Hi everyone, Ken McElroy and I'm here with Bill Borders and John Finn.
Hey, guys.
Ken how are you? Good, good.
So they're with Vinum 55.
So any of you guys that love wine or specifically are into real estate,
self-storage. We're going to talk about wine storage today,
which is a real estate play.
I always tell people, like, you know, real estate is really their boxes.
Right?
So industrials are big box retailers
and big box offices are basically boxes.
The self-storage, which I do, are boxes.
They're a little smaller eight by ten.
Apartments are boxes.
And now you've got these wide storage boxes.
But the thing that ****** me off is that they get more rent
for the little wine box that I get for my self-storage, which is an eight by ten.
That's true. It's nuts.
So that's why I wanted you guys on because this is like a sneaky, nifty
little business.
Let's talk about Vietnam, the you know, how it started and how you got the idea.
Yeah, Kenny, you're absolutely right.
It was storage.
Bill and I are good friends around wine.
And Bill's also a general contractor, and he built our first storage unit
in my house.
100 bottle wine fridge.
What we've done is we we construct all of our own buildings,
and most of that space is cold.
We chill it down to 55 degrees.
We pump in humidity and then they also have some office space
and some conference rooms and tasting room area.
It's a very social club.
If you think about it.
So we try to get we bring in in vintners
and and do wine tastings at the place, but it really is cold storage.
So the first building that we did
was connected to a restaurant who who had no parking.
And so they bought the building two doors down
for the parking in a dilapidated old Hayworth building.
Right. And so it sat there for years.
And when we went looking for something, that's what we were looking for.
So we just took an old building that nobody really wanted.
And we turned it into storage because it didn't have, you know,
clear height of 16 feet or anything because we're just doing cubic feet.
Right. So it all matter
that had ten foot ceilings and it was nice long as it was efficient.
And that's what we converted. That's how we got started.
Okay.
So let's talk about how the math works, because I remember going
into your storage facility.
Yeah, that's a lot of money for this little box,
but in that bar could be thousands of dollars away Yeah.
And so the way it's an A.I.
play, Kenny, it is.
You know, we have a 5000 square foot building.
We cool 4000 of that.
And within that 4000 square feet, you carve it up into what we call cages.
So each locker is a cage.
You can hold as small as ten cases of wine and as big as a couple hundred cases.
So it's just it's literally, like Bill says, we're we're leasing
cubic square feet to our members a lot more efficient than that apartments.
Yeah. I was like, you know, it does a business.
I read.
I was like, wow, this is cool.
Like, these are like, what is a normal box size?
Yeah.
So and so a typical call it a typical locker holds around 24
cases of wine, and those are going to rent for around 200 bucks a month.
Okay. All right.
Is that your kind of strike zone?
Is that where everybody kind of wants to be?
It appears to be the most entry level position.
We do have smaller ones, obviously, and we have much larger ones.
But, you know, I would say that probably 80% of the size that people are looking
for is around that 20 case, or at least 80% of them start there.
Okay.
I mean, we convert a lot of those into twos
and then they get up and down because they just they grow. Okay.
And it really is our, our lead gen is our own membership base.
Right?
Because what they're doing is they get into one locker
and they continue to buy wine
and they're a collector, and then they need another one
and another one and they just keeps kind of going.
So, okay, so now you guys have knocked out
several of these, many of these, and you're looking for other locations.
So what is the demographic?
I'm sure you've learned a lot in nine years, like
if somebody was interested in this business, you know, like for me
with self storage, you know, I'm looking at rooftops, you know,
like residential housing and there's so many rooftops in the area
that you want, you know, that's going to pour over into storage for apartments.
You know, I'm looking for, you know, obviously more
demand and supply and, you know, employment, all that kind of stuff.
What do you guys look for in wide storage?
What are the demographics?
I would say that we are we get lucky in that we we follow Napa quite a bit.
Okay.
You know, we're taking their lead, so we have that logistical side
where we can go into a state and we can deliver and deliver and deliver
and we can start collecting that data and seeing where the drinkers are.
And then that'll that'll tell you where the sticks and bricks,
if they give you that license given they give me their recipe
so you can have a really live Jesus.
You know,
I mean, it's pretty simple, right?
Just to follow, follow Yeah. Yeah.
Well, and, you know, we do look at some demographics
and where people are living and, you know, what is that income level look like?
And, you know, accessibility.
Is it near a freeway?
Is it where, you know, what's in the neighborhood?
So let's talk about vacancy, because in my world,
you know, we're always managing vacancy, essentially.
What's your full?
These things got to be I mean, pretty profitable.
Pretty cash cow. Yes, it is.
You know, I kind of explain our investment thesis as buying a bond.
You know, you invest in this thing and it's something that is going
to continue to pay you back and pay your family back when when you're gone.
So it is you know, we look at it as a net cash.
Yeah.
Cash on return
because once you're full, I mean, I know the one that I'm involved in.
You know, what's once you
it took a little while to fill up, like a lot of stuff like myself storage.
It took me two and a half, three years to build 700 unit.
Yeah.
Once it was full, though, then you're just kind of managing it
as a little different, but it got to be kind of the same for you guys, right?
There's not a lot of people moving.
No. And it it is where, you know,
you fill up a facility and you still have a lot of demand in that area.
So that's why we have three of them.
In Arizona, we're looking at building a fourth
you know, the difference in our storage is is just always seems, you know.
Right.
So we're all we're always in there locker while we're moving in and it's going out.
Okay. It's coming in.
So it's busy.
Yeah. It's just full
So let's talk about that overhead side of it, you know,
because I know you've hired some great people.
Like, these are so manager. They sat, right? Yeah. Yeah.
How many of those you have?
So all of our staff are wine trained professionals and we have 18 on staff.
That's insane.
Yeah. Yeah.
Like and these are hard, these are like very smart people.
Very smart.
Like, I was like, I was like, wow, I could.
Yeah, it's just they they know a lot more about wine than we ever will say.
I was hoping we wouldn't get into that. Yeah, okay.
So you got these incredible people, and then, you know, what's the one type?
Once you put stuff in a box, you know, at an storage facility,
how do they get to it?
Do they come in? Do you send it to their house?
And if they have a party or a wedding or something, do you do you deliver it?
How does that work?
The answer is yes.
All the above. It's always yes. There are some options there.
You you may want to tinker around with your own cellar.
A lot of people do that in the beginning for, you know, the first year.
And then they go, I don't know why I'm doing this.
And then they turn it over to us, will gladly manage it for you.
If you're out of town, we can get the wine to you.
If you want to come and get it, we'll throw it in the back of your car.
I mean, the answer really is yes. Oh, wow.
I never thought of that. So that's actually an interesting thing.
So if you're on vacation or wherever you are, you guys, that's a good point.
You just send it to wherever they are, wherever you are,
so they have a case or to just send it to here.
Truth is, guys, I don't know anything about wine.
Like, I know a little bit because of these guys, but I just have to rely.
That's the other piece that I actually liked
because when I went to you and I said, Hey, I got this big wine cellar, now
what do I do?
You like you didn't like, you know, there's really good stuff
on our hundred box, right? Oh, absolutely incredible stuff.
Yeah. Incredible.
Yeah. And so that was another piece for me.
I saved a bunch of money I think.
Well, obviously, because you're like, you know, you don't need to pay that
much for this kind of wine.
The knowledge, you know, I'll walk in, I'll go all Camas.
Yeah. You know, right?
I grab it as like,
I don't know, but I know that there's a whole bunch of wines that are there.
Comparable. Yeah.
You go to a restaurant, you open it up, whatever
it is, you're drinking it right now.
So they're not stocking anything that's
you know, more than three, four years old, right?
So if you do it right and you're buying today
what you're drinking five years from now, you paid 65 bucks for a bottle
that might be retailing for 300 bucks or it's certainly drinking
like it's 300 bucks.
And now you're now you're in it, right?
So now, now, now you're drinking three or four years later, what you bought, it's
worth more. It tastes better. Yeah. You know, it's, it's all worked. Yeah.
And there is there is a science to all this.
There is a science to buying wine and holding it for a year or two or three,
right? Yeah.
And you know, I always tell people
there really is no bad debt expense in this business.
You know, people are not walking away
from their 12 cases of wine and leaving it for us to drink.
Yeah, right.
So like I started, you know, they were like, oh, this is not yeah.
I got a huge water bottle
right here.
There's the wine bars. Yeah.
If there was, I'd be right there.
That's hysterical.
All right, so let's talk about what else did you guys learn about this business?
Because you you know, I love this is a great entrepreneur story.
Honestly, I can't believe how how credible those people you hired are.
Like, literally these are super smart people.
Very really understand you're which is a massive service.
You didn't actually have to do that for storage, but you did it.
And I think that really does differentiate us
from other store wine storage concepts
where we really have invested in the Somalia
I invested in that concierge service for our members.
Right.
Let's touch on the operating expense side just before we wrap up.
Like what are some of the
you got obviously you're building costs and you've got some overhead.
You know what are because you know, there's a real estate channel.
So people are probably trying to that.
Okay, we've talked a lot about the income side
and the occupancy and obviously how good it is once you fill it.
But what about the the operating expenses?
What should people be looking at or thinking about?
Yeah, you know, I think that our largest expenses
come from obviously rent or mortgage utilities and then staff.
So other than that,
there really are no other expenses, you know, are quite efficient.
You know, the our first building is 5000 square feet.
It's 55 degrees year round and I don't think we've ever had a built over $1,000.
Oh wow.
So okay, try to build them like yetis and yeah, keep them cool.
So I think our utilities are down, you know, the rent is
the rent can be challenging, you know, and when you get in and we have full,
you know, the landlord knows your fault. Yeah.
And he knows how much it costs for you to get out of there.
So your rent goes up and that's been a challenge.
That is one thing that we've really figured out is we're bad renters.
Yeah.
And so what we've really been trying to do is buy buildings
and if you think about what we're buying, it's that undesirable.
No windows, no parking needed, no monument sign.
Yeah, right. We want to block, we want to be in the block.
We want to be in the back.
Yeah. You know, that makes more sense.
Plus, when we get it, you know,
when we build it all out with that stuff, that's permanent, right?
Not stuff that you have to think five years down the road
you might have to take with you yeah.
You know, it's just it's just better, right?
You want to be that building that everybody drive by,
it doesn't know what's in there.
You didn't even know the building was there.
That's what we want. That's what you want? Yeah.
It's like the data center bill.
John thinks what is the best way people can reach you?
I will have a site up and and a way to get a hold of us with a form fill.
Okay, then.
I'm 55 thanks, guys.
This is a very interesting niche.
I think it's a heck of a real estate idea and real estate play.
It's a great way to have a business pay for your real estate, pay
for your building, and generate long term cashflow and wealth.
So there you go. Thanks, guys. Thanks, buddy.
Great seeing you again.