Ian Burnstein | Surviving Encephalitis, TIGER 21, and Building a Self-Storage Empire

John Corcoran 12:35

So this is what yeah, this is 2008 2009. Okay, so you did have a bunch of residential property at that point.

Ian Burnstein 12:41

I didn’t have the residential. I was out of that. But I had about 10 storage properties.

John Corcoran 12:45

Okay. And how did they react? How did they weather the storm?

Ian Burnstein 12:49

So they, they defined, we bought them, right. And we were making money, then we had almost all the properties, but one was on one big loan. It was actually crazy. The bank at the time, was a private bank out of Chicago that sits been bought. But they gave us 92% leverage. Do you believe that? So we had almost no money in the deal. They came back to us and said, We did appraisals, your properties are worth far less, you got to write us a big check. We said you can have the keys if that’s what you want. We’re not going to throw more money into this. They did what they should have done. And they agreed just to extend and double our interest rate, and we swept all our cash flow over to them, which actually worked out great. And the other deal, we were

John Corcoran 13:32

paying a lot more for the loans then.

Ian Burnstein 13:34

Yeah, we did. But it was again, it was not we did amazing on these properties.

John Corcoran 13:40

Did did that though, when you said when you kind of said, you know, take our bluff. I don’t know if that’s the right phrase. But you basically said like, take the property back. Did you were you afraid that they actually would

Ian Burnstein 13:51

terrified? We had many conversations, you know, they would call us and say you have a problem. And then we’d say no, no, we have a problem. And so we said we’re your best performing asset out there. I mean, we’re making a ton of money still. Yes, appraisals are bad, but we’re still operating while we’re doing. We’re still profitless we’re producing money. Yeah. Yeah. I mean, it’s, we’re least concerned, we’re the smallest concern you have out there. So and it was a non recourse loan, so there was no guarantees. So when the dust finally settled, I mean, we were one of the only guys out there that didn’t have properties or getting back to banks. And so between 2009 and 13, and nine, beginning of 13, we bought almost 70 properties in in eight states, probably on cents in the dollar. Well, and then had to guarantee to have recourse and every one of those personal guarantees, which I didn’t have any money, so it didn’t matter. And eventually, you know, by 2012, we will refinance everything, take off our guarantees and Send back our investors all their money, and then some and we got very lucky. I mean, we sold them a lot of it 2015 And are buying them at, you know, 40 50% occupied with very little revenue, we sold them in, you know, to live them in 2015 at a five cap on pro forma, and does that mean for those that don’t know? Yeah. So it’s, it’s this formula of a valuation. And so we we basically ended up returning, you know, seven, eight times our investors money. Wow.

John Corcoran 15:31

And what do you you said they were 40% occupied. So what did you do in order to turn those around and increase the

Ian Burnstein 15:39

occupancy. So there was a lot going on, there was so much, obviously, so much distress. But a lot of these properties, were going back to banks, and they’re just hiring random people to, you know, trustees or people to oversee these properties and who had no idea what they’re doing. We had a very, very strong management process in place. And so we were able to not only get these things full, but charge higher rates.

John Corcoran 16:01

So what it what did that, like, what was the strategy there?

Ian Burnstein 16:06

So website marketing, internet marketing was huge. We hired someone, so we spent a ton of time on it. Revenue Management was really the key, you know, with storage, you’re signing monthly leases, right? You’re not signing any long term leases. So if you wanted to, if you’re not scared about losing business, I mean, you could change people’s rates, you know, every three to six months, if you want, every month, if you wanted to, on the thinking there is for someone raising somebody’s rate, you know, three or $4 a month, they’re not moving, right?

John Corcoran 16:38

They’re not gonna come in and move all their stuff. Yeah. So,

Ian Burnstein 16:41

you know, at one point, you know, we had 35,000 tenants, something like that. And, you know, you can do the math, if you increase everyone’s rate, on average by four bucks a month. Yeah. I’m 35,000 times 12. Significant. Yeah. It’s you just created, you know, several million dollars of value.

John Corcoran 17:03

Right. Right. And, um, so at least fairly stable tenants in the storage space.

Ian Burnstein 17:09

Yeah. So like the, the average tenant was, at the time, when we were really deep into it was saying about nine to 10 months, and then the business, you know, the, the commercial clients would stay for three, four years?

John Corcoran 17:22

And is there anything you can do to change that? Or is that just the nature the nature or now it’s definitely longer longer now? Yeah, it’s,

Ian Burnstein 17:31

Uh, that really, I mean,

John Corcoran 17:35

right? They want to Yeah, right. You could reduce it down to a buck. But maybe you had a, we talked about this before, I might be getting the time frame right here. But you had a, you got a form and encephalitis? Yeah, that was a health scare. When was this?

Ian Burnstein 17:53

So that was when I was working with the guys at the, you know, back in 2000 2006. So that was in 2003. My wife refers to it as the brain explosion of 2003 was in the best shape my life, just run a marathon. I just got a form of I got a flu bug that I couldn’t kick and my body got the way they described it to me as I got mixed messages. From fighting off the virus for so long, it was a virus infection. And it sent mixed signals. And so it basically did deteriorated the myelin sheath that kind of, you know, the rubber that goes around the coil and wire, electrical wire, and it it kind of eroded and it caused a grand mal seizure and a form of encephalitis. And I was in a coma for eight days. And my pain basically didn’t work for over a year. And those guys to their credit, I mean, they, they stuck with me, they paid me they were unbelievably loyal to me. And, I mean, they thought I was that. I mean when the doctors, and once they realized I was gonna make it, they’re like, you’re going to be there for six months. You’re not even going home, you’re gonna be in total rehab, learning how to walk, talk, read, right, tie your shoes. And, you know, the doctors still they study, they talk about my case, still, they can’t believe how I

John Corcoran 19:06

go back. Wow, wow. And so it was literally learning how to tie your shoes, I’ll walk all that.

Ian Burnstein 19:13

I mean, I was I really expected but but I will say you know, six months later, you know, everything about it was hard. I mean, anti seizure, medications depressing on steroids, that makes you angry medication, depress the hell out of me and I could barely get out of bed. And knowing that I had deficiencies was very debilitating and frustrating. And so ultimately, my wife just kicked my ass to get better and I got it really took occupational therapy very seriously. I mean, literally four or five months later, like doing third grade workbooks and not getting the answers right. I mean, that’s how bad wow that’s

John Corcoran 19:56

crazy after having been to law school and everything.

Ian Burnstein 19:58

Yeah, number guy for a real estate. I mean, it was an trying to hide it. I let people know. But it was

John Corcoran 20:05

pretty clear and being worried whether you would get your full mental capacities back ever imagined.

Ian Burnstein 20:11

I mean, the crazy part is everybody to ask you, you know, do you feel? Do you think you’re different? And I said, here’s the real answer like, Mike, your brain could trick you like I could. I could have been a totally different person before the, you know, the injury daftar as possible, right? Like, yeah. Yeah.

John Corcoran 20:33

When did when was the the transaction to sell the business?

Ian Burnstein 20:39

So my big transaction was 2015 2015.

John Corcoran 20:42

Okay, and you and you also had a kidney transplanted into you? That was four years ago after that after the sale of the business. So before we get to that, you sell the business. What was that like? Especially after having been through what you’ve been through?

Ian Burnstein 21:02

Hard to even put into words, the feeling, I remember the moment

John Corcoran 21:07

you’re signing the paperwork, I was just looking on LinkedIn, and Sara Blakely, of Spanx just sold her business, a $1.2 billion valuation. And it was just a picture of her signing the paperwork with this red backpack that she’s got, like this iconic red backpack that she like, has taken with her everywhere.

Ian Burnstein 21:24

Yeah. So I remember being at our attorney’s office, you know, the couple days before, you know, huge conference room, you know, probably 100 foot table covered a document was 37 properties that were so it was like an all day affair signing all the documents, and then we got pictures of it. And then, you know, by the time it takes to we had some loan things we had to deal with. And it was a couple days in between. And I just vividly remember being in our conference room, in our office with my partner, and our CFO, and sitting at the computer, keep hitting refresh

John Corcoran 22:04

on your bank account.

Ian Burnstein 22:07

Finally, it’s it again, he’s like, it’s here. Oh, my gosh, well hit the champagne. The Office screaming it was, it was surreal. Like I couldn’t even believe it. I couldn’t get over it.

John Corcoran 22:20

Now, I imagine you called the bank and said there’s gonna be a bigger figure coming in. Because I’ve heard stories of people selling a business. They didn’t tell the bank before. And then it caused all kinds of problems. Yeah.

Ian Burnstein 22:33

Yeah. Yeah. It was a long process to get that at the time that we originally thought we were going to do. We were working with investment bankers and maybe taking on an institutional partner. Thank God, we didn’t do that. It was a waste of time when we won’t work with them for six months, flew to dog and pony show around the country. And we’re kind of sold a bill of goods when the investment bankers that we didn’t get anything close to what they suggested we would.

John Corcoran 22:56

So where did the ultimate buyer come from then?

Ian Burnstein 22:59

So actually, just before this, I was talking that we there’s a broker based out of Houston, who’s the top guy in our space and institutional brokers now with Newmark that by name Aaron Swartz and his team kind of Cox. And we’ve sold over 100 properties with them. We sold over the persona between five and 600 million and we sold with them. As far as an institutional seller goes, I mean, they’re your that’s who you

John Corcoran 23:30

want to work with. And so he connected you with the buyer, then, yeah, we

Ian Burnstein 23:33

went through a process. Because we had shown the properties before we were worried about getting home and getting a negative image because they didn’t sell. So we kept it to like, we agreed on a list of about 2530 buyers, that were most likely. And there was some decent competition, it came down to three guys real real tight, and we were just, we actually took a price it probably was, I recall correctly, it was not the highest price, but at the highest likelihood of closing.

John Corcoran 24:02

Interesting. Now you had started your co founder and president of an industry group for your industry. And I’m fascinated by that. You know, what? Why did you do that? Did you find that there wasn’t a an industry group to represent your interests? And how did that influence your business?

Ian Burnstein 24:22

Yep. Great question. So it started out really as a form of survival. So back in May kind of started in late October 2009.

John Corcoran 24:33

It says on your LinkedIn, that not not a great time,

Ian Burnstein 24:37

right. That’s when the business launched. But we started earlier, where I went to, there was probably nine or 10 other guys in our group who had similar sized businesses, and I just said, listen, we’re getting hammered. There’s no way we’re going to raise revenues right now. One thing we do to improve our situation is to do better on expenses. And so I went to a bank to our main vendors and said, Listen, if I could get you all of our business, will you give us a discount? And every one of them said, Yes, obviously. And so I went to my partner, I said, Listen, I’m onto something here. Everybody seems really like this. We should get paid to do it now. And so I went to a bunch of vendors, and I cut deals, and I said, I’m gonna create a website. And we remember this very well, like we went to, if you go to a storage conference, ordinarily, like if you went now, there’ll be three 4000 people there. So the conference in 2009, it was in Colorado Springs. And there was like, 210 people there. Literally that bad. Yeah. Yeah. And we somehow convinced almost all of them to come to dinner with us, and we pitched our, our deal and, and like, I go to this whole presentation, like worked on for weeks, and I’m finished. I’m like, All right, who’s with us? And crickets. Word. I mean, we just paid for dinner for like 100. And we couldn’t afford it. Probably. It was about 50 180 people have dinner. And all of a sudden, the guy who’s the godfather of storage is a guy named danger. And again, it was just an amazing guy, and a real mentor to my partner, David Blumenfeld. And he stands up at a time he had a company that’s since going public and was our buyer. And he’s like, You store it’s in all five 600 locations full price we’re in and the next guy stood up, yeah, well, with our 200 location.

John Corcoran 26:31

I’m picturing like, a guy in the bathroom being like, like, starts like they’ll clap.

Ian Burnstein 26:40

That’s basically what it was. And, and then we, we just really grew and as we got bigger and more, you know, well known out there. And people, you know, wanted to be get our endorsements. You know, we started on credit card processing business that we sent, sold, started and insurance was that we’re an offshore insurance company, we’re 25. The top 50 operators are our partners. You know, we’re selling 500,000 policies a month, still, to this day. And it’s been great. And we still the business going, I’ve got a great leadership team there. And we’re doing another online conference here coming up, first week in November.

John Corcoran 27:17

It’s something that that started because you have an itch and need to save your costs. And it ends up being a business in its own right.

Ian Burnstein 27:26

Yeah, I mean, when we had our business, I mean, no, money was not great, you know, in 2009, right. I didn’t take a salary for almost four years, right. This business at one point, I mean, with the credit card processor business, I mean, it was, I mean, our overhead was 200 grand. And I point him in the business was making a cup come over to the close to a half million dollars a year.

John Corcoran 27:54

With these. I’m at the storage business owner. Okay. Yeah. Oh, wow. I want to I want to get to a couple of things before before we run out of time. So first, you ended up having a needing a kidney transplant a couple of years after selling your business. How, how did that happen? And what was that experience like?

Ian Burnstein 28:18

genetic disease called polycystic kidney disease? I knew I needed it. You know, out of nowhere, you know, in 2016, I’ve been doing great I did everything I needed to do. I was you know, eating right. I was pan vegetarian, which was not fun for me. I was on a drug trial and all the sudden my numbers every month, I went to the doctor and they had me come back the data every month, every month, my numbers got worse. They put me on a I was able to do it to go below 20% Can you functionality to get on the list. So he’s a city, hopefully you get one bad reading and then you can be on the list. And if they’re on the list for years, every month I got worse. My wife went in and got tested. She was a perfect match. Maybe promise I would take hers. I said okay, cross my fingers. Went on that day, did a Google search and found out the shortest waitlist was University of Toledo. And it’s only an hour and 20 minutes from us.

John Corcoran 29:13

And I remember when when Steve Jobs had this he moved to a different regions he did you have to do that you have to move

Ian Burnstein 29:21

on as many lists as you want. You can Okay. Yeah. And then ultimately, so I’ve been on the list for a year if you want you can move your priority or time served. You can move that over to another state ago. I got on the list on a Tuesday. And I was going to send in my form of sitting on my desk to move my priority over to Ohio to Toledo and my wife and I were going to dinner with the head of transplant from Henry Ford where I was going to where I thought to get the transplant. They had a two to seven year waitlist Toledo’s 18 to 30 months and I already had a year served so My wife said that we’re going to dinner with them Thursday won’t make a difference. When we ask them Thursday what they think at Toledo so we go to dinner we hand them over a big check we give every year and they they said Toledo is great. You should do Toledo shorter list, I would do it. And so literally sitting on my keyboard in my office, I was going to sign it and set it back Friday morning and get up to get ready for work and have a shower in my robe and my cell phone rings at 615 in the morning and it was University Toledo saying they had a kidney I had been on the list for two days. Wow.

John Corcoran 30:34

Yeah. And tell us about so you go in you you go out you have to rush over there I guess like drop everything and go into surgery and have a kidney implanted. Yeah, yeah. And and you become friends with the the father of the 26 year old man who died

Ian Burnstein 30:54

you know kind of guy Witzig son was named Tyler wet sick. We met them face to face but we we email and talk with some good frequency. You know it, the mom is challenged with it. It’s not you know, I get it. Not everyone you know, some people never want to meet their recipients or, or vice versa. It gives him great comfort. And so I want to respect that. He actually gave me this huge picture of them sitting next on my monitor at home and I think Tyler every day really special. Before we

John Corcoran 31:35

wrap up a couple more things to wrap up with the your father’s clinic. I think he started it right.

Ian Burnstein 31:44

So my father was the last eight years of his life, he was actually going to a homeless shelter and treating patients every Wednesday, he was a doctor, back to his cardiologist, they lined up around the building to see him every week. He touched a lot of lives. And and so so he was into this full time, he decided when he turned 60 He was into it, do his own clinic and open up a whole clinic and do it himself unfortunately, got all the paperwork done was ready to go is actually named after friends of his who had passed away from cancer. And he ended up getting a stage four lung cancer diagnosis and never saw it happen. So my family and I with the help of the minister at the, at the homeless shelter that my dad was so close with where we went, we ended up opening. And we started out modestly, you know, we were at a budget of a couple $100,000 A year and we’d see you know, five 600 patients here all for free. And then after I sold my business, I decided to get a lot more involved. And we actually got a massive donation, we opened up a new facility. And this year, we’ll treat somewhere between nine in 10,000, patients give away 10 or $11 million with a free health care all for free. We’ve got about a budget of about 750,000 in which we were able to give you know it’s only mostly our budget is we buy some medications, we get a lot of donated, we have our staff, but we own our building free and clear. And we would expect

John Corcoran 33:24

no less from you by the way. I would expect no less from you, by the way, that would be the case.

Ian Burnstein 33:30

It’s it’s incredible. You go there and you feel like the world is good place. It’s what we what we’ve accomplished, we just got to we actually got our biggest grant yet we just got a $700,000 grant to vaccinate the

John Corcoran 33:44

community. Oh, wonderful. Very cool. Very cool. It’s great that you do that. And then tell us about TIGER 21. It’s a really interesting group of, you know, founders who have exited a business and want to learn more about managing their money in a WISE and WISE way and maybe getting involved in initiatives like the clinic that you mentioned.

Ian Burnstein 34:04

Yeah. So it’s, uh, you know, I didn’t really even know what it was when I sold my business, I had three investors who really pushed me to join. And so it’s kind of like a high net worth individual group where you learn to kind of four components in meetings. One is wealth preservation. Two is estate plans, and how to basically not mess up your kids. Three is deal flow, and then for his philanthropy, and so you it’s a safe place, you know, we all sign NDAs and we really can share a lot of, you know, kind of deep dark secrets as well as you know, financial information that you know, how we can do things to help our families, help our communities ourselves. But it’s a great access and a great network where you can really get things done and some really impressive people.

John Corcoran 34:55

Yeah, very cool. And so you went from being a part of it. then becoming a chair.

Ian Burnstein 35:01

I was going to be a member, a good friend was going to be our chair. He hated doing it. So I fired him and said, do me a favor, you know, you’re not going to enjoy this. And so I did it myself. It’s cool. I love it. I actually love doing I love it.

John Corcoran 35:18

That’s great. That’s great. Yeah, this has been great. Where can people go to learn more about you and connect with you? 

Ian Burnstein 35:24

So you can either Yeah, best way is just to go to, email me at ianspmadvisorsllc.com. Or, you can even go to www.sba.com. Excellent. And thanks so much. Thanks for having me.

Outro 35:41

Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at smartbusinessrevolution.com. And while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.