How Parking Spaces Make Good Investment With Sam Wilson
Episode 448: How Parking Spaces Make Good Investment With Sam Wilson
Parking spaces are an effective piece of investment in real estate. Although a parking space can theoretically produce an attractive return on investment, the investor still needs to purchase it at the right price. On today’s show, Commercial Real Estate Entrepreneur Sam Wilson sits down with host Mitch Stephen as he shares how he fell for real estate and development for parking spaces and how he made a career out of it—developing massive projects and bringing valuable partners and investors he has been working within business development and capital markets. Parking spaces are inexpensive compared to housing and provide a more affordable investment option for real estate. If you’re looking for another area to invest into, then perhaps parking spaces are for you!
I’m here with Sam Wilson and we’re going to be talking about how to stay in the group, how to keep going through this world that seems to constantly want to beat you down, and how do you approach this stuff for the long haul? We’re going to be talking about being tried, true, and staying the course. I’d also like to pay homage to my sponsor, LiveComm.com. It’s all about lead generation plus mass texting, equaling your success. Please check out the homepage and the videos. There’s a reason why I’m only nine days on the market with my seller-financed homes. It’s in large part because of LiveComm and being able to text my clients who I already know because they’ve raised their hand and showed me that they’re interested in my product. I’m sending them a text and letting them know what my inventory is, how to get to it, and how to look at it online. Sam, where are you sitting? What city and what state?
I am in Memphis, Tennessee.
I went to the Graceland. It was a neat experience. I didn’t know what to think when I went there and I didn’t know what to think when I left. If those walls could talk, that’s all I could think.
It’s one of those things you have to go if you come to Memphis because you have to go.
If you were raised in Elvis’ era or anything, you owe it to yourself to go there one time if you’re a fan. I’m not a big Elvis fan, but he was a legend so what the hell. Let’s get back on track. First of all, who are you, Sam Wilson? Why don’t you tell our audience who you are?
I’m a guy that lives in Memphis, Tennessee. I’ve invested in real estate for many years. I fell into it accidentally, which is a short story in and of itself. There was a good Lord that has mercy on an idiot and I mean that, legitimately. I’d sold a company up North and headed South because I hate the cold. I didn’t go far enough South because it’s what’s called Memphis now. I came South and didn’t know what to do. The short of it is I landed in real estate and haven’t looked back. Through that have been iterations upon iterations of what the business model looks like, what we invest in, who we invest with, and all those things. It’s constantly on the move or in flux. Adjusting the market conditions and being dynamic in that regard has paved the way for success for us, so I can’t complain. That’s the short on me.
I can learn a little bit more about you myself without going into great detail. What kind of business did you have and sell?
It was a flooring company. My family is always in the flooring business. We had a big retail store, a 10,000 square–foot showroom. At the age of 21, I had 30 guys working for me which was an experience in and of itself. I’m a non-confident 21-year-old, who never went to school and suddenly, I got thrust into management and there are guys twice my age asking me, “Boss, what do I do?” That was an education. I was thrown into the frying pan early. We grew the company fast. We quadrupled revenues in one year when we opened up that showroom and it was trial by fire. I ended up buying out a division of that company and then ran that until I was 30. I then sold it and headed South.
I’m going to assume you did well when you sold, so you’re looking for something to do with your resources. Is that right?
It’s one of those weird confluences of if I had money and time, which I have yet to make those two match up again in my life. That was a nice place to be.The only way you’re ever going to understand something is to just go do it, get your hands in the mess, and go figure it out. Click To Tweet
Money and time. It can also be a dangerous place to be. A wealthy, decent looking man was still full of piss and vinegar who has a lot of money and nothing to do all day finds very aggressive demons if he’s not careful.
Having a great wife that keeps him in check helps.
You’re stumbling around trying to figure out how to preserve this wealth and what to do with it and you bumped into real estate. What’s your first strategy? What’s the first idea you come up with?
I had no strategy. I woke up one day, I was drinking my coffee, and I saw a foreclosure auction that day. I found the house. I liked the house, went and walked around the outside of it. I said, “Let’s buy it.” Two hours later, I own the house and I made a pile of money on it. We said, “That was fun. Let’s keep doing it.” That is exactly how I fell into real estate. I didn’t know anything about it. I knew construction and the trades.
I’m going to pray for a lot of people who go into their first deal and make a bunch of money on their first deal. They get ruined because maybe they got lucky, maybe they didn’t, but they think every deal is like that.
It’s like gamblers curse. You go gambling and you’re like, “I paid $10,000 in twenty minutes. Isn’t this the way it always goes?” No, moron. I write a book on how to lose money in real estate. I have had my fair share of mistakes and things that I’ve done wrong, and have been to some expensive lessons. Those thankfully were mixed in with the knowledge and skillset to continue to know that what I was doing was the right thing, continue to make money, absorb those losses and keep moving forward.
It didn’t run you out of business. Did you ever hire a coach?
I did. I’ve hired the wrong coaches, the right coaches. I’ve got a coach and a mentor now. I’ve paid more to him than I have to for my college education, but I wouldn’t trade it for the world. I hired the right guy. It’s very personal, one-on-one, and in-depth. It’s always more than I can even get what I needed to be done. Before our next meeting, it’s like drinking from a fire hose because there are different parts of my business I want to flush out. I wasted tens of thousands on the wrong people too, people selling courses from 40 years ago. They did their first deal and they never did a deal again. Now they’re selling guru courses around the country. Those are mistakes you make. I’m not mad about that either. I picked up some things along the way.
Everyone I know has pretty much the same story. They’ve paid for things that work and things that didn’t work, and bought courses that didn’t fit in or the right place for the right market. It’s one of the evolution or part of the path. There is no success without failure along the way. I’ve never met anyone who did that. My first book, My Life & 1,000 Houses: Failing Forward to Financial Freedom. I didn’t know what I was doing at the time when I was writing this. I didn’t even have a title when I was writing it. I was trying to get into words how I was going to fail without going under, collapsing and burning to oblivion. How do you go through and fail but not go under? I read a lot of books. I read Red McCombs, he’s a big car dealer in Texas and he owned the Saints and the Minnesota Vikings, and then Tom Benson was from San Antonio and he owned the Saints.
These are big guys and I read their stories. They put everything they had on the line all the time. For every one story like that, who was the oil magnet? For every one of those ones that could write a book about how they made it, there were probably hundreds of thousands of people dead on the side of the road who did the same thing and didn’t make it. I didn’t want to be that guy. I wanted to be able to fail, but I wanted to be able to come back and recover, put in short order and then get back at it again. I created a thing called the Moat Theory, which was to figure out what it takes you to live.
At that time, it took me $4,500 a month to live. This a long time ago too. I figured out if I could scuttle some of the stuff I didn’t lean, I could get that $4,500 down to $3,500. All I had to do was figure out how to get $3,500 a month to come into my mailbox, and then I wouldn’t have to have a job. That would free up $2,600 hours a year that I could start working on, “What the hell am I? Who am I supposed to be?” I figured the first step was to become financially free at the most modest level. Once you had the $3,500 a month coming in, you’d put a moat around it. You would never jeopardize what paid for that free space. That space that you could go into and you didn’t have to produce shit, you just needed to heal, whatever you took out when you went out there in the last business.
Anything you made over $3,500 was effectively R&D money because if you lost it, you could retreat back inside your moat, drop the drawbridge, come over and pull it back up, and you’d be okay in there. That’s how I figured I was going to fail my way out of all of this shit. The way I look at this is a man only needs so much. I can only eat and drink so much. I don’t need an entourage. I don’t need a Learjet. If I want to use for 1 or 2 days, I’ll rent it. I don’t need a lot. I’m happy. I don’t need a bigger house. I don’t need a faster car. I don’t need anything. It’s not about the money anymore. I figured the first step of getting to where I’m at, which is where I’m happy, it doesn’t mean everybody’s that way, is I needed to get financially free on the most modest level so that I could continue to fail outside that moat as often as I needed to, to figure out how to play the game. Do you go up the same way? You can put it all on the line all the time.
We’re a little bit of both. We’re at the point now where we own some other businesses as well outside of real estate. That is the moat for us. At stages, we’re still gambling. You have to.
When you have it, then you can put it all on the line. When you have very little, you’ve got to put it on the line because everything takes something.
At this point, we’re not betting the farm or gamble on the farm, but there have certainly been periods of my life when it’s like, “This is it. We’re going forward.” You’ve got to make it work.
I was reading your comments here. You were saying, “Action leads to understanding and the only failure is not to try.” Talk to me about that.
We could go 50 different ways on this, but action leads to understanding. What I see a lot of people do and they call it analysis paralysis like, “I’m still thinking about it. I’m still this or that.” I even find that people who are in analysis paralysis are even one, for me, I’m not a bright guy. I’m just a guy that knows how to do it. The only way I’m ever going to understand something is to do it. Get your hands in the mess and figure it out. Everybody wants to sit down and develop this perfect plan of, “What’s my life? What’s my business? What are we going to do with this?”
It’s like, “No. Screw it. Go out, get your hands dirty, and move forward. In about a week, you’re going to come back a much wiser man or woman than you are now, and you’re going give me the playbook.” Here’s an example. I bought my next-door neighbor’s house, right next to me. It’s going to become my office. We’re renovating that. I don’t have the time to manage the contractors and the people. It’s going to be my office. I’ve got this young man working for me. I said, “Alex, I need you to run this project.” He was like, “I don’t know what to do.” I said, “Go over there, make a list of everything that needs to be done. Call all the contractors, get them all in there, and figure this out, then come back to me with a plan.” You’re going to figure this out by taking action. You’re going to talk to these guys, you’re going to look at the problems, and you’re going to come back with, “I know exactly what we’re doing now.” Action leads to understanding. For me, until you stick somebody in the fire, that’s the only way to do it. I find that too many people spend way too long thinking. Stop thinking, get off your duff and do something.
We might be a kindred soul. We are ready, fire, aim guys. We’ll figure out where the bullet is hitting and it’s not on the bull’s eye. We’ll start to move it closer to the center. We’ve got to find out where we’re at now. Right now, where am I hitting? Apparently, my skillset is not that good at this. I landed way over here in left field. I’ve got to move a little more to the right to get to the center of this problem.
Walk that aim a few inches and you’ll start hitting a lot closer to the center of that paper.
What strategies are you doing now in real estate?
I was doing single-family for a long time. I’ve still got half a dozen owner finance properties that are out there. Those are great. I did a ton of fix and flip. I did some single-family rental. I’ve sold most of those off as owner finance properties. In 2018, I took a transition out of that into parking lots and parking garages. I did that all the way until March of 2020. If you can imagine where the pandemic left the parking industry, ball games, concerts, night and weekend traffic, the whole thing, even airport parking, etc.
I noticed that. I used to fantasize about this airport parking lot on the way to my plane every time I’ll be on a flight. I will fly on this overpass and look down on this place. It’s been there forever. It’s $7 a day for that space and it went on for acres. I was coming back into the pandemic and there wasn’t anybody there.
The first of that industry that always gets hit in a recessionary environment is your travel parking, which is fine. The industry is good, but across the larger parking dynamic, we have not seen a decrease in asset prices. We have seen a decrease in NOI, but not a commensurate decrease in asset prices for downtown parking lot, surface lots, and things like that. We’re hoping when that happens, then we’ll be able to go back and continue to acquire. Now, the underwriting doesn’t make sense in the traditional parking models. There are other things that you could get involved in that industry. The particular focus we had with surface lots and parking garage is in central business districts. That’s on pause for us.
Hit pause on that, continue to look around and see what other opportunities are out there. What happened in 2020? The boat and RV industry exploded. I don’t know if anybody is aware of that, but we had a 30% or 40% increase in year-over-year deliveries in RVs. That’s insane. The people that buy boats and RVs, those are longer-term holds, especially on the RV side. We’re developing boat and RV storage. We’ve got some other developments that we’ve got going on now. You say, “That makes sense. We’ll get into that.” Also, we’re looking opportunistically across the country. I fly to Idaho to meet with somebody and look at what opportunities we have out there. There are lots of things that are out there and shaking. Action leads to understanding. This is what I do. You keep moving like, “This is there. There’s that. Let’s keep doing it until we see what happens.” As you sift, the gold nuggets come at the top.
These parking lots, they were all over the country?
Did you hire a coach for that or did you figure that out on your own?
I partnered with a guy out of your home state that knows parking inside and out. I didn’t know squat about parking. I was at a conference and I met him. This was in the middle of a whole bunch of fix and flip projects. I called running an adult daycare because it’s a lot to manage. I met him and I’m like, “This industry is cool. You don’t have tenants, toilets, termites. When you want a piece of asphalt in the downtown area, what‘s it going to do, flood?” “We’re going to wait until the water goes down and then people can continue to park.” “Great. That’s my asset.”
Until the water is only this deep, then they can continue to park.
If there are 6 inches of water, your flagger better be out in the street waving people because that’s costing me money to own that. It was a great asset class and I take the boxes for whatever I want. I love people and I love talking in stuff like this, but I’m also a huge introvert. At the end of a conversation like this, as nice of a guy as you are, Mitch, I’m worn out. Talking tires me out. If you’re in an asset class where your phone doesn’t ring, “Where do I sign again?” I want an ACH in my checking account every month. You can go years with this.
I used to work for some people that owned a few parking garages in downtown San Antonio. I owned a striping company before that. I put the stripes down and put the yellow boxes with the black number in the middle. I did that a lot. I remember doing the math on those parking garages like, “Here I am putting number 831 down and I’m finally finished.” They’re like, “How much a day are these spaces getting?” I went and did the math and it was such a big number. I scared myself at that young age and immediately put it like, “It’s too big for me.” It is a neat business. I have open parking towards spaces where people park anything they want as long as it’s rolling and can be moved at any minute, trailers, buses, RVs, fifth wheels, cars.Action leads to understanding, and the only failure is not to try. Click To Tweet
It’s the most phenomenal business in the world because it required a fence and electronic gate. I like to have a double-wide mobile home there. At least someone is living there so there’s a set of eyes as perceived security, even if it’s not security. That’s where I put my manager. One of the easiest forms of income ever was open-air parking. It amazes me because mine was down at the coast. People were parking in the acidic rain of Corpus Christi, Texas. They’re a $120,000 blue wave boat and I’m thinking, “Who does this?” About 100 people at least do it in my space. It only holds 100 spaces but at $6,500 a month on 100 spaces on it, I didn’t have to pave it or anything. It just got some reclaimed asphalt.
How many acres is that?
It’s 2.73 acres.
That’s brilliant because if you’ve got to think about it, the restrictions of the covenants for a lot of these people, with these oversized RVs inside their HOAs like in my parents’ neighborhood. I have to like, “I’m only here for a couple of hours,” and then the Nazi’s come out and like, “Get out of the neighborhood.” It’s like, “I’m moving.”
Mine was two blocks from a launch called Packery Channel where you get in the channel and you can make your way to the gulf where the big deep–sea fishing was. I had this built-in little clientele that all they wanted was to be right on the path to this shortcut out of the bay and into the gulf. There were a lot of expensive boats just parked out in the shit.
They’ve got nowhere else to put it, then that’s what it is.
It’s all about the level that you’re at too. When I bought that place many years ago, I didn’t have a lot of money, but $230,000 minus the down payment someone would finance me. I could come up with a down payment and $6,500 a month minus what I owed was enough to replace my entire income from my job I had many ago. It was all relative at the time. It’s up for sale now. It’s under contract for $500,000. I’ll move on and it will go into the next level of stuff that I want. I don’t want 65 or 100–unit spaces anymore. To me, if they only have 200 spaces or 250 spaces, it’s not worth my time anymore, but it got me to where I was going. I had storage units. My first one had fifteen boat stalls in front of the park, then there were 28, then 54, then there was another 32. I bought all these small places that I could afford to buy when they came up.
That’s the way it’s done. One step at a time.
Now it’s 1,300 doors, $1,300 people owe me $100. It’s from 1991, just building and rebuilding. You sound like you’re the same thing at grassroots. You took those companies from one level to the next level. Over how many years was that company?
I’m 21 to 30. That was the flooring company. That was nine years. We did that through the ‘08. We went from going with ‘03, we had explosive growth. Hit ‘08, we pared all the way back down to one guy. There was no work. There are probably plenty of readers on this that remember that, everything dried up. It all stopped. We pared all the way down to one guy, turned around, and rebuilt it back up. I sold that in 2012. It took some time and it turned some skills. I learned some hard lessons.
I had a very good friend in the flooring business down in San Antonio who went to experience the same thing. He was then getting ready to lay tile himself.
I did. I traded in. I used to wear a button-down and dress pants to work every day. Mid 2008, I got jeans and work boots back on. It’s part of the way. That’s life. What are you going to do?
At least you rolled your sleeves back up. There are a lot of new people that are reading this. It’s like anything else. There’s a handful of veterans, and as you go down the chain, a whole lot of people are trying to change their life, and trying to find their start. I can remember clearly when I was trying to figure out where I belong. What’s your advice to those guys trying to find where they belong?
The one thing that I’ve found to be consistently true is that you have to wear the world down until it gives you what you want. There are no handouts. Everybody, especially in this day and age are looking for the pill you take, the simple high from watching fast entertainment, turning on your iPad. We don’t have to go to the movie store anymore. Things are lightning speed. When it comes to building, there’s no fast way to do it. You hear of guys that go, “Last year, I was a nobody and this year I’ve got $800 million in multifamily.” What do you freaking do? That’s the exception that proves the rule, that the only other way is to get out there and hustle.
I always say that grit, determination, and perseverance are more valuable than skill. You can find somebody that has great skill, but if they’re missing any of those three, then they’re probably not going very far. Even in athletics, you watched the lazy basketball player. You watched the guy that doesn’t have the perseverance or the one that doesn’t want to do the extra workout. They’re not going to go as far as the guy that puts his head. We call it, “Putting our head through a wall.” It’s a phrase. I’m not sure where it comes from. I always picture it like when the going gets tough, we’re walking up to the wall and putting your head through it like, “We’re just going.”
It’s grit, determination and perseverance. Those are the things that if you don’t possess, find a way to possess them. Go do something, listen to somebody inspirational, find something that instills something deep within you that says that there is no other way. Success for me, it’s not an option to fail or if you do fail, who gives a crap? You failed maybe for the short run, but if you keep going that grit, determination and perseverance will carry you through.
Where did you get it? I know where I got mine.
I grew up very poor. I didn’t know it when I was little that we were poor. I didn’t know that there were clothes that fit. We didn’t have much. I can remember all the way back to my single digits, working on job sites with my dad. We grew up working. The only thing I knew was that when you’re hungry, you find a way to eat. I was blessed with two parents. I’m blessed that they’re still married. They taught us that, “If you’re hungry, you’re going to go to work.” We go to work. We heat our house with firewood.
I spent my winter splitting firewood, fifteen degrees, and hauling wood in the house so we can stay warm. I didn’t know that there was such a thing as central heat and air. I’m like, “What’s that?” We’re up in the Northern Indiana winter, it’s freezing our asses off. I’m like, “Wake up? Did dad build the fire yet?” “I don’t know. I hope so.” You run downstairs, shiver in front of the fireplace, hoping the thing heats up fast. That’s grit. It builds something in you that goes, “This is it. Hell or high water, get in.” This is what it takes to build something. I wouldn’t trade any of those experiences for anything in the world. If I can grow up in a family of decamillionaires or the way I did, I’d pick the way I did because I got something that you can’t take away.
I got mine from athletics. Having a father that was a Marine. There’s not a lot of sympathy there.
I had to be downstairs and seated at the breakfast table at 7:05 on school days. If you’re one minute late, you’re grounded. Any seconds late, you’re grounded. The only watch that matters was the one on his wrist. “Dad, the other clock says 7:04.” “I don’t care. The one that counts is on my wrist and you’re late.” It builds something in you. At that time, I hated it. Now it’s like, “We’re going to do this.” That’s what people need.
People think about the word preparation. It means a lot of different things to a lot of people. What does it mean to you?
In what particular sense?
To learn to take on a new endeavor, a new challenge, a new business.
How do you do that? We talked about this. If I’m launching into something new now, I’m going to probably find somebody else that’s already done it. The phrase we’ve all heard, I don’t know who said it but, “Success leaves clues.” There are no handouts and shortcuts necessarily, but there are smarter ways to get things done. As I’ve aged, I’ve figured out that you’ve got to leverage the relationships with the people around you. Preparation for me is going and finding somebody like yourself or somebody else and saying, “I’m an idiot that doesn’t know anything.” This is how we did parking lots. It’s exactly what happened there. I went to a guy that knew the industry well. I didn’t know anything about it. I said, “I’ll do whatever it takes. What can I do to learn the parking industry from you?” He said, “Here’s what you can do. You can go out and find deals. Here’s how you find deals. Bring it to me and we’ll start dissecting them, then we’ll split them 50/50 and take them down.”
You got into a partnership relationship with that guy where you were doing the work, and he was the expert and had the money. When you split them 50/50, did you have to share in the acquisition price, or was that his job?You have to wear the world down until it gives you what you want. Click To Tweet
I did. We split the deal down in the middle. It was great.
The expense and the income were split down the middle. That guy was willing to take you on. That’s the old Kiyosaki trick, work for hire. The way he talks about, which is a great way to learn a business. Not paying for it, but you’re earning it because you’re burning a lot of hours and your time is valuable.
I burned months. We went through deal after deal. It never made it across the finish line. It was like, “Here’s why this one doesn’t work.” When one hit, it was great. Going back to the question on preparation, that’s something that I do value. Maybe this doesn’t tie in perfectly, but when I think of preparation, I like to be prepared financially for things. I like to be prepared for any mistakes that we might make in my ready, fire, aim process. I want to know that I’ve got enough ammunition to keep making mistakes until I get it right. That’s the preparation for me. I’ve set myself up to where I can go out and take a risk, and not necessarily lose everything in the process, but I can keep risking until I’ve got this dialed in exactly where I want it.
My friend, I want to thank you for taking the time to come by. Parking lots and parking garages. I bet you hadn’t thought of that as an income source out there. The world of real estate is amazing. It has more niches and more ways to go than you can even fathom. Maybe now, this niche was brought to your attention. Open parking or parking lots generate income too. No toilets, no hot water heaters, no termites.
Check it out one day and next time you’re driving down through town and you see, “You can park here for $15 a day.” You won’t drive past at this time. You’re like, “I wonder how many spaces that lot has.” You then start doing the math and then you start going, “This might be better than my little apartment complex business I’m doing.” The trick is how you get one for value add or how do you buy one at a discount. I’d like to thank you for stopping by and get you some Sam Wilson, and learn a little bit about parking lots. I’d also like to thank LiveComm.com. Check it out. There’s a reason why I only have nine days on the market for my houses that I put up for sale. A lot of it has to do with LiveComm lead generation plus mass texting equals success. We’re out of here.
- Sam Wilson
- Moat Theory
About Sam Wilson
I am passionate about Real Estate. I focus on acquiring and syndicating niche commercial assets that cash flow with super stable returns. I love helping others place money outside of traditional investments that both diversify strategy and provide solid predictable returns.
I’ve invested in real estate in just about every way possible from auctions, foreclosures, fix and flip, rentals, hard money, syndication, subject-to, lease options, brokerage, self directed IRA purchases, commercial assets and more. I love all the opportunities that investing in real estate can brings.
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