Apr 8, 2024
Today’s guest is Ryan Smolarz.
Dr. Joseph Ryan Smolarz is the founder of STOR, leveraging his experience as an entrepreneur and Otolaryngology practitioner to guide people toward financial sovereignty.
Show summary:
In this podcast episode, Dr. Joseph Ryan, a former otolaryngologist and founder of Store Partners, shares his transition from medicine to commercial real estate, focusing on self-storage facilities. He highlights the importance of team building, relationship-driven negotiations, and ethical business practices. Dr. Ryan also discusses his podcast, "Medicine and Money Show," and invites listeners to connect with him for educational discussions on investing.
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Building Successful Teams (00:00:00)
Introduction to the Show (00:00:31)
Dr. Joseph Ryan's Background (00:00:44)
Transition to Real Estate (00:01:10)
MBA and Transition to Real Estate (00:02:08)
Challenges and Enlightenment from Higher Education (00:04:27)
Transition to Self-Storage Focus (00:09:42)
Staying in Self-Storage Lane (00:11:41)
Decision-Making and Deal Selection (00:11:47)
Managing Capital and Acquisitions (00:13:57)
Challenges in Business Growth (00:15:51)
Remote Operations and Team Building (00:19:51)
Finding Deals and Relationship Building (00:20:59)
Building Rapport and Deal Cycles (00:23:26)
Conversation with Potential Investors (00:25:03)
Conclusion and Call to Action (00:26:19)
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Connect with Ryan:
Web: https://storpartners.com/#/
Linkedin: https://www.linkedin.com/in/joseph-ryan-smolarz-4803a81/
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
*Ryan Smolarz * (00:00:00) - Where I think the, you know, the Alpha lies in building the teams. we have a big focus on that. And, trying to find people who were who were all rowing in the same direction with. I find that super important. you know, the when you know, you have a good team, when one person on the team doesn't like the decision, but everybody else does, and they are rowing even faster in the same direction that everybody else is.
Intro (00:00:31) - Welcome to the how to Scale Commercial real Estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson (00:00:44) - Doctor Joseph Ryan is the founder of store. That's. That's spelled excuse me store. He leverages his experience as an entrepreneur and otolaryngology practitioner to guide people toward financial sovereignty. Ryan, welcome to the show.
*Ryan Smolarz * (00:00:59) - Hey, thanks for having me. Sam, this is going to be great.
Sam Wilson (00:01:02) - Absolutely. The pleasure's mine. Ryan. There are three questions I ask every guest who comes on the show in 90s or less.
Sam Wilson (00:01:07) - Can you tell me where did you start? Where are you now? And how did you get there?
*Ryan Smolarz * (00:01:10) - I started in 2017. I realized that, going from room to room as a doctor wasn't going to allow me to retire. And, once I decided that I ended up in a month, I was sitting at a desk in the in an MBA program in Miami. And, so we decided to get into commercial real estate. We, built a assisted living home and started an e-commerce company. Like a lot of people kind of, diversified out. And now we're sort of the diverse offering, if that's a word I'm not even sure, down into more of a focus. And, self storage is certainly one of those. And, where we're going, we want to do right by our investors, raise capital and buy, self storage facilities and, you know, do the best we can for, for our people, our investors, the people who believe in us and treat us well.
Sam Wilson (00:02:07) - Got it.
Sam Wilson (00:02:08) - Now, you're you're an EMT and you decide that you want to do. You said going room to room as a doctor isn't really going to lead us to where we want. So you went to get your MBA? Yeah. It sounds like more education. I mean, you're already super highly educated. So what what was the kind of thinking there or thought process there? And how did you get how did getting an MBA lead you to real estate?
*Ryan Smolarz * (00:02:29) - Yeah. So, when I was what happened was, I woke up one morning and decided I wanted to go on a surf trip, and I had no idea how to get into my bank account to see if I had enough money. I didn't even know what bank we banked at. So my wife took care of all of that. and so I realized that, you know what? Maybe, money is not fun tickets. And I should probably take it a little more seriously. Right? So doing the things that I do, I sort of take it to the extreme.
*Ryan Smolarz * (00:03:06) - And I was like, well, if I'm going to do this, I'm going to go all the way. So let's learn how to do business and the whole bit. And so, yeah, the next month I was in that MBA program and, kind of spiraled from there. you know, I realized that I really liked it. And in that moment, I became, an investor instead of a consumer. And I can tell you that that was one of the most powerful things that's ever happened to me. or, you know, my children's birth and and raising them and my wife and the relationships, but just the outlook on life. my thought process sort of switch from thinking about, you know, watches or cars or whatever it was to solving the world's problems and, capitalism. And, you know, how can we take those thoughts and, you know, do something with them and change the world for better? And, man, it was life changing.
Sam Wilson (00:04:05) - Did you do you feel like you.
Sam Wilson (00:04:07) - And I'm going to. I guess when I say this, I don't think of higher education as a place where people typically get enlightened to go be an entrepreneur. Even in the MBA program, how did was just the right school, the right timing? Was that the right people? Like what was the confluence of things that occurred to really inspire this in you?
*Ryan Smolarz * (00:04:27) - Yeah. So, you know, I was starting from absolute zero. I didn't know, you know, how a bank worked. I didn't know what an interest rate was, really. I mean, we had a mortgage on our house, but, you know, I was like, oh, it could have been 12, 15, 100. It wasn't. You know, I don't want to change anything for me. I didn't really grasp the concept of, you know what that meant. And, once I figured out that, you know, if you do understand business and you can, you can put these ideas into fruition. that there was always a place that there was, like, this itch I was trying to scratch, and I never could figure out what what it was that was off.
*Ryan Smolarz * (00:05:12) - and almost instantaneously, when I made that, that jump, it was completely different. Like, I didn't have that feeling anymore. And so, yes, the MBA, the MBA program was really meant for people who are in that, you know, business, corporate ladder. But I just use the information in a totally different way. Right? I just took what they were telling me and applied it to where I wanted to apply it. and it really worked out perfectly.
Sam Wilson (00:05:44) - That's awesome. So you've gone from a guy that doesn't even know where he banks to now running funds, buying self-storage, raising capital. I mean, being very, very in the weeds in the finances.
*Ryan Smolarz * (00:05:58) - Absolutely. Yeah. We did it, man.
Sam Wilson (00:06:00) - That is that's awesome. So what, outside of the MBA program, how did you then take the next steps to figure out? I know you mentioned the e-commerce business. You mentioned some other things along the way, but kind of give us the, the maybe the modified version of what happened over the last six years to get you where you are now.
*Ryan Smolarz * (00:06:18) - Yeah. So I you know, I always had these ideas in my head about things that I wanted the bucket list. Right. What are the things in life that I want to accomplish? And, I had these ideas for some patents. And so, you know, one day I just said, you know what? We're going to write these patents and we're going to push it through the system and see what happens. And so we did, got a patent attorney and, started having the conversations and, wrote two patents. One of them is supposed to launch the product here in a couple of weeks. It's been, you know, almost five, six years of in production. Wow. yeah. So, you know, once I figured out that Wall Street sort of has this language that they don't want retail to know what it means and that, you know, I've been through medical school, got the anatomy under my belt and learn Latin and, you know, all the things that were really difficult to learn.
*Ryan Smolarz * (00:07:17) - I said, you know what? I think that, you know, the stereotype of doctors not being able to learn this stuff is just garbage. it was the same thing in flying a plane. You know, people told me that I couldn't be a pilot. I said, that's just garbage. so I'm going to go learn how to do it. And, you know, being a contrarian and it's just sort of the way I think and the, you know, you tell me I can't do something. Okay, well, that means that I'm going to do it. If I want to write, I want to.
Sam Wilson (00:07:49) - I would I'm sorry. Go ahead.
*Ryan Smolarz * (00:07:51) - No. That's it.
Sam Wilson (00:07:52) - I would imagine then that being a contrarian again, in a field where everybody kind of has to play by the rule book has been helpful for you because you stand out. No.
*Ryan Smolarz * (00:08:03) - yes and no. there have been certain times where that has certainly worked. not in my favor. but from making that switch from, you know, this ultra conservative, profession to quite the opposite, you know, where the world is, your oyster, kind of scenario.
*Ryan Smolarz * (00:08:24) - it was an easy transition for me because it was hard for me to sort of fit into that box and just never, never been that kind of guy. And so, you know, I would come in and say, why don't why don't we do this in surgery? Think of the work a lot better. Oh, that's not what the books say. Right. And so I pushed it a little too far on occasion. with those, you know, mentors and things like that. But I think that, you know, hard work, dedication that's never been a problem. They knew they knew I was working hard. But, you know, it just kind of it was it fit my mentality so well, to make that sort of jump.
Sam Wilson (00:09:03) - That's cool. Tell me, how did you get to today your you are through store, which again is store. What is the store partners you said was the website. Is that right?
*Ryan Smolarz * (00:09:12) - There's dot com. Yes. Store partners. Com store.
Sam Wilson (00:09:16) - Partners.com.
Sam Wilson (00:09:17) - You have to go check that out. How how did you get into what you're doing now. Because even that even being in real estate this is yet another. And it sounds like you love to learn. That's one thing I've picked up from our conversation is that I think, calling you a lifelong learner is probably an understatement, but, you know, what you're doing now is even a unique subset of commercial real estate. how did you get into what you're doing now?
*Ryan Smolarz * (00:09:42) - Yeah. So, interestingly enough, I remember where I was. I was driving to the airport, and there happened to be a podcast on and I was getting done with my training through the MBA, and I really didn't want that to fall to the wayside. I was pushing hard, to try to use that, if, if nothing else, the mindset. And so there was a guy on there talking about self storage and, I thought, you know, my life is so complicated that what, what I want to do is to find an asset class that is the the most that I can find.
*Ryan Smolarz * (00:10:24) - That's not complicated. And, you know, people say that you can look at your set of keys and figure out how complicated your life was. I looked down at my seat and there was like 300 keys on my passenger seat. And I said, man, my life is super complicated. So here's what we're going to do. We're going to go buy a concrete slab with a metal box. And we're going to do that. And, so I went online, try to find the best, person to learn from that that I could in the world. And that's kind of how I do things like, you know, I, I love mentor programs. I love coaching programs. you know, I want to learn from the best. And I always feel like if I don't, then what did I miss? so I ended up in this group, and I've been there since 2000 and really 2018. We started in 17 because I got an a limited partner deal to, to try to learn. And, it's just grown over the time and, you know, got to know and, respect the, the guys in the group.
*Ryan Smolarz * (00:11:26) - And so it's almost a lot of, you know, it's as much fun as learning going on a quarterly basis up there to see them.
Sam Wilson (00:11:32) - Right? I bet it is. So you've stayed in the self-storage lane the entire time? Yeah.
*Ryan Smolarz * (00:11:40) - Yeah.
Intro (00:11:41) - Absolutely impressive.
Sam Wilson (00:11:42) - Hats literally. Hats off to you. That's impressive.
Sam Wilson (00:11:46) - I.
Sam Wilson (00:11:47) - I mean, there's temptation. I only speak from personal failure on this front, but I'm sure over the years you've had some really great deals come across your desk and unique opportunities that were outside of the slab in a box methodology that you've, been employing. How have you said no to those?
*Ryan Smolarz * (00:12:06) - Well, there's been some times where I have and, you know, it was basically friends and family flipping homes and said, okay, well, here's some capital. Go for it. Right. but I'm just not interested. I don't know it. I, you know, I could probably underwrite it, maybe, but it's a headache, right? I mean, it's just like, it's it's much easier for me to take a self-storage deal, look at the number of, you know, what they're selling it for, for square feet.
*Ryan Smolarz * (00:12:34) - I know the the ins and outs. It's kind of like Warren Buffett. You know, he's got you call him up in five minutes later. He knows if he wants to do the due diligence and put it under contract. you know, it's just it's the experience. It's the knowledge. It's knowing who's in the business know, knowing who to call. I mean, it makes me want to vomit, to try to learn, relearn all that. Right? It took me a lot of time to figure that out.
Sam Wilson (00:12:58) - No doubt on on that front and that and that kind of learning that, those soft skills to where you can have a deal sent to you and within just a few quick, you know, glances, you're like, yes, no or maybe investigate further. I mean, that's a, that's a, that's a hard earned skill set. And even even yesterday I had somebody had a broker send me a deal and I just called her back and said, hey, you know what? If I offer on this, it's going to be one less than one half of what the list price is.
Sam Wilson (00:13:28) - And here's three key reasons why you want to draw it up. Knock yourself out. But that's about where I'm going to be. Yeah. She you know she understood it. But having that innate kind of, you know, built an understanding of what what it takes to make those sorts of deals go around is, is really, really powerful. So you are a full time EMT. You work really hard during the week. You are running your and tell me what is the structure or current structure of what it is that you do, or you guys running a fund or you doing a deal by deal syndication? What what is that?
*Ryan Smolarz * (00:13:57) - Yeah. So it's a series LLC. so there are barriers between each deal. so if you invest in one deal, you're not invest is not a blind pool. it's basically a syndication under a holding company is really what it is. So syndication on syndication on syndication. and so going through that process, my main focus these days is the fund manager role of a fund.
*Ryan Smolarz * (00:14:25) - That's sort of where my, passion lies. And to be able to, you know, to, to do all of those components, which is super fascinating to me and super boring to everybody else. I absolutely love it. and so to be able to do that in self storage, which I have a fair knowledge base on and bring in the right people, it's it's just been it's been fabulous and, almost. Well, it is life changing for me, right.
Sam Wilson (00:14:56) - Does that, what was I going to ask you on that it was or are you guys allocating capital? Are you guys actually buying the deals yourself and running them?
*Ryan Smolarz * (00:15:05) - Yeah. So it started off as allocating capital. we were almost like a debt fund for equity. that's how I can describe it. but now we've moved into our own space. we have a acquisition team that we're building, and, we're going to do it all in all in house, under the under our roof. And, you know, if there's a development deal and we decide to JV with, with another sponsor, or firm, then so be it.
*Ryan Smolarz * (00:15:34) - But right now we're, we're focused on acquisition and, that's, that's sort of where the bread and butter lies for us.
Sam Wilson (00:15:41) - What has been probably the, number one lesson or maybe the hardest thing that you've had to solve in growing a business like what you're doing right now.
*Ryan Smolarz * (00:15:51) - Oh, it's certainly. Well, one thing is timing. Like when the capital comes in versus when the the deal closes and, and trying to make all that work is, sometimes just torture. but the other thing that I think is more kind of, you know, the 30,000 foot view where where I think the, you know, the Alpha lies in building the teams. we have a big focus on that. And, trying to find people who were who were all rowing in the same direction with. I find that super important. you know, the when you know, you have a good team, when one person on the team doesn't like the decision, but everybody else does, and they are rowing even faster in the same direction that everybody else is.
Sam Wilson (00:16:43) - What do you when you. Can you explain that a little bit further? If what I heard was you saying that you may have a team member that doesn't necessarily agree? With the decision, but yet is still meaningfully participating in and helping everybody push in that direction. Is that.
Sam Wilson (00:16:59) - Right?
*Ryan Smolarz * (00:16:59) - Absolutely. Yeah, absolutely. And it may be me that disagrees in the other part. People on the team want to push forward. It really depends on the scenario. But if you're out in the middle of the ocean, everybody thinks that, you know, North America is to the left and Asia is on the right, and you got to get to the, the, the place that's closest. If everybody wants to go to the right and you want to go to the left in the decisions made, you paddle as hard as you can and, and to the right and, you know, you're you're all in. So this is, you know, a team sport. It's not an individual sport, and it's full contact.
*Ryan Smolarz * (00:17:38) - there is no doubt about it. Commercial real estate is full contact sport.
Sam Wilson (00:17:42) - It is indeed. You're based in the US Virgin Islands. Where do you guys buy? And I'm imagining that you're not buying. All right. There in the Virgin Islands. No. So how do you do that?
*Ryan Smolarz * (00:17:56) - Yeah. So we spend hours and hours talking about our buy box, and it's constantly changing. Right. What do we buy? Right now? It's over 20,000ft². It's in the Sunbelt states and only states that we feel are good for business. as you you can just take property taxes, right? We have and we look across our portfolio and you can just look at that line item on the due diligence on the, on the PNL. And you can almost tell right looking looking back, one place will be three times more than the other one. Right? with the market rates being fairly similar and just with that data point alone. Hey, you know what? We're going to the one that's more business friendly.
Sam Wilson (00:18:47) - Yeah. There's no doubt behind, behind your principal and interest payments, property taxes, are probably going to be your second greatest, expense, unfortunately. Generally, you can do nothing about you can contest, but, you know, good luck if you just bought it and they, reassess at your latest sale price depending on what the state is. So that's, What's that now?
*Ryan Smolarz * (00:19:12) - Oh, we look a ton at, dividing up the goodwill, you know, for those purposes. so we don't get hit with that extra income. That's just for goodwill. It's not on the property. we have a person. We're going to have a on the podcast. I think it's next Wednesday. Who not only does cost eggs, but he fights property taxes on the increases, like that's his job. And so we keep him very busy, and, it's awesome. And, you know, I hope he never retires.
Sam Wilson (00:19:42) - Tell me about building team. I guess, you know, again, building it remotely. You guys, I'm sure you still have staff, at the front desk at these facilities.
Sam Wilson (00:19:51) - Maybe you don't. I don't know, you could maybe if you can break down a little bit of your kind of operations and how you guys run that from so far away.
*Ryan Smolarz * (00:20:00) - Yeah. So a lot of it. And self-storage. I mean, these are, C plus B minus facilities. there are, there's a few of them that have, management on site, but not many of them. A lot of it's done remotely. We have, the coined the term, chief petty officer. So, there is someone that at least goes by once or twice a week to make sure that the, you know, there's no garbage on the ground that the the lawn, people who are coming by to keep everything up. you know, there are instances where, you know, we get calls and say, hey, we we need a locker. Like, okay, the keys are in the back, right corner. Right. and, move your stuff in. And, you know, here's the way you pay.
*Ryan Smolarz * (00:20:46) - So there is there's components of it that are, you know, offsite, onsite. It really just depends on the facility and what works for the community and all the all the things.
Sam Wilson (00:20:59) - Yeah. Self storage has been a hot asset class for a number of years. How are you guys finding deals that pencil in today's interest rate and also competitive you know buying environment.
*Ryan Smolarz * (00:21:13) - Yeah. So our last deal was bought on seller financing at a cumulative rate of about 2.8%. yeah. So we. Yeah, that definitely helps it. Pencil. There's no doubt about it. We love Utah. you know, a lot of it's this marketing engine that I talk about ad nauseum over and over. It's, you know, having dialers and bringing deals to the table where really our focus is, to close that deal where everybody wins. Right? Because what we don't want is our name to get out there as sort of a, you know, a a firm that's trying to squeeze. So there's certainly times we leave some on the table, to, you know, keep that reputation intact.
*Ryan Smolarz * (00:22:12) - we love to keep up with our sellers, you know, to see what they're doing. And, you know, when I'm in the town of a previous owner, then, you know, maybe we'll go to dinner or something like that. you know, we're really not in the commercial real estate business as far as I'm concerned. We're in the relationship building. sort of. That's what we do, is build relationships. And, I think that goes a long way. And with you, if you go into, you know, a negotiation with that in mind is how can we all win walking away from the table? I think that's powerful. And I think that that brings, you know, sort of a little bit of a competitive advantage to our group.
Sam Wilson (00:23:00) - It takes time.
Sam Wilson (00:23:02) - To.
Sam Wilson (00:23:02) - Time and effort to build those types of relationships. What would you say your average from the first day you look at a deal and say, I'm interested in that to when you finally get a deal closed. Do you think that, do you think your number of days in kind of transaction, or considering a transaction to getting it closed is longer than other people's cycles? Maybe.
*Ryan Smolarz * (00:23:26) - Maybe, it's tough for me to say. I mean, I I'm in contact with quite a few firms that are doing the same thing. I would assume that we're a little bit, outside the norm. just on the the real front end of building that rapport. but with our, you know, standard operating procedures in place, I think we'd catch up on that a little bit as we go through the deal.
Sam Wilson (00:23:55) - Right. No, that makes sense. And I'm not suggesting that's a that's a bad thing. I was just thinking that, you know, if you're thinking about employing this, which it sounds like an incredibly sound strategy, but that you just need to know that you need to put the time in. I guess at the short, short summary there is that this takes time to build those relationships, but it does pay off there in the in the long haul. So that's very, very cool. Ryan, we've talked about a lot of things, everything from kind of your story as an EMT, going to school, how you got involved in commercial real estate.
Sam Wilson (00:24:27) - I love the singular focus that you've had over the last six, 7 to 7 years now. and just kind of how you've built out your company, the way you guys are finding opportunity right now. So much here to learn. one thing we didn't talk about was that you have your own podcast. So if you're listening to this, check out Ryan's Medicine and Money show. if I had the pleasure of being on that show at one point. So check that out. That's, that's also another way that you can connect with Ryan. if our listeners want to get in touch with you and learn more about you, what are some other ways they could do that?
*Ryan Smolarz * (00:25:03) - Yeah. So on our website, store, store partners.com, there's a button you can click. and that will take you directly to our calendar, Lee or Calendly. And, you can have a conversation with us. a lot of our focus on these calls is about, if we can provide value and some sort of education, you know, not necessarily pushing to, you know, come into one of our deals to me, if a person's not comfortable, with the investment, it really may not be the right time or place for to place that capital.
*Ryan Smolarz * (00:25:42) - And so we really focus a lot on that. we love talking to, you know, the, the potential investors, CPAs or financial advisors or whoever the case may be. So, you know, bring it and, you know, we will do our best to answer every question that that comes up. I'm on LinkedIn, Joseph Ryan, small hours. You can check me out. and, Yeah, that's probably the two best places.
Sam Wilson (00:26:11) - Sounds like a winner. Ryan, thank you again for coming on the show today. I certainly appreciate it.
*Ryan Smolarz * (00:26:16) - Absolutely. And I appreciate you having me.
Sam Wilson (00:26:19) - Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening.
Sam Wilson (00:26:41) - Thanks so much and hope to catch you on the next episode.