[00:02:25] Scott Krone: And so we did it for 60 days and then we went out to California and we did a four hour, a tougher utter, I believe it was, you know, three or four hours. And going through this obstacle course, it was a good test.

[00:02:36] Robert Leonard: What was your biggest takeaway from that experience?

[00:02:39] Scott Krone: There’s more in the tank.

[00:02:40] Scott Krone: Your perseverance is a lot deeper than what you think it can be. You know? And it’s just not from a physical point of view, but it’s also mental in terms of business throughout the 60 days we had different interviews with different entrepreneurs and the common fact is that we all have problems.

[00:02:54] Scott Krone: We all have challenges, right. You know, no, it’s no easy sailing for anyone. And it’s funny because I was at my daughter’s soccer game and I was talking with this fellow dad we’re newer to this team because my daughter was, is older and she joined. A team that was aging up to her age. And so I don’t know the parents as well.

[00:03:11] Scott Krone: And one of them used to work with Jesse at Marqui Jets, and uh, he’s like, oh yeah, I know Jesse. And then he told me this story that Jesse tells from, you know, his perspective. And it’s just, it’s interesting to hear the, you know, the contradictions or you know, the different perspectives that come to a situation from two different points of views and stuff.

[00:03:28] Robert Leonard: Was that how you got introduced to Jesse, or did you find him a different?

[00:03:32] Scott Krone: I found him through a different way. It was through a community that had him come speak and then they offered up the program. And so that’s, I think that’s what propelled Jesse to begin his daily programs or his programs that now that he’s doing on a entrepreneurial basis.

[00:03:46] Robert Leonard: Are you based in the Atlanta area? I know he has the Hawks team. I’m not sure if he’s from there, if that’s where he is now, but is that where you are?

[00:03:53] Scott Krone: No, I’m in Chicago. My in-laws used to live in Atlanta, but I’m nowhere near Atlanta.

[00:03:58] Robert Leonard: So let’s get into some of the real estate stuff. Let’s talk about your transition from primarily a multi-family investor to focusing more on self storage.

[00:04:07] Robert Leonard: Walk us through how that came about and why you decided to pivot to self storage.

[00:04:11] Scott Krone: Well, I think, you know, ultimately everyone dreams of own self storage facilities, right? I mean, that’s the ultimate goal. You know, it’s I think that the bigger point is that I was in multi-family and with the recession there was just massive cap compression and it was getting harder and harder to find Good deal.

[00:04:26] Scott Krone: And because of the massive recession, you know, the lenders were pushing everyone into multi-family and development was all but dried up because no one wanted to take the risk. And so I had a client that began asking me to find him distress self storage, and I couldn’t find it. And that really intrigued me.

[00:04:41] Scott Krone: Like, here we are in the biggest major recession and I can’t find distress, self storage, what was behind that? And so I began studying it and seeing the resilience of the product. And then we developed. We flipped it. We did a couple others and then eventually I sold off my multi-family. We’ve been focusing on self storage since then.

[00:04:58] Robert Leonard: Give us a rough timeline on when you made that full transition to self storage.

[00:05:04] Scott Krone: 13. 20. 13. So a lot has changed. Oh, well that’s when we started. 2013 is when we started, and then 2018 is when we sold our, off our multifamily and solely after self storage.

[00:05:14] Robert Leonard: Even definitely since 2013, but even since 2018, a lot has changed.

[00:05:18] Robert Leonard: And what’s the biggest thing for me that I’ve seen is that self storage has become super popular. Is that a concern for you? Has the popularity of this asset class become at all of a concern?

[00:05:29] Scott Krone: There’s pluses and minuses to everything, right? So you know, in the sense that there’s more competition, that’s a negative, but at the same point in time, because some of the bigger boys are now playing in the space, It’s giving legitimacy to lenders and so there are more lenders willing to do it.

[00:05:43] Scott Krone: When I first started doing it, our lender who I’m a founder of the bank in terms of how long I’ve been with that bank, and they literally just said, we don’t do self storage. And it was like no explanation, no justification, just we don’t do self storage. And now you’re seeing lots of traditional lenders getting into the space because they see the resilience.

[00:06:02] Robert Leonard: What’s the best way to learn about the industry? What did you use back then, and also what do you recommend today for maybe books, conferences, Twitter accounts, whatever it might look like. If somebody is interested in learning more about self storage specifically, and maybe they’re coming from a different asset class like you, maybe they’re just getting introduced to real estate from the beginning.

[00:06:19] Scott Krone: Yeah, so for me it was a little bit different because I taught college architecture, I coached real estate. I’ve been in multi-family. That was my background. So, and then when I started my own company, we’re in single family and then multi-family. So I really understood, you know, the residential side of things and with self storage, to me it is a simplistic, more simplistic version of the same box.

[00:06:39] Scott Krone: And I’ve worked on 14 million homes and I’ve worked on self storage lockers that are rent for $25, $50 a. I’ve done the spectrum. I’ve worked on a hundred million projects and I’ve worked on 10 million projects within that whole spectrum. To me, it’s just we’re renting a box, right? It’s just a box with less amenities and less features than the 14 million house, right?

[00:06:59] Scott Krone: And so it was easy transition for me because I understood the real estate concepts behind it. Now, what I had to learn was that retail component of the business, which is. So if you understand real estate, then self storage is a natural, easy progression to move into. If you’re, if you haven’t done anything within real estate, then I would recommend a book like Paul Moore storing up profits.

[00:07:21] Scott Krone: He was kind enough to include us in the book, but he looks at different types of self storage. He looks at Class C, class B, class A, development existing, all those sorts of things. So he looks at the full spectrum of it, and I think it’s a very good holistic approach to self storage. If you’re looking for a.

[00:07:37] Robert Leonard: If anybody wants to hear, it is a great book and I recommend it as well, but if anybody wants to hear Paul himself speak, we had him here on the show, so you could just search for Paul Moore here on the podcast. You can listen to that episode I did with him as well. Talk to us a bit more, Scott, about the operations, because with a self storage business, it’s a lot like an operational business in the sense that you have customer facing kind of part of your business that you don’t really have as much with multifamily.

[00:08:00] Robert Leonard: So talk to us a little bit about.

[00:08:03] Scott Krone: It’s like a combination of a retail business and a, and apartments, because you do have leases. You do. You are in a leasing mode, you’re in lease up mode if you’re developing and bringing something online. So those things are very similar, but it is much more like a retail business because you have to advertise, you have to market you, you know, there’s competition in the marketplace.

[00:08:22] Scott Krone: Like, we’re in a housing shortage right now, so if you don’t have occupancy in your apartment building, then you gotta scratch your head and figure out what you’re doing wrong. But usually it’s about how much your rent is you’re charging, right? But self storage, there’s a lot of competition. So we had to learn about SEOs and paper clicks and how to get our search engines up so that people can find us.

[00:08:41] Scott Krone: Because what we’re seeing is that the historically people thought you had to drive by a self storage facility in order to see it. That’s how you would get customer. Nowadays it’s all by Google Maps. Like what are people, Google is searching, so how fast are you coming up? Where are you searching? But the market is three to five miles, so it is not a really heavy, you know, I don’t have to advertise throughout like an entire city.

[00:09:02] Scott Krone: I just have to market specific zip codes because we can’t do area codes because of people’s phone numbers being from all over the country. So we have to market for specific zip codes within an area and that’s what we try to dominate is that three mile radi.

[00:09:16] Robert Leonard: Given that you’re focused that way, are you buying in areas with a lot of population or are you okay with some of these more tertiary markets?

[00:09:24] Scott Krone: Well, some would argue that a lot of our facilities are in church area markets because, I mean, we are in Chicago, but then we have Milwaukee, Toledo, Dayton, Cleveland, Louisville. So those aren’t, you know, those aren’t the top markets. But then we also have two in Michigan, you know, and one we have in Ellsworth, Maine.

[00:09:40] Scott Krone: So we have Jackson, Michigan, and we’re building in Bay City, Michigan. And so what we look for is population growth, and we also look for where the supply is well underneath the demand. So we’re always looking to make sure that we’re going into a market where we have a competitive advantage.

[00:09:55] Robert Leonard: What tells you that the supply is less than the demand?

[00:09:59] Robert Leonard: Like what are you looking at to figure that out?

[00:10:01] Scott Krone: Square foot of lockers per cap. And so we have software that we can drop, that we can sp, you know, put in a specific address and we can pull all of the facilities within a 1 3, 5, 10 mile radi.

[00:10:14] Robert Leonard: I heard from another self storage operator that one of the things he likes to do, and this is pretty nitty gritty, but he likes to call self storage facilities in the area that he’s interested in buying, to see what their occupancy rate is, see if they’ll tell ’em, and if they’re 97, 98, 99, close to a hundred percent full, that tells him that there’s probably not enough supply for the amount of demand or that person’s just charging, not charging enough.

[00:10:35] Robert Leonard: But it could be an indicator of level of demand and supply there.

[00:10:39] Scott Krone: It could be both because you know, like the one we bought in Jackson, It was 95% occupied, but it was 30% below market price, which is why we brought it, you know, so he hadn’t raised the rents in many years. What we’re going in there is just going in and increasing the performance of the building in terms of automation and then increasing the rents, and that’s what we’re doing there in that location.

[00:10:59] Scott Krone: We’re not expanding it. It’s one of the few locations where we haven’t done any development whatsoever. We just put in an automated gate. That is a good way. I mean, we always do call the competition. We’re checking what the market is. But you can also look online if you see that it’s like, call it 10, 10 rows of buildings, because that’s like either a class C or class B type facility and they only have a couple units rented or available on their website.

[00:11:22] Scott Krone: That gives you a pretty good indication that they’re pretty full. What are you doing to determine market rent? Same thing. We use the same software and we’re also calling, we’re calling around and we’ll role play that we’re a buyer and just, you know, like, oh, we’re looking for a unit, you know, can you know what’s a 10 by 10?

[00:11:36] Scott Krone: You know, do you have it on the second floor? On the first floor? You know, I’m not really sure how, what amenities do you have? And so we just, excuse me, we co-called them.

[00:11:44] Robert Leonard: Are you doing two story properties? Are you more single story properties?

[00:11:49] Scott Krone: We have everything from single story all the way up to eight stories.

[00:11:52] Scott Krone: Which ones do you like better? The ones that make me more money. , which are what? It depends on the market. I wouldn’t say that single story or multiple story make more money, but it’s not that simple. It’s where you are in the marketplace and the rents that you can get. And so we look for the buildings that give us the best opportunity.

[00:12:08] Scott Krone: So the reason why we bought them multiple story buildings was they, we could buy them well below replacement cost. We bought a five story building in Dayton for, you know, a million dollars and it’s almost a hundred thousand square feet. We can’t build that for that. So that’s why we.

[00:12:23] Robert Leonard: When I think about self storage, one of the things that, and I don’t own any self storage, but one of the things that I think I would enjoy about it is that it seems like it’s relatively easy to manage, maintain compared to a multi-family property, which I do own.

[00:12:35] Robert Leonard: And so when I think that I like that piece about selfs storage, but when I start to think about these multi-level properties of self storage, I’m like, ah, that seems to be a little bit more maintenance, repairs, et cetera, than maybe a single story. So I think if I were to get into it I’d prefer the single story.

[00:12:48] Robert Leonard: Self storage. Do you find that there’s more maintenance with the multi.

[00:12:52] Scott Krone: Well, it’s different mainten. It’s not like we don’t have to cut the grass , you know, we don’t have to plow, we don’t have to shovel as much, right. In those locations, we don’t have those things. We don’t have the outdoor elements, you know, we do have elevators, we have fire suppression tests and stuff like that.

[00:13:05] Scott Krone: But other than that, I mean, it’s, some would argue that it’s actually easier because of the fact that all of your lockers are indoors, right? So they’re, you only have one roof, you don’t have 10 roofs. You know, those sorts of things.

[00:13:15] Robert Leonard: Yeah, it’s wear and tear on the units and things like that. Makes sense. How about development?

[00:13:20] Robert Leonard: You don’t cars hitting them . Yeah, that too. That too. How about the development of a self storage facility? Is it significantly easier than a multifamily property?

[00:13:29] Scott Krone: Well, and I think that has to do a lot with zoning, right? In both cases, I and I’ve in zoned and rezoned both properties. I’ve done commercial, I’ve done multifamily, I’ve done mixed use, and we’ve done self storage, so I’ve rezoned each of those.

[00:13:41] Scott Krone: And if you don’t have to rezone it, then self storage is by far easier because we can get in for permanent a lot faster. There’s just less that we have to design, you know, so it’s a lot more simplistic. They’re just looking at egress and they’re looking at, you know, life safety systems, but they’re not looking necessarily at all the different things within a unit in terms of number of outlets by a bathroom and all those sorts of things, or the structural components, because a lot of times we’re dealing with an existing building.

[00:14:05] Scott Krone: So if we just show that we have a structural capacity, then if it’s an existing building, it makes it a lot easier. But the entitlements is the biggest challenge of each of ’em. The difficulty is finding a space that is zoned for self storage, that is the bigger criteria within the, if the challenge, if you will,

[00:14:22] Robert Leonard: is it relatively easy to end up getting it zoned or changed to be zoned for self storage?

[00:14:27] Robert Leonard: If it’s not already?

[00:14:28] Scott Krone: No I’m going to say zoning and look, I’ve been to multi-family developments where I’ve gone to 36 meetings to get something approved, you know, over two year period of. But you know, there’s still a stigma within zoning administrators or municipalities for self stores because they consider it a dark building, if you will.

[00:14:47] Scott Krone: You know, it’s not a vibrant storefront in terms of like a lot of people traffic going in and out, like a restaurant or a coffee house or this or that. Right? But there’s benefits. I mean, you know, you don’t have the traffic demand, you don’t have the impact on the schools, but you provide a service that people need, not only for residential, for businesses, and a lot of urban planners don’t recognize that, especially in this marketplace.

[00:15:10] Scott Krone: You know, we’ve been told, like in Milwaukee, they changed the definition of storage and self storage. So our building was originally approved for self storage, and then they changed the definitions and they called us up and said, you’re no longer approved for self storage. You have to rezone it. So we were able to do that, and at that meeting, They said they weren’t going to prove any other self storage in Milwaukee because they felt there was too much of it in Toledo and Dayton.

[00:15:32] Scott Krone: They didn’t want our buildings to be zone, they didn’t want our buildings to be self storage, yet they were zoned for it. And I’m like, well, if you didn’t want it, then why did you zone your property for it? And so we’re just doing what is zoned for. So how can you restrict us when we’re entitled to do? So they tried doing other things to like withhold other types of approvals in order for us to comply.

[00:15:52] Scott Krone: But we had to show that, you know, we weren’t doing anything that they weren’t already planned for. So in that sense it makes it a little bit harder. What’s the difference between self storage and storage? It was how they defined it. It was, it they recognized it was truly a definition driven zoning interpretation.

[00:16:08] Scott Krone: So storage would be like Amazon warehouse or something like that. Right. Or an industrial warehouse. And sell storage was also a retail customer base. And so a lot of, they were within the city of Milwaukee, which was, had a very urban, a manufacturing background. There was a lot of warehouses that could have been used for storage.

[00:16:28] Scott Krone: So then they were all being converted into self storage. They felt that they wanted to restrict self storage, but not impact the industry. So that’s why they changed it between storage and self storage.

[00:16:38] Robert Leonard: I find this interesting because we hear a lot of the regulation issues with like more flashy, I guess you would say, asset classes like Airbnb, short term rentals, like regulation laws, industry, stuff like that is always in the news for those.

[00:16:51] Robert Leonard: But I don’t really see it too frequently with self storage. So not that I’m glad that you’re going through this, but it’s interesting to hear that it does.

[00:16:59] Scott Krone: I will say this, that before we were like the ugly stepchild in the sense that no one wanted it, but then they, but everybody would use it.

[00:17:06] Scott Krone: Like 10% of the population uses it. Right? And now it’s become Airbnbs in short term rentals. And so they’re getting a lot more of the publicity while self storage is being a lot more acceptance. And so that’s where we’re seeing the trans. We’re like, sure, go ahead. You guys can take the negative press.

[00:17:22] Scott Krone: We’ll sit over here quietly and keep doing our thing over.

[00:17:26] Robert Leonard: Yeah, you guys could take all the regulatory scrutiny and we’ll just keep flying under the radar.

[00:17:30] Scott Krone: Yeah. I was just at a, an open house conversation about, you know, real estate and investing in the recession and stuff like that. And all the single tenant re residents guys, all they wanted to talk about was zoning in terms of, they had an alderman there and he’s like, Hey, what are you going to pay to help us get this through?

[00:17:45] Scott Krone: And stuff like that. And of course, it comes down to all the tax money, right? The biggest hindrance of that is that municipalities weren’t getting any tax revenue off of it, which is why they didn’t.

[00:17:54] Robert Leonard: Self storage base tax is similar to any other type of asset class though?

[00:17:57] Scott Krone: No. Yes, in the sense that you have your property taxes, but then we have a small amount of retail sales.

[00:18:04] Scott Krone: But the bigger problem that they have is it’s a retail business, but you’re not generating sales tax. And so that’s why a lot of municipalities don’t like it. They want the sales tax.

[00:18:12] Robert Leonard: See, that doesn’t even cross my mind.

[00:18:13] Scott Krone: So you’re a hundred thousand square feet and I might have like $300 of sales tax.

[00:18:19] Robert Leonard: Yeah, that doesn’t even cross my mind. I live in a state with no sales tax, so I don’t even think of, I don’t even think of sales tax. We don’t have income tax or sales tax.

[00:18:26] Scott Krone: You gotta come more to the Midwest for, in the East coast where they love taxing people. Right.

[00:18:31] Robert Leonard: So the south of me, it’s tax.

[00:18:33] Robert Leonard: Taxachusetts, we call it Massachusetts, you know, lots of taxes there. But just north of the border in New Hampshire where I live, we got, I mean, we have high property taxes, but we don’t have sales tax and we have no income tax.

[00:18:43] Scott Krone: You’re on that little island up there then?

[00:18:46] Robert Leonard: Yeah, for sure. On the East coast. I spoke with my friend’s uncle recently who has been building and investing in self storage for over 30 years, and I was picking his brain and asking if he was me, would he go out and try to find a facility that’s selling below replacement costs, that’s being poorly managed, like you mentioned, or would he build new or retrofit and existing structure?

[00:19:05] Robert Leonard: What are your thoughts? I know you’ve done both.

[00:19:08] Scott Krone: If you’re trying to learn the business, you know, it’s great to start with an existing business where you don’t have to worry about the lease up. This was the argument for my real estate client. He couldn’t find one that you were describing and I always told him, I said, the way to make real money in real estate is through develop.

[00:19:23] Scott Krone: Anytime that you can change the program, change the valuation of a property, that’s where you will make the most amount of money. There’s greater risk associated with it, but that’s where you can make the most money. So that’s why we are a development company. We do development, we do the design, we do the build, we do the management, we do all of it.

[00:19:39] Scott Krone: But that’s the big challenge. But, you know, we spend two years looking for the one in Jackson, Michigan. And you know, it’s hard to find, but even that one was a 3 million acquisition.

[00:19:48] Robert Leonard: You were fortunate to have gotten started in real estate at a pretty young age, studying architecture like you mentioned, and then you ended up working for one of your professors who also happened to be a developer.

[00:19:58] Robert Leonard: I’m sure he was a big influence and a mentor for you. Do you have any mentors or coaches today and is there someone in the self storage industry that you really, admire?

[00:20:07] Scott Krone: I do have other mentors, and you are correct. He was my first mentor and I was fortunate enough to get into industry while in graduate school working for him and my master’s thesis was a hundred million project that he was working on in his office.

[00:20:19] Scott Krone: That was his TA. So in the, I had to work for him in his office in the morning and I was doing all the development stuff, and then I’d go to class and work on all the architecture stuff, and then I’d go home and do homework and do more architecture for him, you know, like from six in the morning till midnight.

[00:20:32] Scott Krone: And I did that for three years and then worked for him for another three years. Another mentor I have is Dr. Nino Cobain, who. You know, immigrated here from Lebanon when he was 16 with a couple hundred dollars in his wallet. And he’s just built up a couple different businesses and now owns Lazy Boy and Great Harvest Bread.

[00:20:46] Scott Krone: And he’s the president of High Point University and just does a phenomenal job. He’s increased that campus by 2 billion in, developed over a million square feet of campus there. And it’s just an incredible transformation. And so I was, you know, I’m for enough to have been in a mentor relationship with him for a.

[00:21:01] Scott Krone: But then, and on the self storage side, I’m part of a mastermind and you know, there’s other self storage operators that are in the community. There’s like 30 of us and I admire each and every one of them because they bring something different to the table. I’m one of the few developers in the room, but they all understand something different of the business.

[00:21:18] Scott Krone: And you know, my business wouldn’t be where it is today if it hadn’t been for all the people that I’ve discussed just recently because they all bring something different to the table.

[00:21:27] Scott Krone: That

[00:21:27] Robert Leonard: first professor that you worked for, why was he still a professor when he was developing a hundred million properties?

[00:21:33] Robert Leonard: Was that a separate just development business? He didn’t have any ownership in it or like why? Why was he still doing both?

[00:21:39] Scott Krone: Oh, he owned the company. Yeah. I mean, because he used the school as a laboratory for his ideas, right? He could have 50, 60 students working on an idea and then implement them. You know, it was a, and then he would, then he could also choose which students that he wanted to hire to be his employees.

[00:21:52] Scott Krone: It was a brilliant. And I liked it as a student because I knew I was working on something legitimate, you know, something real, as opposed to like, you know, I always say in architecture, if you don’t build it, it’s just a, it’s a pretty drawing or maybe not a pretty drawing. It’s just drawing. It’s gotta be good in order to build it.

[00:22:07] Scott Krone: And so I wanted to work on real things. I mean, here I’d done my undergraduate and then I had fun in college, did my undergraduate. Then I recognized when I got to graduate school, like this is my career. This is what I’m really going for, so I better take this more seriously. And the TAship was with undergrads.

[00:22:22] Scott Krone: You, you could tell the difference between the undergraduates who still had that I’m in college mentality versus I’m preparing for my career. And that’s how I approached it. And I love the fact that I was working on real project.

[00:22:32] Robert Leonard: Yeah, I think it’s super cool from the students perspective, because I had professors and this is not a knock on them, they were brilliant people, but they had never done what they were like teaching.

[00:22:41] Robert Leonard: They were either entrepreneur professors who had never started a business or financial, you know, investing professors that had never really made significant investments in the stock markets. And they’re teaching these strategies and. Things like that had always kind of bugged me. So I do think it’s really cool from a student perspective that you were able to experience that, but I just think from his perspective it’s maybe difficult to focus.

[00:23:00] Robert Leonard: I’m sure being a professor isn’t easy. Developing a hundred million dollar properties isn’t easy. So kind of doing both at the same time. I can imagine it was probably a lot on his plate.

[00:23:08] Scott Krone: It is. But I mean, to go back to your point, and he got a lot of criticism from the other faculty about not allowing students to explore the creative side of architecture.

[00:23:18] Scott Krone: What I really appreciate about Dr. Nito Cobain is that when he took over High point, he treated the school as a business. And, you know, he turned on the job originally because he said, you’re not going to let me run it like a business. And they’re like, no, we need you. We’re not doing well. We need to do better.

[00:23:32] Scott Krone: And so he brought, he has merged academic with business in a way that I’ve never seen it any other campus. So he has like Steve Wosniak there, he has Mark Randolph. He brings in all these different entrepreneurs and he, and they teach classes and they work with students, and he really balances both real life business with the ability to pursue things academically.

[00:23:53] Scott Krone: And that’s what makes High Point unique to me, and that’s why I really like it, is the fact that you can, you don’t have to separate ’em and I, you know, when I was teaching in the academic world, it was like the academic purity of such something. I’m like, well, if you’re not preparing kids to actually do what they’re going to be needing to do, then it’s like you’re saying it’s all in the head space.

[00:24:11] Scott Krone: You need some real life application in there as well.

[00:24:14] Robert Leonard: For those listening that are a little bit earlier on in their real estate journey, how should they think about mentorship? Is it a necessity?

[00:24:22] Scott Krone: This is always a huge debate, right? I mean, if you go into bigger pockets, I think if you just type in this one topic, you can create a landslide of arguments with people, you know, like you shouldn’t have to pay for anything and this and that.

[00:24:32] Scott Krone: I mean, I’ve paid for it. I mean, granted, you know, when I took my job, you know, when I was a ta I was paying to go to school to get the education. I was, you know, took a job with less salary because I knew what I was going to learn. And then I paid other people, I paid for education. I believe in paying for things because I believe that you get what you paid.

[00:24:50] Scott Krone: Now, I’m not saying just pay indiscriminately, but I’m saying make sure that what you’re signing up for is in alignment with what you’re getting. Because when I did teach the 80 20 rule apply, you know, we’d ask all of our students, we would have like 25 students every semester, and we’d ask ’em what they all wanted to get outta the class.

[00:25:07] Scott Krone: And most of the time, like 90% of the people would say it. A and the people who said like, I really want to learn about something within this field. Like, you know, I want to learn about this sort of design or how to do. Those were the students that got the A’s and every student who said they wanted to get an A, didn’t put in the work effort to get the A.

[00:25:26] Scott Krone: And we would say like, look, we don’t give a’s we’re going to tell you exactly how to earn ’em. And if you follow, you know, if you meet those criteria, you will get an A. It’s as simple as that. You know, it’s like, it’s not subjective, it’s, you know, we’re going to outline the different things that you need to do to get an A.

[00:25:40] Scott Krone: And the students who didn’t want to put in that time and effort are the ones who didn’t get the A’s, but that was 80% of the class. But they would all say they wanted.

[00:25:49] Robert Leonard: I hear people frequently say that they can’t get started until they have a mentor or they don’t know how to move forward because they don’t have a mentor.

[00:25:55] Robert Leonard: Do you think somebody should still just kind of power through, find a way to keep going or get started even if they can’t find a mentor and then maybe just find one along the way? Or should they wait, find a mentor first and then get started?

[00:26:07] Scott Krone: It’s interesting you began this whole conversation talking about Jessie Hitler, right?

[00:26:10] Scott Krone: And we talked about the mental hurdles and stuff like, When I would coach real estate, I would always ask people, what do you want to accomplish? And they’re like, well, I’m hoping to do this. I’m like, why are you hoping and not doing, the first thing we have to do is change your mentality. So if someone’s saying like, I’m trying to get into real estate, well, you need to change that mindset from, I’m trying to, I am in real estate.

[00:26:30] Scott Krone: Right? That’s the first step. So if you keep telling people that you’re trying, then no one’s going to take you serious. It’s not that hard to get into real estate or any other profession because there’s lots of resources out there. The biggest thing I would say to people is figure out what you want to. You know, if you want to get into self storage, then learn about self storage and, you know, if you want to do that, if you want to get into brokering or flipping, or fixing, there’s plenty of avenues, there’s plenty of things out there in order to train you, to teach you how to do those sorts of things.

[00:26:57] Scott Krone: And so it’s not that hard. What’s hard is making sure that you do it right, you know, and making sure that you have the systems in place to make sure that you’re doing things right. That’s the hard part. Getting involved in it is not that.

[00:27:09] Robert Leonard: If you’ve been involved in real estate as long as you have, there are going to be successes, but also failures along the way.

[00:27:15] Robert Leonard: What has been the biggest setback that you’ve experienced? How did you handle it and what did you learn from it?

[00:27:21] Scott Krone: I have no idea what you’re talking about. You know, there’s, the biggest setback is when it’s, I’m going to say it is personnel, right? It’s you align yourself with someone who doesn’t have the same goals and objectives as you.

[00:27:31] Scott Krone: And then that causes problems. You know, ultimately you’re going to, there’s going to be something that comes down the road. It’s a challenge, and if you’re not on the same alignment, then you’re going to be going in different directions. That’s where I’ve, the thing that I learned from my first mentor is how to do the business.

[00:27:47] Scott Krone: The second thing I learned from Nito was how to replicate or build my. You know, when I, before I met him, I was just working in a small area of Chicago. Now we’re from Milwaukee all the way to Maine and down to Louisville and Michigan. And so I wouldn’t have been able to do that if I hadn’t thought like how to expand my business.

[00:28:06] Scott Krone: And so for me, the biggest challenge is finding the right people that can come alongside that want to do that as well. And if we’re not in alignment, you know, then they’re going to go in different direct.

[00:28:16] Robert Leonard: How do you test if you’re in alignment, how do you make sure you, now that you’ve learned that, what are you doing to make sure that you are going forward?

[00:28:23] Scott Krone: Well, one thing that we do is we, there’s a book called The Road Back to You by Ian Morgan Krone. And you know, I gotta go back to Paul Moore and try to get more of these royalties for all these endorsements I’m giving him. You know, it’s like, you know, you’re like, oh, go talk to Paul Moore over here.

[00:28:35] Scott Krone: I’m like, I gotta renegotiate like my charges with him. There’s zero. Right. And now by the. In Ian Morgan Cro, I, there’s no relationship, so I’m not getting any endorsement fees from him, just like with Paul Moore. But it’s a book on the Ingram, when the Ingram is an understanding of personalities.

[00:28:51] Scott Krone: For me, the first step is whenever someone comes into the company, we have them go through that book so that we can understand their personalities and they can understand ours, so that we can try to avoid conflict based upon just how we communicate. You know, if I understand how that person, where they’re coming from, I can make sure that my communication doesn’t come across as a way of challenging for them or difficult for them as opposed to helpful for.

[00:29:14] Scott Krone: You know, that’s the biggest thing is making sure we understand one another, how we communicate. And then the other is getting to know people and taking the time to see what they really want to do and accomplish. And we’ll say this, it’s easy to get into real estate, but to be an entrepreneur is not made up for everybody.

[00:29:28] Scott Krone: You know? You have to be willing to hear no. And if you’re not, you used to hearing no, then it’s going to be hard for you. You know, you’re going to hear a lot more nos than you hear. Yes.

[00:29:38] Robert Leonard: Real estate can be quite a grind at times, and it’s definitely not all sunshine and rainbows. How do you reignite yourself and get outta slumps when your passion for real estate might be waning?

[00:29:48] Robert Leonard: Maybe you’re going through some tough times. How do you reignite that passion?

[00:29:53] Scott Krone: You can’t look short term. I also look long term and you know, for me, faith plays a major component of that. And I’m just recognizing like, ultimately where am I going long term, you know, what’s, where’s this happening? And if there’s a plan, if there’s a, if I have an overall goal and I have a bigger picture, Then it propels me beyond the little bumps in trials that you face throughout your life and then when you’re in ’em, they don’t seem little, but you know, in the big ran scheme of things, when you look back you’re like, wow, that wasn’t so bad.

[00:30:18] Scott Krone: Usually every time I’ve, you know, that’s one of the points that Jesse was trying to make. Every time you accomplish something, you look back and you’re like, man, it wasn’t really that tough. There’s like these mental hurdles that you put in front of yourself that make these hurdles bigger.

[00:30:29] Robert Leonard: How do you focus?

[00:30:30] Robert Leonard: How do you fight off shiny object?

[00:30:33] Scott Krone: It’s going back to that major goal, right? I mean, people call us up and say, Hey, you want to do this? And we’re like, no. Our goal is 10 facilities in five years. You know, we have this goal, you know, it’s a long term goal, and people are like, what’s your goal for the new year?

[00:30:44] Scott Krone: I’m like, it’s part of my five year goal. You know, it’s part of my 10 year goal. That’s how I fight off the shiny objects, is having that longer term vision.

[00:30:52] Robert Leonard: So you think of every opportunity, time you get asked for something, anything like that. You relate it back to that main goal you have. And if it doesn’t kind of get you there or apply to that or relate to that, you say no.

[00:31:01] Robert Leonard: And if it does you maybe consider it.

[00:31:04] Scott Krone: Yeah, absolutely. If I think it will enhance or contribute to our overall goal, then I’ll do it. If not, then I won’t do it.

[00:31:11] Robert Leonard: I know you played soccer and then football in college at Keny. There are many athletes that have transitioned to real estate after their careers were over.

[00:31:19] Robert Leonard: Roger Staubach and Emmett Smith come to mind. What is it about sports do you think that often leads to success later in life?

[00:31:27] Scott Krone: I will say that’s the first, and probably the only time in my life that I’ll be in the same sense is Roger Staubach and Emett Smith. Thank you very much for that comparison.

[00:31:36] Scott Krone: I think it will end at that point in time, but I think that you learn to overcome advers. Every athlete gets hit back. You know, even those guys in the Hall of Fame, they’ve had setbacks, right? They all get to a point in their career where they can’t perform like they were anymore, and so they have to learn how to adapt.

[00:31:51] Scott Krone: They learn how to adjust. They learn how to compete differently. I’ve been fortunate enough to meet Roger Staubach and he talked a lot about that. You know, he, his career was not, you know, hall of fame right from the beginning. I mean, he overcame a lot in order to get there. If you look at it today, in today’s world, he probably wouldn’t even be drafted because he doesn’t meet the physical criteria.

[00:32:09] Scott Krone: Right. And just how much the sport has evolved and changed. And so that’s the biggest thing. And I mean, he’s been probably more successful in the business world than he ever was on the athletic world, but people don’t realize.

[00:32:20] Robert Leonard: What would you tell your son if he came to you and said, dad, I want to get started in the business and we’re going to assume that he didn’t have the good fortune of already having you in the business.

[00:32:29] Robert Leonard: What would you tell him if you wanted to pursue his first real estate or even specifically self storage deal?

[00:32:35] Scott Krone: My wife works with family offices and I came from family business on both sides of my family. My mom’s side and my dad’s side. And the thing that, the commonality is that I assumed that I was going to go into the family business and then my parents showed up at graduate before my graduation of parents’ weekend.

[00:32:51] Scott Krone: They said, oh, by the way, you’re not going into the family business. We’re selling it. But if I had that opportunity, I think the better thing would’ve been for me to do is go work for somebody else to see how other people run businesses, and then bring that experience back into the family. Right now none of my kids want to go into real estate.

[00:33:08] Scott Krone: They all want to, my daughter just pursuing her nurse practitioners, so she’s just finishing that up this year. She’ll be have that degree next year, and my son wants to go into international commerce and strategic planning, and my daughter wants to go in logistics. I’m just encouraging them to go do those things rather than feel that they have to be going into the family business.

[00:33:28] Scott Krone: You know, when they were younger, I worked from home, so they probably saw things that may impact them or, you know, want them not to go into this. But again, what we always try to do is develop the skillset that they like within, you know, our parenting styles, like teaching them how to win, how to compete, but more importantly also how to lose and recover and then grow and build in each of those things.

[00:33:50] Scott Krone: That’s what we’ve really taught our kids, because again, it’s that those are the life lessons that are going to apply their business, you know, whatever they want to go into. My, my daughter might become a pilot, you know, she lives flying, right? And she’s also going into strategic logistics. You know, so who knows?

[00:34:04] Scott Krone: Like both industries are great for women right now. We’re just encouraging our kids to pursue what they want to do because they have to have a passion behind it. If you don’t have a passion behind what you’re doing, then it’s boring, right? It’s no fun.

[00:34:16] Robert Leonard: Knowing what you know today, what could you have known when you were just getting started that would’ve allowed you to scale faster, maybe be more profitable along the way and avoid some of the mistakes that you’ve.

[00:34:27] Scott Krone: Oh geez. I think Patience . I started my own company at 28. I don’t know if I was stupid or impatient. Probably both. Right? You know, I thought I knew everything at 28 and you know, I certainly didn’t know that, but you know, I think patience is the biggest thing.

[00:34:41] Robert Leonard: Maybe I can implement that. Now as we wrap up the show, what’s the biggest takeaway you’d like our listeners to walk away with from this interview, and where can people go to connect with.

[00:34:52] Scott Krone: Well, I think the biggest thing is like if you were to want to pursue something, like really define what is what you want to do and make sure that it excites you, right? So that you have a passion about it. I mean, people say like, how do you have a passion about self storage? It’s not self storage, it’s real estate.

[00:35:05] Scott Krone: Right? It’s a component within real estate that I’m focusing on. If that’s what you want to get passionate about, great. If you we’ll love to help you out in that process. And as a gift to your listeners, if they reference this show, we’ll give them two things. We’ll give ’em one, a feasibility study that we did on our, one of our sites in Dayton, and it’s like 175 page report, and it talks about the self storage industry, but also about why we went into that site, why we went into that location.

[00:35:28] Scott Krone: The second thing is we will give a self storage deal analyzer. So we will give tools to help you guys get on the on the path from the route to determine whether or not self storage is right for you. And if you find something that you wanted to evaluate, call us up or email us and we’ll spend an hour with you.

[00:35:44] Scott Krone: We’ll go through it and see if that, if it’s right. And, you know, the industry is so small that we’re not going to try to steal a deal. That’s not our focus, that’s not our operations. And we, if you want us to sign a non-disclosure, we’re happy to do that, but we’ve never stolen a deal from anybody on that.

[00:35:58] Scott Krone: That’s not our business model. But we’ll be happy to talk about it with you and then say something we would do or something that we wouldn’t do. And you know, there’s plenty of times where we’ve said both, right? You know, like, Hey, you’re going to do it great. This looks like great opportunity. Or, I wouldn’t touch this with a 10 foot pole.

[00:36:11] Scott Krone: And sometimes no can be the best thing you ever. But they can reach us at info@codacdamg.com. That’s info coda mg.com, and we’d be happy to reach out.

[00:36:24] Robert Leonard: I’ll put Scott’s resources that agents just mentioned, email, website in the show notes below for anybody that’s interested in checking that out. I’ll put my link, a link to my episode with Jesse Itzler, Paul Moore.

[00:36:34] Robert Leonard: I’ll put Paul’s book. I’ll put everything related to this episode that we talked about in the show notes below for anybody that’s interested in checking those out. Scott, thanks so much for joining.

[00:36:43] Scott Krone: Thanks for having. I appreciate it.

[00:36:45] Robert Leonard: All right, guys. That’s all I had for this week’s episode of Real Estate Investing.

[00:36:49] Robert Leonard: I’ll see you again next week.

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