Joseph, Founder and CEO of Neighbor.com, is reshaping the $400 billion self-storage industry through his innovative marketplace. With $65 million in funding from esteemed investors like Andreessen Horowitz, Fifth Wall, and key industry players such as Airbnb, Uber, StockX, and DoorDash, Joseph has propelled Neighbor to the forefront of the global storage market. His leadership has expanded Neighbor’s user base to cover all 50 states, offering an unparalleled range of storage solutions. Prior to Neighbor, Joseph honed his skills at Bain & Company, Sorenson Capital, and in the office of the U.S. Senate Majority Leader. Beyond his professional successes, Joseph treasures moments with his wife and six children.
Here’s some of the topics we covered:
- Neighbor.com & How They Branched Out
- The Inside Baseball of Neighbor.com
- What The Office Space Can Do To Earn Income
- How The Office Space Is Keeping The Lights On
- Maximizing All Money Making Potential From a Property
- What To Do With Extra Space In Multifamily Assets
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
00:00:16:29 – 00:00:40:05
Rod
Now here’s your host, Rod. Welcome to another edition of Lifetime Cash Flow Through Real Estate Investing. I’m Rod Cleef, and I am thrilled that you’re here. And we’ve got kind of a unique conversation today. A unique guest today. His name is Joseph Woodberry, and Joseph is the founder and CEO of Neighbor Gqom, which is a fascinating concept that I’m really excited to share with you guys or have him share with you guys.
00:00:40:07 – 00:00:53:14
Rod
And I think you’re really going to enjoy the conversation. It’s really about maximizing revenue and ROI on an investment and increasing your A.I on an investment. So I think I think you’ll get a lot of value. Joseph, welcome to the show.
00:00:53:16 – 00:00:55:01
Joseph
Yeah, thanks for having me.
00:00:55:04 – 00:01:04:08
Rod
Absolutely. So why don’t you give us a little background on you maybe to start and then talk about neighbor neighbor, ICOM, great name.
00:01:04:11 – 00:01:28:28
Joseph
Yeah. So I came out of the the kind of private equity consulting world worked for a private equity shop here in Utah and then for a consulting group called Bain and Company out in Texas. And then we started Neighbor with Myself and two other co-founders as neighbors, a peer to peer storage platform. We’re the we’re the only storage provider in all 50 states at this point.
00:01:28:28 – 00:01:53:11
Joseph
But it started out as a very small concept where individuals could rent out space in their home or their garage, very Airbnb style, and they could earn extra cash flow on the side. My co-founder actually had the idea because he had this need himself, he needed storage and had a pretty bad experience where all the units caused by to him were full and they were all going to charge an arm and a leg.
00:01:53:12 – 00:02:03:05
Joseph
So he found a friend to let him store in his garage. So we kind of turn that into an idea and it’s just taken us all across the country and it’s been a lot of fun.
00:02:03:07 – 00:02:20:26
Rod
So you before we started recording, you, you kind of alluded to some of the things that are possible in your on your platform. So why don’t you elaborate on those? So what sorts of clients would benefit from neighbor e-com? And give us some of the examples of some of the uses?
00:02:20:28 – 00:02:43:10
Joseph
Yes. So as I mentioned, we started in residential and that’s that’s grown all over the place. And residential. What it looks like is you have a driveway. You rent it out. We put your neighbor’s boat on your driveway. You earn a few thousand dollars a year in ancillary income, or we put your neighbor’s boxes in your garage. You earn a few thousand dollars in ancillary income.
00:02:43:12 – 00:03:10:14
Joseph
Then as time went on, we started branching out into other real estate types, and they’ve just taken off. First, we branched into small businesses assemblies. So we started allowing gyms, nail salons to to rent out space. This became really big in COVID as things were shut down and a lot of these businesses, neighbor kept the lights on. We had gyms in L.A. earning $50,000 a year on our platform, and it paid their lease for them.
00:03:10:16 – 00:03:19:29
Joseph
And they also used it as a way to kind of get into their community. It’s great to have these renters come by. They also find out about your business and all of a sudden they’re shopping at your business as well.
00:03:20:01 – 00:03:31:17
Rod
So, like they had it they had an empty room or a couple empty rooms and they allowed, you know, you basically you’re kind of like a subletting kind of a scenario here. Right. Yeah. Wow.
00:03:31:19 – 00:03:57:19
Joseph
Yeah. Last couple of years, you know, real estate trends just kind of drive us. So you’ve had a lot of REITs and large portfolio owners looking for ancillary income, and it’s a big focus for them. And so we’ve we’ve really gone hard and to retail and multifamily. So a lot of the largest billion dollar retail and multifamily routes use us as kind of their main source of ancillary income.
00:03:57:21 – 00:04:18:29
Joseph
We’ll go on, we’ll do a full property analysis across all of their, you know, 300 properties across the country. We’ll tell them which ones we can monetize for storage, and we’ll take storage lockers they’ve already built or parking spaces that the city made them build and we’ll rent them out for vehicle storage or self-storage. And you can earn millions of dollars and ancillary income to your portfolio.
00:04:19:00 – 00:04:40:26
Rod
Wow. Yeah. You know, in the multifamily space, very often there’s extra land, there’s extra parking spaces, there’s their basements that aren’t being used, buildings that may not be be big enough to throw another unit in. And and they’re just sitting there. And in fact, we’re buying an asset right now in San Antonio that’s got some space like that that that could probably work.
00:04:40:29 – 00:04:59:02
Rod
So so yeah so somebody can rent their garage out. Somebody can rent a room in a building out, rent a bit of a room in their house out. I suppose pretty much anything storage related either covered in closed on enclosed parking, whatever. It all it all applies then. Yeah.
00:04:59:05 – 00:05:25:09
Joseph
Yeah, that’s right. It’s, it’s I mean it’s really about efficiency here. We storage is such a huge category does, does about $50 billion in annual revenue and we’ve now we’re spending about $5 billion a year just on building the industry is, and building new storage and yet there’s all this space already sitting there built and why don’t we use that more efficiently?
00:05:25:09 – 00:05:44:20
Joseph
And neighbors the platform that finally brings those together. We have millions and millions of renters coming to our site every year in we’re in every city in the country at this point. And so we can take your property and we can just pair that with those renters and then we don’t have to build so much storage. Let’s just use the space we’ve already got.
00:05:44:20 – 00:06:05:04
Rod
Well, you know, I mean, my brains kind of this is brand new to me. And I wasn’t really even prepared for this interview today. Full disclosure, I’ve had a lot of other stuff going on. And, you know, I was it’s kind of peaking some thoughts with me because, you know, I’d love to talk to you about what you feel like is going on as far as trends in the commercial real estate space right now with what’s happening economically.
00:06:05:04 – 00:06:15:13
Rod
I’d like to go there next. But one of the pieces of that is there’s a lot of office in trouble. And I would see I could see, you know, potential solution for some of that with your with your platform.
00:06:15:18 – 00:06:42:08
Joseph
Yeah. Office has just been hammered with occupancy rates in some cities below 50%. Right. And do you look at the prices that some of these office buildings are selling for? And it is, you know, 20% of the prior value and that presents a big opportunity for space change. I think people are looking at this. A lot of people’s mind goes office to crazy, right?
00:06:42:11 – 00:07:06:19
Joseph
There’s certainly buildings that that works well for. I’ve been in a lot of conferences this year where it’s been interesting listening to two guys talk about office. TERESI And it seems like most of the guys that talk about it say don’t do it. They’re like, right, Would you buy the building for 50 million? And you got to put 50 million into it just to get the plumbing and the right place aren’t built right and the windows don’t work.
00:07:06:19 – 00:07:18:23
Joseph
And it can be very, very costly to do a resi conversion. So it really works in these like downtown high density and downtown Manhattan. And you can make an office Tarazi work.
00:07:18:25 – 00:07:39:08
Rod
Right now it’s extremely expensive because they’re not plumbed for for residential they’re not they’re not wired for residential. The ingress and egress has got to be there. Maybe their fire restrictions, hallway sizes, there’s so much to it. It is very complex. I mean, you know, hotel to residential conversion, that’s a whole different story because a lot of them have have a little kitchen or whatnot.
00:07:39:10 – 00:08:01:18
Rod
But yeah, office is very difficult. Are you seeing any operators utilize, you know, low cost office purchases to to start you know, I’ve seen office to storage conversions complete storage facilities created out of office. But have you seen have you seen anybody use your platform yet for, you know, utilizing some of the space for storage.
00:08:01:22 – 00:08:22:14
Joseph
We have in fact we’ve got a number of different groups that neighbor and they basically focus on finding office or other properties. They converted to storage and then neighbors kind of their front end. So we do all the customer management customer acquisition. We basically run the place for them and they just get to go make the IRR off the property.
00:08:22:20 – 00:08:48:22
Joseph
And honestly, we’ve dipped into it with neighbors, actually got a little fund on the side where we work as investors. Well, we use our data because now we have all this perfect data where we can layer a heat map on where all the renters are coming from in a city. We just go zero in on that location and then we go find a distressed office property in that location and we buy it.
00:08:48:22 – 00:08:58:06
Joseph
We convert it to two storage, we list on the platform and get it to 90% occupancy very quickly. And there’s a great arbitrage opportunity there.
00:08:58:11 – 00:09:18:17
Rod
Oh yeah, for sure. Wow, that’s exciting for you guys. So to talk about how the platform actually works, I mean, what would you compare it to? Would you compare it to an Airbnb or an Uber or something? Does it do people self-police it where they give each other ratings and all that and like those platforms? Can you describe it a little bit?
00:09:18:18 – 00:09:44:07
Joseph
Yeah, it’s very similar to the marketplaces you’ve used. Okay. When a host signs up, we walk them through a slow. We ask them a bunch of questions about their space for our large enterprise partners, you know, big multifamily reads. We actually have a team that will do this for them and kind of on board them in bulk and and we’ll price each space will help determine the right price.
00:09:44:09 – 00:10:07:19
Joseph
And then we ID verify every host on our platform and then we publish them live. The renters come along, we collect a lot of information from the renters, exactly what they’re trying to store, how long they want to store it. All that information gets communicated to the host when they place a reservation. And then we handle like all the payments we do, all the messaging.
00:10:07:19 – 00:10:27:19
Joseph
They’re done on platform messaging. We also handle and this is something to think about in storage is, you know, storage operator What happens if a storage renter stops paying you actually have to, you know, just get rid of the items. You have to run a formal auction process that that’s different In every state. We do a 100% of that on behalf of our hosts of it.
00:10:27:20 – 00:10:28:09
Rod
Oh, wow.
00:10:28:14 – 00:10:42:24
Joseph
The if a renter, this doesn’t happen very often, but if a renter decides to stop paying, we actually cover the payment. So we’ll keep paying out the host even though we’re not getting paid and we’ll go and take care of disposing of those items.
00:10:42:24 – 00:10:44:10
Rod
Wow, that’s huge.
00:10:44:13 – 00:10:45:27
Joseph
So it’s huge.
00:10:45:29 – 00:11:00:11
Rod
Yeah, that’s huge. Love it. How do you market your company? I’m just curious. This is for my own edification. How do you get it out there that this is even available? Because I had never heard of it. So of course, that doesn’t mean anything because I’m kind of living I live in a shoebox. But but yeah, how do you market this thing?
00:11:00:13 – 00:11:29:04
Joseph
We were across all the all the marketing channels, you know, we’ll do TV, billboard, radio, Digital. But, you know, an important piece for us is now that we’re in again, we’re the first storage provider in the world to operate in all 50 states. You look at public storage, extra space storage, there are in 39 states. And so with a footprint like that, we can really start to make an impact on SEO.
00:11:29:06 – 00:11:42:15
Joseph
So we have a huge kind of organic SEO where when someone searches Topeka, Kansas, storage or downtown Washington, D.C. storage, we can pop up one of the top results.
00:11:42:15 – 00:11:43:14
Rod
And that’s great.
00:11:43:14 – 00:11:45:19
Joseph
Renters that are looking for that.
00:11:45:22 – 00:12:02:14
Rod
Nice, nice, nice, nice. So yeah, I’m all about marketing, so that’s why I ask the question again. That was more for me than anything else. So. So talk about talk about the trends that you’re seeing because obviously you’ve got you’ve certainly got your finger on the pulse of the storage market, but in probably commercial real estate in general.
00:12:02:14 – 00:12:13:10
Rod
So maybe you could talk about what you’re seeing, what your thoughts are, maybe your opinions on where we are economically in commercial real estate and what you feel like the horizon looks like.
00:12:13:12 – 00:12:40:13
Joseph
Yeah, I mean, for first and this may sound like stating the obvious, like who who doesn’t know this, but for me the story is just interest rates. I mean, that’s what you’re seeing common across all of them. Office is obviously unique in that they’ve got historically high vacancy rates. But I just saw a chart on multifamily where it showed that we’re hitting the highest delinquency rates in multifamily that we’ve seen.
00:12:40:13 – 00:13:04:03
Joseph
And like how do you how do you make that? How do you pair that with the fact that we’re also at historically low vacancy rates? Multifamily is doing very well from a vacancy standpoint. So why are people going delinquent? And I think it’s because properties were underwritten at a certain in a certain interest rate environment and now term loans are going to start coming due.
00:13:04:05 – 00:13:06:19
Joseph
2024 is supposed to be the big year for that.
00:13:06:19 – 00:13:16:09
Rod
Are you a link we see in the operators, not the tenants, correct. I okay. I was I wasn’t tracking you. Yes. We’re seeing we’re seeing multifamily deals go south. Please continue. I apologize. Okay.
00:13:16:16 – 00:13:29:24
Joseph
Operator delinquency and. Right. So I think I think multifamily is an even more interesting story than office because office you can point to the vacancy rates multifamily, you can’t the vacancy rates are low right now.
00:13:29:27 – 00:13:48:02
Rod
Well, I can I can tell you why it’s happening. It’s so many of these guys got bridge debt. You know, they got they got adjustable rate debt and the rates went up and they’re in deep trouble. I mean, I’ve got a couple of myself we’re dealing with. We’ll handle them. But a lot of operators got crushed. That and insurance has gone way up.
00:13:48:04 – 00:14:09:14
Rod
You know, taxes have gone way up. You know, in the yeah, we are at record occupancy, See, But, you know, the other thing I’ll tell you, I’m kind of stealing your thunder here, I suppose, but I want to interject when I realize what you were talking about is, is, you know, these C class assets are in trouble, too, because that demographics are getting killed.
00:14:09:16 – 00:14:21:11
Rod
You know, I go to the grocery store and I’m like 150 for that. Are you kidding me? And and, you know, and they’re just getting killed. So I think that’s a component as well. Anything you want to elaborate on what I just said.
00:14:21:13 – 00:14:49:28
Joseph
But I just add in there the rent factor as well. Like you saw people start to get in trouble in 2023 when rents were at historic highs. Now the rents are starting to come down and more term loans coming due 2024, I think is going to be as you mentioned, I’m bearish. Yeah, I’m bearish on the prospects. I think the economy will start to recover, but you’ll see some lagging effects in commercial real estate that won’t be pretty.
00:14:50:00 – 00:15:15:16
Joseph
And I think there’s you’re going to see two types of operators show up here. There’s going to be the operators where like the easiest thing to do on some of these, it’s just going to be will walk away property. But if you can hang onto your shirt and find a way to to to bridge the gap on the property, it’s going to put you in all the better position, you know, three years from now when sale prices come back.
00:15:15:19 – 00:15:42:12
Joseph
And so I think that’s why you see these sophisticated operators that the operators that own large portfolios, if you listen to their earnings calls, their public company earnings calls, they’re talking about ancillary revenue because they’re saying we’re going to be a good operator, we’re going to find a way to monetize the property. We’re going to get through this even though we might be upside down and we’re going to come out the other side looking like a genius because our returns come back.
00:15:42:14 – 00:16:04:21
Rod
Yeah, I will tell you, you know, the catch phrase right now is survive to 25, right? That’s the catch phrase in the industry. But, you know, I will tell you, I see incredible opportunity. Like we’ve got an asset under contract right now. We’re assuming a 4% loan, approximately seven years left on it. And the guy just got in trouble.
00:16:04:21 – 00:16:25:08
Rod
And, you know, this economy has as has created some of this and just screaming deal that we’ve got us under contract for 26 million, we’re getting it for 20. Just a screaming deal. But but I think there’s going to be a lot more of that. I think, you know, we’re going to see some of these multifamily assets come down the pike that that these guys just can’t hold on.
00:16:25:08 – 00:16:30:03
Rod
And we’re going to see some real opportunity. So I don’t know if you feel the same way, but.
00:16:30:06 – 00:16:52:20
Joseph
Well, one one player I’d call out here that I think is has long been a very innovative player in the space is X are the great job of they’re kind of very forward thinking. I was just listening to one of of their kind of earnings statements and they talked about how they’re going to do, you know, eight figures in ancillary income this year.
00:16:52:23 – 00:17:26:13
Joseph
Now they’re one of our partners. We’re a piece of that. They’re you know, we’re a seven figure piece of that that they’re counting on, you know, for us to deliver for them. And so I love when big operators like that, the pictures of the world, they they’re progressive, They’re forward thinking because this is an industry that it’s we’ve been doing commercial real estate for a long time, so it can be quite archaic and there can be a lot of old processes from ten, 20, 30 years ago.
00:17:26:15 – 00:17:46:00
Joseph
Legal approvals and all of that. And I think it’s the operators who who are building real estate for the 21st century that are really capturing a lot of the gains right now. And they’re forward thinking and they’re willing to think about property. Some people can’t get beyond just a core use case. They’re like, this is what I do is my core.
00:17:46:00 – 00:17:48:17
Joseph
I can’t think about them. But smart.
00:17:48:20 – 00:17:52:22
Rod
No, no creativity, no creativity. Bottom line. Yeah.
00:17:52:25 – 00:17:57:14
Joseph
Yeah, I own a property. How can I make the most money off of that property possible?
00:17:57:15 – 00:18:17:01
Rod
Yeah, Yeah, that’s the name of the game. That’s the name of the game. Now, I love it. And you know, you’re making really making me think as well. And, you know, we’re considering solar on that asset that I just described. We certainly have a parking, you know, we have potential parking for it. We’re definitely going to do ancillary income on the parking in the number of the spaces and so on and so forth.
00:18:17:01 – 00:18:38:03
Rod
But, you know, if they don’t get taken, it could be an opportunity there with neighbor e-comm, for sure. You know, so so really what we’re talking about here is full property monetization. Yes. It’s like looking at every possible ancillary possibility for additional revenue.
00:18:38:06 – 00:19:05:13
Joseph
Yeah. You mentioned solar, which which is exciting, especially for people that have a large like roof plate warehouse that’s doing a lot of solar right now like vehicle chargers think are a popular option. I mean, electric vehicles are just becoming more popular. And unlike the gas station, infrastructure charging is not built out for that. It’s a world where there’s lots of cars and no gas stations.
00:19:05:15 – 00:19:14:19
Joseph
And so I think a lot of properties are finding they can they can make ancillary income by having vehicles, charging stations on their on their property.
00:19:14:22 – 00:19:29:17
Rod
Although I will I will throw this in. I will throw this at I don’t know if you saw the news. There’s a lot of people pissed with the cold because their vehicles aren’t charging. I just saw that there’s been a lot of a lot of scuttlebutt about that. And then we started to please continue. What other thoughts do you have for for monetization?
00:19:29:17 – 00:19:30:18
Rod
For monetization?
00:19:30:20 – 00:19:57:00
Joseph
No, no, I, I think that that just highlights the highlights. The state of the industry is like there’s a lot we’re still learning about electric vehicles and the upsides and downsides to moving in that direction. And then of course, you know, we work with a lot of people to do to do storage monetization, which I think often feels very adjacent.
00:19:57:02 – 00:20:14:02
Joseph
It’s easy to understand. It’s very similar to kind of the core operations of the property. Sometimes these assets like, you know, ghost kitchens is another one where people will have a parking garage adjacent and I’ll put a ghost kitchen in it and you can make a lot of money doing that. But it’s also I’m sorry.
00:20:14:02 – 00:20:17:24
Rod
I’m sorry. I’m a neophyte. I have no idea what you’re talking about.
00:20:17:26 – 00:20:32:12
Joseph
So ghost kitchens are these things that that, you know, Uber eats and DoorDash are using where you you have a Chipotle That’s. That’s just meant to service DoorDash delivery.
00:20:32:12 – 00:20:34:06
Rod
Oh, interest delivery. Interesting.
00:20:34:06 – 00:21:05:08
Joseph
They set up ghost kitchens. They don’t need to go a traditional retail space. They can do Uber. And so you’re seeing a lot of people entertain ghost kitchens in an extra spaces that they have because they can make a basically a lease payment off of that. But it’s really hard to understand, right? Like if I’m an operator and I’m trying to understand putting a ghost kitchen adjacent to my space that doesn’t you know, it’s difficult if you can get your head around it, you can make a lot of money.
00:21:05:10 – 00:21:12:15
Joseph
But that’s what I love about what we do is it’s it just slips in. There’s no build out, there’s no construction, there’s no property.
00:21:12:20 – 00:21:35:15
Rod
Let me let me ask you a question about about like let’s say you’ve got a multifamily property and you offer additional parking space. I could see the issue with the unsightly potential of what gets parked there. Do you have that come up and you have an answer for for that scenario?
00:21:35:19 – 00:21:47:17
Joseph
So every single multifamily partner or retail partner will walk through them. A list of all the things that could be stored there and then they get to like check off what they want, what they’re comfortable being stored there.
00:21:47:17 – 00:21:48:28
Rod
Got you, got you got.
00:21:49:04 – 00:22:07:24
Joseph
We will filter the renters and we will only store what you want to be stored there. Now we have some properties where they’re like, I just want to earn as much money as possible. I don’t care if it’s a boat. I don’t care if it’s a camper trailer. I don’t care if it’s a classic car or a vehicle or a motorcycle store.
00:22:07:24 – 00:22:25:01
Joseph
It we have others that are like in downtown. They have height restrictions and they’re like most of this parking is for my tenants. It’s vehicles. So I only want vehicles stored there and they’ll they’ll blend in. It’ll almost look like a tenant is there. God, I can do whatever.
00:22:25:03 – 00:22:47:17
Rod
Okay, now that makes sense. That makes good sense. Well, listen, this is fascinating, buddy. And I really think there’s a real opportunity for operators in any asset class, frankly, to consider utilizing your services to to create more income and and really just causing you to think outside the box. What else could we do to bring more revenue in?
00:22:47:19 – 00:23:02:28
Rod
You know, we did this I talk about this. We had an asset in San Antonio where we just a number of the parking spaces and offered up a parking space to the tenants in front of their unit and we had 100 of them take it. It was an $800,000 instant increase in value because it went right to the bottom line.
00:23:03:02 – 00:23:14:28
Rod
So this this is right along those same lines. Well, listen, Joseph, I really appreciate you coming on the show, my friend, Doug. It’s very, very interesting topic. And and good luck with with your incredible idea here.
00:23:15:03 – 00:23:16:23
Joseph
Thanks. Thanks for having me on.
00:23:16:26 – 00:23:37:13
Rod
Absolutely. So one other quick thing. We encounter so many people that are frankly frustrated. You know, they’re looking in the mirror and they’re frustrated that they haven’t been able to escape the rat race. They haven’t been able to build cash flow to the point where they’re able to have financial and time freedom with their families. You know, and maybe they see other people buying real estate and creating, you know, incredible cash flow.
00:23:37:17 – 00:23:57:03
Rod
And they think, well, it’s just scary. You know, buying apartments is intimidating. And I get it. See, that’s why we created our Warrior Mentorship program. There are coaching students and they’ve had extraordinary results. My students, I’ve been teaching about five years and own upwards of 140,000 units now that we know of. Right. And we feel like it’s just getting going now.
00:23:57:03 – 00:24:14:21
Rod
We’re looking to grow this group and really take it to the next level. And I honestly believe that the greatest transfer of wealth could be upon us right now with this current economic environment. Everything’s going on sale. So we’re looking for people who want to follow a proven framework, really like a blueprint or a map, literally step by step.
00:24:14:28 – 00:24:38:05
Rod
And then they’re able to leverage our systems and our incredible network to raise money and equity, to find deals and close those deals and build partnerships really nationwide. So if you’re interested in finding out more about how you can become more in our incredible network and take advantage of the unbelievable opportunities that are upon us, you can apply to my Warrior Mentorship program by texting the word crush to seven two, three, four or five.
00:24:38:09 – 00:24:53:11
Rod
Or you can go to mentor with Broadcom and what we’ll do is we’ll set up a call so you can check us out and we can check you out and see if it’s a fit. Now, again, you can go to mentor with Broadcom or text the word crush to seven two, three, four, five to apply, and we will speak soon.
