Grow Your Cashflow Podcast

Pascal Wagner (01:10)
Welcome Mark.

Marc Kuhn (01:10)
Hey, thanks Baskel. Thank you for having me on, man. This is awesome.

Pascal Wagner (01:15)
Yeah, I'm excited to to dig in here. A lot of stuff I want to cover here at the beginning, but I wanted to first just let's just start out with what we've been talking a little bit about. You've been on social media a lot the last several years and really maybe even four years and it's been taken off. And you said last year you did over 150 podcasts and

You know, sometimes it's kind of a lot all at once in it, it wanes and comes back. I would love for you to kind of talk about, what it's like, as an operator in North Dakota, of all places to, to really get on social media and what has that, ⁓ what has that done for your business? How, you know, LP is coming to you, maybe, maybe in misconceptions people have about you would love to start there.

Marc Kuhn (02:07)
Yeah. So a guy that drives a Tesla in North Dakota is not common to be on social media. Um, and, uh, you know, I, I think, uh, I think I had 300 followers, maybe total in November of 2022. And, uh, that's where I started to, uh, you could see a lot of social brands getting built in COVID. I wish I would have done the same because it was much easier, uh, to buy attention at that time.

but you know, there's never a best time to start anything. It's always yesterday anyway. yeah, I took the deep dive November of 2022, had hardly any following and wasn't, I don't think you go for a following, right? Like you're, you're going to try to help people. I think if you go into that mentality of like, that's the whole reason I created Mac capital was to help people understand real estate, how to invest passively in real estate and why you would actually even want to put it in a portfolio.

and diversify outside of, you know, the stock market. yeah, I just, uh, Ryan Panetta was a mentor of mine. Um, Grant Cardone was actually my first mentor in 2019. Um, and he's, was obviously a shark on social media, created a lot of attention for himself, created a lot of following, uh, can raise a lot of money from that. Um, and can almost do anything, right? The brand is worth something. It's a personal brand. And, uh, then I kind of leaned over into Ryan Panetta. He was more my age, more kind of doing different

different things within social media, but very much a master of marketing. and then I just realized I was like, man, I gotta, I gotta lean in here and see if I can shoot 30 reels a week. And, we had a really big output. was doing 150 posts per week reels, posts, you know, LinkedIn, Instagram, tick talk, Facebook, threads, LinkedIn,

Twitter, X now, you know, so it was, that's a, that's a lot to build up to that. and, but how it has helped my companies now is like, I, most people can't find deals. So I just post, need to find deals or I need to, create awareness for luxury storage. I can create all tons of awareness because no one's like, what, what is luxury storage? Right? It's kind of a question mark afterwards. and now I know how to do podcasts better. I know what catches attention, how to deliver a real.

in a punchline format. So it's made me a better speaker. It's created more awareness for my businesses. It's created a, I think the biggest thing that you will get from branding is Google my name and Google luxury storage. Just Google Mark Kuhn or Google luxury storage. You will see that the social media tools are like the SEO, the search engine optimization is incredible. It does all the work for me. And,

you can go and Google your name and maybe it's some other guy or gal, right? And you didn't, and mine was the same way in 2022. It took till really late 2023 for all that to change and YouTube changes the algorithm. Obviously it's owned by Google, but man, the amount of credibility when you Google luxury storage or Mark Kuhn and you're doing a podcast with Ryan Panetta or Brandon Turner, or maybe there's an article they written about you because people like

know that you have a following for a certain niche and you know they're promoting that. it's it's such a powerful tool even if you don't create much of a have 3200 followers on Instagram. It's not a big deal but there are 3200 really good followers. They know what I'm doing. They follow me day to day. They like what I'm doing. You know I have 50 almost 50,000 on LinkedIn.

It's still, they know me day to day. They know what I'm doing. Most people only have less than 500 followers on LinkedIn. So I'm on their page every day, because I'm posting every day. So it's just the amount of, you know, it's all about getting out there and being known by somebody and creates a ton of credibility for all my companies.

Pascal Wagner (05:52)
You know, I think the it's an interesting discussion about like operators building brands on social media because I there are many people in this industry that I respect that raise capital that actually maybe have more of a disdain or you know, more of a knock on those who do have social

followings and brands that they've put work into like yourself, right? and, and, um, you know, I think their jab when they're talking to LPs, uh, is, you know, Hey, we might not have, um, you know, a big social media presence and a following, you know, we're very much just focused on the deals. And so I'd love for you to maybe talk to and, uh, debunk, um, this idea that

Marc Kuhn (06:17)
Mm-hmm.

Mm-hmm.

Pascal Wagner (06:42)
⁓ you know, even if you've put in the work to be big online, doesn't mean that you're doing bad deals or, that you're any less sophisticated than those who don't choose to build brands.

Marc Kuhn (06:55)
Yeah. I, I see a personal brand. That's a business, right? That's another business. If you want to side hustle, create a personal brand. and, most of these operators, they're more, we'll say they lean heavier toward analytical guys, right? I would say, I would probably lean a little bit more to the risk taker, you know, willing to, to do the deal. I have really good people behind me who are great with spreadsheets. I'm not your spreadsheet guy.

So anyway, I'm just saying that I have a little more risk variability and, and, and it's funny because all beyond I'm actually, Talk to many different operators and they always call me about this because they have troubles raising money. Cause not enough people know them. It's local people that know them. And it's like, well, they're not funding right now. It's like, well, your options are limited to Kansas city. It's like Kansas city dried up. Okay. Well, you know, I'm funding from.

Pittsburgh, Texas, Florida, they're sending money up to the Midwest because they can't find cashflow in the Sunbelt market. And then all my Midwest, North Dakota, South Dakota, Minnesota, Kansas, the Midwest is sending money down to Florida and Texas. there's always a greener side somewhere else in their minds, right? Whether it's right or wrong, but it just...

It creates so many more leverage points. And then the credibility is awesome. Like most of the investors I get on with, even yourself, you're able to know me. You probably knew my hobbies. You probably knew what I was about. You probably know what I like talking about before you even talked to me. so it's such a different conversation with LPs that like, yeah, we listened to your stuff. We heard you on 20 different podcasts. So it's like, you definitely aren't just fly by night.

There's great operators that are behind the doors and maybe have really high net worth guys behind it and they want to keep quiet and they don't want to do a whole lot. But I haven't found that to be the best. And most of those people are having a harder time raising money because it's one or two avenues. I like keeping multiple dollars doors open and I like educating people. That's probably why I like doing content. think the more you give the, you know, the more you'll get in return.

over the long run, it doesn't pay me much. No, I make like $18 on YouTube every month. So no, I'm not retiring on the personal brand. where the analytical person, if they spend, you know, I'm spending about $10,000 a month on just personal brand. That's money outflow always. the analytical person's going to say, I don't agree with accountants because I'm not, they don't like marketing cause they need to see like, like what's cost per click and what's, you know,

It's not building a brand. You're not getting that kind of return. It's a slower investment. It's like investing in a 401, you know, a real estate, whatever. It's a slow return over time in 20 and November of 2022. I'd had hardly anything after a year after paying out 60 to 80 grand to buy camera equipment and all this crap. And I was like, there was times I was like, this is hard and I don't want to shoot 30 reels this week. Or I don't want to write.

posts or talk about or shoot selfies and it's another job. But I think the credibility that you will earn from it as a JP and helping educating others, teaching LPs a lot, what your podcast is about. my LPs come in and know the things that I, you know, I'm going to tell them and try to, I, I have a series of questions that I asked for them. You know, here's the things you need to ask for me. Cause I'll realize that they don't know what they're talking about.

and I'll say, Hey, go watch this YouTube video. I've already shot it. This is what you should be asking me. This is, this is what matters and this is what should matter to you. so anyway, I, I just think a lot of, a lot of that just really, really helps. mean, it does. And so I'd say if you're not doing it, you should be doing it. You're only hurting yourself. Is it a job? It's for sure a job. And can you look at all sorts of deals? I think anyone on your team, especially the CEO should be shooting some kind of content because.

I don't really care about Tesla, brand and their marketing schemes. care about Elon Musk and what he's focused on and doing. And most you'll find that in every single company. That's really what matters.

Pascal Wagner (10:46)
Yeah, yeah, people follow people, not companies. OK, cool. I'd love that take. I'd love to dive into the whole reason we are here today is to learn about luxury self-storage. And for those who are unfamiliar, could you give us a breakdown and how long you've been doing it?

Marc Kuhn (10:49)
Yeah, yep.

Yeah.

Yeah, so I've been doing it since 2019 is basically when I started on it. I, again, I told you my mentor was Grant Cardone. Again, if you know of him, he's a multifamily guy. You always need a place to live. So that's where I really started my career is doing a lot more multifamily because it was hard to fight that, that series of that quote, you know, it's like.

Pascal Wagner (11:29)
And when you say mentor, are you texting, you taking a course from him, coaching? What does that look like?

Marc Kuhn (11:35)
Yeah. So basically with him, you know, his attention was hard to buy. 2019 was a little easier and then COVID happened and all of a he was really going hard. Just for, I was six to eight months, I was in a approved room. You had to make so much and you had to do, but you flew down to Miami, got to meet with him. It was in a group setting and then he would meet with you for whatever and talk about your situation.

He give you a really good feedback. I mean and and it's a lot of the things I talked about today I mean, he's not he was not wrong. He's not he's not a dumb guy. He understands negotiating he understands How to build a brand and how powerful it is because that's literally what's created him, but he also I think for him It's like it's you're never too late. He didn't start till he's 51 really doing the branding thing The guy's 67 today and goes harder than anyone. I know right like so

It was just motivating. I think that way. He's a very motivational guy, very hard. And it was, it took me to learn Grant Cardone. Not everyone's going to like him, but he did push hard. And I think if anyone's going to go down this route of syndicating or real estate, you know, it's lumpy cash. If you're a syndicator, if you're a GP, GPs are making all that much. And, and if you want to go all in and real estate, you got to realize it's not quick money. It's not.

That's not what you're in as a GP. We get paid at the end. These are coming in five year increments. Understand to get your income somewhere else. What Grant Cardone does, he's got all his coaching businesses, you know, and other avenues. And then he has these syndications that he is able to raise money and raise awareness. Are that the highest returns? No, it's not. But he gained their trust that he's buying institutional quality deals that even if the returns are lower, you're getting returns and, you know, he's essentially

still giving them what they wanted and they trust him. So, but he makes a lot of money and he buys a lot of real estate. I mean, that's his path. And so just learning from him. And then I developed learning real estate and real estate, meaning self storage, luxury storage, starting getting into that in 2019, leaning a little heavier that way, just because I had some success with it locally and started becoming a better syndicator.

found out, you know, when they tell you, you know, riches are in the niches, it's, it's very true. ⁓ and it's hard to find niches in real estate because there's all these different. I should say there's not that many different niches in real estate, right? You, can, you can make money, wholesaling, burr method. You know, you do all these flips and all these different methods I've learned, and found out that I, I enjoy raising money. I enjoy talking to LPs.

⁓ and I really enjoy the boring. I'm a concrete guy down deep. I, eight years ago, I was doing concrete work. So I always like to tell people that is like, I'm not like, you know, the most brilliant. Scientistic guy, you know, I, I, I'm 12 credits short of a four year degree. there's lots of, I'm an ordinary person. I will qualify myself as right. Like I, if I can do it, you can do it. And, and so the motivation for you is like, I found a simple thing storage.

I heard it does well in recessions. It does well in good times. and it's very stable. Okay. Well, that sounds nice. and it's very boring. The tenants, you know, don't live there. They just store stuff there and they, you know, they move on. and then, you know, you, you listen to guys like Alex Hormozi or you, some of these influencers, you always find that, I don't want to just sell a watch that's a hundred dollars. I want to sell the, the $4,000 watches that like gain value and like,

It's a different customer line. So I added luxury to a simple storage business, offered more of a premier product with heat and electricity, whatever, and rent them out monthly at a higher value than, you know, 89 bucks a month for a 10 by 20 and realize that my tenant base was better. My turnover was lower. I don't have to be an auctioneer. it's a very boring business, but it's a little bit higher end now.

Is it a lot different than normal self-storage? Not really. You just got to keep these. These are institutional quality products, but building institutional quality products also brings you better buyers. Now you're selling to private equities. Now you're selling to, you know, your family offices. They're paying a premium for assets like these because they can manage it, you know, an entire portfolio of a million square feet with a couple of guys. And so that's where I landed on luxury storage.

And just kind of evolved. Some people call it flex space. I term it storage because I'm still 30 day rentals on most of our product types, which is a little bit different than the market on a one to two year lease or something like that. So, and really how I just kept going with this, just really, you started looking at market data and you he got really into data is being, you know, small businesses exploded after COVID, you know, there was about three and a half.

million businesses in 2016 through 2019 and then COVID happened all of a sudden, small businesses went to almost I think we're up to 6 million, you know, new businesses for almost doubled. So all these small businesses need these flex spaces to put their small overhead in, they got to get out of their garage at some point, whether you're selling, you're running a turbo business or you're running, you know, renting cars or if you're small Amazon e commerce type business or

All these small businesses, have many contractors, of course, and all these different things. So our spaces are cheap. They can put it on their AMEX. They can expand if they need another unit, they rent the next unit. If they don't need it that next month, then they can go back. Right. So it's very expandable and less full commitment in our product. So that's really the whole back line of why I hit luxury storage. And now it's something I don't see myself not talking about for at least a couple of decades.

Pascal Wagner (17:16)
Yeah, and like the type of tenant, like how is the tenant different than maybe the person that's just moving out of their home and needs to, in a 12 by 12 foot space? So you mentioned heating, you mentioned, you know, our... What does that tenant look like?

Marc Kuhn (17:31)
Yeah, well, I'll just tell you our tenant base of 75 % small business. You will have some you well, I think what you have a little bit of is you got car guys, right? Those guys are out there and they got lifts in there. But you got small businesses that rented for their boat and their camper, but you don't we're not an RV rental space. I think those places are have to be built as cheap as possible. And they're there to store your camper your boat, which you already

most people have a payment on, you know what I mean? they don't want. Most of the stuff that I see if they're storing their cars or if it's a Lambo or whatever it is, a high-end car, these cars are paid for and they want a really nice place to put it and we're more leaning to that. But what we are not is we're not condos. Like we're not a...

We don't have lofts and fridges and stoves. You know, we're more boring on the aspect of it's a flat concrete space with a tall ceiling and a 12 by 14 overhead power door. And it's got a couple of lights and outlet and climate control, you know? So it's, it's not as high end. we, do we involve condos in some of our scenarios? Yeah. If we have to, you know what I mean? But, luxury storage is very much a boring asset class. That's just, we'll say more exciting than just a self storage 10 by 20 container type.

method.

Pascal Wagner (18:47)
Yeah.

you're all, so you're all in North Dakota. How many units have you done? Have you like mostly built all the units? Have you converted units? What, does that look like?

Marc Kuhn (18:57)
Yeah, so we've looked at the conversion process. It's just not the feel that we want when you come into our facility. So we yeah, we have two facilities in North Dakota, two facilities, one that's getting built one that's coming in South Dakota. We're in Iowa with another facility. We're getting two more added this fall in Texas, two more facilities. So outside of Fort Worth, we got a facility that's real close in

on Southwest Florida. And it works. It works about everywhere your businesses live, right? Like, we're not on the prime time corner of Dallas, Fort Worth, we can't afford $40 a square 5080, you know, whatever that land goes for. We got to be all on one level. But so we're near these bedroom high end bedroom communities around where lands a little bit cheaper. Maybe we need exposure to an interstate for marketing purposes and lease up.

It's got to be easily accessible. we, yeah, that's kind of the areas in the suburbs is where we live. And that's honestly where most small businesses live is not in the main city. They live in the suburbs and everyone travels to the city. So we try to think about that when we're placing all of our facilities. And sometimes even tight HOAs, know, sometimes you can't park your, these people have $2 million homes and they can't even park a car in the driveway for more than a day. Right? So it's like,

They need a place for the boats. They do need a place for extra cars. They need a place for anything. And you can be in a $2 million neighborhood and reach out with both arms and touch each house. know, that's just real estate is crazy right now. And, you can be in a high end community and it's just not, you don't have any space and you can't park anywhere in the garage.

Pascal Wagner (20:32)
Yeah. What is, you know, thinking and putting the LP hat on, what is investing in a luxury self-storage look like? it like, ⁓ you know, someone invests with you and there's, it's a five year hold and you expect, you know, 5 % cashflow and you know, like walk us through the intricacies of the deal. then I, and then I'd love to dive more into specifics.

Marc Kuhn (20:36)
Yeah.

Yeah, let's do it. So on the most general term, if I'm an LP, or, you know, if you're an LP and you're talking to me, I, I always, we try to always keep our yield on cost because we're developers, right? That's what we build out. try to keep our development with at least, at least a 1 % spread to the market, meaning we'll build at a seven, sell at a six, you know, something in that range. That's what our spreads, there's some minimums that we have to have. And usually to an LP, they're like, I don't know what that means.

And if they're going to invest with me, so I go more simple. I, you can get in the terms of IRR and all the spreadsheet nerds listening to this can adjust that IRR to 20 X plus. What do you want to see? Right? Like they'll just adjust a couple of quick numbers and move on. I basically will not let any investor invest in me unless I, I'm confident that I can, I can basically double in their money in five years. That's my goal from development. So since we're development.

You know, any LP listening to this, there's no, there's no cashflow during your building and stabilization and stabilization can sometimes take some time for, again, we're building institutional assets. means they're bigger. They can't be just a 12,000 square foot building sitting out in the country. You got to build, you know, minimum 40 up to 140,000 square feet or most of our facilities. and just say average a hundred to 150 is what we try to build. And.

With that being said, it's like, it takes time. You know, if it's, if it's six months to usually to build it, these can get built pretty fast. They're pretty simple structure for the most part, but it does take up to 18 months to fill them. So do I ask most people, are you, know, if you're looking for 8 % return, I'm like, well, go and go just invest in a debt debt fund. So if we do debt on our mezzanine debt or something, well, if you want your 8 % return,

I said, you're going to be pretty upset with you once you realize what an 8 % return is on five years. It's only 40%. You left 60 % on the table and you got no tax benefits as an investor, which should be your biggest priority. so, know, our cash and cash just with rates right now, you ain't no family. I always, I always like to tell the LP. It's like, I talked to family offices. I talked to private equities. They never care what the cash on cash is.

not that I've ever seen all they care is what is that multiple at the end of the deal? Is it to am I going to to x my money in five years? Or am I going to 2.5 x my money? You know, what what is that return look like? And if you're an LP, you should be paying more attention to that than worrying about 11 IRR and a 19 IRR. I only invest if it's a 16 or plus. It's like, I already know you don't know, you know,

really what you're talking about, like, let's talk about what really matters to us in this deal. If I can two extra money in five years and give you a bunch of tax benefits, do you really care that I send you four or five grand a year for cashflow?

Pascal Wagner (23:44)
Well,

I think it depends on the investor and what their needs are, right? It's not that you're a bad investor or you're looking for the wrong thing. I think it's more of like, you know, if you're a 60-year-old senior, your product isn't good for them.

Marc Kuhn (23:47)
Correct.

Correct. Yeah. Yeah.

If you don't want to, you know, this is diversification. Some, some of our investors are 70. I have an investor that's 89, you know, it's like, he's just rolling it up into a trust at the end of the day. He's just trying to maximize his ROI. He can, he can figure that he can save some tax benefits, which is always the case at an 89 year old method. and he can, and he can double his money or whatever it is. he still feels pretty good with it, even if he passes away and it goes to his kids. I mean,

anyone can feel good about that kind of return on your money.

Pascal Wagner (24:25)
Yeah. Okay. So, so this is a ground up development play. That's the only way that people can invest with you at least, at least with you. And that's how you're, you know, you're putting it together. So, Hey, you know, we're to hold on to the asset for, five years, three years. Do you think about that? And I'd love to dive. yeah. Do you think about that?

Marc Kuhn (24:44)
Yeah, I absolutely. And like I said, I always, I came to luxury storage by backing into it. I learned that I wanted to be luxury higher end and I wanted that kind of clientele. Well, what I did is I get on because I do have a social brand or a brand I get on phone with really smart people that are a lot smarter than the concrete guy. Eight years ago, that was me, but I ask, I'm curious. I want to say, Hey, what would you buy?

That's literally how we back into building a facility. It's like, okay, talk to family offices. This is what they want. and we backed into exactly what they wanted to get built. And that's kind of where we, where we start with that, you know? and, and I think if you do that in anything you do, you're always going to have a better outcome. Now I have buyers, I have lists of buyers already for the facility. so,

Yeah, I don't know if that answers the question, but I mean, that's literally how I reverse engineer everything I do.

Pascal Wagner (25:33)
Yeah.

Yeah, I love that. I'd love to maybe, you know, one of the things I, I like this train of thought where you're saying, Hey, I'm working backwards. ⁓ I'd love for an LP to get into the mind of how you think about acquiring assets. ⁓ and, and maybe looking at your buy box. So, you know, Hey, I, I only invest, you know, within good school districts or, know, would be the equivalent of multifamily. What? I only.

I have to make at least 40,000 square feet. There needs to be, it needs to be by a major highway. What is that list of criteria and how has that changed as you've gotten more experience? What have you added to it?

Marc Kuhn (26:16)
Yeah. Well, I think you'll talk to enough banks and you'll talk to appraisers, of course, as you finance these deals, you're going to learn that they'll talk in the terms of feasibility studies and different things that basically qualify your project for that area, gives the bank some security. So I ordered one of those feasibility studies and ordered plenty appraisals in my life.

whether it's acquiring a property or building a new one. And you just look at the data that they're looking at because that's really what the banks are qualifying to, right? And, and so now we do them internally. So now we know, okay. We do look at the self storage industry in the markets. We use a program called radius plus. If you don't have it you're doing self storage, you, should definitely get it. And it definitely gives you all your demographics in the area. But it's,

per cap, you know, how many square feet per capita. So that'll just generally show what the cell storage industry and it'll say climate controlled, nine climate controlled, and it breaks it down. It shows you new permits coming up. So that will really give you, you know, they used to say six is, we need to build here and six square feet per capita used to be, now it's like eight because.

All these renters, we're starting to turn into this renter nation a little more every day because of high interest rates and no inventory. That's only going to get worse. People aren't building right now. And so now tens the new number, right? So like, it seems like as with all these renters, more, that's why the self storage industry exists and why it keeps getting demand. So that's a, that's a big one per square foot per capita. And usually when you look at the climate control side, it's a lot less.

you know, you're going to look and sometimes it's one to one, to two square feet per capita. Again, the little more premium that's where we live. and we really try to not all our customer base is, is, is in there, but it does show us the climate controlled luxury storage model that we have. And it shows that, you know, there's always a bigger demand there than people think. So, and then we, you know, we go through the typical demographics, ⁓

You know, shouldn't take more than two right turns to get into the facility off an interstate. You know, that's, that's kind of a big one for some guys who buy self storage. I didn't know that I talked to a family office. was like no more than two right hand turns. It's like, okay, that seems weird, but it's, it's true. and you know, anytime you're thinking about why, know, why do you pick your favorite gas station to go fill up that, you know, or, why, you know, why do you go do something?

and you do it all the time, is it because it's probably more convenient typically. So you just start picking up on that. Like I even look how to get into any kind of facility. How do you get into a hotel? How do you get into, you know, why would you go to that one? Not this one. I always play, you know, just, just kind of understand why, why, you know, why do you watch one reel over another reel? You know, I always, I always think about things in that way now. and so as an operator, you just kind of develop that.

And so I'm just trying to go through some of the non-generic stuff that they tell you. And, and this is more like how you should be thinking as an operator and, and, and, and become better at it. So, but again, we do, yeah, we do look at like household income and then there's some, there's some areas that like, yeah, the household incomes under a hundred thousand, may not bring a product type like ours, but

It's not always true because there may be a lot of businesses that thrive there because it's cheaper to survive there. And it might be cheaper to build there. The land might be cheaper. So it's really hard for us. We have to navigate a bunch of demographics, the land, vet the demand a little bit on climate control storage. If we see other spaces that are climate controlled, we definitely look at their rent roll. We definitely look at what

What the rent they're charging at how you know, what is their occupied status? So simple things like that. We we do a lot of research within that But yeah, it's it's amazing when you radius plus will break down median household incomes It'll bring your population density your future density your five-year population growth because you don't want to go to a market where And I can I built in a Grand Forks the worst demographic that you could have built in I built in my first facility and it worked

Okay, so, so I am not the guy to say data proves everything. I'm just saying that it can help, right? And I know our product type works because we built it in the worst possible place you could have built it. It's not on an interstate. It's in a poor demographic area. The market's not growing. The facility is 100 % full with a wait list. I, you know, but there's a lot of small businesses that survive here and they need something economically to land because

They can't afford the contractor shops. They need maybe a more of a flex space. So you just start learning some of those things. And, it's nice because we keep building these facilities while we just keep getting new data on what makes a better facility better. ⁓ and I don't think when you're in a niche space that we're in, it's like, you need to figure out your own data, use your own data. That's why.

Property managers and asset managers are, if you're doing multifamily, they know all the data, right? They know more than you do. They're willing to overpay for the facility because they know something that you don't know. And that's really what we're creating with Luxury Storage. We're getting all the data now, so we know we can pay for a lot, a little bit more because we know we can build a facility that cash flows there. And that'd be a good product type to add to our portfolio. hopefully that helps a little bit.

Pascal Wagner (31:31)
Yeah,

no, that's incredible. You keep mentioning flex space, you know, that there's a, this asset type is maybe between, yeah, normal cell storage and flex space. Can you talk about this flex space as an asset class in relation to that?

Marc Kuhn (31:48)
Yeah. Flex space can be classified as luxury storage. So really what you have in flex space, you have condos. So condos would be those nice car garage condos that you see built. It could be in Scottsdale. It could be in Naples, Florida. It could be any higher end market that, you know, Dallas has plenty of them. You build them and you sell them off. It's like a spec deal, you know, if, if whatever, you can just sell some off individually. Well, my plan is always

I'm a build and hold, you know, at least for five years, maximize my ROI and move on. and so that's really your condo. That's the highest end version of what we do. It's also the highest risk because you cannot rent out those types of products for the price it costs you to build them. So there's risk. If the market turns and suddenly you have no buyers, you're kind of left holding the bag and you can't make it cashflow. also the highest risk. and then you kind of move down to more of a contractor shop, which we'll call.

a business suite, maybe it's just more of a rental type facility, little less amenities, not as high end, right? And you don't sell them, you build them to rent them. So you're just kind of like the condo shop, but you're building them more to rent them and hold them in cashflow. And then you have the stripped down version, which is literally luxury storage, where there is no floor drain, there is no bathroom in the thing. It's lighted, climate controlled.

power overhead door, 16 foot tall ceilings, that type of thing. So it's everything you need, nothing you don't. And then you go into non-climate controlled larger storage. It still can be part of luxury storage and a facility. And then you can even go to parking because with all these different things, some people just need general parking. And maybe you're in a condo shop. And so what I want to get to is, is there's really four different classes there, right? You can go nine climate controlled all the way to the condo shop.

Some people, and we like to do this, is mix them on a facility because it might be the highest and best use of the land. And maybe you have exposure to a really top end road and that land was worth like 12 bucks a foot and that just doesn't qualify for your deal. Well then behind that, you can maybe do some luxury storage and then maybe some climate control and then even parking. And so you can kind of create a dynamic type project.

Which is what ours ended up turning into. mean, you don't want to just overbuild on one product type. You, you, you can have multiple product types, but, that's what the flex space really is. You can add all of those different things. It's flexible, right? I could have a condo shop and I could rent five spots. could actually rent a luxury storage spot and own one of the condo shops. Okay. It's flexible. Maybe I need to rent three luxury storage shops, have the condo shop and I need 10 spots of parking.

whatever, it's super flexible for any small business. just adaptable. That's why people like it. And they're not, you know, you don't have to commit to anything but a 30 day lease. So you can flex and move all those space. So when you're thinking flex space, that's what you're thinking about. It's a very moldable, very shape of, know, you can shape it to any business contract or whoever, and serve those needs. I've never built a facility with all of that, but I'm working on one now.

And it's very interesting. You can see the popularity of it and why it's becoming so popular US-wide and why I talk about it a lot.

Pascal Wagner (35:00)
You mentioned that, so you can go look up in Warren Buffett's letters dating back to, I think, five or 10 years ago, where he starts, maybe five years ago, where he talks about the United States moving towards being a renter nation. And I think, like you mentioned, with interest rates being high and inflation, that is a trend that is only getting exacerbated as it continues. And I'd love to get...

Marc Kuhn (35:22)
Mm-hmm.

Pascal Wagner (35:25)
Mark Kuhn's prediction, his snow glass ball of like, do you see that part of the market influencing self storage in general as an asset class and then also related to luxury?

Marc Kuhn (35:38)
Yeah. So I think as we're going to continue moving, I am a contractor. I promise you to find affordable housing is almost impossible in this country. And if you were to ask me and you're 22 listening to this or, know, we'll just say coming out of college and you're in your mid 20s, whatever. And it's going to be pretty impossible unless you borrow money from your parents to go and buy a house and make it feasible with student loan debt. It's going be impossible.

And I'm a contractor and literally try to figure out how can you build cheaper, right? 3D printing, all these different methods. mean, building modular, I mean, it's just all gets smaller at the end of the day and more compact. I don't know if you can really call even some of these places houses or campers with small foundations. And so what you're finding out is that

It's just not going to be feasible to buy anymore. It's really going to turn into a rent or nation. It's going to get worse. These, these class a multifamily deals. How do you beat it? It's the same. It's actually cheaper to buy. And you have every amenity you could ever want. I, I would sell my house and go move into one of these. If I didn't have three kids with me, you know, it's like my kids would probably actually want to live in one of these facilities over that. And, and your house is going to what maybe double in value every 10 years.

That is not where your net worth is ever going to grow. I think more and more people like me, it's like, I wouldn't buy a house. would invest all my money. I would save as much as I can make my cost of living as cheap as possible and invest it. I promise you, will quadruple whatever someone goes out and over buys for a house and, tries to create any net worth that way. cause typically your primary residence is never going to be considered net worth anyway. so that would.

That would be my recommendation. But anyway, to get back to the question, it's like housing is only going to get harder and harder. It's harder for us to, I am so interested how Doge or, you know, Trump administration's going to tackle this one. I've been waiting every day. I know they're not that deep into their services, but they're really slimming down the government. I'm really interested when they get to that point.

what they're going to do. Because other than lowering interest rates, I don't know how you make that affordable, especially including tariffs for like lumber from Canada. you know, everything is going to get more expensive even to build. And so if you reflect it all to storage and how it create, know, storage centers have turned out like car washes and gas stations. I mean, they're on every corner now. These

You know, some are really nice looking four story, five story buildings that you pull in with a U hall and has an elevator right to your unit and everything's Bluetooth and it's very easy. these facilities have popped up everywhere. and in a lot of institutions, high net worth guys own these facilities, develop them just like gas stations and car washes. and I don't want to compete with those people and that's why I don't and why I leaned into luxury storage, but I think.

I think everyone, no one wants to work for anyone these days being an employee. They want their own time. Even if you're leaving an eight to five and working five to eight, you know, or whatever it is now, it's like, I, I see new, more new businesses getting formed all the time. It's like, everyone wants to go on their own. It's all these small little niche businesses. even for my company, it's like, I don't have accountants. I fractionally CFO them.

Um, some of my project managers, I just have a consulting agreement with them. Like everyone's working on their own now and that's just becoming the norm. Um, and with that being said, you're going to have more more flex space need, um, whether it's flex office, flex, um, warehouse, flex, whatever it's, it's going to be a bigger need in the future. And, and so I, I just don't see where this asset stops. Um, especially with new businesses.

approaching 6 million new businesses every year in US.

Pascal Wagner (39:23)
What are the biggest variables that are in play that affect your business the most? I could imagine that's anything from property taxes, insurance, cost of... I'm trying to think of unexpected expense changes.

Marc Kuhn (39:38)
Yeah. Yeah. Well, the nice portable luxury storage, and I think with any asset type that runs the gray line, I mean, our storage places are a lot nicer than typical storage, but we get to classify them as storage. so insurance is actually a little cheaper. ⁓ your property taxes stay a little bit lower in the storage, verse like moving to like a business suite or a condo shop. so we ride the gray line pretty hard there. and so that keeps us a little more in check.

But yeah, I mean, everyone's worried about insurance. mean, insurance is just, it's always going to go up. I mean, I don't see, everything's adjusting. These property taxes are adjusting to this new COVID era where everything's 30 % more and it's not coming back down. It's just not, it might come back. It's been settling for a few years, so it's starting to become normal. and it's going to keep going up. so it's

I don't know some of our variable costs a pretty tight storage. It's all about property tax. That's our biggest expense always. I think I need to be better at negotiating, you know, when they do the valuations of it and try to negotiate that down because when they, don't want some of these administrators in these counties that we work in US wide, mean,

It's not a very vigilant process of what they do. It's just, you can call them and they won't know what your taxes are. And so when we're developing new facilities, being a lot more involved with that process has helped cut our expenses, probably 20, 30 % versus just letting it go and let them go figure it out. We've even got our taxes pushed back a year where they'll only value the land for one year before, you know, cause they know you're not stabilized yet.

So they'll give you some breaks up front, is huge when you're stabilizing or getting a new property and then being a little nicer to you on the backend when they actually do evaluate where your property is. It's, thought it was more of a black and white process, but as I've learned, it's, it's not really, completely that.

Pascal Wagner (41:32)
When you're like, let's say you're an LP kind of looking at this deal, you know, always, I'm always optimizing for what is the downside. I should always be asking, how can this deal go sideways? Um, and in your instance, um, I imagine it's maybe, you know, if, if demand for the product shifts, um, or, you know, I don't know how much construction costs, you know, it sounds like it's pretty simple. What's your

building, yeah, walk us through what those risks, you eyes wide open, you're walking into luxury self storage or anything like that.

Marc Kuhn (42:06)
Yeah, I, you know, I mean, we talked to the reasons we mitigate them, right? And we try to work with higher line clientele. We're not, we're not trusting ourselves with people that are just shifting apartments and trying to pay 89 bucks a month. ⁓ so I think that's helped us. but there's, there's risks associated with everything. I, you know, I don't know, is the product type going to be needed for every, everywhere we build? We don't know we're creating.

Right. That's the risk you're creating a new product type that hasn't been offered in most markets. you know, there's plenty of markets with flex space in it. there's some people that just won't touch it. They, they absolutely only do self storage. you know, in the highest, you know, they can rent it out for the highest per square foot because there's five by five bays and all that. It's just a different business model. but then there's some people that won't touch self storage anymore. That's just completely.

overbuilt in their eyes and they need to find a source of some other, you know, option. So there's some risk. I mean, these are very simple buildings by the most part, for the most part. People can use them. People do use them. And, and like I said, building in poor demographic areas, that's was my biggest test. I didn't know that at the time. And I think that's what, how you come up with things, right? Like,

You shouldn't know everything when you start your first project. You, you as an LP, if you knew everything of how to be, how my asset class was going to go, mean, you need as an LP, I, I, and most of the LPs I talked to, you need to trust, you know, the jockey more than the horse. Like, you know, you trust, trust your operator before you're trusting just a basic statistics or

data on a real estate deal and showing you IRRs trust the operator that he's going to make the right decisions. Try to overcome hurdles. ⁓ there's hurdles every day. you know, every quarter I rant about on a three minute video, you know, to the investors have like, here's the stuff we're working on. You know, marketing more for stabilization and leasing and you know, there's always something where it can be better. And I'm always a guy who is always trying to improve. So I think

That's where LPs can trust an operator. It's like find a guy that's innovative, find a guy that, um, or a person, a gal, whatever someone you trust that knows that like, even if the product type's not perfect, we're pushing this as hard as we can to try to make the success happen of it. So, um, cause not everybody, it's not like we have a 20 year track record. I mean, you can go to invest in a read and go up for a five and a half percent dividend. I get it.

go do that, you know, and if I didn't send you your five and a half percent in year three, because we just didn't make it. It's not that the valuation has been hurt. It's just took longer to stabilize than we anticipated. I'm, I'm, I'm like an open book to most of my LPs and, most of this burns me more than it burns them. And so I think, transparency from an operator is super important. ⁓ and, and as an LP look for that, it,

You can't hear fluffing butterflies all day. There's always problems. And I could tell you about my concrete company. I could tell you about my construction company. I could tell you about my property management company. could tell you about I'll talk to you as transparently as possible. I love business and running things. But if there's no problems, I just don't know. I want that business.

Pascal Wagner (45:24)
Yeah. Can you share a little bit more about, know, I think this is a trend I would like to spearhead of the transparency train and driving, you know, highlighting great operators that do, you know, great monthly or quarterly reporting or that are, you know, just present a lot of the information upfront in data rooms or anything like that. Can you talk a little bit about maybe how you approach

communicating with your investors, what you include, all of that kind of stuff.

Marc Kuhn (45:50)
Yeah, that's a that's an awesome question. Because it's, you know, I invest with you know, what happens, right? And, and, and that's, that's a very common question we have. So if you're, you know, for for our process in the Mac capital, you come and invest one of our deals, everything is through a portal, of course, that's how we manage K ones and taxes. And basically, our entire documentation lives in that portal distributions are

wirelessly sent, we do everything on a quarterly basis. I wanted to try to get to monthly. I still might get there at some point, but realize it's not a huge upside to that. It's a lot more work. I need to staff it more, which then I'm gonna have to charge people more. I can very much give you on a quarterly basis a video update of how construction's going. Maybe we're in the middle of construction. can...

share with you a job site link that shows a live feed to the job site so you can check it yourself. And so those are some of the things. We were doing monthly construction reports to them. We kind of get it from our construction team and share it with our investors as we're building. But that link has provided a lot of security for them. They're like, yeah, this is fun to watch. I'm in Pittsburgh, not in South Dakota. So it's nice to see how this is going. And I can check in any time.

Um, but very much on a quarterly basis, we talk about the income. We always talk about the problems, you know, income expenses is always part of the deal. Um, but if you're in the stabilization process, you know, what are you doing to market? How can we be better? And I always have, I have a page on there always on, our template and it's, it's a four or five page. try to keep the video to a minimum, uh, like 10 minutes, but it's a video update of how the property's doing, what we can be better at.

And that's usually where the meat and potatoes is. Like my portfolio manager, it's like, how do we be better? And he knows as well as I know, it's like, yeah, we need more leasing agents or we need more, we need to have people stop living in the units because that's starting to be a problem, you know, or why is there a tenant with a pool outside and has their kids in there in the weekends? That's not okay.

So, you know, you're always constantly adjusting your lease and trying to be more, know, again, property management issues. It's a long story of all sorts of different issues, but I always love to tell my investors those stories. They always appreciate them, whether they laugh about them. It cost us money. So I had to boot them out and trying to...

Yeah, I think it's just transparency. goes back to but quarterly reporting is just fine. We found all our investors on a monthly basis, I used to update them almost pester them more than there was a lot getting done. So on a quarterly basis kind of gives you a little more of a show we can do our distributions at that same moment you get your report just laid out in an email basically what happened there's a video link and and you can watch it and watch us during construction. So it's

To us, we think we've found a sweet spot within, you know, doing our asset management correctly.

Pascal Wagner (48:44)
Yeah, and I think highlighting those stories or the funny things.

actually important. get those on, on maybe like half of the investments I'm in. and I think what they really do is they just make the investment real, right? I think it's easy as an LP to invest money in a deal. saw the investment summary and you're like, okay, well, this isn't going to plan or this isn't, you know, this isn't exactly what the plan was. and you know, it's still a business that you are investing in. So I think that kind of transparency is, is great.

and would love to make that the gold standard. So thanks for pushing it on there.

Marc Kuhn (49:18)
Yeah. And I just to add, mean, so we do development, we do the construction, we do the management, we do the asset management. It's all one team. I think it's just one head to chop. You know, it's mine basically is what I try to tell people and investors. I'm always, always telling my investors about that. But, know, another powerful thing about social media, ⁓ cause I'm all about culture at all my companies.

all my investors end up turning out people like me, because they know who I am on social media. They know what I'm about. They know what I'm doing day to day. They end up being, you know, really good investors. think one of my worst investors are all my first investors because they just didn't understand what I was doing and who I am. And I was kind of taking money without, you know, really vetting them. Because of course you need in your first deals, you're trying to get something made and build your track record while

It's just another, you know, really good touch on, on social media is, your culture building. Even if I have new employees come to my construction, they know who I am and know what I'm about, what I'm doing. Um, and, and it just, just seems to be a really positive effect for me as I raise money from LPs. Um, so I think you and I have to get along as an LP. Otherwise I don't want you in there. I don't like you. I ain't taking your half a million. don't care. You put 2 million in front of me. I don't care. You're just going to be a problem to me.

⁓ and, and I'm to be a problem to you. So it's like, let's just not, we don't need a date. We don't need, I don't need to. Yeah. So it's another important piece though, as an LP, got to find someone you do like and really enjoy as an operator for you.

Pascal Wagner (50:43)
Yeah. Yeah.

Yeah, I hear that. Mark, where can people go join your investor list, learn more about you, know, follow you?

Marc Kuhn (50:58)
Yeah. most of the largest place people find me is on LinkedIn. ⁓ you can get to our email, ⁓ Matt capital, gf.com. think we're redoing the website right now. So hopefully that's back up by the time this airs, but if not, you can find me. you can find me on LinkedIn DM would be one of our investors. Basically we jump on a call and again, we vet each other. If we like each other, I'm not going to push you. I don't push anyone into a deal. I, I, I more or less vet and then.

give them the opportunity to invest in a deal. it's a great place to find me, LinkedIn, Mark Kuhn.

Pascal Wagner (51:30)
Love it. Love it. OK, amazing. Thank you so much for sharing with us today, Mark. For those of you listening, if you're ready to deepen your understanding of passive investing and explore other unique opportunities like this one to grow your portfolio, be sure to join us next Thursday and every Thursday for more actionable insights on the passive income playbook here on the Best Ever series show.

If enjoyed this episode, please subscribe and leave us a review. Your feedback helps us continue to deliver valuable content and reach more investors like you. Thank you for tuning in and I'll see you next week for another episode of the passive income playbook.