everything's

much more densely populated I remember one time this is a useless story but I'll tell it anyway I went to LA one

time and everyone's like this is the greatest City ever and I'm like this is not a city man it's just like a lot of

land like it's different to us but you got to remember how we everything over here is so so densely populated so we do

have to do like really compact up buildings to be able to build multif Family Garden style apartments in some

locations inside the C like we own a garden style but there's not many Garden style type apartment buildings in

Baltimore City just because there's not enough room for them you know so it is a sometimes where you operate is what

allows you to have that different type of Building Product that's different and unique to your

area yeah it's I I want to talk about little bit I think it's 100% true I

think you have we have a lot more land mass and then they're trying to like densely populate um but you're you're an

older City too it's just it's just a plain fact every all the East Coast cities are older cities so they have uh

they're dealing with that that age- old stuff that was built back then how was the

transition into like storage and multif family uh a lot of people they struggle with that what are some things you kind

of you kind of dealt with in that transition cuz I think a lot of people they're like I'm single family forever

you know that that was us dude that was uh single family for life you know it was like dude I can imagine own hundreds

or thousands of these and it sounds so cool and you're like those idiots over in multif family like they don't know

what they're talking about and plus I don't have that kind of money to do that and a lot of our

struggle coming up and it's funny you ask that because we we talk about this a lot is like it was like how do you do it

I'm like I don't know just do it man just just go do it right but that we were kind of forced you know 20 9 we

were buying shells you know I know you guys don't have shells this cheap but we were buying shells for five five to 25

Grand we'd be all in at 120 Grand and they'd be worth a buck 50 and we were getting ,200 to $1,400 rent that was our

wheel house all day every day just bang bang bang bang one day overnight next you know those same houses shell I'm

talking shells like you walk in and you can see the sun dude the next day they're worth 50 Grand you're like dude

okay rents got to be like 17 $1,800 no rent still $ 12250 I'm like what are you guys doing so the barrier to entry got

easier and easier and easier leading into 2019 20120 just preco and it kind of forced our hands to

start looking at other asset classes and we wanted bigger there was always like an urge to be like all right I want to do a little bigger I want to do a little

bigger some of the issues were revolving around Capital what banks are going to

finance can you imagine doing 76 like that's overwhelming thinking about that

and what I would say is by cutting our teeth in single family and doing the same thing over and over and over again

it buildt a banking relationship it built a network it built guys seeing what we were doing offering to invest

with us I was like okay and eventually we want to buying uh a really big 76

unit apartment building prior to that we bought a 7 Unit A 7,000 SQ foot commercial building 44 unit like we were

kind of like Dilly ding all around it and another thing I would say is what helped us get over it was you know when

I'm at work for 24 hours I'd be on this damn thing all the time not looking at Facebook or Instagram I was signing up

for everybody's email distribution list to see how they were syndicating deals how are they buying these gigantic

apartment buildings because I couldn't put the two and two together so then finally I get a performa I'd see how

they would do it then I'd re underwrite the deal how I saw it I'm like there's no way they're making money there's no way they're making money well the funny

thing is most of these guys aren't making money they're collecting fees and I was like well I figured that out

but it allowed me to do it over and over and over again to the point where we were comfortable and then when the right

opportunity showed itself we were able to jump right on it which we'll talk about at some point but you know we were

able to buy a 76 unit apartment building with 90% owner financing it was probably one of the wildest deals we've done but

have we not done all those single family houses flipping 100 houses building a 100 house portfolio doing some small

multi figuring out are instead of like you know some guys just get success they like boom on to the next thing it's like

no we had success now it's time to refine it let's hire an operations manager let's hire an office person

let's hire a maintenance guy let's figure out AppFolio or whatever software

we were on at the time we on AppFolio now building the system and processes then it's like cool today what I can do

and even at then but I didn't realize it is we can look at almost any asset class and say all right how does this fit into

our system we do construction well let's find stuff where we do construction first management second and that's

really how we made the transition by doing the same thing over and over and over again to the point we were so

confident allowed us to get into what everybody perceives as the next level getting into that next asset class all

right so I'm gonna address a few things the management fees we're gonna jump into that because that's that that's always funny and I like picking on

people so we're we're GNA jump to that but I'm going to jump a little bit forward before that I want I want to uh

I want to say figuring it out I think is the base of everything a lot of people

want the shortcut they want to know they want to what's the trick what's the tool what's the resource who's that person

and a lot of people like I think us as entrepreneurs you have to figure that out like whatever it takes you got

to figure that out and sometimes you lose money sometimes you're gonna some you're gonna get a lawsuit you're GNA figure that out though real

quick lose a lot of hair go gray whatever it is man but again that goes back to the fire department of us yo you

can't leave until this fire is out okay boss no problem and you stay there for 12 hours till the damn fire it's the

same thing in our business how many people in you probably out in California a lot of people got money right what's the first thing to do pull the wallet

out let me throw money at it let me throw money at it guess what money is not solving your problem most of the time it's you needing to use these

things those that are listening your hands and go out and get dirty and get the damn job done too many people come

from the standpoint of oh it'll work out oh it'll work out that guy won't me over this this will work out you know

you got to go out there and get dirty and get it done this passive is the biggest joke minus your tax return it is

not passive dude it is a full contact sport I think I think the brain the brain and hands solve every problem 100%

100 all right let's let's jump into uh management piece so this this is I think it's gonna be a good conversation I

think I think it's a sore point for you and this is a I think a lot of people don't understand this so what's your

opinion on AU which is ass under management everybody

doesn't know okay go ahead there's there's a fine line of I understand

today with what we own that yes you need to keep the lights on but there's also a fiduciary responsibility not to make all

your money on your fees so from an AUM standpoint we don't do value we just do

Topline revenue and we take a very very small fee when I took a small fee under a percent off of the top top line

revenue so at $150,000 a month on a property you're talking less than 1,500

bucks a month some of these people and I'm sure this is what you're alluding to AUM is based on their perceived value of

the asset well that just you're asking for a goddamn lawsuit I'm out

so okay good answer good answer okay let's talk about are you are you a fund by chance we're not a fund we do single

purpose entity syndications or private placements yep okay okay so this is this

is where syndications and funds come in you talked about uh management fees and acquisition fees and disposition fees

let's let's let's dig in these multif family peoples a little bit because nobody talks about this and nobody likes picking on them but I do so no let it

rip let's go I like it they need to be called out man let's have some fun with this so I heard there's a lot of there's

been a lot of foreclosures happening through 2023 I think 2023 was rough here for a lot of people especially the

interest is rising if put a lot of people under the gun where now they're facing for closure but they still got

paid yep that's so that's that's the joke right like that's

the joke in it I love how like people are like yeah man I'm invested in this deal I own 80% of it you know I'm I'm a

LP I'm like okay you own 80% of nothing right they've stripped all the equity

out front and if for some odd chance this thing does right and the markets go in the correct direction there'll be a

Payday again for everyone at the end they already got paid and when Dan and I

S I won't go off on a tangent but I I'll tell you my I'll continue to tell my thesis on

this go ahead go ahead okay so when Dan and I so you got remember this first deal that we ever did 76 unit apartment

building that we ra truly raised capital for I needed to raise a million bucks and I I didn't know how to do it I kept

looking at I said I'm not gonna own 20% of this that's stupid and and I knew people were getting fees and I'm like I

can't look my friends in the eye be yo I'm going to get a you know basically a $100,000 Payday on that I was like I'm

not doing I'm in this for the long game like we've always personally signed our debt we've always been in this for the

long game and I was just like man I can't do it so we restructured our deals to where we own a lying share of it up

front you know 60% 70% but we don't charge the fees we

don't crack people in the head for acquisition fee disposition fee development fee construction management

fee personal guarantee fee Capital raise fee did I get all of them I feel due diligence fee right management

management fee right like without a real management company in place if you're charge a management fee you better be

managing your the people the day-to-day operation right like I understand that and so our thing was listen if we're

going to go do it we're going to char if we're going to charge anything it's

going to be because it's keeping the overhead going but more importantly we want to own a bigger share of this deal

at the backside because we truly believe in what we're buying we are all in we personally signing the debt we are doing

all this stuff to make this deal happen that we want to get a bigger Payday on the backside and that's what motivated

us not owning I don't like I get it like owning a little bit of a lot and people

get all like you know they get business boners over it but not me dude like I'd rather own a bigger share of a little

that perform really really well and actually pay us on a daily basis is what I'd prefer to do and that's how we've

always structured all our deals and that's how we want to continue to structure our deals so you know if you're owning 80% of a deal I would look

at it and say well how much in fees it's the first thing I do when I look at any other syndication is what's the fee

structure and how are they doing this because they're getting paid somewhere I like I like I like that that that line

of thought process because I think educating LPS because they're getting their money from somebody and they're

doing bad business and they make the rest of us look bad and I think how let's talk about LP structure so when

you're doing syndications or funds what are tips that LP that's looking to invest in a fund or syndication what are

things they can look for besides that that fee structure I would say understand what you're buying and the

problem is most people don't they they end up it is a relationship Capital game right it's reputation building it's

that's what it's all about and but for me it's it's really transparently understanding and I get it a lot of

people invest with us because they like us and like oh those are normal dudes they get it my whole thing is if I can't

explain it to you I don't even want you to invest so like when people started showing us waterfall structures if you

hit this IR metric and then they get paid this and you get paid that and then the whole thing flip-flops I'm like I

can't dude I can't explain that let alone the last thing I want to do is end up in a courtroom and they're like well

it's actually 14.99 and you screwed these guys and you because your rounding error went up to 15 you triggered this

you all I don't I don't want to get into all that I wanted to always keep it simple stupid the way it works in our

office you know I come up with the deal we look look at the deal I underwrite it I show my business partner very

simple-minded fireman as well he says I don't understand it okay well let me go back to the drawing board right so when

you're an investor if if if the person can't explain it to you and there's the well

or it kind of work you know like those are like red flags for me I like to be

able to go in there I want it outlined these guys are making money here this and I do as a LP you should want your

sponsor to make money right because that's how we all survive but in the same sense they don't need to make it

all on one deal right they need to make it together with you and that's how we've always viewed it and our investor

group is mostly friends and firemen people that we are very personal with we don't get many outside third you know um

Outsiders that we don't really know and that's actually more scary but we have a we have a responsibility to act and

perform and we want to show them and we want them to understand what they're investing in and too many times guys are like whatever just take my money I'm

like no no no no no we are sitting down we are talking about this I want to I want you to understand Self Storage I

want you to understand how we're making money I want to understand how you get paid because the last thing I want you to do is go back you gotta understand

fireman it's uh you know tell a phone tell a friend tell a fireman if you tell a fireman it will get around the whole

world so if you screw over one fireman the whole fire service across this United States will know who I am because

I screwed them but if we do good they don't know who I am which is also Catch 22 but I prefer that nobody knows who I

am and we just continue to do our job the right way and we're transparent and we share all the information with our

investors I think a lot of GPS they need to educate their LPS because when you

when you cross that line of understanding where they understand what they're getting they understand your underwriting they understand your where

the money is coming from and where the valuation is coming what the exit strategy is it makes that that conversation a whole lot easier because

you're you're disclosing which I think is a big thing you're disclosing all the risk and upside and downside up front

yep yeah the last thing you want someone to do is like I don't understand how I'm getting paid because then when they

don't get paid they're like well I still don't understand then they call a lawyer friend then the lawyer friend's like

yeah dude you got a case here can you call everybody else that got in this actually know you're on the front page of the Wall Street Journal or whatever

and nobody wants that three-letter agency come to your knock on your door and in the end people that are usually

investing with you are the closest to you they are your friends and family why do you want to them over they are your boys they are your friends they are

the people that you're working with or for we call it we tell everyone hey you're co-investing with us you are side

by side with us and we are doing this together this isn't the Ian and Dan show yes we handle the day-to-day and get the

gray hair and the bald heads but in the same sense this is your investment too like we're in the process of selling

some assets I call a few of our investors hey what do you think about this we're looking at this I think this

makes Financial sense we're trying to do the fiduciary thing and they're like yeah I get that I understand that you

know but it's good to have those conversations and really have your people engaged because guess what that

means if you don't make money on a deal they're going to want to get in on the next one because they feel like they're a part of the team and they should be a

part of the team and I think that's really what it comes down to and too many people are disconnected well

whatever the Act was that allowed people to start crowdfunding and advertising for funds and all that stuff was

probably a good thing for the industry it also created some issues in the industry allowing people just to

Syndicate do whatever they want and really just became a big sales game than actually doing the right thing by the

investors yeah I see I see a lot on Twitter like all these GPS are just marketers 100% that's all they are

because that's what they have to do they have to Market themselves that they're the smartest dude they have the best deals put your money in over here

because again you just hit the nail on the head yo they're picking up that six figure seven figure fee because they did

a $50 million deal they got 2% of that they got a seven figure payday it covers

their marketing made some money onto the next one who cares if the asset does good or bad they got non-recourse debt

this that and the other thing and look those guys aren't as bad as we're making them out to be but they are out there

and pay attention to it let just understand what you're getting into as as the bottom line 100 per. there's bad

apples in every sector yeah well and yeah 100% And investing in syndications and you know I'm I know your audience is

into real estate and investing on their own or investing into syndications we tell all our guys hey you should go

invest in real estate you should go do your own thing because your syndication investment with us is just another

investment in your book of Investments right so some of our retirement funds I

pass off to my hard guy who I co-host my podcast with he's a hard money lender I put my money with him we put our money

with other other syndicators because it's like that is just another investment bucket for us inside of here

besides our own properties and again a lot of people look at it Dam and got me

or whoever's got me it's no big deal it'll all no dude you need to be actively managing your assets at all

times and treat your money and your wealth even if it's $5 doll like you are

a family office and you always trying to grow your money in any way shape or form you can absolutely let's jum a little

bit of creative Finance because say you got a creative Finance how how big was that purchase with Creator finance and 90% seller finance oh yeah that was a

that was a $5 million deal and I know we'll showcase that on another episode but yeah dude that was a

dude that was a $5 million purchase man that was and we'll get into how we found that but dude that was the largest owner

finance deal that we've done and it was career changing I'll leave it at that so it was a really good one all right we'll

cover that in the next episode stay tuned but let's talk about creative financing as a whole are you let are you

front edge seller financing on every deal that you try and get because I

no yeah see that's a problem though like you know we're not I don't want to say it like that but it's like we do a lot

of onm Market deals and when I say on Market off Market we're dealing a lot with Brokers and you know Brokers they

always want to know how they're getting paid they hear out financing blah blah blah blah they get all butt hurt but what I will say is when that market

started to change I'd say probably about a year ago at this point now Brokers were calling me hey seller will take you

under financing hey what kind of seller financing terms you got yo if you want to get this deal done at this price they'll do 0% interest like the

floodgates open and so Brokers are pretty in tune with where the market is from the debt standpoint and how they're

going to get deals done and how they're going to get paid but yeah we look at owner financing from the standpoint of

how to enhance a deal not necessarily how to make a deal work a lot of people

look at it as I don't have cash how am I gonna make this deal work we we are well capitalized from private Capital

standpoint and as well as banking relationships that I can get any deal

need to get done across the Finish Line with a few phone calls so what does that do for me that puts us in a position of

power to negotiate better pricing better deals we can get the deals done when someone's like really hard-nosed on

price that's where I pull the owner financing out I'm like listen like I can't control the cost of your property

I can't control the cost of anything but the one thing that you can control the cost of in this transaction to make the

deal work is the cost of capital and if you're willing to hold a note then I can make this de work and usually people are

open to that idea and we've owner financed multif family we've owner financed commercial we've own owner

financed single family and they all work it's really just where it works the best

and I I I'll tell you I think asset classwise in the commercial space owner

financing is better served than in the single family space I know pace and a couple other guys are really out there

pushing it and they do really well with it but in the commercial space you got to remember it's B2B right we're dealing

with business owners that want to do business understand the velocity of

capital understand the power of earning interest understand the tax benefits versus dealing with someone who just

inherited grandmother's house and fighting with six of their brothers and sisters over this house you know

yeah it's definitely is definitely varying for different asset classes and I think um it's harder with commercial

assets just because it changes hands so often and it's uh refinanced

all the time I can see that yeah you got to really find the Legacy like you we do a lot down in the Southeast for Self

Storage you get a lot of mom and pop owners that were like super successful business person in the area kept

building the storage facility over time now they own it completely in cash no debt hate the government don't want any

banks you know like then you're like hey let's have this conversation like the doors the floodgates open at that point

um and I think to me that's what I've had better success in the in the commercial game because I

find too many people in the single family game it's like oh my personal credit or yeah they maybe they owned

single family they just wanted off their books I've had I've personally had better luck in the commercial space but

we also spend a lot more time over there than we do in the single F family space anymore so now this is a side question

have you done any land stuff at all no not not big land guys it's all around us

just having uh having done it I know that's that's like the best of both world right people get the land and then

they they owner finance but land's not our game but you got to remember I don't have a lot of land over here like you guys do yeah you're in Pennsylvania okay

so let's jump let's jump into storage and What markets you're doing business in and what size business you're looking

for so maybe somebody will send you a lead you never know I'm sorry what was that let's let's talk about where where

you're buying and what size like parameters you're looking for your buy box yeah sorry let me close this out so this thing doesn't make noise sorry

about that yeah you know we look for stuff that's all right we look for stuff that's like 20,000 square feet or bigger

you know because let's get let's get let's get this out of the way it costs the same to run a 6,000 foot facility

that it does a 50,000 foot facility the phones the internet the marketing the

gate control access the software all that stuff relatively speaking costs the same whether the facility 6,000 squ feet

or 60,000 square feet so we always look to try to find scale and look we'll buy a 10,000 or 15,000 square foot if it's

around something else that we own you know like in Baton Rouge we have 350,000 ft of storage and one of the sites is

13,000 Square ft cuz it surrounds excuse me because it surrounds one of our other

facilities or several other of our facilities it made sense to gobble that up so for us we need the size or the

ability to expand it the day we buy it and make it worth our time energy and

effort and as you go up you know look it takes the same amount of work to do a $500,000 deal that it does 50 and I

haven't done a $50 million deal so that's not fair to say but it takes the same amount of work to do a $500,000

deal or a $15 million deal it's all the same damn work you know so you might as well do the best you can you know get

the best bang for your book where we like to focus I'm not dude like a lot of dudes are like tertiary Market type guys

like middle of nowhere that's not my jam dude like we're City Boys I guess you could say I never really considered

myself a city boy but I like rooftops we're in Baton Rouge Capital City Little Rock Capital City Hattisburg Mississippi

big ass City Livingston Texas not a big city that's the smallest city we own most of the cities were in 50,000 plus

population Livingston Texas is 5,000 square feet or 5,000 people but it's a destination town so it it makes sense to

why we're there but for the most part overall speaking we like rooftops we like demand we like people we like where

there's industry yes we get some additional gray hairs fighting with REITs and those types of things but

that's what works for us and we end ended up in the Southeast just because there was a lot more ability to purchase

facilities at scale and do it quickly so we could build a management operation

behind it rather than trying to fight for one or two deals up here in Maryland or PA or Delaware they just don't pop up

the same way they did in the Southeast and we just we were had the ability to buy and then once we were in a market

plan a flag and continue to grow around it and build some nice portfolios as we're getting ready to sell some of them

for really nice exits because we have the scale in locations and it bring just a different group of buyers one thing

I'll say is I I'm the same way I like I like investing where people want to be I don't like these tertiary markets not

too much I like I like that that that style of it what's your opinion

on saturation because I know these big this big money is coming into the storage

game I think it hit the the multif family so bad where the cap rates went so Li so low and overpriced how do you

feel about saturation coming into the storage Market because I think a lot of big capitals moving into that place yeah

there was a lot of capital running in during covid you know we bought our first facility in 19 or 20 right around

there you know pre-o so and then right after that there was a rush because what happened in covid was it showed who's in

control and who's not in control right there was a lot of consumer protection laws that popped up you know this is not

political this is the truth like we're in a very blue state in Maryland and what happened was we couldn't evict

tenants but we also couldn't utilize any of the funds that were set up for eviction protection from covid losses so

it was like we're handcuffed it's like I'll keep your tenant but pay us or don't pay us and we'll evict the tenant

you pick like we can't have it both ways so it really showed the light to who's in control basically Nationwide and I

think what that did was people started looking for other asset classes that made sense that they weren't constrained

to these types of things and storage provides that from the standpoint of it's like multif family there's a lot of

Leverage you can pull admin fees application fees 24-hour access but

there's also why people are moving towards it is there's no 12:00 calls you

know we are out here where it's cold heat calls frozen pipe calls backed up toilet calls those are emergencies

because somebody's living there versus when you're in a metal box like that emergency is not as emergent because

they should not be living in a unit so big money has been chasing it but they've also been

chasing a lot of nicer asset class like we've been we've been talking to a publicly traded company in Canada about

selling our portfolio to them the deal's kind of falling apart but they're actively purchasing Middle Market

America just buying whatever and chewing up whatever they can because the returns are better than what you know yeah and

the other thing is we know what California cap rates are and I can tell you the East Coast isn't as crazy but a

lot of compressed cap rates because we're on the coast right everything in middl Market America it just provides

better returns for everybody and honestly there's a lot of people you guys know you're losing everybody to

Texas or Idaho or all the other states that kind of surround you the same

thing's going on over here in the east coast people are fleeing to Florida Alabama Texas Louisiana Miss like

they're they're all fleeing South and I think a lot of people are following those Trends and chasing it and I I

think there's a lot of opportunity because the country as a whole is underserved for the most part and

storage works not in macro markets but very micro markets of three to five mile

radiuses from the facility and it's very predictable to what you can build or what the needs are for those areas so I

think those are all the benefits of storage I hope I got all of them no I

think you got them all those the question I was going to ask and it left me real quick I was in the Miss that conversation what is a quote that yours

or somebody else's that you resonate with I'm sorry what was that what is a quote that is yours or somebody else's that you resonate with oh it's not like

uh well I guess it is well it's kind of like a quote slash more of a theory but I'm going to not do it justice but you

know I look at um Warren Buffett and he talks about you know building a snowball

and getting it roll down the hill and basically that you're building a snowball and your snowball gets so big

that like if a piece breaks off like Layman Brothers when he had issues with Layman Brothers it breaks off but it

doesn't affect the rest of the snowball I did not do the quote Justice by any means please go look it up but creating

that s snowball is one of the most powerful things you can do and you can see we started with

$15,000 buying our first ghetto Section 8 rental in East

Baltimore and now we have $70 million of real estate and it's wild to even think

yes we've had Tailwinds we've had all these other things but we have a snowball now that if something happens

we can continue rolling down the hill and make adjustments that snow gets packed back on and continues to build

that snowball you have enough

momentum yeah yeah well that's the thing how many people how many people treat real estate how many people treat real

estate like a hobby right and they don't treat it like a business and have we done that we could have had a few hundred houses me and Dan could be

running around all the time we wouldn't have Ryan who runs our whole operation and allows us to free up to look at more

deals and we would just we would hit the ceiling and we can't go from you know what it takes you to go from 1 to 5

million and 5 to 10 million or 10 to 20 and you replace those numbers with whatever numbers you want most people

don't want to do the hard work and blow it up start over and build and grow and

do what it takes to get to the quote unquote Next Level because what work to get from zero to a million is not going

to work potentially from one to five million and it's going to be painful but again you can't build that snowball most

people get to that point and they just let it they just like kind of go into the hamster wheel whereas us we're always like cool we got it going boom

how can we make it a little bigger how can we make it a little bigger and bigger is not always more bigger sometimes is quality hiring the right

people doing the right marketing making the right relationships or connections with people speaking at the right events

those are all things that help this snowball grow over time that allow you to run into the right people to do the

right deals to know the right people to hire the right people to partner with and I think that's what's important

overall and I think people need to take investing in real estate seriously it just it's it's just crazy man it's crazy

to think that people throw hundreds of thousands of dollars at the stock market because they tell you it's right and you

couldn't even tell who the CEO of the company is but then I ask someone to invest $25,000 side by side with us in a

deal and you would think that I'm trying to steal their whole family right like that's what's crazy here is that most

people don't take the time and appreciate and understand what it takes toow grow your capital and invest in the

right people and do the right deals to ultimately grow your Capital to a point that allows you to be

free so I I I saw cystic like last week or two weeks ago there's $31 trillion do

invested into the the T bill it's crazy dude 5% it's crazy it's crazy it is freaking

look those things are good if you have millions and millions and millions and millions and millions of dollars and you want to protect some of your capital I

say the same thing about stock market 10 20 $30 million you want to go stick five 10 million bucks over there whatever you

got a small percentage stick it in the stock market and just let it grow slow because it's hard to deploy that much

Capital but those of us that don't have a lot of capital we're working with 25 50 100 Grand let's find the best deal we

can to get the highest return to allow us to get to that next level let's take our active in make enough to allow us to

become passive income so we can be free right because being rich is really about time freedom and getting out from under

your job as fast as possible I think that's what's important I always say that dividends and that t Bill stuff is

a FR people it is like if you're investing in dividends like and you got 20 bucks in your account yeah you make

$5 a month like $5 a year like congratulations but yeah no no way D go

go on like lending I don't even know if it's still a thing but like when we were broke I go on Lending Club and I would buy some of those like crap loans and

I'd stick 25 bucks a week in that thing and just buy loans because again that snowball got going next you know I was

like cool 200 bucks a week 300 bucks a week holy how do I get that much money in there but again the velocity

cap dude everybody should have a compound interest calculator on their computer screen on their phone and every

time you're looking at stuff just look at that stick it in compound interest calculator you know what's his name from

Shark Tank Mr Wonderful your job is to send those little green soldiers out and come back with more of them right like

that is your goal and just go do it and execute on that so I remember my question I forgot earlier I to ask it

now before before we end did you hear about the the person that was living in a unit like last week and he went viral

for oh yeah dude I saw that he was living and then wasn't he like oh I got my own gym here he's kind of like making

fun of it yeah that was wild I mean look dude we've sorry go ahead I was gonna

say has that ever happened to you and how do you deal with a situation like that because I know it happens more

often than not it's not an anomaly I know it happens but like that yeah you

know look the class A facilities is not happening some of the stuff that we buy that you know was like Legacy asset

stuff we had an issue with someone living in one of our sites you know usually you can call the police and they

view it more as of a trespassing issue and you don't have to go through the eviction process I had a tenant that was

so rooted mentally challenged like all like every every dot that you an eye that you

could cross or whatever the saying is is just he hit every metric so after a talk

with the cops and the lawyers because he really just needed help right like he needed mental help to be in the right

place I had to file an eviction to get him out luckily it was in Louisiana took seven days to get done and that was it

and it cleared up the problem and they got him the right help got him in the right location but for the most part usually it's pretty cut and dry black

and white hey get out of my facility but I've had it I've I've witnessed I've witnessed uh other of my friends habit

where he dude he bought a facility next day he had a family of five move in to a

climate control facility in Alabama but they didn't move into the climate control facility part they moved into

the hot part and it was the middle of the summer he's like dude I'm worried about these people dying like it happens man and those are the that's the Dark

Side of stories that people don't want to talk everyone tells you how great it is it's Recession Proof and it's this and it's that dude we have people that

move into our units online and we never talk to so if you're not on top of your assets and paying attention to what's

going on it is very easy to get on overrun by people who were living in units paying the dollar special living

there for 30 days and getting thrown out of their units so I think this alludes to another question then we'll end it

we'll get toward the end here but how do you prevent because I mean that in storage

you don't you can't there's there's a systems in place you can have talk to that tenant they sign something online

they put a a card on vile and they have a pass code to get into the gate and you can track their movements but like what

other what like what what things can you put in place to prevent them and prevent that from Happ

for moving in on you I would say the biggest thing is you could just do all phone reservations but you you want

you're trying to make this business as automated as possible so the way we comat combat that is by having our boots

on the ground checking on the facilities once to twice a week and getting out ahead of the problems and you know once

you get a reputation for being a good facility those problems usually stay away from you is when we buy the value

ad facilities and we're flushing the trash out got remember the bums only know one thing and I know this from the

fire department they they just know one thing they know where to go to be safe so when all the bum friends are talking about hey I can go live here now you got

to flush 20 30 people out of this system I we had this issue in Baton Rouge we had people move in on us and they

continually were moving in using different names using the dollar special I turned the dollar special off for 30

days prom went away they eventually went away and they know not to mess with us because the cops will get called on them

as soon as we recognize that there's an issue so keeping your facilities in good operating condition they won't even

think about those types of things you know so that's really what it comes down to just being on top of your assets and

it's the same thing in any piece of real estate you don't want problems stay on top of your assets stay out ahead of the

problems good answer good answer I think this is a it's been a great interview uh where can people find you online I got

Equity warehouse.com where else could people find you online social media wise yeah most of our content pushed out

through Equity Warehouse all the platforms You Name It We on it I do the most interaction on Instagram it's my

favorite place to interact with people in DM easy for me to pay attention to

but we're on all the social platforms uh you can check out Equity warehouse.com if you want to learn how we co-invest or

co- lend with our friends and family we got a bunch of case studies on there and then finally as you guys can tell I love

talking we have our own podcast it's called real estate Reserve podcast you can check that out co-host it with a friend of mine who's a hard money lender

and uh we talk same thing we just bring in real people doing Real Deals talking real life scenarios is not like oh I got

gurus so and so coming in to talk to her like that doesn't serve anyone any value like we want to hear from the real

people doing real they got the real stories that can talk intelligently on it you know and that's that's what we do

so there you go eity warehouse and what's the podcast again real estate Reserve podcast real estate Reserve

podcast go check it out we'll see you on the next episode thanks for coming on Ian Ian Hartz I stick with name sometimes but

you got to roll with it sometimes you know what hey man it's the it's the Jewish pronunciation you got it don't worry about it no I'm just

kidding thanks for tuning in we'll see you on the next episode thanks thanks guys [Music]

bye

Ep 462: From Flames to Fortune: Ian Horowitz's Journey from Firefighter to $70 Million in Storage

Daniel Esteban Martinez

Ian Horowitz