Networking Your Way to Investing Success: Learning to Leverage Relationship Capital in Self-Storage

If you feel like your self-storage investments have plateaued or you’re a new investor having a difficult time finding deals, you might consider taking greater stock in relationship capital. This approach has worked wonders for my personal business. Though it might sound like a snake-oil pitch, I’m living proof that building and leveraging a strong network can truly make a difference in growing wealth.

Wikipedia suggests that “relational capital” is what occurs when institutions and individuals form a “strong sense of belonging and a highly developed capacity of cooperation.” Put more simply (and in my experience), it’s the value that occurs from relationships forged within your network.

Before we delve into some of the specific benefits, let me share a bit of my personal story and how I came to the realization that relationship capital really works.

My Journey

My wife and I had our first child in 2014. With the added pressure to provide for another human being, I started looking ahead, including at how much it was going to cost to send our daughter to college. At the same time, I started running retirement calculations.

I quickly realized that even though I was making decent money, our retirement was looking bleak, and saving enough for our daughter’s education was going to be a challenge. These worries motivated me to find another avenue for making money. After scouring the internet, I decided to put my energy into real estate investing.

I really caught the bug by listening to numerous podcasts. The advice and expertise doled out on these shows convinced me that investing in real estate would not only help me provide for my family, it could build wealth and possibly provide financial freedom.

Over the next several years, I bought a single-family rental and did one fix-and-flip. Though I made some money, I wasn’t moving the needle. Knowing that I needed to scale, I started looking at apartments, car washes and other small businesses. To this point, I was still listening to podcasts and doing everything myself without any networking with others.

In 2018, I stumbled upon self-storage. Since I knew nothing about the asset class, I started reaching out to educators in the sector. This led to joining some mastermind groups and going to industry events, which put me in the same room with people who were way smarter about the business than I was.

What transpired was nothing short of amazing. My portfolio exploded. In four years of doing single-family rentals on my own, using what I gleaned from podcasts, my portfolio was worth about $300,000. After an additional four years of diving into self-storage and surrounding myself with people whose expertise I could lean on and learn from, I was able to grow that portfolio to a value of $30 million.

Looking back, I probably would have gained some sort of success with residential real estate just by staying consistent and applying what I was learning via the podcasts. However, switching to a commercial asset class was definitely easier in terms of scale, and I probably hit the self-storage market at the right time. Plus, being in rooms with smart, experienced people created access to all sorts of tools I never knew existed. The podcasts helped me find a path to financial freedom, but relationship capital gave me a vehicle through which to skyrocket.

Now that you understand where I’m coming from, let’s look at three key benefits relationship capital can provide.

New Skillsets

The first positive aspect to relationship capital is learning new skillsets. I did this through development and mastermind groups that focused on self-storage. These alliances allow you to dive deep into finding and structuring deals as well as how to effectively run an operation and scale the business. Though some aspects may seem easy, there are always little details to absorb. I’ve overhauled my storage operations five or six times in the past few years because I learned about new software, management options, hiring processes and other strategies from fellow group members.

Most of us in these groups are probably solo entrepreneurs (or small partnerships) and don’t have the luxury of having a mentor or ownership team with whom we can discuss ideas. This is the real value of networking. If you’re around the right people, you can use them like a board of directors.

For example, let’s say you’re struggling to find a competent call center (I’ve been there!). After reaching out to your network of fellow self-storage owners, you can gather personal recommendations and feedback. Heck, someone may even advise you on how to start your own call center and bring that portion of your business in-house. Though you may learn these things on your own in time, being able to share information and bounce ideas off of other investors can help you discover and implement strategies further and faster.

Business Partnerships

Another benefit to networking is finding a business partner. Let’s say you meet someone who’s great at finding self-storage deals but not at operating facilities, which happens to be your strength. You may be able to bring value to this person by managing the properties while they focus on deal sourcing.

Another possible partnership can grow if you’re adept at finding deals but don’t have the money to act on them. You may be able to find the right people with capital from inside your network.

The key is to look for those you might complement and vice versa. To form an effective working partnership, it’s important that you work well together and can form a business plan in which you align with goals, values and ethics. There are many ways to structure partnerships, and you can learn about those options by growing your network!

Shifting Mindset

The third benefit that can come from better relationship capital is a mindset shift. I’ve spent time with high-level thinkers who have challenged me to think differently. Sometimes, someone’s viewpoint on a scenario you’re convinced is negative can flip you into correctly believing it’s positive. Other times, someone may point out something in your life or business  you just aren’t seeing clearly.

Outside, unbiased perspective can have tremendous value. We all have blind spots, so it’s beneficial to have reliable third parties who can bring these to your attention. The key, of course, is to surround yourself with people who’ll challenge you to help yourself and grow without them trying to profit from it or make themselves feel better in some way.

There are many networking groups out there. To connect with others who’ll help you on your self-storage journey, you have to perform your due diligence to make sure you’re a good fit. I like to look for gatherings in which I’m one of the least-experienced participants. At the same time, though, I also want to provide value to the room. If you join a group planning to just be a “taker,” you won’t last long. Ideally, in the right group, everyone contributes and benefits.

A Transformative Experience

In the end, it’s truly rare to build a successful business alone. The people I’ve met and the networking I’ve done have completely transformed my personal and professional life.

Relationship capital is about learning from others and getting constructive feedback. It’s also about sharing your knowledge to help others succeed. Strive to network with those who have similar problems they’re working to resolve. Having strong relationship capital will help you overcome your challenges quickly and move forward in self-storage investing with confidence.

Jon Farling is a real estate investor who specializes in self-storage. His investments allowed him to quit his day job and grow an Ohio portfolio worth $30 million. To reach him, email [email protected]; visit l4investing.com; or listen to his show, “The Do More Podcast.”