[00:03:08] AJ Osborne: Or remembers me, which is actually, turns out it’s not true. Basically, I think it’s a good place to start because it’s the reason why I’m here. Prior, I was in insurance with my dad. I sold insurance, right? We wanted to get out of what I called the treadmill. We started buying up real estate. We started to create a real estate company.

[00:03:27] AJ Osborne: We sold our insurance business. I was working for a big Fortune 500 company. And I was doing that for a lot of years and we were trying to build up our side business of real estate and that was like where we want to go, what we want to do. And at the time it was, you know, you have those time in life where you’re just winning, right?

[00:03:48] AJ Osborne: Like you’re just winning. And that was a moment for me. I was running this big firm. I had built up huge margins. We were growing great. I was fastest grower in our west coast for you know, my firm and my real estate business was thriving and booming. And it was just one of those moments that it was like, I’m winning and I’m down at the PGA tour down at Napa, California, and we were literally just like, we’re sitting there, Dave Matthews is singing to us and we’re just, he’s right in front of us and it’s like, wow.

[00:04:24] AJ Osborne: And so that night I had been feeling a little under the weather that night. We go back and we had our brand new baby. So we just had our new child and we have four children. We go back and I look at my wife and I was like, you know, I’m going to go for a run. And I don’t know why. I’m like, I’m, maybe I’m hurting a little, maybe I’m just unease.

[00:04:43] AJ Osborne: But I’m like, I’m just going to go for a run. I went out to go for a run and like I’m running out of breath. I can’t really run. So it ends up being a walk. Now I’m from Idaho, so being there in California, it’s usually the opposite. I can run a lot fast. I’m like, ah, I got a lot more oxygen. I feel lighter. And you know, everything else like that.

[00:05:04] AJ Osborne: Right. So that was my first hint that something, there wasn’t something right here at, you know, top ignored. It got home. Long story short, out of nowhere, my legs stopped working like nowhere. Like we just, they stopped working. My wife rushed me to the hospital. They started doing tests on me. They couldn’t figure out what was wrong.

[00:05:24] AJ Osborne: They were like, are you on heroin? They’re like, are you a drug user? Is this psychotic? Cause they’re like you’re perfectly healthy. How old were you at the time? I was 32, 33. So I’m 33 years old. Right. Four kids. Very healthy. And that was one of the reasons why they had a problem. You’re young and you’re perfectly healthy. 

[00:05:46] Patrick Donley: And you were into the outdoors, did a bunch of hiking, fly fishing, all kinds of stuff, right?

[00:05:50] AJ Osborne: Oh, yeah. Backpacking, fly fishing, skiing, big skier, like I am an outgoing person, right? Whitewater rafting. I’m all about it. Traveling. I worked out every week. And there’s just nothing wrong with you. And we’re like, yeah, except for the fact that my legs worked two hours ago. They don’t work now. Right?

[00:06:11] AJ Osborne: And so they couldn’t even admit me because they couldn’t figure out what was wrong. So I’m literally sitting in the emergency room for like two days. They can’t admit me because there’s nothing wrong the whole time. It’s getting worse. Well, quickly after that, the neurologist, head neurologist came down and said, I think I may know what’s happening with this guy.

[00:06:28] AJ Osborne: And they came and put me in a room. My wife had gone to be with the kids that night. My mom and dad were with me. They said, we think what? We know what you have and we know what’s going on. We’ve gotta take you to a bigger hospital and somewhere where they can take care of it. Which we were already in a huge hospital.

[00:06:45] AJ Osborne: So that was my first sign, like, what do you mean what you can’t do here? Right. And it was kind of this weird moment where the doctor looked weird and he was like, I don’t want you to look it up. And at that moment it was like, okay. He left the room first thing I did look it up, told my mom and dad. And what was it that he told you not to look up?

[00:07:08] AJ Osborne: Guillain-Barré. Something called Guillain-Barré. I’d never heard of this in my life, but I didn’t know what this was. Right. It’s a virus. Correct. It’s not a virus. It’s an autoimmune response to an outside thing. So mine came from, I think I could probably say this now, a vaccine at the time, this was a long time ago. And my autoimmune problem, what happened is they put it in, so you’re, you produce white blood cells, right, to go attack the virus.

[00:07:35] AJ Osborne: So I know people that also have gotten it from like bad milk, but it’s a reaction to something outside and they don’t understand why. But what was happening was this, my body was producing white blood cells at levels that were just. And those white blood cells had identified my nervous system as that threat that had been put into my body.

[00:07:59] AJ Osborne: And so they were essentially on a mission to destroy my body. And then they said, and then they look at it and say, it’s everywhere. So then your body freaks out and starts producing white blood cells at thousands of times. And so while I was sitting there, my body was losing connection with my brain. And I looked it up immediately, turned to my dad and my mom, and I said, Hey, take care of my kids.

[00:08:21] AJ Osborne: And I was like, dad, don’t ever let my kids want for anything. And then I looked at them and said, don’t let me live on tubes. And that was a distinct possibility, correct? Yes. Well, I was immediately after that, put on life support. So I was put on tubes and I stayed on life support. They left, took me from that hospital and I went to what’s called an ltac because there was no checkout date.

[00:08:46] AJ Osborne: There was not, oh, well, you’ll be gone next week. So they trached me. Put me on life support, not in the hospital, in a, an LTAC that could take care of me. They were trying to decide where they were going to take me. It was Colorado, somewhere like that. They’re like, well, let’s stay close to home. And then there’s no cure.

[00:09:03] AJ Osborne: There was no anything. It was, let’s wait and see. So I sat on tubes for months, and the problem was I was in extreme pain. My body destroying my nerves. My nervous system couldn’t communicate with my limbs and hands. So I was fully quadriplegic. I couldn’t speak, I couldn’t eat, I couldn’t drink. But I was in pain 24/7, and it was pain that they couldn’t stop.

[00:09:27] AJ Osborne: So I was on fentanyl, I was on methadone, I was on oxy and morphine all at the same time, and they could not stop the pain. For the first month. I didn’t sleep. I would just pass out from pain and that’s how I would sleep. And I couldn’t speak, so I couldn’t communicate. I communicated through blinking and through plastic sheets.

[00:09:45] AJ Osborne: Well, after two months. That’s kind of a tripping point. As in, after the two month mark, your odds of really recovering or anything start dropping like a rock. Like it’s every week after that it’s, you’re down 10% right? That you can even come back. And a few weeks after two months, I started showing signs that I might be able to breathe well in this scenario that was just absolutely hellish for me.

[00:10:13] AJ Osborne: I could do nothing. They would roll me over on my side and bathe me with blankets. I couldn’t drink my lips and tongue would bleed. And it was constant 24/7 pain. I became I c U delirium at times. I started to not understand where I was cause I’d lost my senses. And so then it was like a constant 24/7 nightmare.

[00:10:38] AJ Osborne: And when I was about to, they got to a point where they’re like, we think he could support a breath. That means that we could change the cuff on my neck, which would allow air to go up through my throat so that it could go through my vocal chords and I could speak for the first time they told me, they said, AJ we’re going to allow you to speak.

[00:10:55] AJ Osborne: Now you have to understand two things. First of all, you are not going to sound like yourself. Your vocal chords haven’t been used for so long. You won’t sound normal. Second of all, it’s going to be fast. We’re talking seconds and then we’re immediately shutting it off because you can’t sustain anything. So it was like, you have one thing and I go, my wife and my new baby was there, which my baby was like everything to me because I didn’t even get to say goodbye to my kids.

[00:11:21] AJ Osborne: And then I didn’t get to see my kids for like a month because they didn’t know what happened. They were like, we don’t even know what to tell the kids. We don’t know if he’s going to live. We don’t know anything. Finally it got to a point where like, it doesn’t matter, just bring the kids in. Which was very hard for me to see my kids, to see me on life support and everything else.

[00:11:35] AJ Osborne: But my baby, he could stay with me all the time. So he would lie on my pillow next to me. And I would move my lips and he would put his hands on my lips and giggle. And that’s how I played with my children. And when I’m looking up at my wife and my kid, you know, I’m sitting here going, you guys have been by my side this whole time.

[00:11:49] AJ Osborne: You’re my everything. And they turned my cuff. And the first thing I did, I looked up at my child and I said, “Theo, I am your father.” Because I thought I’d sound like Darth Vader. So I thought it would be funny. And because they said I’d sound weird, and then I looked at my wife and I said, just kidding. We don’t know who the dad is.

[00:12:07] AJ Osborne: And then they turned my cuff off. So it may not have been the most romantic and best thing to say at the time, but it was one of these situations that I was like, I’ve been so out of control of everything. I got to do something for these people that have been here. I don’t want them to worry because watching them me suffer was horrible.

[00:12:25] AJ Osborne: All I want to do is tell my wife it’s. It’s okay. Even if I die, it’s okay. Just like, don’t worry. I wanted to let my kids know I’m dad, right? And so with one breath, the only control that I’d had in months, I tried to just look at them and tried anything to make them feel better. I don’t think I accomplished that, but I think my wife probably didn’t maybe think it was nearly as funny as I did.

[00:12:48] AJ Osborne: But after that, I slowly, after that first breath, I slowly be able to started to come back. I started to use my fingers and then my hands, and then I was transported after months to a rehab facility where I had lived, and they would work with me every day. After that, I was sent home, paralyzed and put in a bed.

[00:13:10] AJ Osborne: From there, they got me just so I could transfer out of my hospital bed to a wheelchair. So I practiced that every single day. After I got in my wheelchair, they allowed me to go home. But while I was in the rehab facility trying to learn how to go home, I got, I was awarded my first time. To go home and see my house and kids, which would be accompanied by the hospital.

[00:13:29] AJ Osborne: And this first time that I was going to get to go home, I’m looking out the window and I’m so excited it, it’s snowing. It was Christmas Eve. I was going to get to go to my house on Christmas morning, see my kids open presents. And I am ecstatic. When I went into the hospital, I was out planting trees like we were out playing.

[00:13:48] AJ Osborne: Like it was totally, you know, it is now snowing here and I’m looking out there and I’m like, it dawned on me the gravity of my position as far as how lucky I was, because I was excited to see my kids, my family, and I knew my wife was going to spoil my kids with Christmas presents. I wasn’t worried about losing my house.

[00:14:10] AJ Osborne: I wasn’t worried about my kids not getting Christmas presents. And I had just been fired three weeks earlier in the hospital. I am now paralyzed. Lost my job. And I’m not worried about money at all because of what we had done to get me off of my income and my job and the years that we spent investing into real estate.

[00:14:35] AJ Osborne: And it was that moment, it was so like it just, the whole thing, just 33 and my life was over, yet I could still provide for my family. It shook me to my core and I go, I mean, just made a promise. I was like, I’m going to talk about this. I’m going to teach this, and then I’m going to let others come with us and invest with us out of my wheelchair.

[00:14:55] AJ Osborne: I started multiple different companies, all of them, Southern plus figures, started private equity firm. I started teaching and talking about it. I started getting on social media and coming onto podcasts like this, and that’s why I say it’s probably a good place to start because prior to that, I had never talked about business entrepreneurship, investing or everything in my life.

[00:15:12] AJ Osborne: I didn’t do anything on social media. After this. I decided I, I needed to change that and I needed to do what I felt I’m in debt for. 

[00:15:22] Patrick Donley: It’s an incredible story. Thanks for sharing that it, I can’t imagine going through something like that and I just had several thoughts. I mean, you shared so much and I want to unpack some of it.

[00:15:33] Patrick Donley: I was in my twenties and I volunteered with an older lady that she developed. Ms when she was in her twenties, ended up in a wheelchair. She had three kids. She was married at the time. Her husband ended up leaving her with three kids. Somehow she managed to get her PhD in psychology and it was a branch of psychology that she was actually a pioneer in called rehabilitative psychology, which was how you deal with a traumatic events, something like you went through.

[00:16:01] Patrick Donley: How do you deal with the psychological impact of that? She was an incredible lady. When I was working with her. She was in her late sixties. One of the wisest human beings that I’ve been around, but she would comment that when something happens like that, people go one of two ways. You know, they’re either going to go through some sort of transformation, accept their new fate, decide to make the most of it, and in many cases become more than what they would have otherwise, or they become depressed, bitter, just kind of resigned.

[00:16:30] Patrick Donley: I wanted to know like that mental toughness that you had, like you obviously went through the transformation stage. Were you always like mentally tough that way? Or was that something that was like a latent thing that developed because of the, you know, the disease that you went through? 

[00:16:45] AJ Osborne: Two things I want to say about this, because this is a really important topic and it’s not important topic for anyone that has gone through anything traumatic like me.

[00:16:53] AJ Osborne: It’s important for every single person, every single day. What I realized while I was sitting in the hospital and I was in my wheelchair and I was looking out, I had a lot of time to think and I realized. I will either become this AJ in the wheelchair, or I’ll become something else. And that didn’t mean that I was going to get out of the wheelchair.

[00:17:17] AJ Osborne: That’s not what I was talking about. I was totally fine living at that point. I was totally fine living the rest of my life in a wheelchair. It was such an upgrade from anything that I’d imagined. It was like my wheelchair was everything to me. It was my access to life. And so I was like, it wasn’t about getting out of the wheelchair, but I would become the guy in the wheelchair or I would become something else.

[00:17:40] AJ Osborne: And I realized that is a choice. That is not a thing. It’s not an event, it’s not a state of being. It is a choice. And I said, I have to make that choice now. That was easy to make in the moment. So now I want to fast forward. As I fast forward and I was living life, because I think when we think about mental toughness, a lot of times we think about, well, I got knocked down, but now I’m back up.

[00:18:11] AJ Osborne: It’s event based and that’s easy to do actually. What’s not easy to do is when the thing that you got knocked down from doesn’t go away every single day. You have to deal with it. This is a totally different type of mental toughness that I don’t know that I or anyone is ever prepared for, and I have to live in pain all day, every day.

[00:18:36] AJ Osborne: It is all involving in my life. I carry a backpack full of meds around everywhere I go, and it wears on you like is indescribable and what I realized was life can suck and be hard in many different ways. Mine is physical. Other people, it’s purely mental. Well, I guess mine was physical and mental, right?

[00:18:58] AJ Osborne: Because you have to deal with it. But other people, it’s financial. Other times it’s social, right? And those things may not be going away, right? I may have social problems, I may have mental problems, I may have money problems. I may have had a spouse cheat on me. I may have had horrible things that I’m still dealing with.

[00:19:17] AJ Osborne: I may have a child that is hurting in those capacities and I can’t do anything about it. This kind of mental toughness is something else, because what I realized was at that moment in the hospital that I like to say, oh, I made that choice, right? And from there on out, it was just boom, that’s my choice.

[00:19:34] AJ Osborne: That choice was me taking the first steps to making that choice every single day, and I have to every single day. And that is something that everyone has to do. Everyone has to make that choice every day. We have to wake up and remember. We have a choice. I can be this or something else, but if you don’t make the choice to be something else, you can’t do anything.

[00:20:00] AJ Osborne: And I find that a lot of people, when I was leaving the hospital, it was actually quite scary. The first thing they asked me, I had to go through endless series of tests, right? So I was in occupational therapy, speech therapy, all that kind of stuff is on the road recover. And I was going through lots and lots of psychological evaluations to get me out of the hospital.

[00:20:19] AJ Osborne: And my final one that they sat me down, I could immediately tell this is different for some reason, I don’t know why. And she looked at me and she sat down. She said, I’m going to ask you a few questions. And she said, I don’t really want you to talk. I don’t want you to really look at anything. I don’t want you, I just want you to tell me a yes or no.

[00:20:37] AJ Osborne: And the first question was, do you want to kill your children? That was the first question she asked me. I was flabbergast. I was like, what? No. Second question, do you want to kill your wife? Third question, do you want to kill yourself? And I was si, I was so shocked by this. Then I realized why they’re asking me those questions and I realized, oh, I’m obviously not the first one on earth that has gone through this.

[00:21:04] AJ Osborne: It was one of those realizations that I have to develop mental toughness because I think that if I don’t, it will take me down ways that I don’t even understand. But I don’t want to go down. And that is, I wish I could say that. Maybe it was just because of me. I often said, they’re like I’m, everybody was like, I’m sorry this happened to you.

[00:21:25] AJ Osborne: And I responded, I’m so happy that this happened to me and not somebody else. It wasn’t my kids, it wasn’t my wife, my family. I’m glad it was me, because I thought, oh, I could deal with it. Right. And I think that’s easy for me to say because I had a support system. I had family, I had people that would help me.

[00:21:44] AJ Osborne: And I think to develop and have mental toughness like that, It’s not something you can actually do on your own. That’s with anything. And that I think is why I’ve been successful because I realized I need other people and I need lots of people, and that’s okay. It’s okay. And that pride was eliminated.

[00:22:06] AJ Osborne: Pride goes away very quickly when you’re bathed in your bed and you can’t go to the bathroom and people have to do everything for you and you lie naked there. White people take care of you for months. But that was something that even today, I still have to remind myself of. It’s one of the reasons why I like telling my story because we forget it.

[00:22:24] AJ Osborne: I get all of a sudden prideful. I get thinking that thing. I should just have something for it. I start getting down on myself and I start complaining. And every time that I ever do that, it leads me to this weird place. And that place is just a slippery slide that can go very badly and you can just stop functioning.

[00:22:44] AJ Osborne: And so it has to be a daily choice. 

[00:22:47] Patrick Donley: Yeah, those are great points. I wanted to go back to, you got laid off while you’re in the hospital. You were able to weather that storm strictly. You had a great support system, but the financial support was also there because of self storage and the real estate investments that you and your father had made.

[00:23:06] Patrick Donley: I want to talk about that. How much prior to the illness, when did you guys start investing? 

[00:23:14] AJ Osborne: A long time prior. One of the things that I think I was very fortunate about is I understood the need for wealth and passive income. Now, we were in a cash based business, which meant our income common thing was very volatile because I got paid only by clients.

[00:23:31] AJ Osborne: There was no w2. That didn’t matter what the revenue did. Right? No, that’s not how it worked. If my client left, if my client fired me, if I lost a client, my income dropped by 30% or whatever it was. For me, because of my position in sales, that was an ever-present danger, right? So I was always intuitively aware of it and I didn’t, wasn’t comfortable.

[00:23:54] AJ Osborne: And because I wasn’t comfortable, I was proactive to change the circumstances. Both my father and I, we talked about it all the time. This could end, right? Because we saw it every day happen all the time, and we didn’t know when a big client would leave or anything else. And that’s a hard way to make money and live.

[00:24:13] AJ Osborne: Now, the upside of it is you can make a lot of money, right? But I regularly would lose 50% of my business. 2008, I was always having to replenish clients because my clients were going out of business for us. We didn’t know what to do and we tried to look around at assets, but we also knew that real estate didn’t make sense to me.

[00:24:34] AJ Osborne: This idea that I would spend all this money to buy something that made no cash flow like or very little cash flow. That was hard for me to understand as a guy that only lived on cash flow, right? We had no assets. It was just cash flow. So revenue and cash flow was everything. self storage was, and especially at the time, this was prior to 2008, was a cash-based business and I needed to buy something that I could affect the cash flow or the revenue because that’s what I understood how to do.

[00:25:00] AJ Osborne: We saw self storage as my cake and eat it too. A cash-based business that is real estate, but this revenue I can affect, meaning that I can operationally change it. So if I could buy something, I could increase that revenue, therefore the equity and the value of that asset would go up. I like that a lot and there was lots of inputs for me to do that in self storage that other asset classes just didn’t have.

[00:25:27] AJ Osborne: What we did is we started buying it. At the time there was no third party management. These were, so our first facilities were very small and cities, no one’s ever heard of, like we’re talking about remote. Like remote cities, you know, up in the middle of nowhere, mountains. Like I often joke about like one of our first cities, there’s more grizzly bears there than there are people.

[00:25:47] AJ Osborne: And I actually think that’s legitimately true. You know, these were not bustling cities and we were moving big capital entering around and not at all. And we learned the basics as we bought these little storage facilities, but there was no third party management available that didn’t even exist. So we had to figure out how to operate and manage it.

[00:26:06] AJ Osborne: That meant that we needed all the revenue to then spend on managing the asset. Okay. But we knew, oh, we can buy them up and then we can figure this out. We can get it going. And so we said, all right, well we’ll build management type stuff to do it. So then we went and also build the management company simultaneously.

[00:26:25] AJ Osborne: Because of that though, that meant I had to, and my dad had to keep working. We couldn’t quit because the revenue had to go to the management. We said, Hey, there’s a future where these will either pay themselves off and we’ll have no debt on it, right? And then we’ll just have all cash flow, or we’ll get enough income to where we can lay, but we have to be able to manage it.

[00:26:43] AJ Osborne: We focused then all our time and intention on two things, which became very important. We had to get that revenue up. It wasn’t nice if we got higher returns, if we didn’t get revenue up, we couldn’t pay the bills to manage the thing. Then that also meant that if we sold it, we wouldn’t have the revenue, so then we couldn’t sell it, but we needed our money out so we could redeploy it.

[00:27:05] AJ Osborne: And so what happened is we’re working and our strategy became, we’re finding, and we got really good at finding really underperforming properties predicated on those inputs that we can change. We would buy those, change those inputs. It would go up. We would refinance to get our money out, but we would still have the cash flow to pay the management.

[00:27:28] AJ Osborne: That was the only way we could do it. So then our specialty over that time, and we’re talking long time, right? 15, almost 20 years became revenue and capital management. Finding the most upside and managing that revenue with the least amount of downside, because if we lost it, it wasn’t that we lost it on this business, that meant we lost it on the other business.

[00:27:53] AJ Osborne: So our appetite for risk was like nothing. Like it was, we had to do what I call money on the table, meaning the upside. I have to be able to measure it, and I have to be able to get that upside to, in today’s market, it can’t be dependent on the market rising. So if the market rising is what’s going to make it eventually worth more, we can’t buy it because I don’t know if that will happen.

[00:28:17] AJ Osborne: This model that we built at a necess. All of a sudden at 2008 came around everything else. We didn’t lose any properties. We fixed long-term liabilities and everything because I can’t be an event-based investor, meaning it’s predicated on a sell, it’s predicated on refinance or it’s predicated on interest rate change or anything else.

[00:28:36] AJ Osborne: So we had to lock in those liabilities for a long time. High cash flow, locked in liabilities, known improvements that can get us that increase in revenue. 2008 happened, we didn’t lose anything. We had high cash flowing businesses, everything else. And then all of a sudden the assets that could produce that predicated on the fact that their intrinsic value was solid, meaning that their cash flow and return was good, but the extrinsic value of the price started dropping way below the intrinsic value.

[00:29:06] AJ Osborne: So that spread right is big money on the table, as I call it, for us. So then all of a sudden we started buying up a bunch and we realized we need to buy more. So we sold our benefits stuff. We sold our insurance stuff, which is something we’ve always done. I keep buying businesses and selling them to put them into self storage, and we kept buying more and more.

[00:29:26] AJ Osborne: Our management company, though, this is the big thing that was different yield or that rate of return on that asset was so important that we pumped millions over this time into the management company. So we were re refining assets, not buying other assets and putting that money into things like technology and everything else.

[00:29:46] AJ Osborne: Why? Because the higher we could get that yield on that asset, the better it was for us. So what ended up happening is after 15, 20 years, we built this huge self storage company that is not just about owning the assets, but it’s a business. We have layers of tech, we have total operational efficiencies, we have branding.

[00:30:05] AJ Osborne: We can compete in ways that other people just can’t. And that is where that came from. But it came out of necessity. It came out of long term. It was like choose the right horse and then train yourself to become the best jockey, and then don’t do anything that would stop that along the way. It wasn’t easy.

[00:30:24] AJ Osborne: Once again, me and my dad worked two jobs that were, you’re talking, these aren’t part-time jobs. These were beyond full-time jobs. I had clients, I had to run this firm from this big national company as well, so I had to manage clients’ money. I had to run this firm for this national company, which they paid me to do, and I also had to be buying assets and work.

[00:30:45] AJ Osborne: Then also on a management company. It was a lot. It was a lot of sacrifice, but it paid off in the end. 

[00:30:51] Patrick Donley: Were you bringing in outside capital or was it just you and your dad at that point investing your own money? 

[00:30:57] AJ Osborne: No, outside capital and we scaled to hundred 50 million.

[00:31:01] Patrick Donley: With no outside capital? 

[00:31:03] AJ Osborne: Yep. 

[00:31:04] Patrick Donley: And talk about that. Were you churning properties? Were you upgrading, I know you were doing a lot of value add 

[00:31:10] AJ Osborne: and so the only thing we did, the original small ones in small towns, we realized could never get us the yield that we needed to do our system. We sold those off. Right after that, though, we didn’t sell anything. It was only through the refinance and putting that money back.

[00:31:24] AJ Osborne: So that tells you how much we had to get. For example, if we look back, those properties have given us a 22% annualized average rate of return on cash flow. That’s not refinance, that’s not selling. That’s on cash flow. That means with our refinances, our average is over like 500% return to us. That’s how we were able to compound and do it.

[00:31:49] Patrick Donley: You’re doubling money every three or four years at that rate. 

[00:31:53] AJ Osborne: Yeah, exactly. That’s exactly what happened. Our portfolio was doubling every three to four years, all on our own. 

[00:32:00] Patrick Donley: Pretty wild. We’ve got a lot of beginning and intermediate investors. It’s kind of somewhat hard to relate to a guy that’s got 150 now.

[00:32:09] Patrick Donley: You’ve got what, 300 million under management? I believe. 

[00:32:12] AJ Osborne: 300 plus. Yeah. 

[00:32:14] Patrick Donley: Talk to us about how a regular person can get started in self storage. Your book is fantastic. It kind of lays out the playbook, and as I said, I would highly encourage anyone to buy that book and study it, but talk to us for listeners?

[00:32:27] AJ Osborne: And it’s meant for beginners, and this is the thing that I try to stress to everyone.

[00:32:32] AJ Osborne: First of all, I know when people look at us today, they’re like, you own a tech company, you own development company, architecture, lending companies, you all of this around storage tech. Oh, I can’t do this. Right? Okay. Hold your horses here. First of all, let me tell you a few things. So self storage offers the best opportunity for any investor in any commercial real estate asset class, hands down.

[00:32:54] AJ Osborne: And I will argue that till I’m dead. The reason is this. And I use this example, funny enough on Instagram, but we had a 60 door property that we sold to somebody in our group that for 200 and I think it was 60, $70,000. And I ask people, how much are duplexes in the area that you live? Well, where I live, they’re not $250,000.

[00:33:19] AJ Osborne: They’re 400 and this is 60 doors. All of a sudden, 10% delinquency. Maybe you can get rents up. You’re diversified amongst all these doors. Your upside potential is huge. You have 60 different doors that could add. If you have, if you could add, let’s say, make people do insurance or even just add a fee. I have 60 different revenue sources that I can now increase, and two, if market goes down, if I lose one door on duplex, I lost 50% of my revenue on this.

[00:33:50] AJ Osborne: Well, you’re talking about the difference of a rate increase for me and a duplex. My rate increases a McDonald’s mill. Your rate increases the difference for those people going out to eat that month or not, it’s not the same impact. So it’s a lot lower default rate. It’s the best performing asset in 23 years.

[00:34:06] AJ Osborne: The lowest defaulting asset. And the reason being is the impact on the customer is so low and the economics that are driving the need keep going up. All of a sudden you get a far superior asset, diversified risk and lower risk, lower cost basis going into it. And guess what? People are like, oh, I don’t understand it.

[00:34:26] AJ Osborne: People can relate to maybe a duplex because it has toilets, things like that. And I’m like, exactly. The reason you don’t understand it is because it’s simpler. It’s a metal box. And guess what? If I want to kick somebody out, I just do it for whatever reason. I had a customer that was at one of my big facilities that was not treating my manager right.

[00:34:44] AJ Osborne: I literally just called and said, get out, like we’re done. You’re over. Get out. If you don’t get out, I’m selling all your stuff. You can’t do that in housing. You can’t do that in these other asset classes. You have long-term leases. You have tons of rules. So for an individual, a newbie, what is better? Your risk is way lower, right?

[00:35:01] AJ Osborne: It’s actually easier to understand if you get a few of the basics, and here’s the best part about it. The vast mAJority of these assets are owned by mom and pops, which means you have something to buy. When you look at multi-family, and a lot of these commercial real estate assets, 90% of all of them are institutionalized.

[00:35:21] AJ Osborne: So that means 90% of the assets are owned by big institutions. That make me look small. When I looked at that landscape in real estate, I’m like, I can’t compete with them. I don’t understand real estate. I got into self storage because I don’t understand real estate. And so when I, that’s when I tell people that looking at it, I’m like, you can buy them.

[00:35:41] AJ Osborne: You can get them for cheap. You can improve them because they’re all ran so poorly. That means you have huge upside. And there’s lots of them. So when you put all these things together, it is by far a superior product for a newbie to get in than any other commercial real estate asset. 

[00:35:59] Patrick Donley: So what are some basic steps?

[00:36:00] Patrick Donley: Somebody’s listening to this and they’re getting fired up, listening to you. What are some just basic steps early on that they can take to move towards that first investment in the self storage? What would you do? 

[00:36:10] AJ Osborne: So the first thing you need to do is, and funny enough people are like, if you lost everything had to start over again, what would you do?

[00:36:17] AJ Osborne: The exact same thing you should do. I would go into small markets. I would start out buying small facilities that were just not being ran at all. All I would do, and this is the model we started out with, it’s the exact model I would use again, and it’s the exact model you should use. First of all, you should find mom and pops.

[00:36:33] AJ Osborne: They’re not being ran hands off, like they just forgot them, two, 300,000, maybe a million. And then I buy it and I do this. I make people pay their bills. So I actually make sure that people collect right. And if they don’t, I take them out. I get rid of all the delinquencies, everything else like that. Of course, when I’m making people pay their bills, but then I also, I pick up the phone.

[00:36:54] AJ Osborne: So that’s number two. I pick up the phone if somebody calls. And number three, maybe make a website, maybe market a little on Google or in your hometown, those three things, superior business model to 50% of all mom and pops out there. If you do that, you can be successful. But here’s the thing, demand is everything in storage.

[00:37:15] AJ Osborne: This is where people have to learn. If I’m starting out, I need to really understand why they are successful outside of me. Okay? So, all right, you got those things. I can do that. I can clean it up and make sure that people pay. Get rid of people that aren’t paying. I can do a little advertising maybe, and I can answer the phone.

[00:37:33] AJ Osborne: What are the things that are the most important to me, which are the things that I can’t control that will kill me? So our model is we don’t expect the market to make us, but we know that it can always kill us. And when we look at these assets, you have to remember that self storage is very sensitive to supply and demand.

[00:37:53] AJ Osborne: What I tell people is, you can be an idiot and successful in self storage as long as there’s demand, but you can be the smartest guy in the world and fail in self storage if there’s low demand. If you can get that right, you can, and I call this my margin of stupidity, meaning when we look at an asset, I have to be an idiot and be able to buy it and be successful.

[00:38:13] AJ Osborne: What that means is I have to be able to make mistakes and it still be successful. That is nothing to do with me. That’s all market. So what you should be learning about and studying about is first of all how to accurately underwrite them so you don’t get tricked by an owner or something like that, right?

[00:38:30] AJ Osborne: The second thing, or that, that’s actually the second thing. The first thing is once again, just demand. You have to understand demand that is currently what’s existing, the facilities in that market. How many are they? Are they full? Are they getting rate increases? How long have they been full? Then are there any new ones coming on?

[00:38:48] AJ Osborne: Have anyone’s opened up? Because the one thing that will kill you is if you’re in a small market and somebody builds one and there’s just not enough demand in that market for it, there’s nothing you can do then there’s no demand. It’s over. If you spend 90% of your time on demand and 10% of your time on everything else, like I would actually prefer somebody to just go, I found these 10 markets that have these 10 small markets that have outrageous demand.

[00:39:10] AJ Osborne: I’m not focusing on anything else, and I’m basically just going to go buy it. I’ll underwrite it. I’ll figure out operations and everything. Later you’ll be successful. 

[00:39:18] Patrick Donley: You had some interesting kind of tips and tricks on how to approach owners, mom and pop operators of self storage spaces, and that’s really the first step is how do you find one of these to acquire in the first place, mailers or whatever.

[00:39:32] Patrick Donley: I think it’s a pretty low probability that a mailer is going to work?

[00:39:36] AJ Osborne: Very low. And especially as a newbie, you can’t compete against the guys that are sending out mailers. They have all these touchpoints, everything else like that. That’s not a game you can compete in. How you need to do it is, and this is exactly how I did it.

[00:39:48] AJ Osborne: So let me give you just a walkthrough of exactly what I did starting out. I’m in Boise, Idaho. That means that we are on the western front of the Rockies. There is a big loop freeway that goes around the Northern Rockies. It goes southern Idaho, into by Wyoming, Montana, up northern Idaho, down through the middle of Washington and Oregon, and back to Boise.

[00:40:13] AJ Osborne: Very simply, I said, all right, I understand these markets because I live here and I understand these people. I know these cities and they’re smaller cities. All I’m going to do is say, I want cities that have like 10,000 to 50,000 in population. And then I marked all of those cities along that freeway. Why?

[00:40:33] AJ Osborne: Because I could get to them in a day. Then I marked all those cities and I looked at all the cities and I did one piece of research on all the cities. Is it shrinking? Like is the population losing? Is that city dying? All those cities. I just took off the map. Then that left me with, let’s say, 20, 30 other cities out of all of those cities.

[00:40:53] AJ Osborne: I said, which are the best ones and the worst ones predicated on growth. And then I listed that one through 30 out of the top 10. I then took and I said, all right, here’s the top 10. What’s every facility in that city? Then I have 10 and I then I have 10 facilities in every city that’s a hundred facilities.

[00:41:12] AJ Osborne: Each city out of those top 10 cities. I then took the assets and I said, mom and pop, meaning they’re not institutional, they’re really not being run well, but they have the best location, so the worst run, but they have the best location cause I can’t change the location. Then I listed that in every city from one to 10.

[00:41:29] AJ Osborne: So now I have a top 10 cities in each city. I have a top 10 facilities. I don’t know anything else about them. Nothing doesn’t matter. Nothing at all. From there, I now have something I can drive to in a day. They’re cities. I understand they’re small mom and pop facilities, but they have good locations. From there, I went into every city and then I took those facilities and then I started ranking them predicated right on those things.

[00:41:52] AJ Osborne: And then I started looking at the demand in the cities, everything else, and I picked the three ones that I wanted to look at. Out of every single city, I now have 30 facilities in this entire four state, five state region that I’m looking at, that I’m comfortable with. I now have 30 facilit. Now very easily.

[00:42:13] AJ Osborne: You can do that in very quick amount of time. This is literally go onto Google Earth. Okay? So I want you to go onto Google Earth, mark out your path. Go to every city, type in the city’s growth rates, find that all. Then go to Google Earth, type in storage facilities. Look which ones pop up, but then look at Google Earth and find the storage facilities.

[00:42:31] AJ Osborne: They all look very easy to find, okay? They look like they’re either long, they’re chicken coops or swords. There’s not nothing else. They can be, right. Very easy to spot. Find the ones that aren’t listed, which would immediately make them go to my top. By the way, if they weren’t listed on Google and they were in a good location, that’s a start.

[00:42:49] AJ Osborne: So then after I did that, I had my 30 facilities. Then I went to find everything I could about those 30, 30 facilities, who’s the owner? Everything else like that. Then we would drive and I would go to, and I would try to find out the owner, and then this is what we would say. Then everybody’s like, oh, great.

[00:43:03] AJ Osborne: So then you call them up and say, Hey, can I buy your storage facility? Nope. Oh no, you don’t do that. Why? Because they get calls like that. They get mailers, they get emails every single day and guess what they are trained to do? No. So you have to use language that does not get a reaction. That is no. But a reaction that is, yes.

[00:43:25] AJ Osborne: So the language that I had to then use was something like this. You are an expert in this industry compared to me, because I don’t own any. So you are the expert. I don’t care if you’re running it bad, you have one. I don’t. I want to learn about this business and your market and how you got into it. Can I take you out to lunch so you can tell me how smart you are?

[00:43:45] AJ Osborne: Yeah. I’m happy to go have you pay lunch so I can tell you how smart I am. Then after we start talking, building a relationship, I don’t ask them to sell still. Don’t ask them to sell. I then ask them and I say, I’m looking to get into storage. Do you know anyone that would sell to me in your market? I get two answers.

[00:44:05] AJ Osborne: I get one, I may get referrals for other people in the market, or two, which is 50% of the time, you know what, why don’t you buy me? I’m kind of done with this. I’d sell, and I do that with all 30 facilities. And right there, I have an entire pipeline. If they’re going to sell, they’re going to pick me because I now have relationships with all 30 of those people.

[00:44:25] AJ Osborne: So if they ever sell, they’re going to, they’re going to come to some of those facilities sold to us three, four years later. 

[00:44:29] Patrick Donley: Yeah, I love that. It’s a really great idea that I’m going to have to implement. 

[00:44:34] AJ Osborne: It’s very effective, but, and two, though, this is what big guys won’t do. I won’t do that today. Why I’m too big doesn’t make any sense.

[00:44:41] AJ Osborne: And I’m not going in those markets. So what you’re doing is you are getting in a spot where you’re artificially driving away. Competition and demand, and you’re putting yourself in a position where your rate of success is going to be a thousand times what the big boys get and can do anyways. And two, those types of owners, they sell like that.

[00:45:04] AJ Osborne: Those types of owners sold to us on a handshake sitting in their office. The big guys that come in, they immediately just say, no brokers that come in, no. A handshake in the office, they’ll do, it’s a competitive advantage. 

[00:45:20] Patrick Donley: Absolutely. And so once you’ve acquired one of these mom and pop storage facilities, what are your next steps once you’ve made the purchase?

[00:45:27] Patrick Donley: What are some top two, three items that you do immediately to start pushing rents up or you know, do the value add that you do? 

[00:45:35] AJ Osborne: First things that we do is we look at what we call the. Normally when we’re looking at spreads, we could look at a spread in rates. What we’re looking at the difference between physical and economic occupancy, okay, so these are two different things.

[00:45:49] AJ Osborne: Physical occupancy. If I have a hundred units and there’s somebody in every single unit that’s a hundred percent full, okay? If I have a hundred units and 10 people are gone, that’s 90% full. Now, economic occupancy doesn’t work like that. So let’s say that you have a physical occupancy that is 90%, but then out of that 90%, let’s say for a 10 by 10, you charge a hundred dollars, for example.

[00:46:11] AJ Osborne: But out of those 10 by tens, the average person is only paying $80. Well, let’s say they’re for simp, very simplistic. Let’s say all hundred of those units are 10 by tens. They’re charging a hundred dollars, but on average, because people didn’t get rate increases, they got specials, everything else like that, all of those units are on average is $80.

[00:46:33] AJ Osborne: That means if you had all of them full with people, you have a hundred percent occupancy, but your economic occupancy. Is 80%. So we gotta make sure that our physical, occupancy and economic occupancy are the same. That’s the first thing. That’s a quick hit that can drive and immediately jump revenue.

[00:46:53] AJ Osborne: The second thing we do is, aside from doing any cleanup or fix up that we need, if you gotta do a door, things like that, I’m not talking about the physical part. We can all see that and that will depend on per facility. The second thing that we then do is make sure we have good communications, emails, phone numbers, and we make sure, oh, also, excuse me.

[00:47:12] AJ Osborne: I guess first thing we do, we make sure that they’re all on leases. That’s going to be a problem. Normally when you buy them, you have to redo the leases. The leases aren’t good and a lot of people don’t even have them because this is a mom and pop facility, so you have to get everybody on the right. Then from there, right, we do the economic spread, we get it going.

[00:47:27] AJ Osborne: We want to make sure that we have a website. We want to make sure that we’re advertising, we have a good sign so people can see us because we want to be driving inbound leads. because anytime you make change, people leave and we make change to get people to leave. So a lot of people are like, oh, I don’t want to make any changes cause I don’t want anyone to leave.

[00:47:44] AJ Osborne: We make CH changes to get people to leave. So when you look at that, we want there to be 15% vacancy because if I don’t have 15% vacancy, I don’t have anything to sell. I’m a business. The next thing we’re doing is we’re looking at insurance, adding in mandatory tenant insurance to protect the tenors, which we get chunk of that, you know, those are $12 policy, we get 80%.

[00:48:10] AJ Osborne: So we get $10 to it. That’s a 10% increase on every single one of those facilities Immediately. 

[00:48:17] Patrick Donley: And you make that mandatory in your facilities? 

[00:48:20] AJ Osborne: Yes. They have an out where we can say, if you can provide renter’s insurance that covers your storage facility, but that’s rare. Really rare. Like most people say, oh, I have renter’s insurance, but it doesn’t cover their storage facility.

[00:48:32] AJ Osborne: Basically everybody gets on it. So when you look at that, then we just went from our average economic 80 to a hundred, that’s a 20% increase in gross rep. Then all we did was add insurance, which is another $10 for every single unit. So now we increased it by 30% gross revenue. We lost 15% of occupancy.

[00:48:54] AJ Osborne: That 15% of occupancy that we lost, we’ve got fees for, and now we’re getting new people in. That means we’re getting set up fees, which a setup fee is $25. So if it’s a hundred dollars a month, right, and you get $25 that first month, we just increased 25 bucks, churn is profitable, and so all of a sudden we have a net gross effect of 20 to 40% in gross revenue.

[00:49:20] AJ Osborne: Well, if you look at that on a cap rate that you bought it on, you just doubled your money because that’s net. That all goes to net. So it’s not a 30% increase on your net income. It could be a 50% increase on your net income. 

[00:49:34] Patrick Donley: And why do you think the current mom and pop owners aren’t making these changes themselves?

[00:49:39] Patrick Donley: It’s just laziness. Is it just they’re just used to doing business as usual? 

[00:49:43] AJ Osborne: They don’t do it. It’s not, you gotta remember here, in self storage, a lot of people don’t understand this because all the other asset classes are so sophisticated compared to self storage. But up until 2008, nobody wanted storage.

[00:49:58] AJ Osborne: It was a dirty asset. When we were buying storage, people wanted to know why they called us slumlords. Why are you buying junkyards? We were buying them at 10 caps. When people built storage facilities, they were built to tear down to build something else. These were simply land holds that they wanted to get income off of.

[00:50:18] AJ Osborne: Why they held land. The vast mAJority of people that is owned for 80% of the entire lifespan of this asset class did not look at it like we look at it today. There was no tech, there was no business operations, there was no branding. I still find storage facilities where their marketing is through the Yellow Pages and they spend $15,000 a year on, I mean, they could spend 15% of their entire gross revenue for yellow pages, which they get no leads from.

[00:50:50] AJ Osborne: That’s the reality of self storage. They built it 20, 30 years ago. They’re operating the same way. And two, by the way, most of these people, they don’t want to operate it. The reason they were in storage was cause they don’t want to do anything. If I’m in apartment building, somebody’s going to call me. I’m going to have problems, I’m going to have issues.

[00:51:06] AJ Osborne: If I build a storage facility, people rent it. I don’t really care. I never raise rents cause I don’t want to deal with it. I never do any of these things. I was literally have it. I built it for nothing. They’re like, I built it for $15 a square foot today. It costs a hundred dollars a square foot to build.

[00:51:20] AJ Osborne: It’s all profit. I don’t do anything. So anytime I want to do something, it takes away from my profit. So I don’t, that’s the mAJority of storage facilities out there in small markets. 

[00:51:28] Patrick Donley: I wanted to ask you about building ground up versus buying a mom and pop. I’ve got an uncle that has been in self storage since, God, he probably built his first one in the late eighties, early nineties.

[00:51:40] Patrick Donley: He has been in self storage a long time, and I just always looked at his lifestyle and, you know, he had freedom. He had, I always thought he, it was a really wise, intelligent move that he did getting into self storage. But I asked him this summer, this past summer, like if he had his druthers, would he build a ground up unit or would he buy mom and pops and do exactly what you were doing in terms of increasing the efficiencies and increasing the value?

[00:52:03] Patrick Donley: And he said he would do the ground up building. What are your thoughts on that? Like do you lean one way or the other?

[00:52:10] AJ Osborne: I do both now. Here’s what you have to realize. Development is riskier. It is. And the reason why is you remember what I was first talking about. Demand is really the only thing that matters.

[00:52:23] AJ Osborne: Demand you can suck at doing this and hence why mama pops have been very profitable. Just because there was demand, because banks wouldn’t loan, like we couldn’t get banks alone prior to 2008 on this asset. Nobody wanted it. Right? When 2008 hit, you have to realize that the average like debt to income or debt to equity on these things was like 30%.

[00:52:44] AJ Osborne: It was the lowest leveraged asset of any asset class because banks wouldn’t give money to it. When we look at when you building versus buying, well if I bought and I can see today what the demand is. Now if I go into a market and I build and I put 200 units into that market, I have to know or believe that there will be 200 people that will want to rent.

[00:53:09] AJ Osborne: Now, a lot of people say, oh yeah, that’s easy, right? Like, of course there’s going to be 200 more people. Now in big markets, maybe in smaller markets, no, because you’re talking about 10% or less of the population uses self storage. So you need to really know what that market wants. The other problem is people build the wrong products.

[00:53:33] AJ Osborne: So storage facilities will go, they’ll put 300 units out, but the problem is what did they build? They just built 10 by tens, five by whatever the architect basically said, or what somebody told them to do. They have no idea what they’re even doing, and then all of a sudden they find out 25% of their units have very little demand.

[00:53:47] AJ Osborne: So they built the wrong type, they built the wrong product. So generally speaking, you need to understand the market way better. You need to be able to analyze trends. You need to know what people are buying. We’re very good at that now. So we’re very comfortable with building because building costs today, I would say if you’re dealing in small markets, okay, which most newbies will be, right?

[00:54:09] AJ Osborne: Cause that’s entry point. Everything else, you’re buying it below replacement costs. So then if you want to go into that market and build, you are building higher than you could buy it. Now when you get into markets like Phoenix, so like I’m building in Phoenix, I’m building in other markets, it’s inverse.

[00:54:25] AJ Osborne: I’m building for 150 bucks a square foot, but they sell for 200. When you look at that makes more sense. But newbies starting out, it’s not that you can’t, and this is how you do it. So you don’t make mistakes. So I actually, if you want to do it, you can’t find somebody to buy and you believe there’s demand in everything.

[00:54:39] AJ Osborne: Here’s how you do it so that you don’t get caught with demand that you might not be able to measure. What you do is you build it building by building every single building. Let’s say that those buildings have 20 units, 10 on each side. The first B building I build, I’m going to build one side with 10 by tens and maybe the other side with 10 by twenties.

[00:54:58] AJ Osborne: All I gotta do is fill up 20 units and if I can fill up 20 units and if I have weight lines, then I can see, oh wow, a lot of people want 10 by twenties, not 10 by tens. Next building I build 10 by twenties, five by fives. And so you build as you go along and then the moment you build something, if there’s no demand, you’re like, oh wait we built 10 units, but three of them not filling up.

[00:55:19] AJ Osborne: Well, instead of building a hundred units and having 30 that aren’t full, you only have three. So that’s how you build when you’re a newbie and in small markets and don’t get in trouble. 

[00:55:31] Patrick Donley: That makes a lot of sense. You also do conversions of.

[00:55:35] AJ Osborne: Yes. Bankrupt super Kmarts office buildings. We buy them in to them.

[00:55:38] AJ Osborne: Into storage facilities. Yeah. And do you like those as well? I love them. But they’re that next level. You have development here, conversions are a whole nother level. The reason being is when it’s development, let’s say I pick a market that I want to be in, I can go find the best spot and buy the land and build.

[00:55:56] AJ Osborne: Okay. When it’s a conversion, I don’t get that ability to, plus I have to pay for the buildings and the land. My entry cost is big. So a lot of people, even though they say, oh, conversions because I can get this cheap building or whatnot, actually end up being way more expensive than if they would’ve built from the ground up.

[00:56:13] AJ Osborne: Because you buy the building, you have to pay for all of it. But then two, I gotta replace HVAC systems, I gotta replace walls. Everything else like that. So all of a sudden you’re into this thing and you haven’t even started putting storage units in and you’re like, holy cow. Right? So you gotta be very careful with it.

[00:56:27] AJ Osborne: But you can get access to opportunity and locations that you can’t get development because there’s nowhere to develop. That’s why I love it. But if there’s no land to develop on, that’s why you’re buying it. To get access, that normally means you’re paying a hefty price. So you gotta be very careful. 

[00:56:43] Patrick Donley: I’ve got a ton of questions.

[00:56:45] Patrick Donley: I haven’t even got to here. We’re running out of time here, but I wanted to ask you, I read a distinction, actually. It was a podcast and I heard you make the distinction between being rich and being wealthy, that I thought was really interesting. It’s something that I not heard before. Can you talk about that and what you mean by that?

[00:57:04] AJ Osborne: Yes. When I was selling insurance, I realized something very quickly that there was a difference between me when I was doing really good, making six figures right, plus than somebody else that was making less than I was. And that was that they were better off. And what it was they didn’t have to work and they still made money.

[00:57:26] AJ Osborne: And I realized, oh, you can be rich. But not financially free. You can be rich and still have a live in paycheck to paycheck. You can be rich and have a horrible time. And rich people spend their money. It’s taxed high, they spend it, they lose it all, and they’re on a treadmill. It’s just a faster treadmill.

[00:57:45] AJ Osborne: Being wealthy means you don’t have to work for money. Your money works for you. And that is the difference. And that’s what I wanted to achieve. I wanted to be wealthy, meaning I didn’t need to work and I could compound my money without my effort. That’s being wealthy, and that’s a big difference.

[00:58:02] AJ Osborne: That’s a very big difference. And so I started to apply all my effort to become wealthy, not rich, where prior I was working really hard in sales and things like that, working nonstop to make a lot of money, and I had to change my mindset. That’s a hard shift because when I made that shift, I actually lost earning potential on my rich side cause I had to start spending owner.

[00:58:25] AJ Osborne: But it eventually not only met but surpassed. Why? Because you can compound. When your money’s not tied to your time, when your money is tied to your time, you are capped. There is only a certain amount. You have to get away from that if you want to become wealthy and financially free. 

[00:58:44] Patrick Donley: And wouldn’t you say you’ve gotta do it intelligently?

[00:58:46] Patrick Donley: I mean, it helps to have a W2 job to segue to the wealthy status, right? 

[00:58:52] AJ Osborne: Hundred percent. People crap on W two s all the time, and I do not understand that. I’m like, that makes no sense at all. First of all, what? You don’t get a W2 and you think you know about business. You like what? You get out of business school and you’re like, W2 suck.

[00:59:06] AJ Osborne: It’s like, okay, first you don’t know anything, right? It doesn’t matter how many books you read, a W2 gets you access into the real world. Really doing jobs, really seeing p and L’s expenditures, really knowing what happens in operations within a business and how to execute it. So first of all, W2 S are the best training ground for your success ever.

[00:59:28] AJ Osborne: Second, you are paid higher for your time than you are in any other way. What does that mean when you’re first starting out? I pay a premium for somebody that works here for their time to do the thing. So they’re better off doing that thing for me than they are on their own. That’s why employment works so well.

[00:59:49] AJ Osborne: They work for me and pay it. That means I am overpaid. People hate to hear that story. I’m not overpaid. I’m underpaid. Wait until automation comes in. Let’s hear you say that you’re overpaid and all businesses are trying to do is figure out how to do your job cheaper, meaning without you, because that is the most expensive piece.

[01:00:08] AJ Osborne: Because of that, that gives you capital, that gives you track record for banks, lenders that gives you experience, that gives you access to pay your bills, to do all those things. If you don’t have those things, you’re going to fail very quickly. It’s a big myth to think having a W2 either stops you, holds you back.

[01:00:29] AJ Osborne: It is the best gift that you can get to build your future. You should be grateful for it. You should work for the right reasons, not the wrong reasons, right? And then you should work on building a plan on how to utilize that to move you to the next step in life. I’m a big believer in this, a really big believer in this.

[01:00:50] AJ Osborne: I think that W two s get a bad rap, and the only people that give W2 s a bad rap to me don’t really understand entrepreneurship. They don’t understand big business. They maybe haven’t been through the cycles. It’s really easy to give W two s a bad rap when the market’s going straight up and you bought Bitcoin or something and think you’re a genius.

[01:01:07] AJ Osborne: But the first time it goes down, then you gotta go get a job. And guess what? Now you have no experience. You’re going to get a crappy job. And I think, yeah, you want to work out of a job. Cause you don’t want your money tied to your time. That’s all you’re trying to change is the functionality of time to money.

[01:01:20] AJ Osborne: That’s what you’re trying to change. Everything else though, with a job is great. And the better you can put yourself in a position within an organization to learn, understand it’s better than any MBA you could ever get. Work hard, learn and transfer those skills out. Then when it’s right, you can leave.

[01:01:38] AJ Osborne: Why? Because you are the biggest factor in your failure. You are the number one thing that will get in the way of you being successful. The number one reason is because you take a lot of money to live and you gotta take that from your business. So if you can build a business while somebody else is paying you to live or build investments while somebody else is paying you to live, your success rate will go way up.

[01:01:57] AJ Osborne: Why because $50,000 a year, $60,000 a year that you have to pull out to live on, try to build up a business. How long can you live? Three, four months. Without an income, try to build a business in three, four months that pays you $60,000 a year, 50, 40, $30,000 a year, you’re going to fail, right? Unless you have big investors, unless you have things like that, which, that’s all great, that’s fine.

[01:02:17] AJ Osborne: But this idea of just, I’m going to quit and leave, or my W2 doesn’t do anything I’m very against that. Use it and the more people that do, the more success we’ll have. 

[01:02:27] Patrick Donley: Yeah. That’s a great place to kind of wrap things up. AJ, I really appreciate your insight today. I loved hearing your story and I really thank you for sharing it.

[01:02:35] Patrick Donley: Incredible. What you’ve been through and what you’ve been able to accomplish through some really tough times. Just for our listeners that want to learn more about you, learn 

[01:02:43] Patrick Donley: more about your book, talk to us about the way to maybe get in touch with you? 

[01:02:47] AJ Osborne: The book, growing Wealth to End Self Storage by AJ Osborne.

[01:02:50] AJ Osborne: You could just go find that on Amazon. Now Self Storage Income is our podcast. We have the number one selling book in the industry, the largest podcast in the industry. So you can learn everything. We are completely transparent. We give away all our information every single week. You can find more about me, AJ Osborne, on Instagram, selfstorageincome.com, and there you have links to my firm, Cedar Creek Capital and our investment firm, things like that.

[01:03:14] AJ Osborne: So pretty easy to find. Google, AJ, self storage, and you’re going to get too much. I apologize. 

[01:03:20] Patrick Donley: Great stuff though. Really great stuff. I didn’t get to half my questions here today, so maybe we’ll have to do a round two. But I really do appreciate your time, AJ. 

[01:03:28] AJ Osborne: Thank you. Appreciate it. 

[01:03:30] Patrick Donley: Okay folks, that’s all I had for today’s episode.

[01:03:32] Patrick Donley: I hope you enjoyed the show, and I’ll see you back here real. 

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