Feb 4, 2022
Zach Quick is a self-storage investor based in Northwest Arkansas and an owner and operator in $38 million dollars of self-storage in the Midwest.
His passion for real estate and finance and love to connect with others led him to a successful career in the self-storage space after years of investing in single-family homes. Zach joins us in this episode to talk more about his journey and some practical steps we can take to invest in the self-storage too and grow our investment portfolios.
[00:01 - 02:08] Opening Segment
- Let’s get to know Zach Quick
- Why he pursued entrepreneurship and real estate
[02:09 - 08:07] Investing in Self-Storage
- The cliche reason Zach started investing in self-storage
- He talks about his experience buying in off-markets
- Zach reveals some tips to close large deals in the self-storage space
[08:08 - 13:51] Boat and Recreational Vehicle Storage
- The creative ways to fund self-storage deals according to Zach
- He shares his experience in investing in boat and recreational vehicle storage
- Here’s what you need to understand to start investing in self-storage
[13:52 - 15:17] Final Four Segment
- A real estate mistake and how to avoid it
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- Avoid analysis paralysis by getting your hands dirty
- Your way to make the world a better place
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- Growth opportunities for employees
- Giving back to a children’s center and food bank
- Reach out to Zach
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- See links below
- Final words
Tweetable Quotes
“Understand supply and demand in the market. If you're buying, don't buy blindly.” - Zach Quick
“You can read all the books; that's only going to help you so much. You just kind of have to get your hands dirty, so to speak, and then it compounds from there.” - Zach Quick
“ I would say one thing I'm really proud of is how we're developing our employees, and then also my wife and I have been really giving back...” - Zach Quick
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Email zach@zachquick.com to reach out to Zach or follow him on LinkedIn and Twitter. Visit his personal website to learn more about investing in self-storage.
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read this episode's show notes? Check it out below:
Zach Quick 00:00
Understand supply and demand in the market. If you're buying, don't buy blindly. Go check with the counties, go check with the cities. Is there anything new coming? Does every single competitor have room to expand? Is every single competitor at like 80%? It's an art and a science, but I kind of touched on it earlier and that the biggest enemy of storage is more storage. You know, it's not like, we don't have a, I would say generally we haven't under you know, we're undersupplied on housing right now across the United States. In general, we just need more housing.
Intro 00:31
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson 00:43
Zach Quick is a self-storage owner and operator in the Midwest. Zach and his wife and his two kids reside in Bentonville, Arkansas. Zach, welcome to the show,
Zach Quick 00:52
Sam, thanks for having me. I appreciate it.
Sam Wilson 00:54
Hey, man, pleasure’s mine. Same three questions I asked every guest who comes on the show. Can you very quickly tell us in 90 seconds or less where did you start, where are you now, and how did you get there?
Zach Quick 01:02
Sure. Born and raised in Southeast Kansas, I kind of always grew up knowing that I would do something entrepreneurial-slash-real estate not really exactly sure why, just kind of was in me for lack of better words. So when did the corporate thing out of college, did retail, got promoted a few times. But then wife and I kind of started with kind of a garage buying a house that had a garage apartment renting that out, got up to about 30 residential units and got stuck, felt stuck. Fast forward to today. We've since sold all those. I mean, we've been in self-storage full time for about four years. So, and I don't miss the residential part. Not that I'm I was in a very different part of it than a lot of people. But yeah, and then now we live in Bentonville, Arkansas.
Sam Wilson 01:43
Man, that's absolutely fantastic. Yeah, I think that's a pivot that so many of us have come to at some point. And you know, I've had plenty of people come on the show, who are you know, have learned and figured out how to scale large, single-family portfolios, I mean, sometimes 1000s of them. But that's something I'm with you, I got stuck. I just went, “Oh my gosh, like I've hit a ceiling. I don't know how to get beyond it. I'm stuck.” And so did the pivot and punted like you did, how did you pick self-storage?
Zach Quick 02:09
This will sound cliche, but honestly. I was on a family vacation in Nashville, Tennessee, I was sitting in the backseat, my dad was driving, I looked out the door, and it felt like God was like tapping on my shoulder and said, “;ook at those bright blue self-storage doors.” So I just started researching, you know, driven by storage 1000s of times and never thought twice about it. And so did the research for about a year. And then we were selling a 12-unit apartment that we had originally intended to 1031 into a larger apartment, but decided that was going to be our foray into storage. So we sold the 12-unit apartment and 1031 into our first property. So I would say a good solid year of research, and I was just kind of drawn to it once we started researching it.
Sam Wilson 02:49
There's so much storage out there. How did you find the first one made sense?
Zach Quick 02:54
A lot of so, everything I've ever bought, both residential and self-storage has been off-market. And that's not to say that buying something on market is bad. It's just the way that it's worked for us is that I basically started building out a list in good old fashioned Excel using county records and just trying to figure out, you know, if I was looking on Google and I saw a property that I thought like, “Ah, this looks like within the realm of what we could afford, it looks like there's a little bit of upside to it.” Then they got a letter from me or they got a phone call from me. And so I did that a couple of times. Got close on a couple of other properties. And then a guy called me late on a Thursday night said, “Hey, come meet me.” We went down Saturday morning and shook hands so it's kind of, you know, kiss a lot of frogs so to speak, and then that one works. So…
Sam Wilson 03:37
That's fantastic. And so you buy mostly in the Arkansas and Missouri area now.
Zach Quick 03:43
Yeah, so we've found all throughout the state of Missouri right now we're pretty much Kansas City and then south to about Central Arkansas. So I've owned an Oklahoma City area before I have a look. I'm in Arkansas, Missouri, Kansas, Oklahoma, we're starting to branch maybe a little bit to, I don't know Texas, Nebraska, Iowa but as of right this second what we owner in Missouri and Arkansas,
Sam Wilson 04:06
Are their challenges to being geographically diverse?
Zach Quick 04:09
Yes, and no, I guess you could say and some of it frankly, is just my own comfort level on where we bought so far. I mean, everything has been within, call it a four-hour drive. And that's just kind of where I started my direct-to-owner marketing. So recently hired an operations manager to kind of help deal with the day-to-day with managers and each property but yes, a fair amount of driving but I'm kind of fortunate that where we live I can touch quite a few metros within, call it a five-hour drive, and so you can kind of and we're in the Midwest too. So where everyone is trying to buy as opposed to you know on the coast so…
Sam Wilson 04:44
That's really really intriguing. What have you found have been some effective ways to manage the demeanor you guys, you have on-site management, do you guys run like front offices do you have you know, all that all remote as we talk about some tactical things?
Zach Quick 04:58
Yes. So I've done at all, we've bought and sold a lot over the last couple of years, and really all the ones that we've sold is just put the intent to exchange up into larger ones. So we've done it even from the beginning ones of being me answering the phone calls and the property was two hours away, and we just have a guy that was, you know, he was our mower, there was a maintenance issue, he would check on it. And that can work totally fine, depending on the property in the area, to up to now, you know, across our seven properties, they're all large enough that they can afford essentially an onsite manager, there's a couple of properties that split. So we have some density in the properties themselves that one manager will, she has about 85,000 square feet at one property and another one has 75,000. And then they split about a 40,000 square foot property. So, so every other week, they have this small property, if that makes any sense. So, try and get some density geographically obviously helps. But yeah, right now they're all on sites, there's 100 different ways to skin, the cat, a lot of people are really passionate about having quote-unquote, manager lists on-site or no, quote-unquote, onsite manager, I'm of the opinion that if the facility is large enough there, the delta and what you're saving really isn't there, and especially if it's someone, you know, ideally, you have the right person in that seat that's driving business that's doing a good job. So we're agile, but that's where we're at right now and how we manage the data.
Sam Wilson 06:20
Got it. Yeah, that's really intriguing. Talk to us Zach about, you know, the size of this, you know, square footage, that's a term that I hear a lot of in self-storage versus, you know, units in multifamily, we always say buying 300 units, we don't really care. I mean, we do care, but not really how many square feet it is. But for you guys, you always mentioned that it's 80,000, square foot, 70,000 square foot, and you kept saying you keep changing up inside your 1031, you buy a smaller, and that's how you've grown your company. It's just keep buying larger and larger. What's the size that makes sense for you today? And why?
Zach Quick 06:51
Yeah, I would say today, again, if it was right down the road from an existing property, it might be a little bit smaller, but I would say right now call it 45,000 square feet now. And mainly because well, to use this as an example from back in the residential days, like whether I have a house that rents for 1,000 bucks a month or whether I had a house for 500 bucks a month pretty much cost the same to replace the air conditioner pretty much cost the same to replace the gutter or downspout. So really the same thing applies across self-storage. I mean, obviously, the more square feet, you know, your maintenance should be a little bit higher just because there's more stuff to fix. But all things aside, your software costs the same. Utilities aren't necessarily double just because it's double the square footage, you know, really labor is kind of your only slight sliding scale within that. So yeah, that's generally about the size that I'm looking at. And obviously, again, I'm in the middle of the map. So you know, the higher rent per square foot, if you were to go elsewhere, like maybe you can go a little bit smaller, and it makes sense for you. But I found that, yeah, I would say that purchase price somewhere between call it two and a half million up to 10 million kind of seems to be a little bit of a sweet spot that there's a little bit less institutional, but it's also a little bit larger than maybe, you know, someone that doesn't know storage if that makes sense.
Sam Wilson 08:08
Yeah. Well, talk to us about that. I mean, that two and a half, you know, anything under 5 million, I would say is that typically a tougher commercial asset to get financed. How have you guys bridged that gap? So you know, the bigger the number is on seems, the easier it is to get financing for.
Zach Quick 08:22
Yeah, generally, honestly, especially on the purchase side, we're just going with a local regional bank, just because they're generally they're flexible. If it's more or less in their backyard, and they have some experience with you, then they want the loan. They like you they like the business plan, I understand what you're set out to do. You know, we don't have Fannie & Freddie with like multifamily. So generally speaking, like our terms, or interest rate is probably going to be a little bit worse. But it's not like it's like, you know, twice as bad or anything like that. So, so yeah, generally on the purchase side, it's really a small to medium-sized regional bank. On the refi, there's a little bit more options in that, you know, if you're willing to do a lower loan to value you can get you know, CMBS, life insurance, etc. Just no, Fannie Freddie,
Sam Wilson 09:06
Right, man, that's very, very interesting. Let's talk about this. You're in a very interesting location in the country. They're in Bentonville in that you guys have loads and loads the for those of you that don't know that that's a beautiful part of the country, if you've ever been, but the reservoirs, there are reservoirs and RV parks and campgrounds galore where you guys are and then of course over to the Ozarks as well. Have you guys dabbled in boat and RV storage in those areas?
Zach Quick 09:32
Yeah, so actually, the very first storage facility that we bought was a boat and RV storage only and like the smallest unit size was a 12 by 32, which in normal storage terms, that's huge. So and that first one was right near Beaver, like we were like less than a mile from the boat ramp. So it was an ideal location for that. And then we have had some other properties in the past and in some of the other like, Ozark lakes in Missouri as well. So yeah, a lot of demand. COVID kind of accelerated the demand. Just a lot of more people who you know, would normally maybe go on a vacation, we're like, “Well, I'm just gonna buy an RV.” There's a lot less parking forum, neighborhoods and HOAs do not want them in their neighborhood, they are, you know, we'd like boat and RV storage, there is no perfect investment by any means. But they can definitely be, you know, you're getting a lower cost per foot. So it's a little harder to develop in terms of making your numbers work, as opposed to regular self-storage, people hit your buildings, people back into your doors, granted, usually, you know, you've got cameras, and they're on auto pay, so you can make them pay for it. But that doesn't make it any easier, especially when supply chain makes doors, you know, two months away from getting them that, you know, there are some and then from on the flip side, too, you know, the biggest enemy of storage is storage. And that's especially true in boat and RV storage, if there's too much supply, it is not very hard to just hook up your boat or your RV and drive down the road and move in somewhere cheaper, you are not going to do that if you just unloaded a U-haul of four bedrooms worth of stuff and you know someone's 10 bucks a month cheaper down the road, like you're not gonna reload the U-haul and do it. So while the boat and RV customers are generally a, more column price elastic, they're probably willing to pay a little bit more because you know, they have a boat or RV. That doesn't make them immune, you can't you're somewhat compelled with the market as well, just because, you know, again, it's easier to leave. So good properties. I think that the demand is definitely there and more so but yeah.
Sam Wilson 11:25
That's really intriguing. Yeah, those are not things I would have thought necessarily about directly is just the ability to, you know, up and just move and go somewhere else. And yeah, of course, like you said, also just the damage aspect of it, it becomes a little bit more to manage. And also you get a lower price per square foot where I would imagine your building costs are going to be just about the same.
Zach Quick 11:43
Yep. And yeah, I mean, they are essentially the same. And you know, you're getting higher, larger doors, which could be across a little bit more, but there's less of them. So and your other crosses, generally, you know, you could probably build a decent, let's assume it's a single storey self-storage facility, you can build a nice sized facility on four or five acres, if you're trying to build a four or five-acre boat and RV facility, it's gonna be really cramped, and you're just not going to get just because you need to have that 60, 70 feet in between buildings so that they can move those classes back and forth and not have the havoc actually have the room to back into their units. So need a little bit more land.
Sam Wilson 12:19
Right? Yeah, your drive aisle is going to be a lot bigger on those facilities. Yeah, it's been interesting to watch that asset class, especially in the last 12 months, like you said, I mean, RV deliveries were somewhere I think 2021, was that a half a million new deliveries, which is just I mean that they're gonna have to have a place to still own in that asset class. Or if you sold all those off.
Zach Quick 12:38
We have one that's kind of a hybrid, it's got a little bit of both. And again, we didn't sell them just because there was anything wrong with them, per se, it was more to just scale up into larger assets. So, but I agree with you, it will be interesting to see how that plays out. Because I know multiple people that, you know, can't buy one right now. And they want to buy one just because they're not there. So…
Sam Wilson 12:58
Right. Yeah, absolutely. Yeah, it's absolutely fascinating. What would be one piece of advice you would give to somebody who wants to invest or begin investing in self-storage?
Zach Quick 13:06
I would say really, really understand supply and demand in the market. If you're buying, don't buy blindly go check with the counties, go check with the cities, is there anything new coming to us? Does every single competitor have room to expand is every single competitor at like 80% It's an art and a science, but I kind of touched on it earlier, and that the biggest enemy of storage is more storage? You know, it's not like we don't have a, I would say generally we have an under you know, we're undersupplied on housing right now across the United States. In general, we just need more housing. I can't say the same for storage at every single place. So you know, people don't magically just store more stuff just because it's built. So just really have a good understanding of the supply and demand of where you're either buying or developing.
Sam Wilson 13:52
Yeah, that's absolutely fantastic. Zach, if you could help our listeners avoid one mistake in real estate, what would it be? And how would you avoid it?
Zach Quick 13:58
I would say analysis paralysis is a huge part, especially if you're starting, is your first deal is not going to make you rich. I don't I mean, if it does, then you're one in a million. So really, half of it is just getting in and learning firsthand. You can read all the books; that's only going to help you so much. You just kind of have to get your hands dirty, so to speak, and then it compounds from there. So yeah, get in and do it.
Sam Wilson 14:20
Yeah. I love that. Yep, absolutely. When it comes to investing in the world, what's one thing you're doing right now to make the world a better place?
Zach Quick 14:26
Oh, I would say one thing I'm really proud of is how we're developing our employees. And then also my wife and I have been really giving back to, there's a children's center here and then a food bank here as well.
Sam Wilson 14:37
That's cool. Man, Zach if our listeners want to get in touch with you. What's the best way to do that?
Zach Quick 14:40
Sure. Zach@zachquick.com. Z–A-C-H, I’d, one of the few names so if you just Google me, you'll probably have to find me. But yeah, reach out anytime.
Sam Wilson 14:49
Awesome. Zach, thanks for your time today. I do appreciate it.
Zach Quick 14:52
Thanks for having me.
Sam Wilson 14:53
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 I appreciate you listening. Thanks so much and hope to catch you on the next episode.