In this bonus episode, Joe Downs returns to share deeper insights into the operations, trends, and future of self-storage investing. He covers hybrid management models, the role of AI in streamlining customer service, and his approach to sourcing and funding deals. Joe also highlights how the ongoing housing shortage is boosting demand for storage and why younger generations are driving industry growth. The episode wraps with practical advice for investors eyeing opportunities in this evolving asset class.
Joe is a lifelong entrepreneur with a track record of success across the securities, mortgage, hospitality, and real estate industries. As co-founder and CEO of The Belrose Group, he’s built a powerhouse firm specializing in the self-storage sector of commercial real estate—expanding it from acquisitions to include development and consulting. Known for spotting “niches within niches,” Joe brings a sharp eye for opportunity and a passion for educating others. He’s a featured speaker at the Self-Storage Academy and Mastermind, where he shares his insights as both a visionary leader and a hands-on investor.
In this episode:
- Exploring hybrid management models in self-storage operations
- Leveraging AI-driven call centers to improve efficiency and service
- How Joe Downs sources deals and stays ahead of market trends
- Creative funding strategies for storage acquisitions at any investment level
- The connection between the housing shortage and rising storage demand
- Demographic trends fueling continued growth in the self-storage industry
- Joe Downs shares expert advice on the future of storage and smart investing
Episode:
Narrator Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we’ll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you’re a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here’s your host, Craig Evans.
Joey Romero Welcome back everybody as promised, here’s the Bonus Session with Joe Downs. Hope you enjoy.
Craig Evans So I’m interested to hear you know we, we’ve talked several times about the relationship and business of what we do. You and I were talking some prior to getting on air about that and now we’re talking about how we’re turning the storage space and how it’s really about how you’re interacting with that client from a digital perspective. So I’m curious to see, because I’m seeing storage facilities go both ways to where they’ve still got people that are on site managing and I’m seeing a large trend that have no person on site full time managing, no one living there, no one doing any of the old school stuff. What have you guys found? And do you see that differ from geographical areas from one to another?
Joe Downs Yeah, good question. The only geographically is interesting. I’m coming to that one first, maybe slightly, only because of snow is the only thing that’s coming to my mind. I’ll come back to that. For the most part geographically, no, or yeah, the most part, I’m gonna say geographically now, because even then you can have this snowplow. No, it has more to do with the type of service you have. So you might have no service, right? No services. I’m just drive up storage. You can access 24/7, you know. And it’s no climate control, nothing, you know, whatever, that’s we’re operating. That’s most of ours, by the way, and we’re operating that in what we call hybrid management style. So we have a roving manager. They’ll be there one or two days a week, and then they’ll move to another, sorry, month. They’ll move to another facility. And then we have the ability to have local boots on the ground anytime you set up a contract with usually we use law enforcement or firemen, because they work those odd shifts. They usually have time off. So if you need a unit cleaned out, or you need something, we’re relying more in a local boots in the round. So it’s kind of like a hybrid management structure, which is incredible for cost savings. And then we said, well, what if somebody has a question or a phone call? Well, so they can they call the call center anytime, and, you know, in the down the line, that’ll all be AI driven as well, so they’ll be able to talk to somebody like they’re talking to a live person. By the way, I’ve talked to live AI agents before. It’s incredible. You do not know the difference.
Craig Evans Yep.
Joe Downs You have to try to trick them into asking a question they can answer so you can see, is this a real person or an AI agent? Anyway, that’s how good it is. Where you are seeing what you described has to do with either the servic that is available at that facility, and I’ll give you an example in a second, or the size. So certainly, at 100,000 square foot, four story building, which a REIT probably owns, or some institution, they’re likely to have a full time and even a full time and a half employee, so maybe they have two people there on weekends, right? And that’s because, partly because of the size and the sheer volume of people that might be there at one time. But then there’s also little things like, hey in a building, you have elevators, you’ve got carts, you know, it’s still self service. But there’s components involved. There’s no component involved when you pull up to your your unit, in your car, and you get out in your truck, and you unload and load. The only service involved, the only thing we control there is, did you get in or out of the facility, right? You’re controlling your door yourself, right? So, there’s nothing that, there’s less that can go wrong, right? From that standpoint. Or, like I mentioned, you have a service. So we have a facility in upstate New York. And back to our army theme, it’s right outside of Fort Trump. And we park cars for the soldiers. They store their cars with us in a warehouse. It’s more like a valet service, so they’re parked in there like Tetris, right? You. And we start the cars for them. I think it’s once a week, or it depends on the weather. I forget the cadence, but we make sure, especially through the winter when, you know it’s negative 50 up there, or whatever it gets to where engine where, you know, vendor blocks will freeze. We make sure their engines aren’t freezing and crack. They might even drive them. Or simply, I don’t know what they do exactly, but we have to have employees for that on stat. But that’s built into that model. Most of what we do, we don’t have an employee at all. We have one manager, and they’re roving, and we have local boots on the ground, and they’re as needed, or it depends on the relationship and like, it’s a little different in every facility, but it’s mostly on an as needed basis.
Craig Evans Okay, how are you finding that you guys source most of your deals still?
Joe Downs Great question. We have had the best success with what I’ll call off market deals. So cold calling off market deals, cold driving, I guess, you know, just walking on the lots, old school right at Glengarry, Glen Ross, you know, just walk on a lot.
Craig Evans Yep.
Joe Downs And we’ve bought probably a third of it. We’ve acquired 20 facilities in six years. And maybe I’d have to do it. It’s either five or six are from brokers, most are cost market.
Craig Evans Wow. Okay, so when you buy your deals the way you’re set up now, and I think part of this because I want our audience to hear like, hey, where do they need to be before they can start to look at self storage, right? If they’re working three jobs and trying to figure out how to reinvent is self storage a game they can get into, right or, or what do they need to do to that, or to do that to accomplish that? You know? So are you raising capital? Are you buying them yourselves? Are you putting them in with a REIT? Are you JV-ing? What’s the methods that you guys look for?
Joe Downs Yeah, let me give you different examples of of maybe your, what your audience might be like, right? So you have people out there who are like, I was reinventing, broke, no money, you know, working two jobs and on the weekends, out looking for deals, right that I wish back in 2003 or two, wherever it was that I had heard this podcast, because the answer is yes, you can spend your time driving on weekends. I would have 2003 Joe would have heard this, and instead of gone to look for single families, would have gone looking, driving onto storage facility, facility, storage facility, lots to talk to owners and find out if and when someday they’re going to sell or be interested in selling. I’d be making relationships with those people. And the reason is even have no money to buy, because there are tons of buyers out there. The hardest part of this business is finding a deal. And a deal is not a facility. A deal is a willing seller with what might be a deal for the right buyer. And I say right buyer, meaning depends what your capital stack is, right? So Craig, you might offer, you might be able to offer 100 grand more on a deal than I could, just because we have different capital stacks, and that’s okay. My point is, when I say a deal, it’s a willing seller with a deal, That’s a deal for somebody, meaning it’s financeable or or tradable within reason, right? Not I’m a lonely seller, then I want 10 million and it’s worth two, that’s not a deal. So that’s the hardest part of this business, is finding them, and we do it by making relationships. And sometimes it, you know, it takes a while. The last deal we just closed, was, well, I started three years ago, I walked on the guy’s property. So sometimes it can take time. Sometimes it, you know, there you strike, or you get lucky, it’s lightening the bottle. But if I was out looking to make money, that is what I would first thing I do, because you can wholesale those deals. You find a 506, $800,000 deal. But you can’t buy it because you have no money at all. That’s a 50,000, $60,000 wholesale fee, right there?
Craig Evans Yeah.
Joe Downs Worst case, you know, 2530, that’s, that’s not nothing.
Craig Evans Yep.
Joe Downs Let’s say you find that deal and you got a couple 100 grand, right? You’ve been in business, or you’re looking to get into real estate, you find the same deal. Let’s let’s say it’s 700,000 we’ll pick a number. You could wholesale it for 50 that’s wonderful. What’s unique about self storage that is different from most other commercial real estate asset classes, and I love them all. This is not a knock. This is just, highlighting something unique about self storage. It is a business, and therefore we qualify for SBA loans, Small Business Administration Loans. That means, if I do have some cash, let’s say I’ve got 200 grand, and I’m looking at small multi family, or a package of single families, or whatever might I consider self storage? Yeah, I might, because that’s $700,000 acquisition. If I used an SBA loan, I’m only putting 10% down. I’m getting 90% financing. So 10% down, that’s 70 down. I roll in my closing costs. Maybe I’m at 100, 110 somewhere in there, 120 I’ve got some capex. I’ve got cash to operate this facility, and have cash left over. I don’t even need 200 right? I, feeling pretty comfortable so that that’s that’s a unique opportunity. Or if I don’t have 200 grand, and I need to raise it, I can put together a deal using, you know, a 506(c) or 506(b) offering memorandum. I can still use the SBA debt, and I can raise the 150 or 200 grand, whatever it needs at that point. I mean, you’re gonna, it’s gonna be a little more expensive, because you just added some legal cost to it, maybe another 15-20 grand. But I can still get the deal done. So there’s any number of ways to take down that deal if I can find it. I don’t have to take it down. I don’t have to buy it. I can wholesale it, and there are plenty of buyers, and I personally, my company, would be happy to help you, and we might even be your buyer. Who knows?
Craig Evans I mean, listen, I mean, I could sit here and talk about this all day, but I got to respect your time as well. So I got probably three questions left. I want to ask. You know, there’s a lot, especially right now with, you know, we talked about the markets, what’s going on with the markets? Everybody trying to read them, that whole process, right? And then everybody’s talking about the real estate market as a whole, where it’s going what’s going to happen? What do you see happening with storage? And what do you see as the future of storage?
Joe Downs Well, that’s a great question. We have a housing shortage of 4 million units, I think, consistently for the last seven years, and projected for the next 10 they’re continuing to, which tells you that we have a well, it tells you about housing storage, right? So it speaks a little bit about our population, right? And our population trends, right? We we grow at 1% a year. That’s a lot storage, storage development does not grow at 1% a year. The last four years definitely let in about 1% a year, I think, each year. So our growth rate for the last couple of years has doubled. And I don’t think with I’m not getting political, I’m just speaking logically here. I don’t think even if there’s any success of mass deportations, it puts a dent in the number that is here for to stay so, and that’s the number that they count, right? Who knows what the real number is? So you had an unnatural influx of people that puts pressure, by the way, that’s not even included in the $4 million housing shortage. So you’re going to see, no matter what tremendous growth in housing, the way they’re buildingthese houses, these multi families, and I think even residential units, they’re all getting smaller. And you guys might know that right, not just total square footage, but even your storage, your closet space, everything within your units and these buildings are getting smaller. So, I mean, that’s hand in glove with storage there. There, not only is the growth rate of the population rate in our favor, but so is the way they’re solving the housing problem, right? So, and then on top of that, interestingly enough, I’m, I’d mentioned I’m 51 I’m Gen X. You know, I’m eyeballing you, Craig, roughly, Gen X as well. I don’t know about you. Like I said earlier, I’ve never run storage. Our generation was the smallest generation in the last, like, four generations.
Craig Evans Yep.
Joe Downs We are not the best for storage. The the greatest generation is the baby boomers and and the millennials are huge. What’s unique about the millennials, and our generation in particular, is, even if we were bigger in terms of population, we still would be a smaller percentage users of storage because of how we grew up. We don’t believe in it as a generation, and it’s okay to say it out loud and admit it being a storage. I have an attic, a basement, garage if I need storage. I personally think I have a hoarding problem, but that’s just me. 10 to 15% of my generation disagrees, and they use storage. I mean, look, some of it is they need to. And by the way, I’ll use storage, I’m sure someday, if we get jet skis or something. And you know, it’ll be for discretionary, you know, vacation use. It won’t be for my day to day use. Or maybe I’ll use it for moving, who knows. But more importantly, the millennials, which is the next largest generation to the baby boomers. They not only use it, they expect to use it. So they’re using it at 30%, 30% of their generations using it or expecting to use it. The generation after them was that Z they’re projected at 50 or greater, they just see it as part of like having a system, right? Everyone has a storage unit. It’s just part of life. So what do I see for the future of storage? I see the future of storage being phenomenal, and the time to get in is now, because of what’s about to happen in the next 10 years. There’s 2.4 million businesses that will change hands in the next 10 years, cash flowing businesses. And at least 20,000 Yeah, at least 20,000 of them are storage facilities, because they’re all owned by people 65 years and older and by the way, if you ask me, we buy most of these deals, these 20 deals, if you ask me the average age of I’m shooting from the hip, it’s just spitballing. But I’d say the average age of our seller is like 70, 71, years old.
Craig Evans Really?
Joe Downs It’s, yeah.
Craig Evans That’s an interesting matrix, yeah.
Joe Downs So, it’s a really interesting time to get into storage. Look, do we have cycles? Sure, our down cycles are nowhere near. We’ve got the data, the proven. The down cycles are nowhere near anything else. They’re just they’re okay. In fact, I think we just had our worst two year run ever, because we came out of COVID in a stagnant environment. Real Estate market wasn’t down, but transactions were, and transactions really are important. That’s a bread and butter piece of storage. So when, if you think we’re headed into a slowdown in real estate transactions, then I would expect storage to slow down again. But that’s really it. Every other factor is wind at our back.
Craig Evans I’m going to finish up last question for you, of real substance, of same thing is, it’s one that I really ask everybody, right? So what would you tell brand new investors?
Joe Downs There’s a ton of information out there on storage. There’s podcasts, if you’re interested in storage. If you’re, you know, this is, I would stay with this podcast if you’re, if you’re not looking for storage. But, and by the way, let me commend you, by the way, because I’ve said it twice now, we didn’t have podcasts 20 years ago. So thanks to guys like you, Craig, who are taking your time to interview, not I mean you’re interviewing me about storage, but I’m sure you’ve got guys on talking about other real estate asset classes. What a tremendous service, public service, true public service you’re doing for the entrepreneurial investing world, because we didn’t have it. And you know just the advantage that you have by listening to your podcast every week, or every podcast you put out, whatever the frequency, you’re just so fortunate today that to have it, but so keep listening to these podcasts is number one. But, you know, there’s information out there and but I, storage is a business, so I would highly recommend, I mean, you’re, you’re welcome to reach out to me. I’ll give you my contact information. But I would, seek out the, if you’re interested in storage, I would seek out, the Scott Meyers Self Storage Academy. They’re actually, they’re teaching people the business they taught me the business. I actually teach there now. And we offer mentorships, and then my company actually does the mentoring, the training. So we, I love it. It’s great to give back. It’s, I love the questions that are asked because I haven’t been doing it for 30 years. I’ve been doing it for six, and I remember those questions because I had those same fears, doubts, questions, everything. Look the first deal seemed like Mount Everest, right? And I tell people, when I stand on stage, when we open up the academies, and I go up and I and I do the opening and I welcome everybody, and I say I was sitting in your seat six years ago, I remember vividly what’s going through your head right now and what’s not going through your head, right? You’re about to learn, you’re about to drink from a fire hose. I tell them that, and then I don’t think they get it. And then three months later, when we’re mentoring, I’m like, remember when I said it was me feel like fire hose, like starting to, starting to ease off a little in it, starting to get it, but at the same time, like, I’m not launching rockets into space or or catching them. As my newspaper, what things say now, I’m not catching rockets from space anymore, or these days. So I’m not Elon Musk. I’m not this brilliant guy. I’m just, I’m just just a little grit. All he needs a little grit and a little desire and, and, and you’ll figure it out. It’s real estate, buying a facility is obtainable. All of this is obtainable, even without money. You just takes a little, some time, desires and some grit.
Craig Evans Joe, I appreciate you. I appreciate you being willing to be on today. It is a wealth of information that you’ve given. It’s been a pleasure to learn more about you, but also for the things that you pour into our listeners, again, whether it’s for the seasoned investor that’s got 30 years in this industry or or somebody just starting, right? So I guess the last thing is, you know, for anybody that’s listen, if they’ve got questions, you know, I know you’re with Scott Meyers Academy. How can they reach out to you? How can they reach out to Scott Meyer? How can they get involved to get more questions answered about the niches that you look at, as well as just storage as a whole?
Joe Downs Yeah, would love to first of all, you can email me directly, Joe@Belroseam.com so that’s B-E-L-R-O-S-E-A, as in asset, M, as in management.com, our website is belroseg-r-p.com Rose group, which is belrosegrp.com and then if you Google Scott Meyers Academy, I don’t, I don’t have, like, a handy jingle to give you. Or if you Google it, or just email me, and I’ll quickly make the intro over there. Would love to see you. I think our next meetup or next Academy is in Seattle, Washington, in August. Love to see you there. It’s incredible. It’s just there’s a ton of information you get on the internet, but you read, it’s the type of thing where you really want someone to show you. It’s like you wouldn’t climb Mount Everest without a Sherpa, right? And this isn’t Mount Everest. It just feels like it right out of the gates. It. I can’t believe how incredibly easy it was to get into our first one. Compare to what I thought it would be.
Craig Evans Well.
Joe Downs …relatively, it was like walking, and I thought it’d be like climbing Everest.
Craig Evans Well, Joe man, listen, it has been a pleasure for everybody listening, I can’t thank you enough for being on today. If you got any questions, reach out to him. Reach out to Joey. We’ll make sure and get you in touch until next time. We’ll, see you soon. We look forward to seeing you. Thanks again for joining us today.
Joe Downs Thanks Craig.
Narrator For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out learn.thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.
Joey Romero The Norris Group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to learn.thenorrisgroup.com and click the hard money tab.