Texas Self Storage Association has served its self-storage industry members since 1986.  Headquartered in Round Rock, Texas, TSSA is the leading expert in self storage in the state of Texas.  Whether you're an owner, operator, manager or employee,  TSSA's blog will provide you with the latest tips, advice and knowledge for running your self-storage business. 

Storage Essentials Manual

Back to Basics—Industry Fundamentals

by Jennifer Jones, Managing Editor of Self-Storage News

Owning and operating a facility is an enormous responsibility. Some of our members have one facility with a few units while others own multiple facilities in many states. While the needs differ from facility to facility, there are core business practices that make sense for all.

Getting back to the basics of what makes the self- storage industry great is a good way to ensure the core focus of the business is still being realized.

For this series, we spoke with several members in third-party management positions who have a wide variety of experience. Together, they have 88 years of experience in the industry, have managed more than 550 facilities and worked with around 400 owners. All of those owners had different measures of success and goals for their facilities, with some in lease-up and others well established. Within the Storage Essentials Manual, you'll find numerous ideas and best practices that can be used whether you have one small facility or multiple large ones.

BEST PRACTICES

There are so many things to consider when running your facility. If you’re in a major urban area like Dallas/Fort Worth, Austin, San Antonio or Houston, you’re probably seeing a lot of competition. What used to work may not anymore. Many of you are facing competition from the REITs, which report they are increasing their marketing budgets around an average of 25 percent.

So how can you set your facility apart? Do you spend money to make money? Do you increase your marketing budget, or make capital improvements? Knowing the right way to move forward and where to invest your time, money and energy is key to competing in an overbuilt market.

“On one hand, this business is incredibly straightforward: rent units, make money (lots of it at that),” laughs Sarah Cole with Oakcrest Management. “On the other hand, if you invest the time, training and money to ensure that you and your staff are properly trained and have the needed tools to be successful, the investment pays for itself many times over and allows you to sleep better at night.”

“We recommend setting a clearly defined standard or procedure for maintenance, operations, leases, etc.,” says Katie Cowen with Move It Storage. “If you have a clearly-defined process to guide your staff, you’ve set a standard that they know they have to adhere to. “You need to stay on top of things much more than you did in the past because it’s much easier for tenants to find storage now than it ever has been before. I saw a statistic this week that there are more storage facilities in the U.S. than there are Starbucks and McDonald’s combined. I have no idea if that’s actually accurate, since you can’t trust Internet memes for news, but I wouldn’t be surprised if it is.

“Competition is fierce now, and you can’t get by with ‘good enough’ anymore. You have to be great to succeed in the overbuilt market that we’re currently in, and this can mean needing to make significant physical improvements to your location if you want to keep up.

“Another factor now is the cost of hiring good help is getting steeper every day. The strong economy is creating a scarcity of entry-level workers and the days of a $9- or $10- per-hour property manager seem to be well behind us. We’re seeing major metro area salaries in the $13-16 hourly wage level lately, with or without an apartment onsite to offer.”

“Agility is key,” says Monty Rainey of RPM Storage Management. “People tend to think of self storage as a static industry, but you really need to be ready to change tactics at a moment’s notice. What worked a month ago may not work today and what works at one facility may not work in a different demographic.”

Some additional tips:

INVENTORY

Keep a rolling inventory of clean units, preferably two of each size, so you have ready-to-show units of every size in which you have a vacancy. Highlight the units on your vacancy report so all employees can easily reference available units.

MAINTENANCE

The most important maintenance tip is setting a schedule and adhering to it.

  Clean air filters on HVAC units every 30 to 60 days, depending on time of year.

  Set your HVAC thermostats to cool to 80 degrees and heat to 50 degrees. The objective is to keep the temperature in the range to protect stored contents, but not the same range you would keep an apartment or office. This saves energy and money.

  Keep the unit door tracks (and any exposed springs) lubricated to make the doors easy to open and prevent broken springs.

  Change the rubber gasket at the bottom of the door when it gets brittle to allow it to seal out dust.

  Keep the hall floors dry mopped weekly and wet-polished as needed to keep the halls bright and shiny.

  Perform daily walk-arounds/lock checks for security and to be visible to customers. A "nice but nosy" manager can help prevent problems before they happen and should always work to establish good rapport with customers.

  Keep up your property’s curb appeal. If kept clean and well-manicured with professional, friendly signage, it can help generate leases from drive-by traffic.

  Consider using a support ticket system if you have several facilities or a large facility. This allows your maintenance professional to know what tools might be needed before heading to the store. It also allows tracking of high-priority items.

  Keep the office area and the approach to the office looking fresh and clean. Often, owners who have had a facility for years let it look less than its best. Look at your facility with a fresh set of eyes.

  Keep signage as friendly as possible. Don't go overboard on rules signs.

CUSTOMER SERVICE

  Treat others the way you want to be treated.

  Respect everyone; it goes a long way.

  Use scripts to develop managers’ communications skills.

  Prepare a general escalation or upset customer document for dealing with difficult customers later in the customer life cycle.

  Role-play difficult situations with managers to teach them the best responses, practices and reactions.

LEASE

  Use a standard lease, standard addendums, and a scripted lease explanation. It is helpful in getting customers to understand and adhere to their lease agreements.

  Perform regular lease audits to ensure that you have 100-percent lease compliance at your facility.

OPERATIONS

  Have a clearly-defined operations manual—it is essential. If you don’t have one, TSSA has a very good basic operations manual that can be purchased. With minimal effort, you can make additions/revisions to make it your own.

  Perform a very comprehensive audit every month that includes property inspection, inventory, lease reviews, auction file reviews and a review of the financials.

  Have managers shop competitors by actually driving by the facilities to see what is new/different.

  Have a third party conduct telephone and in-person shopping to see how your facility is being represented.

  Focus on rental rates just as much as occupancy—both are important.

  Take time to have meaningful, unrushed conversations with your managers to let them know how much they are appreciated. A good manager makes a huge difference.

MARKETING

Marketing is really about staying on top of things and finding what works for your property.

“Marketing self storage is inherently different than most businesses,” says Rainey. “You’re not going to have much luck convincing someone who doesn’t need one to rent a storage unit. The key to marketing a facility is to put your name in front of that potential customer so that in six months, when the decision is made to clean out the garage, your storage business is the one they automatically think of. They’ve already been to your property when you had that event (car wash, garage sale, food drive, etc.) and already know your facility is well-run and maintained.”

Ultimately, as Tron Jordheim with Store Here Management says, “Every market is a bit different, and every facility has its own characteristics and quirks. There is a ‘right mix’ of people and technology for each site. The trick is to find the right mix for your particular needs.“

Processes are very important. If you have solid processes that are well suited to a particular site, and you follow those processes, things will run more smoothly and be easier to track and audit.

MARKETING

Getting it Right, from SEO, Technology to LED Lighting

One of the key things that helps people find you when they need you is marketing. There’s digital marketing, social media marketing, grassroots marketing and traditional marketing. The REITs are increasing their digital marketing budget by around 25 percent this year to dominate online searches.

So how on earth can you compete with their scale and budget?

SEO (search engine optimization) is incredibly important when someone Googles a term like “self storage near me” and gets a search return with ads (at the top of the page), location results with maps (next) and organic search returns. Improving SEO is a long-term strategy; gains do not happen overnight and it takes consistent effort. However, if you do it correctly, you can make significant gains in moving your facility to first page results instead of being hidden on the third or 10th page in a digital ghostland.  As an example, Tiger Self Storage in Porter, Texas moved up to the No. 3 and No. 4 spots on page one from page two on Google for two top search terms using a combination of SEO and PPC, so it can be done with the right strategy and tactics depending on your market. This was accomplished by a new faster website that was optimized for SEO, relevant and optimized content and backlinks in a few short months.

PPC (pay-per-click) is a form of internet marketing, the most common of which is search engine advertising, which you may have heard of as Google AdWords. For example, if someone types in “storage facility near me” and you bid on that keyword, then your ad may show up on their Google search. It’s referred to as “pay-per-click” because each time someone clicks on that ad, you are charged a fee (the amount depends on how competitive that search term is and how relevant and targeted your ad campaign is). Ads chosen by Google are chosen based on the amount of the keyword bid and the advertiser's quality score which is determined by how relevant your site is to the search term, your click-through rate and the quality of your landing pages. When you are working on SEO, which is a slow process, PPC is a great way to get quicker results. In effect, you are buying visibility.

Gately says, “Every facility has a website, hosted by a third-party website marketing company. We believe SEO is very important. We evaluate results monthly and track the number of website visits and eventual leases we get to determine the return on our investment.

“We use tracker numbers on our website and for most advertising to be able to identify the number of calls from any source. The tracker number forwards the caller to your facility, keeping track of each call.

“We use PPC for most properties, especially new facilities in lease-up. We adjust the PPC depending on results and the recommendations of our website provider.

“For new facilities, we invest in prominent LED signs with the capability of changing messages/ graphics. For all facilities, we invest in the largest signage allowed by local code, including banners to promote specials. We schedule our managers to do off-site marketing about two hours per week, targeting area apartment managers, retirement communities, competitors (to promote cross referrals) and major area employers.

“In late spring or early summer, we will send out a postcard mailer for properties in lease-up. Most of our marketing is year-round to keep consistency.”

Rainey says, “Keep it local and know who your customer is. Ninety percent of your customer base either lives or works within a 3-mile radius. Don’t waste time and money marketing to people who live far outside that radius. Limit your promotional giveaways to items people will use over and over and not end up in a junk drawer somewhere, never to be seen again.” This would include items like stainless steel water bottles, magnetic grocery list pads, letter openers and staple removers, and of course the standard items, such as ink pens and keychains.

Cowen says, “We focus a lot of effort online, but we focus just as much effort on the facility itself. All of the online marketing in the world won’t help a run-down or trashy-looking facility succeed. We consider maintaining the curb appeal of our facilities as a key item in our marketing program. Depending on the area, we may also do local marketing in the form of print ads, billboards or local sponsorships.”

Cole says, “You can’t just pick one marketing avenue, you need to do a little of everything to stay visible. We aren't an industry that people are shopping for daily, like a restaurant or grocery store. However, if you keep a visible presence in your community, when they need storage, they'll remember you and come to your facility.

“Therefore, we do online (Craigslist, Facebook, Twitter, Instagram and Google+), grassroots (flyers, tote bags, mugs, pens) and take them to different businesses, and we host charity events (pet adoptions, car washes, BBQs).”

At the end of the day, you have to know what you want to accomplish with your marketing. Tie your marketing with your overall business objectives and set realistic goals to be successful. Digital marketing with re-targeting ads, website analytics and more can help lead people down a buyer’s journey to your facility. One of the keys with any marketing strategy is knowing your audience (potential customer pool) and developing a marketing strategy that is targeted to them.

TRAINING

Tailoring to Your Facility

When you consider what a manager can and can’t do for your business, you realize how important training and hiring really are. A manager is part of your brand—the personality of your facility, the person who makes sure things are working properly. Depending on the size of your facility, they can wear many hats from marketing and maintenance to operations and revenue.

Trusted Self Storage Professionals has new assistant managers work with an experienced manager for two to three weeks before being scheduled to work alone. New managers work with an experienced manager for several weeks before being assigned their property. “We have one site that does most of our training, which makes for consistency,” says Gately. The manager doing the training is a strong manager who likes training others and uses a written checklist of all tasks to be trained that must be completed and sent to the property supervisor. Good training is critical to achieving operational excellence and to have confident, competent employees.”

“Move It is larger than some of the other operators, so we’ve used our benefit of scale to set up an online learning management system (LMS),” says Cowen. “Our managers get a combination of live, one-on-one training, training via review of an operations manual, and training via modules in the LMS. The LMS modules can include written lessons with a test afterward, video lessons with a test afterward, or a combination of both items. We also utilize training resources and certification from our software provider (SiteLink) and our ancillary truck rental services (U-Haul/Penske).”

Cole says that at Oakcrest Management, each new manager gets one week of training with a seasoned manager, two days of customer service phone skill training and one week in their store with a seasoned manager/ supervisor. “By the third week, they should be able to handle day-to-day functions on their own. On lien process days (NOC, cut lock, etc.), a supervisor will be with them to make sure notices are done properly and the new manger is learning how to do them properly. Oakcrest Management also has quarterly training webinars on various topics, such as collections, closing the sale and auction process.”

So, what do you do if you don’t have multiple facilities or don’t want to hire third-party management? You can write your own training manual. Each day you are performing a task, write down your thoughts and start creating checklists. Implement some of the tactics used above at your facility. You may only hire a new manager once in a blue moon or you may have higher turnover. Creating a training manual, although a time-consuming process, can ultimately save time when you hire a new manager.

Creating checklists for leasing, maintenance (as well as schedules), operations, procedures, new hire orientation, marketing and more will ensure your new manager is aware of your systems and expectations.

At RPM, training never ends. They have a designated trainer who gives personal, interactive training following a two-week program. At each subsequent store visit by a district manager, time is set aside for ongoing training for the entire staff. RPM also provides employees with paid tuition for online business management related courses.

PRICING

Finding and Setting Value

While pricing is certainly covered in other articles, it’s a big topic. So we want to call special attention to it. Be sure to look at the other articles for revenue management and how to use software to improve your rates.

Many things should be considered when determining unit rates. “Price should be based on a combination of market rates, quality of the facility and amenities offered,” says Cowen. “Price alone is no way to judge a storage unit because a 10’ x 10’ climate-controlled unit on the fourth floor with no elevator access has a completely different value than the same unit on the first floor right next to an entrance door.”

Cole says, “We base it off of availability and competitor pricing by size. If we are below 70 percent occupied on a size, then we may price it a little under a competitor, but if we are 100 percent occupied on a size, we may price it above other competitors.”

Gately concurs, “We have found on existing facilities with stabilized occupancy, the most important factor in pricing is your property's occupancy on each unit type. We keep pushing rates higher on any unit type that has an occupancy of 90 percent or better. Even if a competitor is $20 cheaper on the same size unit, we will keep inching our rate higher, so long as our occupancy on that size is holding 90 percent or better.

“We also use premium location pricing on certain units. For example, say $10 higher on first floor than upper floors or $5 higher to be near the elevator.

“Manager training on setting rates is very important. A well-trained manager understands that most prospects are looking for overall value (not just low price), so the manager emphasizes the benefits when talking prices.”

“Don’t use a broad scope for pricing,” says Rainey. “When a store is struggling with occupancy, you may have a tendency to lower prices. While this may be needed for some unit types, you may have other types that are more than 90 percent occupied and those rates may even need to be increased. Each unit size and type is its own product and should be based on supply and demand, not on overall store occupancy.”

AUTOMATION

Why You Should Consider Automating at Your Facility

Understanding what technology can do for you and your facility can make a difference in your bottom line, bring you money that may be left on the table and streamline your operations. If you’re still using spreadsheets, they may work for you to some degree, but automating and updating your processes will allow you to have a better idea of where things stand with your facility on a daily basis and free up time to devote to other functions. The difference is like trying to light a fire by rubbing two sticks together versus using a match. Both get the job done, but one is much more efficient.

“I am a strong believer that automation makes for efficiency,” says Cowen. “Your benefit in automating everything that you can is that you know it gets done, and it frees up your manager’s time so they can focus on serving their customers and renting units.”

COMMUNICATION

“We automate functions having to do with tenant communication and revenue management,” says Gately. “We use a texting service to remind delinquent tenants about payments, which has been very successful. It saves the manager time and the tenants appreciate its convenience. We make sure our managers use it as a reminder for tenants, but not as a substitute for the manager making phone calls or sending emails on the more serious delinquent situations.

“We also use automated tenant surveys that can be scheduled to go out within a few days of move-in or move out, which are emailed to the tenant and can be sent to the manager or to the corporate office. We keep the surveys short and easy to complete and use the information to make sure we are creating a positive customer experience.”

“Our management software automates the delinquency process, late fees and automatic lien letters that are generated and emailed,” adds Cole. “All new move-ins receive an automated email welcoming them as customers and inviting them to take a survey.”

 “We automate our collection calls,” says Cowen. “Robo-type calls are used as our first call to alert tenants that units are past due. These aren’t the only calls made, but a good portion of past due tenants pay after the robo call but before our managers make their ‘live calls.’

“We have an integrated SMS [text] program that is scheduled to send tenant messages for certain events on pre-defined dates. These can include past-due notices, or notices that something is happening at the location. This has been especially helpful during weather-related closure events to keep our tenants updated with issues on the property. These aren’t completely automated due to a software limitation in SiteLink, so someone has to actually hit ‘process’ to send out the notices, but once that’s done, the system generates a text to every tenant who is set to receive that particular message.

“Nothing zaps a manager’s will to live like stuffing hundreds of envelopes with letters. We use an automated mailing service that’s integrated with our software to process paper notices to our tenants. This is also an option for sending auction notices without having to go to the post office, which saves a ton of time for our managers.”

Reviews can help a facility’s reputation drastically by showing your potential customers that your current customers love you. Cole says, “Use Google Review QR codes to allow tenants to leave reviews while at the store. We created a QR code that will take tenants directly to our Google Review page for each location. When the customer is at the store renting a unit or truck, or making a payment, we ask them to scan the code and leave us a review. Because we made it so simple, our number of reviews have gone up quite a bit.”

LEADS

There’s also something to be said for instant communication and striking while the iron is hot. “We don’t have missed call leads because they automatically roll over to our call center rather than going to an answering machine,” says Cole. “When a customer makes an appointment to come to the store to rent a unit, there is an auto- mated text message that is sent out two hours before their appointment.”

Cole’s website automatically emails completed and incomplete reservations to the manager, district manager and home office to follow up with the customer and track the reservation lead.

REVENUE MANAGEMENT

“Most management software programs now offer a revenue management feature, which we have found to be a real money maker and time saver,” says Gately. “For example, you can program the software to raise rents on vacant units by a set percentage when the occupancy on any unit type exceeds a defined target (e.g., raise rents by 6 percent on any size that is 90 percent occupancy or higher). During the busy leasing season, this can really be a big help to the manager, as the software will automatically raise the rate without the manager having to even notice that the occupancy target has been achieved.

“This revenue management feature is also very helpful in prompting rate increases on occupied units. For example, you can instruct the software to raise rents on any occupied unit after 12-months’ tenancy by a certain percentage. You can allow the rate increases to be limited to the current street rate or not. The manager can get the proposed list of rent increases each month for review. The manager can be given the authority to approve the rent increases or modify as deemed appropriate.”

“We use a website scrubbing soft- ware to monitor our competitors’ rents and specials and any changes. The software is inexpensive and provides regular prompts of any rate changes with comps in your defined market trade area. The pricing is laid out in an easy-to-use grid, showing rates by competitor and unit type. In addition, we have the managers contact their counterparts on five or so comps each month by phone to trade notes on the occupancy, rates, specials and market info. The managers should drive by their comps at least quarterly.

Cowen also uses software to help with competitive pricing. “We use a revenue management program that ‘scrapes’ online rates for our competitors and compiles them into a list so we’re able to easily see our low, high and median competitor rates in any given market.”

PAYMENTS

“We have an automated payment prompt that customers can use to make their payment over the phone,” says Cowen. “This saves our managers or call center agents from having to talk to multiple customers who are just wanting to make a payment and frees them up to handle other customer issues or new inquiries.

MAINTENANCE

“We even use automation for maintenance internally,” says Cole. “We have a maintenance ticket system where the manager creates a ticket and it sends it to the maintenance personnel. They repair what needs to be repaired and the manager receives a notification when the job is done and the ticket is resolved.”

Technology has come a long way and continues to allow us to streamline things that we previously handled manually. A lot of times, the use of technology can give us an edge on competition as well by giving us data at our fingertips to help us make smarter and quicker decisions.

 

 

Storage Essentials Manual

Best Practices

by Jennifer Jones, Managing Editor of Self-Storage News

There are so many things to consider when running your facility. If you’re in a major urban area like Dallas/Fort Worth, Austin, San Antonio or Houston, you’re probably seeing a lot of competition. What used to work may not anymore. Many of you are facing competition from the REITs, which report they are increasing their marketing budgets around an average of 25 percent.

So how can you set your facility apart? Do you spend money to make money? Do you increase your marketing budget, or make capital improvements? Knowing the right way to move forward and where to invest your time, money and energy is key to competing in an overbuilt market.

“On one hand, this business is incredibly straightforward: rent units, make money (lots of it at that),” laughs Sarah Cole with Oakcrest Management. “On the other hand, if you invest the time, training and money to ensure that you and your staff are properly trained and have the needed tools to be successful, the investment pays for itself many times over and allows you to sleep better at night.”

“We recommend setting a clearly defined standard or procedure for maintenance, operations, leases, etc.,” says Katie Cowen with Move It Storage. “If you have a clearly-defined process to guide your staff, you’ve set a standard that they know they have to adhere to. “You need to stay on top of things much more than you did in the past because it’s much easier for tenants to find storage now than it ever has been before. I saw a statistic this week that there are more storage facilities in the U.S. than there are Starbucks and McDonald’s combined. I have no idea if that’s actually accurate, since you can’t trust Internet memes for news, but I wouldn’t be surprised if it is.

“Competition is fierce now, and you can’t get by with ‘good enough’ anymore. You have to be great to succeed in the overbuilt market that we’re currently in, and this can mean needing to make significant physical improvements to your location if you want to keep up.

“Another factor now is the cost of hiring good help is getting steeper every day. The strong economy is creating a scarcity of entry-level workers and the days of a $9- or $10- per-hour property manager seem to be well behind us. We’re seeing major metro area salaries in the $13-16 hourly wage level lately, with or without an apartment onsite to offer.”

“Agility is key,” says Monty Rainey of RPM Storage Management. “People tend to think of self storage as a static industry, but you really need to be ready to change tactics at a moment’s notice. What worked a month ago may not work today and what works at one facility may not work in a different demographic.”

Some additional tips:

INVENTORY

Keep a rolling inventory of clean units, preferably two of each size, so you have ready-to-show units of every size in which you have a vacancy. Highlight the units on your vacancy report so all employees can easily reference available units.

MAINTENANCE

The most important maintenance tip is setting a schedule and adhering to it.

  Clean air filters on HVAC units every 30 to 60 days, depending on time of year.

  Set your HVAC thermostats to cool to 80 degrees and heat to 50 degrees. The objective is to keep the temperature in the range to protect stored contents, but not the same range you would keep an apartment or office. This saves energy and money.

  Keep the unit door tracks (and any exposed springs) lubricated to make the doors easy to open and prevent broken springs.

  Change the rubber gasket at the bottom of the door when it gets brittle to allow it to seal out dust.

  Keep the hall floors dry mopped weekly and wet-polished as needed to keep the halls bright and shiny.

  Perform daily walk-arounds/lock checks for security and to be visible to customers. A "nice but nosy" manager can help prevent problems before they happen and should always work to establish good rapport with customers.

  Keep up your property’s curb appeal. If kept clean and well-manicured with professional, friendly signage, it can help generate leases from drive-by traffic.

  Consider using a support ticket system if you have several facilities or a large facility. This allows your maintenance professional to know what tools might be needed before heading to the store. It also allows tracking of high-priority items.

  Keep the office area and the approach to the office looking fresh and clean. Often, owners who have had a facility for years let it look less than its best. Look at your facility with a fresh set of eyes.

  Keep signage as friendly as possible. Don't go overboard on rules signs.

CUSTOMER SERVICE

  Treat others the way you want to be treated.

  Respect everyone; it goes a long way.

  Use scripts to develop managers’ communications skills.

  Prepare a general escalation or upset customer document for dealing with difficult customers later in the customer life cycle.

  Role-play difficult situations with managers to teach them the best responses, practices and reactions.

LEASE

  Use a standard lease, standard addendums, and a scripted lease explanation. It is helpful in getting customers to understand and adhere to their lease agreements.

  Perform regular lease audits to ensure that you have 100-percent lease compliance at your facility.

OPERATIONS

  Have a clearly-defined operations manual—it is essential. If you don’t have one, TSSA has a very good basic operations manual that can be purchased. With minimal effort, you can make additions/revisions to make it your own.

  Perform a very comprehensive audit every month that includes property inspection, inventory, lease reviews, auction file reviews and a review of the financials.

  Have managers shop competitors by actually driving by the facilities to see what is new/different.

  Have a third party conduct telephone and in-person shopping to see how your facility is being represented.

  Focus on rental rates just as much as occupancy—both are important.

  Take time to have meaningful, unrushed conversations with your managers to let them know how much they are appreciated. A good manager makes a huge difference.

MARKETING

Marketing is really about staying on top of things and finding what works for your property.

“Marketing self storage is inherently different than most businesses,” says Rainey. “You’re not going to have much luck convincing someone who doesn’t need one to rent a storage unit. The key to marketing a facility is to put your name in front of that potential customer so that in six months, when the decision is made to clean out the garage, your storage business is the one they automatically think of. They’ve already been to your property when you had that event (car wash, garage sale, food drive, etc.) and already know your facility is well-run and maintained.”

Ultimately, as Tron Jordheim with Store Here Management says, “Every market is a bit different, and every facility has its own characteristics and quirks. There is a ‘right mix’ of people and technology for each site. The trick is to find the right mix for your particular needs.“

Processes are very important. If you have solid processes that are well suited to a particular site, and you follow those processes, things will run more smoothly and be easier to track and audit.

 

 

Best Practices

Compensating and Rewarding Your Managers

Creating Defined, Measurable and Achievable Incentives

by Karen F. Aroian

What motivates us to reach a goal or exceed expectations? Our behaviors are rooted in a complex combination of internal and external driving factors.

To be sure, one factor that motivates a self-storage manager is the incentive package, which is why self- storage operations offer property managers additional monetary earnings that are defined, measurable and achievable for the income they generate. To balance how a manager and the market are doing, self-storage owners should regularly review the purpose and goal of the incentive packages they offer.

PROPERTY-LEVEL INCENTIVES

“Bonuses are not an entitlement,” says Tom Maxfield, director of operations for Move It Management, a company which manages 53 properties. “When a manager does something exceptional, you should reward them. Every employee wants to know they’re doing a good job and moving in the right direction. All of us like to have that [affirmation]; it feels good.”

Move It believes all sources of income are relevant to the success of their business because the property manager’s focus and effort influences each area, whether it is the closing rate of reservations to rentals, delinquency collections, rate increases, retail sales per rental, rental truck commissions or tenant insurance.

Move It uses a property-level bonus system based on cash gains collected year-over-year for a monthly reporting period. Their managers must reach a minimum 5 percent of cash gains collected to earn a monthly bonus. Move It then pays an escalating amount up to 10 percent for higher percentages of gain.

According to Revenue Operations Manager Katie Cowen, Move It pays at least 80 percent of the monthly bonus to the primary sales manager and up to 20 percent of the earned bonus to the assistant manager, depending on the size of the operation. A site manager can expect to make $250-$400 monthly or $3,000-$4,800 annually. “We would like the property manager to earn 10-15 percent of their monthly/annual wage in bonuses,” she says.

“If we identify a specific area that needs improved performance, such as higher closing rates of reservations into rentals or retail sales per move-in or percentage of auto-pays, we will create a contest for several stores or for an operating district,” Cowen explains. “These contest periods are from one to three months, and we have a lot of fun with the competition. We normally utilize non-cash awards like gift cards, dinner for two at a nice restaurant or tickets to a concert or athletic event.”

For new properties in lease-up during the first year of operation, Move It looks for a step-up in occupancy each month. Based on expected absorption, they provide the property sales manager with a schedule of expected leases to be obtained for each month. Managers can earn additional income for achieving that monthly rental lease goal plus an additional bonus for exceeding that goal.

Cowen and Maxfield emphasize the importance of two things:  being able to calculate incentives easily and paying on performance since each property generates business from various sources, which managers have the power to influence positively or negatively.

“The data points should be easily identified from the point-of-sale software so the manager, the district manager or the owner can quickly calculate the bonus formula,” Cowen says. “We have found multiple metrics or complicated formulas become a disincentive for the manager because they don’t control the bonus calculation.”

“To be successful,” Maxwell continues, “we have to work hard and earn our business.  When we see exceptional work or performance from a manager, we may give a surprise bonus to that employee. The bonus can be a larger than normal monetary award or it could be extra vacation time like a Galveston cruise or a weekend on the San Antonio Riverwalk. These fun bonuses have proven to be very motivating for our top property managers.”

In addition, Maxfield adds, Move It rewards managers through team building and company recognition. “And, if we observe a hard-working manager who has a yearning to improve themselves, we counsel that employee and support access to academic or self-improvement courses or training. While we expect top performance from our managers, we also care for them as people and coworkers. We have found the ultimate incentive for a property manager is to be appreciated and recognized for the hard work at their properties.”

FLEXIBLE INCENTIVES ON NET RENTALS

Denise Bowley, co-owner and operations officer of Grow Your Storage, LLC, offers the managers at her 10 properties in Texas and Colorado incentives on a combination of end-of-year, performance and special projects.

Grow Your Storage (GYS) structures their performance-based incentives on net rentals. Their bonus structure for special projects varies. GYS informs their staff of their new firm’s annual challenge at the TSSA annual conference and trade show and awards a $500 cash bonus at the conference the following year. This year’s challenge is selling the most merchandise.

However, the purpose and focus of incentives at GYS does change. “We may see the need to lower delinquency rates, obtain online reviews or rent a certain type of unit. For example,” Bowley explains, “if we have a high vacancy rate in a certain unit type, we will challenge the store manager to rent as many as she can within 90 days. I usually let the store manager set the number of rentals while I set the bonus amount. The objective of the bonus is to keep the manager personally invested in the daily operations. The bonus allows them to experience how the success of the business directly results in recognition and reward for the people providing customer service and facility maintenance.”

While the store managers for stabilized facilities do not receive performance-based bonuses, they can earn a special project bonus a couple of times a year. For new facilities, the store manager has an opportunity to earn quarterly bonuses based on performance (net rentals).

Their store managers are paid based on gross revenue. Salary for a 105,000-square-foot facility with a resident manager is different from that of a 55,000-square-foot facility where the manager does not live on site. All “relief” (leasing agents) are paid by the hour and those hourly rates can vary.

In addition, GYS conveys the message that “good things come from working here” by awarding employees with random cash gifts related to life events, whether to help celebrate the graduation of an employee’s child or to help an employee with a needed car repair. “People do not only function in a cause-and-effect system,” says Bowley, who supports bringing “an unexpected, unearned gift to a valuable employee’s life.”

TOP LINE SITE BUDGETS

To successfully compete with REITs that focus solely on call centers, Advantage Storage, with its home office in McKinney, first takes time to hire employees who want the challenge of outperforming bigger competitors in their markets and are naturally goal-oriented. Advantage incentivizes based on performance and supports their high-end managers with the ability to adjust their site rates, to meet with their regional managers on a weekly basis and provides them with the tools needed to manage revenue and earn extra income. Turnover is low with 80-85 percent of full-time employees staying for more than 12 months.

 “We pay our hourly employees the highest in our industry to make sure we get a higher caliber employee,” says Chief Operating Officer Cory Horne, “and to make sure that our properties are managed well, and our customers get the best customer service in our markets.” Advantage’s full-time employees work 40 hours and receive 100 percent of benefits.

Most sites have one full-time manager and an assistant manager. Seventy-five percent of the time, the assistant is a part-time employee, working 29 hours per week. As long as the assistant has worked a full 29 hours during their four-week term within that month, these employees split the site bonus 70/30.

Advantage bases their incentive structure on a 12-month period and solely on each site’s top line budget revenue. As Horne explains, “That's because it’s what managers can control. Each manager and assistant knows what their budget looks like, January through December. We don’t change it mid-stream.”

Advantage uses each month’s figures from the trailing 12 or 24 months to give managers the ability to hit their numbers. “In January, for example,” Horne explains, “if the site manager’s total revenue budget is $50,000, and they meet or exceed that budget, they get $200; if they meet or exceed that number by $2,000, they get an additional $300, for a total of $500; if they meet or exceed that number by $5,000, they get an additional $400, for a total of $900.”

The last part of Advantage’s bonus structure relates to delinquency collections. While the industry standard is 3 percent or below, Advantage holds their managers to a higher standard by awarding bonuses for delinquency rates of 2 percent or less. According to Horne, 98 percent of their managers meet that goal, for which they earn an additional $100. That brings total potential incentive earnings to $1,000 a month when combined with the other incentives. “We do have those who hit that highest tier on a monthly basis,” Horne says. “They’re in higher income, higher density markets, which provide them that opportunity.”

Regardless of the market, Horne believes keeping managers motivated also has to do with how well they are managing revenue, in-place tenants, expiring versus non-expiring discounts along with how closely they look at their market and the competition within that market and adjust their street rates accordingly.

“So, if you’re 98 percent occupied, and you have two 10’ x 10’ units available, those units should be rented at a higher rate,” Horne tells his managers. “Now, if you have 25 5’ x 5’ units available on the third floor, adjust those rates to a lower level to be more competitive in the market.”

Site managers have the flexibility to set rates and the ability to go over that in detail with a regional manager to better hit their bonus goals. Regional managers visit 10-12 locations, at minimum, once a week for site reviews and audits. “We make sure that we’re giving our managers every tool they need to be successful,” Horne says, “because if they’re hitting their bonuses, obviously we’re doing well; the regionals receive a bonus based on their [managers’] bonuses, so they’re motivated as well. It works out well for everyone.

“One other thing we do is give our employees an end-of-year holiday bonus to thank them for the entire year. It also lets them know that staying with us for the full year is appreciated. A lot of our competitors have two-three managers a year. It’s hard to keep someone in place. We feel the holiday bonus shows them our appreciation.”

KEY TAKEAWAYS 
“You have to be careful not to lose sight of your goals, collections or maintenance of properties,” cautions Amy Nolan, co-owner of The Storage Place. “That’s why we do a combination of things in our managers’ bonus plans to keep all the relevant things front and center.”



Compensating and Rewarding Your Managers

Setting Sale

Questions to Consider Before You Jump on Board to Sell Your Facility

by Michael Johnson

What should an owner look for when he/she is interested in selling?

The owner should seek the advice and feedback of a self-storage broker on pricing conditions based on the current market. Brokers can walk an owner through the marketing process and explain what goes into selling a self-storage facility. Other items an owner should look for include estimated closing costs and an overall timeline. After getting this information, owners should consider if it fits within his or her investment goals and expectations.

When should an owner sell?

This answer comes down to many individual characteristics. Several market factors can make it an attractive time for an owner to sell. A few examples of these market factors are favorable cap rates, interest rates and supply/demand within the facilities sub-market. When cap rates are low, prices are high. When interest rates are low, there are more buyers willing to take advantage of the lower cost of capital. However, the majority of sellers are often forced to sell because of life events, such as relocation, health problems and divorce.

What are the peak conditions for selling?

Several factors determine peak conditions for selling (also known as a seller’s market).

Examples are:

High demand combined with a shallow inventory of properties for sale. In this type of environment, there are more buyers than sellers. Many of the large operators and REITs have been aggressively buying in the top 50 MSAs to build up scale/efficiencies in those markets.

Low cap rates and financing readily available with rock-bottom interest rates.

Historical occupancy and NOI growth with little new construction within five miles.

Buyers using pro forma underwriting standards to determine the value.

Do you need to be fully stabilized when you sell?

Short answer: No. At certain times in the market cycle, buyers give the owner credit for unleased units. However, it is more advantageous for an owner to be stabilized when he or she decides to sell. This is an income-based business, meaning the higher the income, the higher the purchase price.

How do you get your facility ready to sell?

When getting a facility ready to sell, it is important for owners to focus on three areas that can pay off in the long run:

Improving revenue

Owners should look at their rent roll to determine how long it has been since raising prices for both existing tenants and street rates. This is an easy way to pick up additional income. A five to 10 percent increase every 12 months is standard. Getting delinquent tenants current on their rent or getting them to move out is also important to maximize revenue.

Reducing expenses

Owners should take the time to identify and clean up expenses. Have real estate taxes been appealed? Are marketing costs in line with market averages? It is important to identify personal expenses such as cell phone, car and health insurance payments. Owners who can identify their facility expenses make their income statement more appealing.

Improving facility appearance

Quality sells, so an owner should focus on the general aesthetics of the facility. In residential real estate, it’s called “curb appeal” and it’s no less important with your facility. Dusting hallways, cleaning doors, cutting grass and removing weeds are a few small things that make a difference in the overall appearance. Repairing lights, replacing damaged doors and adding a fresh coat of paint are larger items the seller should focus on. A coat of paint goes a long way.

How do you structure a deal?

Owners should consider working with a professional self-storage broker who has a proven track record selling storage facilities. Brokers can use their expertise to help structure a deal with the highest price and best terms. An experienced broker who specializes in this unique market has a database of qualified, interested buyers.

How can you buy in a seller’s market?

Over the past decade, the self-storage industry has evolved dramatically, and keeping up with the change can be difficult for some facilities/operators. Even though prices can be at all-time highs in a seller’s market, buyers take advantage of their large amounts of capital with low interest rates. Buyers tend to look for value-add opportunities to increase their bottom line. A few examples include raising prices on existing tenants, investing in online marketing and expanding the facility to add more units. Buyers who understand the operating fundamentals of the business can effectively purchase properties in both seller’s and buyer’s markets.

How can you sell in a buyer’s market?

Prices in a buyer’s market often suffer due to economic conditions and less favorable financing terms. Of course, all owners prefer to sell for the highest price possible. Whether it is a life event or other factor causing an owner to sell in a less-favorable buyer’s market, it is important that he or she focus on the following:

Revenue management

By keeping apprised of competitor pricing, owners can ensure their units are being rented at a price the market bears. The value of the property directly relates to the income the facility produces.

Property inspection

Owners should complete any minor deferred maintenance items and make the property as presentable as possible. Owners should let potential buyers know of any outstanding maintenance items on the front-end, so they do not have a reason to reduce their offer during their due diligence.

Pricing

Owners should seek out a professional storage broker who will give them pricing feedback based on current market conditions. There are more properties for sale than purchasers in a buyer’s market, so

it is important not to have unrealistic pricing expectations.

Is it better to build or buy?

This is always a popular question. Loans are readily available for people looking to build a new facility or acquire an existing facility. Both options have their own pros and cons. Take a closer look below to help determine which may be a better fit.

Building new

Ground-up construction gives you the benefit of creating and customizing everything from start to finish, or from the initial design to the way the property is managed. Overall, it is a riskier investment to build new because you will be starting at zero percent occupancy with expensive carrying costs and negative cash flow. However, there is greater profit to be made on the back-end when the property is stabilized. The overall timeline of building new is another potential drawback. Finding the right land, getting permits and approvals, having design work done and experiencing unexpected site conditions and other unforeseen issues can delay the project.

Buying existing

The immediate cash flow from a stabilized facility is a major benefit for individuals looking for a turnkey investment. A potential con for buying an existing property is the time it can take to find that opportunity that fits all of the individualized investment criteria—size, price, location, cap rate, etc. The success of the self-storage industry has been well-publicized for some time now, and competition is very strong from the self-storage REITs and other large private equity group that have been able to pay more than the average investor can because of their lower borrowing costs.

 

 

Setting Sale

Developing Your Disaster Plan
by Grow Your Storage, LLC, Members Lee Fredrick, Denise Bowley and Brandon Grebe

On July 13, 2016 a building at one of our facilities became engulfed in flames. The building was a total loss and virtually every tenant experienced complete loss as well.

We have learned a lot through this process and hope our story will help you develop a best-practice plan to handle a disaster such as a fire.

IMMEDIATE STEPS TO TAKE – STORE MANAGER

  • Call 911.
  • Call the facility owner or your immediate supervisor.
  • Lock the access points after the situation is contained.
  • Email all tenants to notify them that access will be limited until further notice and be sure to mention which building was on fire, so you are not bombarded with phone calls from tenants worried about their belongings.
  • Call all tenants affected by the fire and explain the situation. Know ahead of time what information you can provide (but also what you will not provide) and don’t make any assumptions regarding cause, responsibility, loss, insurance coverage, etc.

 IMMEDIATE STEPS TO TAKE – OWNER/PROPERTY SUPERVISOR

  • Call your insurance agent to initiate a claim.
  • Call your fellow owners, partners and shareholders.
  • Speak to your store manager about not answering any questions from the insurance adjusters or media.

By order of the fire marshal, our facility was closed to all traffic and we were required to have 24-hour security until the burned RVs were removed from our driveway, which took three weeks.

We incurred numerous expenses which had to be paid prior to the insurance company settling the claim with us. Keep a detailed record of all expenses associated with the emergency and insurance claim.

EXPENSES PAID PRIOR TO INSURANCE SETTLEMENT

  • Wrecker service (fire department ordered stored vehicles to be towed from the building)
  • Temporary fencing
  • Security
  • Extra staffing
  • Door removal
  • Locks and chains – to secure temporary fencing
  • Testing required by the building engineer
  • Volunteer fire department services

EXPECTED EXPENSES

  • Demolition
  • Cleanup
  • Engineering (new building)
  • Permitting
  • General contractor fee
  • Steel, fabrication, delivery, erection
  • Electric
  • Lighting
  • Overhead doors
  • Restoration of buildings affected by smoke damage
  • Sprinkler system (code update – luckily our insurance covers the cost of any code updates)

In addition to the expenses we have already paid and those we anticipate, we have lost revenue because of the fire. The building had to be demolished.

Going through a fire can be traumatic on your staff and certainly on your tenants. It is important to train your staff about how to handle a disaster BEFORE it occurs. Below is a list of items you should have in place now.

BE PREPARED

  • Import a form letter into your property management software stating access to the facility is closed because of unforeseen circumstances, so your manager can easily email tenants.
  • Check your insurance coverages for lost revenue, code updates and volunteer fire department invoices. Verify each building has the appropriate value and square footage.
  • Discuss how to handle a disaster with your manager.
  • Require your manager to keep a printed current rent roll, which includes telephone numbers, at all times, preferably kept off site.
  • Reserve a minimum of $25,000 for upfront out-of-pocket expenses for clean-up.
  • Perform a lease audit quarterly.
  • Require tenants to purchase or provide proof of insurance on their stored goods.

Developing Your Disaster Plan