Jun 27, 2022
For 12 years Andrew Leedom has been working successfully with his W2 job as a Structural Engineer, being a father, and finding he transitioned into commercial real estate specifically in self-storage.
Highlights:
[00:00 - 04:19] Transitioning from a Structural Engineer to an Investor in Real Estate
- Andrew Leedom is a husband and father to four kids.
- He transitioned from his structural engineering to investing in commercial real estate, focusing specifically on self-storage.
[04:19 - 08:33] Self Storage: A Hot Asset Class
- The self-storage market is hot and there are opportunities to invest in this sector.
- Self-storage is a good investment option because it is a hot asset class and the market is consolidating quickly.
- It is important to make deals that are profitable and have long-term potential.
[08:34 - 13:06] Trying to Focus on Projects that are Already Available
- Conversion of a 60,000 square foot warehouse to indoor vehicle storage
- Looking at deals where the market isn't oversaturated and there's still some demand
- Underwriting for an indoor vehicle storage facility
- Andrew shares about doing a feasibility study specifically on boat and RV storage
- He expects to start leasing within a month
[13:06 - 16:11] Closing Segment
Reach out to Andrew
- Links Below
- Final Words
Tweetable Quotes
“Going to the dealership Just making sure they know what we are doing and that we’re here, that could assist them in selling the vehicles. If their customers know they've got a place to put them”
- Andrew Leedom
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Connect with Andrew Leedom on LinkedIn or visit their website at: Self Storage Stewardship
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Andrew Leedom: a lot of it will be word of mouth going to the dealerships and getting in touch with the folks that are selling the vehicles. Same thing with the RVs going to the RV dealers and just making sure they know that what we're doing and that we're here and, that could assist them in selling the vehicles. If their customers know they've got a place to put 'em.
[00:00:31 ] Sam Wilson: Andrew Leham is a husband and father to four kids. He transitioned from his structural engineering w two to invest in commercial real estate, focusing specifically on self-storage. Andrew, welcome to the show.
[00:00:41] Andrew Leedom: Thank you for having me, Sam. I'm glad to be here.
[00:00:45] Sam Wilson: Hey man, pleasure's mine. There's three questions.I ask every ghost. She comes in the show 90 seconds or less. Where did you start? Where are you now? How did you
[00:00:50] Andrew Leedom: get there? Well, where I started, I studied to be a structural engineer and did that for 12 years and transitioned to the commercial space about a year and a half ago. And currently investing in self storage and working with a.
[00:01:05] Andrew Leedom: A group doing multi-family self storage, some hotel conversion stuff, but I'm focused on the self storage part of that.
[00:01:11] Sam Wilson: Interesting. So you were a structural engineer for 12 years? Yes. What were you doing as a structural
[00:01:18] Andrew Leedom: engineer? I got to see a little bit of everything. I did started my career off in the inspection world, doing some bridge inspections and transitioned to building design and then to waterfront design.
[00:01:29] Andrew Leedom: So designing bridges, designing peers and waterfront structures doing some work for the shipyard port of Virginia doing some my, my latest job. I got to do some underwater inspecting, which was, A lot less glamorous than it sounds
[00:01:44] Sam Wilson: right. I mean, you're like decked out in scuba gear doing other water inspections.
[00:01:48] Sam Wilson: Oh, my word. Yes. That's that's wild. When you look at the difficulties of the projects you were designing and building and inspecting, and then compare it to self storage. Do you feel like you, you now it's much easier or is it just different.
[00:02:05] Andrew Leedom: It's it's different, but you know, one thing that, that led me to pursue self storage when I was determining kind of between the various asset classes was the It's not an easy business, but it's a simple business.
[00:02:19] Andrew Leedom: So the simplicity was very appealing. Both the structure as well as the business. I mean, the structure you're for drive up units, you've got a concrete slab and steel building. And not a lot of moving parts. So I appreciate that.
[00:02:34] Sam Wilson: I bet you do. Yeah, I would think from a construction perspective, you're like, okay, this is really easy compared to say a bridge over an enormous river.
[00:02:46] Sam Wilson: Yeah. Yes. That That is really cool. So you made a point there where you said some of the effect of, when you were, assessing the various asset classes. Trying to figure out which one maybe you wanted to pursue. What was that process like
[00:02:58] Andrew Leedom: for you? I started off my investing career back in 2015 in the residential multifamily, a few duplexes Plex and through the years, saw that, real estate really is, there's nothing like it's it was doing.
[00:03:12] Andrew Leedom: What I thought it would and growing but the time it was gonna take was gonna be a lot longer than I like. And so that was kind of what got me set on the commercial space. And I started just as a passive investor and some multi-family syndications and and then made the decision with my wife, that we were gonna make the commercial thing work.
[00:03:31] Andrew Leedom: And so the start of that was just evaluating. Various various asset classes and really came down to three. It was multifamily mobile home parks and self storage. And so I just broke those down. I really like all three of those asset classes. I think they've all got a lot going for 'em recession resistant.
[00:03:50] Andrew Leedom: Multifamily is the bread and butter it's, the everything's built on that. When I was looking at where I was with my W2 and just trying to figure out something that I could build and get my foot in while working a full-time job. I thought the multi-family space just with all the institutional money and the.
[00:04:11] Andrew Leedom: How hot the space was gonna be a lot more difficult than the other ones and same thing with mobile home park, what led me, I, I really like that asset class. It really serves That affordable income and especially when you can own the ground and and lease the space.
[00:04:29] Andrew Leedom: But really in that space, similarly, they're building and developing fewer and it's most municipalities aren't allowing 'em. And so. I just saw the competition growing and growing in that space as well. And so self storage was kind of where I landed, both what I mentioned earlier, just with the simplicity of the business model and the ability to really set up a business, to run remotely.
[00:04:50] Andrew Leedom: So you're not as stuck in the location and with the self storage it's still several years behind multifamily in, in that the market is consolidating rather quickly. , it's definitely been the buzzword the past probably four to five years and is a hot market.
[00:05:09] Andrew Leedom: But there's still a lot of potential right now, currently the market there, it's still over 50% mom and pop. And so there's that opportunity to have direct to owner contact conversations and really pick up opportunities direct from those mom and pop. Owners. And so that's where I felt like I could get my foot in the door and, focus more on the secondary tertiary markets and and get started.
[00:05:34] Sam Wilson: Got it. That's that's really cool. Tell me at what point in time did you know you could transition from your W2 and what steps maybe would you recommend to somebody else thinking about that.
[00:05:44] Andrew Leedom: Yeah. I the the W2 transition was was actually a mix. I closed on my. My first two properties last year, and both of them were from, mom and pop operators and really kind of run into the ground.
[00:05:57] Andrew Leedom: Very low occupancy needed a lot of capital improvements. So I knew purchasing those. It was gonna take a while before the cash flow caught up to where I would be able to step away from my W2 job. Right. And so the plan was just to, to run them until we hit. Hit that break even point and be able to step away and, try to scale.
[00:06:18] Andrew Leedom: But fortunately com I mentioned earlier community investment group, who I had invested in as a passive investor and they're local to me. And I've really grown to be friends with a lot of the guys in that group. And they knew what I was doing and. Had kept them up to date.
[00:06:34] Andrew Leedom: And and so once I got to that point they offered me a position with their team and just said, well, why don't you just come and join us and start our self storage division? So you don't have to wait until. Wait until your cash flow catches up to where you need it to be. So you can take the jump and start doing this stuff full time.
[00:06:52] Sam Wilson: That's cool. So you went, you, I mean you, so you're still a w two or did you go in as a partner? How did you
[00:06:57] Andrew Leedom: arrange that? Yeah, it's right now I'm a 10 99, but also have some partnership on the deals. . Hi little girl.
[00:07:05] Andrew Leedom: What are you talking about? I am talking about self storage. Can I come see you after I'm done? All right. Bye. Bye.
[00:07:11] Sam Wilson: You know, Andrew, I think we might leave that in. That's that one that's super cute. And two, the reality of, what it takes to business, right. I mean that's right.
[00:07:23] Sam Wilson: A lot the stuff from home there's kids in the background, there is transition there's just everyday life. So that's really cool. I love that. Fantastic. That's right. So you went to work with them, 10 99 you said, Hey, , we're gonna start taking down properties. Talk to me like what opportunities are you seeing right now in the market?
[00:07:43] Sam Wilson: Self storage, like you said, it's a hot asset class. How are you guys finding opportunity?
[00:07:47] Andrew Leedom: Yeah, really the market right now listed properties are just going for insane values and cap rates.
[00:07:58] Andrew Leedom: And, , a few of the properties I've looked at recently are just these buildings, whether they're conversions or new development that go up and with where the market is, the developers are basically just listing these empty buildings and selling them for year three, year four performer numbers.
[00:08:18] Andrew Leedom: Right. And so , when you're competing with that, it really takes making, creating deals. Either with trying to make those connections with owners directly we're still gearing up our acquisitions team and trying to accelerate. Build that out to focus just because we've been trying to focus on the projects we've already got in house.
[00:08:39] Andrew Leedom: So, one of 'em that we're working on now is the conversion of about a 60,000 square foot warehouse to indoor vehicle storage and the back five acres doing a boat and RV enclosed covered, open storage trying to make that. Work with that. So, so yeah, as far as as far as the deals, we're, looking at some of those conversion type deals where you can get into markets where the market isn't oversaturated, there's still some some demand and trying to get in on that side where it's not, you're not purchasing an on market deal, but you're purchasing something where you can buy below replacement value do a conversion and and be up and running.
[00:09:22] Sam Wilson: So how do you underwr. An indoor vehicle storage facility. I mean, it's not like you have all these, they're everywhere and you can go, oh, okay, cool. We'll just, we'll plug in the things that are normal. It's like, that's a pretty nuanced thing. How did you come up with idea and then how in the world do you underwrite that?
[00:09:39] Andrew Leedom: Yeah it's been a process. Originally, being a self storage guy, the start was boat and RV and indoor climate control and maybe some indoor, just some indoor boat and RV storage. But the guys that I work with over at community investment group particularly the founder, Brad Newton, it's been a lifelong dream of his to have an indoor, like an exotic car.
[00:10:02] Andrew Leedom: Storage, facility, club high end a place that has, like the executive lounge and just various amenities, detailing services attached to it. And so, it kind of morphed, I had, the underwriting started with, kind of splitting the space, but then we really came down to.
[00:10:20] Andrew Leedom: We wanted the space to be dedicated to that and have the storage stuff in the back that we're developing, boat, RV some of the larger enclosed units. And so, we just did some research just throughout the country of other similar models and just looking at various various pricing models and and looking at the demand, we got a feasibility study done particularly more focused on the boat and RV side, but also just some of the other things in the area and knowing that, there really is nothing like it in our area and seeing seeing the success of other similar models in other areas.
[00:10:57] Sam Wilson: Got it. So what's the timeline on that project? How what's the build out? What's the timeline? What's the cost? I mean, walk us through that side of the project. I'm really curious about this, cuz it's just not something we talk about a lot here on, on indoor vehicle storage, especially, exotic car storage going the higher end.
[00:11:14] Sam Wilson: You're serving a very niche market, so yes. You hear kind of your thoughts around that and some of the parameters of the deal.
[00:11:20] Andrew Leedom: Yeah. So we're we're set to close in probably little over a month. We anticipate a. Three month window for the finalization of architect design drawings some of the the building permit side of things.
[00:11:34] Andrew Leedom: The land is already approved as far as the zoning for what we're proposing And then we've got a nine month window for the construction and build out some aspects will be quicker than others. Some of the, once we can get the demo and the site work done, we'll be able to start on a lot of it.
[00:11:51] Andrew Leedom: but you know, things like the enclosed units in the back and the canopies really that's. Primarily a lead time issue. , once the materials are delivered, those go up pretty quickly. Right. So we're anticipating, being able to start leasing, a lot of, especially the outdoor stuff.
[00:12:11] Andrew Leedom: Sooner than later. And, , and even within the warehouse, being able to have some of the space, where it's not, , we've got it split into some nicer places where are more like a showroom type feel and then other spaces where it's more just , parking , glorified parking.
[00:12:29] Andrew Leedom: And so once we open it up and clean it out, we'll be able to utilize some of that space. , and then same thing with the back, once we have the site cleared and graded, then we'll be able to start some of the open parking while we're developing the canopy and enclosed, and then start Leasing all that up and anticipate having a pretty aggressive marketing plan to try to get a lot of this preleased and, and going as we're doing the construction,
[00:12:55] I
[00:12:55] Sam Wilson: was gonna ask that, how will you market this property for, especially the higher end indoor vehicle storage, how do you reach out and find people that.
[00:13:07] Sam Wilson: Those vehicles that want to be stored. I mean, again it's a nuance and niche market. So finding those clients, I would think would be a pretty specialized. Art.
[00:13:16] Andrew Leedom: Yes. Yeah. I'm not really in those circles, but we've got guys on the team that that run in those circles that have those cars.
[00:13:23] Andrew Leedom: And so, I mean, a lot of it will be word of mouth going to the dealerships and getting in touch with the folks that are selling the vehicles. As well, same thing with the RVs going to the RV dealers and make, just making sure they know that what we're doing and that we're here and, that could assist them in selling the vehicles.
[00:13:41] Andrew Leedom: If they. Their clients know that customers know they've got a place to put 'em. And so, so yeah, I mean, I think that's partnering with some of them doing some some online. Obviously, online marketing and Google ads, things like that where folks can find it.
[00:13:58] Sam Wilson: Gotcha, man. That's great. I love that. If you were to rewind maybe five years and do one thing differently, what would it be? I
[00:14:10] Andrew Leedom: would say Just to allow myself to dream bigger. It was one of those things. I mean, even just the idea of commercial real estate and multi-family syndications, self storage, all of these asset classes. For so long, It wasn't even in my realm of thinking, because that was just for those guys out there that are crushing it.
[00:14:30] Andrew Leedom: And that's not something I could ever do. And so, I mean, it was the, that, Napoleon hill calls it the definitive purpose of really just making up your mind and making that decision to, we're gonna make it happen and whatever it takes, whatever training we need, you know, once my wife and I made that decision, Things just started falling into place. And I mean, you're still pushing through all those levels of fear and uncertainty and, I don't know what we're doing and trying to figure things out and just networking, meeting folks.
[00:15:00] Andrew Leedom: But but I think just opening your mind to the possibility that if other people are doing it, then you can do it. Just as you take those steps and take action. The dominoes fall into place.
[00:15:11] Sam Wilson: Wonderful. Andrew, I've enjoyed it today. Thanks for coming on the show and sharing with us, your journey thus far, look forward to keeping track of you and seeing where where the next few years take you.
[00:15:19] Sam Wilson: So this has been a blast. Thanks for sharing with us today. If our listeners wanna get in touch with you or learn more about you, what is the best way to do that?
[00:15:26] Andrew Leedom: Yeah, they can find me on LinkedIn or go to our website. It's www dot self storage, stewardship.com. And you can shoot me an email or reach out.
[00:15:37] Andrew Leedom: I'd love to connect to your listeners.
[00:15:39] Sam Wilson: Wonderful. We'll make sure to put that information in the show notes as well. Andrew, thanks again for your time today. I do appreciate
[00:15:45] Andrew Leedom: it. Yeah. Thanks Sam.