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. 

Preparing to Use Your New TSSA Rental Agreement 

by Kristy Breaux, TSSA Deputy Executive Director

One of the most important benefits of membership in TSSA is the right to use the renowned TSSA Rental Agreement. Having a basic understanding of the contract’s terms, as well as the decisions you as the business owner must make, is a great place to start. With this blog, we will focus on Page 1 of the lease, which includes all the items that are not simply defaults (in other words, things that will need to be filled in at the time of rental or decided in advance.) 

The TSSA Rental Agreement is a lease contract between you and the tenant outlining all fees and responsibilities. The agreement informs the tenant of your policies and protects you from damages, lack of payment, or other circumstance that may arise. If this is your first time using the printed TSSA Rental Agreement (or e-Lease if using electronically), this guide will help you get started. For a more detailed look at the terms of the lease you can read this blog or watch this short video
 
The first section, Tenant Information, collects the contact information for the tenant. The customer will need to identify who should have access to enter the unit and who should be notified in case of emergency.  That can be the same person or two different people. It’s important to note that the emergency contact (unless named as having access rights) is not authorized to enter the unit unless there is legal reason for such. Additionally, anyone listed as authorized to enter the unit may be given account information. If the person listed as authorized to enter does not have a key, facility staff may assist by cutting the lock. It’s helpful to explain these things to the tenant during the lease process. In either case, neither the person with access rights nor the emergency contact have a financial responsibility. This falls solely on the tenant listed.  

TSSA recommends that only one person or business be listed on Line 1. Spouses or significant others can be listed as having access rights. That way, you are only obligated to deal with one tenant, who makes all decisions regarding the contract.  

 

Paragraph 2 asks the important question about military service. (Special rules apply to foreclosures and evictions of military personnel because of the federal Servicemembers Civil Relief Act, so you need this answer.) Form ADD-4 may be used as an addendum for lease agreements with service members.  

This paragraph also explains the tenant’s obligation to keep information updated. If the tenant moves or is unreachable, the burden is on them to make you aware of current contact information so that any communication you send reaches them. 
 


Paragraph 3 is the space commitment. The minimum lease term is the minimum number of months the tenant is obligated to the terms of the contract. Most members use a default of one month, but you can use a longer minimum if your customer agrees to it. After that initial period, the tenant leases from you on a month-to-month basis. The obligation to pay rent stays in place until the tenant provides a 10-day move-out notice as outlined in paragraph 9 of the lease. 

You can use forms ADD-10 or ADD-11 if the tenant is storing a vehicle, boat, or RV, in addition to renting the unit. Or, TSSA does offer a rental agreement specifically designed for storage of vehicle, boat, trailer or RV when the tenant is renting a parking space or enclosure rather than a regular self-storage unit.  If your facility offers exclusively boat and RV storage, you’ll want to consider using the Vehicle, Boat and Trailer Rental Agreement.  

 

Paragraph 4 details the rental rates, late fees, and all charges for non-compliance. While the rental rate may change based on the unit size (if you offer a variety of unit sizes or amenities), the remainder of the fees are generally the same for all tenants.  Checking to see what neighboring facilities are specifying for each of these charges is usually a good place to start. Things like charges for the newspaper ads you must run in the event of a foreclosure requires a little research on your part, as you’ll want to cover your costs. Only fees outlined in the contract and accepted as terms by the tenant may be charged, so it’s always better to have these dollar amounts filled in, even if you don’t intend to charge them on a regular basis. There is not a guideline on setting these rates, but we can help you understand each line item so you can make an informed decision. 

A. This is the dollar amount the tenant is expected to pay in rent each month until the tenant notifies you of move-out and vacates the space. 

B. What date is the rent due? Some facilities have all customers pay rent on the 1st of the month while others use the anniversary date of the tenant’s move-in and collect rent throughout the month. The 1st of the month is the most common due date. Be sure to check your management software for your options on rental due dates. 

C. This is the date and the amount charged if the rent is not received. You will need to decide if you will give a grace period and then choose either a date or number of days. For instance, on the 5th of the month a late fee will apply, or 4 days after the 1st a late fee will apply. If you are using the e-Lease, it may be helpful to see what your management software offers as default process for late fees. Some require a specific day of the month and some use a sequential number of days before a late fee kicks in. 

D. In the same format as above, complete this if you will charge a second late fee if rent remains unpaid. 

When determining what fee, if any, to charge for E through O you will have to decide what pass-through costs may apply—staff time, and other required resources, etc. PLEASE NOTE: You do not have to apply a fee to these specific line items, but if you choose not to, you cannot charge the tenant later for these specifics.  If you never intend to charge a fee for an item, you should indicate $0 as to not have any empty blanks on the agreement.



Paragraph 5, Payments and Notices, allows you to indicate what payment methods—cash, check, or credit card—you will or will not accept.  Please note that you can change the method of acceptable payment in the future after giving notice to the tenant. 



Paragraph 6, Special Provisions, allows you to add any pertinent facility rules that may not be addressed in the lease. This may be guidelines for parking, notice of a required lock type, gate access rules, etc. 



If you have a lengthy list of rules, you will want to consider using an addendum, indicating that rules addendum in Paragraph 7. 

Paragraph 7 is the place you’ll indicate any addendum you use on an ongoing basis.  If you generate a particular addendum with every lease, you can have this hard-coded into your e-Lease so this remains checked and ensures your facility manager has communicated this to your tenant. Some software programs will require the addendum to be sent to the tenant separately from the lease. In any case, if any addendum is checked on the lease, the tenant is signing off that they have received and agreed to the terms, so you need to provide the tenant those documents.



Signature block—To e-sign or not? 
Lastly, the signature block completes the agreement between the lessee and the lessor. If you are using the e-Lease you will need to understand how your management software processes the electronic signature. Some will have a fully integrated system with a digital signature option and others will generate a PDF that may require the tenant to insert a signature and send back to you for completion. 




If you have further questions on setting up your new TSSA Rental Agreement, please contact us at 512-374-9089 or elease@txssa.org. 

Additional Resources:

Blog: Lease Essentials

Video: Rental Agreement Overview   

Additional Forms and Addenda (Requires Membership Log In)

Read More Blog Posts » 

Preparing-to-Use-Your-New-TSSA-Rental-Agreement

Independent Operators Respond to COVID-19
by Taressa Dominguez, TSSA Director of Education & Marketing
April 24, 2020


Knowing how to react to the sudden change in self-storage operations due to the impact of the coronavirus is a challenge, and there is no “one size fits all” solution.  That’s why hearing what other self-storage operators and managers are doing to continue sales and accommodate customers and their communities is so valuable. We checked in with JoLea Pingelton, All*Star Storage, and Jeanne Dube, Solid Ground Storage, to gain insight into their operations and how they are tailoring their response to their tenants during this unprecedented time.  

What were your main priorities in responding to the COVID-19 threat at your facility?

Jeanne Dube:  We wanted to limit traffic and points-of-contact.  The first issue was the amount of UPS drop-off traffic we have in the store.  We immediately stopped indoor UPS drop-offs and posted a sign indicating that UPS would still be picking up from the outdoor drop box.  Second, we started working from home with the e-Lease we just installed.  Managers trade off the onsite duties, but are never onsite together.  We still take appointments if necessary, but advise everyone to keep a distance and wear a mask.

JoLea Pingelton: First around mid-March, we did simple things.  We increased the cleaning frequency and started cleaning touch-points after every customer.  As “stay in place” orders were issued, we closed down the office, but not the gates.  We didn’t want to take the risk to our employees or customers; but as the orders were extended we started to take appointments, while still implementing social distancing.  We have installed the e-Lease and have been able to continue leasing that way.  

How are you handling late fees and foreclosures?

Jeanne Dube:  We will look at it case-by-case and continue to evaluate the situation month-by-month as we go along.

JoLea Pingelton: We’ve stopped foreclosures and auctions.  We will handle late fees on a case-by-case basis.  If they are always late, we will enforce the fee.  If this is the first time being late, we may waive it.  Some local restaurants are tenants, so we have already waived all their April rent.  They are doing a lot to help feed the community, so we are doing what we can to help them. 

How are you addressing security onsite?

Jeanne Dube:  Same as usual.  We walk the property regularly.

JoLea Pingelton:  We have employees alternating onsite that can still watch the property and keep track of who is moving out.  We have access to cameras and are having a Ring camera put in at the front door so we can see who is coming and talk to them if necessary.

Overall, what has been the biggest challenge?

Jeanne Dube:  One of the challenges has been communicating our change in operations and social distancing procedures to some of the customers.

JoLea Pingelton:  The biggest challenge has been readying the office to be fully online.  We’ve had to update our phones, which included a wait time, just so we could forward office calls.

While nobody has all the answers, and the answers may change from month-to-month, it is important to continue to evaluate what your priorities are and set a plan to address them.  Remember, plans can always be adjusted to what suits your facility and community.

What are you doing at your facility to combat the impact of the COVID-19 crisis?  

Let us know.

 

 

Independent-Operators-Response-to-COVID-19

Turning a Property Around
by Tom Maxfield, Move It Management
March 31, 2020


It is all too common to hear about a particular facility not succeeding in its market, or, perhaps the facility was once successful but has since declined. For an owner or manager concerned about falling performance, rehabilitating a facility can be a daunting and often perplexing undertaking. However, most of the time, the keys to a successful turnaround program are right under your nose. So, don’t panic about the situation. Instead, become purposeful about identifying the problems and implementing a turnaround plan.

The first step is to simply recognize doing “something new” requires you to stop doing “something old.” It can be difficult to organize.

Your priorities as an owner or manager after years of “we have always done this way” procedures.  The primary goal is to always increase NOI. A troubled facility is always failing in that goal, and as a result, alternative ideas, strategies, and processes are necessary to achieve the desired outcome. Any owner or manager, regardless of the size of their facility, can, and should provide a safe, clean, pleasant environment for tenants and employees. Doing so will almost always add value to the storage experience, generate additional income, and prolong the life of your asset.  Over time, some owners get these priorities out of order or take shortcuts causing poor customer satisfaction, declining staff morale, deferred maintenance, and underperforming financial results.

Consider Your Facility’s Appearance

“Curb appeal” is a frequently used term to describe the aesthetic appeal of your property when first seen by a drive-by customer. We know that term refers to a fresh-looking image including neat landscaping, quality signage, and exterior lighting.   However, imagine what prospective tenants are sensing when they enter the office, and they see dirty windows or flooring, stained ceiling tiles, faded painting, and a messy desk. And, if you show them a unit, what if they see litter around the property, filthy hallways, or rodent droppings in the unit? The solution is to roll up your sleeves or hire a cleaning team and clean up your property. Your property may not be fancy but it can be clean. Once done, you can proudly proclaim, “We are the cleanest facility in our market.” Customers will love and appreciate your hard work and commitment.

Assess Your Facility’s Security

Customers want to know you care about their safety and their stored property. That does not mean you assume responsibility, either real or implied.  Rather, in this area, the level of trust with your customers is proportionate to your maintenance of access and surveillance equipment.  A customer will quickly lose faith in you if half of the video cameras are not working or the manager has no training in operating the DVR. While modern systems for access, surveillance, alarms are recognized added value features for most customers, it is essential to maintain the functionality of the security systems in your facility, regardless of the sophistication of the equipment. Doing so will create peace of mind and goodwill with your customers.

Analyze Your Marketing Program

Troubled facilities are not keeping pace with the market.  The reason is generally due to complacency.  Getting out and visiting the competition provides immediate feedback as to your level of curb appeal, cleanliness, professionalism, and customer service compared to your competitors. Prospective customers already know the differences from their comparison shops. It would seem obvious managers would be knowledgeable and proactive to these differences, but generally, you will find they do not. Even if prospective customers drive by your facility, most of them seek additional information online. Having an informative website is important, of course, but having free listings on local search directories is one of the quickest, effective strategies for generating more inquiries from prospective tenants. Registering the facility on internet directory or aggregator sites (including TSSA’s Facility Locator) can also produce significant new traffic but recognize most of these prospective tenants are price oriented in their decision-making process. They are using an aggregator site to easily compare deals or prices.  If this strategy is used, be prepared to offer a rent discount to the new customer while paying a commission to the internet site.

Employ Revenue Management

Underperforming facilities generally do not change their asking rates on vacant inventory because of fear of losing a new rental or lack of knowledge of market rates.  If a unit category has not leased up over a period of time, it clearly indicates potential tenants don’t believe that unit type has value at the existing rent rate.   Correspondingly, if a unit category has a high occupancy for a period of time, it indicates potential tenants not only find the rent rate attractive but they might also pay a bit more due to the general demand.  Many companies use their management software to analyze these trends to decrease rent to stimulate sales or to increase rent to maximize income.  Similarly, satisfied existing tenants recognize moderate increases in rent from time to time. For the customer, the acceptance of the increase is tied to their perception of fairness.  If an owner or manager is providing a high level of service and maintenance of the facility, the customer is more tolerant and accepting. To be successful, it is advisable for owners to correct facility or personnel problems prior to implementing an aggressive rate increase program.

Review Processes and Procedures Commonly, troubled facilities have inadequate daily, weekly, and monthly operations.  As a result, management control is inconsistent.   Site related duties for the manager, including daily security checks or bank deposits, are often not defined. Importantly, many poor facilities have no defined procedures for collecting delinquent rent or conducting lien sales.  With their lease, TSSA has provided members with the most complete lien sale procedure in the nation, and there is no excuse for not using this statutory tool to collect past due rent and free non-productive inventory for new rentals.

Evaluate Your Property Manager

How “good” is that person for your property?   Even though there are a variety of assessment resources, it is rare for owners to make minimal investment in personality and skill profiles when hiring their employees. As a result, many facilities do not perform because the wrong hiring decision was made.  The majority of these managers did not receive adequate training when they were hired nor were they afforded training on an ongoing basis.  If the facility has deferred maintenance or a lack of organizational structure, it should not be a surprise that the manager has lost motivation and instead copes with just maintaining a job.  Often, these situations are not salvageable.  How- ever, high expectations of the owner carry the responsibility of providing a supportive atmosphere for the manager to succeed. A defined job description regarding duties, competitive compensation, benefits, working environment, and training are essential to developing great managers. In a relatively short period of time, a bad manager can ruin a good property, but conversely, a good manager can improve a bad property.

Turning around a troubled property requires a commitment to create a new atmosphere and experience for the customers and employees. It also requires capital and organization to implement a defined plan for improvement. It normally takes six months to complete the plan, but the improvement and pay-off can be inspiring.

 

 

Turning-Property-Around

COVID-19 Response: Across Multiple Facilities
by Taressa Dominguez, TSSA Director of Education & Marketing
April 24, 2020

As the coronavirus crisis evolves and we are figuring out how to address the new reality in our businesses, it is helpful to consider the many business processes implemented.  Knowing what peers are doing and getting an idea of how the industry is responding, not only helps breed new ideas, but also the confidence and security in your own procedures.

We spoke with Raheem Amer, Senior Vice President of Operations with Devon Self Storage, and Troy Sheppard, Chief Operating Officer with The Jenkins Organization, to see how they and their teams are responding to COVID-19 across their self-storage operations.  Here’s what they shared with us.

What procedures do you have in place in response to COVID-19?

Raheem Amer: As the pandemic grew, we implemented social distancing, locked the doors and wanted a no-contact sales process where we would still talk to the customers, walk them through the sales process and get the rental—minimizing the exposure to customer and manager.

At the same time, it is extremely important right now that we’re making customer call backs as soon as possible.  If people are looking for a unit when they are supposed to be hunkering down and staying safe, they are really interested in a unit; and if they don’t get a live person as soon as possible, they are just going to move on to the next storage facility on the list.

Troy Sheppard:  Our first step was to analyze the situation and make sure we could keep our offices open to safely help our customers, while at the same time keeping our employees safe. Now, all location offices are open with strict adherence to CDC guidelines and social distancing. Most locations have tape marks on the floor indicating where to stand as well as signage on the doors indicating adherence to these standards. We also try to encourage online payments/rentals, etc.

What has been your biggest challenge so far?

Raheem Amer:  The biggest challenge would be the flow of customer coming to your property—walk in leads. We have seen a drop in walk in traffic. The people that are coming in have a focused interest. That is why they left their house—to go to storage!
 
Now on the other end, we are seeing a drop in move out traffic. We are seeing this because customers are sheltering in place. But we know this trend will change soon. The challenge is to grow occupancy in preparation for those move outs.

Troy Sheppard:  The biggest challenge initially was assuring employees that we would do our best to keep all properties open. Most employees were skeptical that we would be able to, and were afraid of not working and not getting paid. 

How do you plan on handling payment issues, late fees and foreclosures?

Raheem Amer:  First, we’ve waived all late fees. There was a thought process behind it. It’s easier to keep a current customer than trying to gain a new customer.  If you look at how much you spend on a new customer acquisition this is a no brainer. So we have decided to appease that frontline customer.

Second, we’re not overlocking customers and have stopped auctions. We’ve communicated with them, telling them not to worry about storage right now and to go take care of all their other things.  Hopefully we win them as a customer for life.

Troy Sheppard:  We are taking those case by case and have, in a few instances, deferred rent. We have not waived any rent payments thus far. We are handling late fees case by case as well. We have had quite a few instances where we have waived late fees for non-habitual late paying customers who tell us they were laid off, etc. We have temporarily put a stop to foreclosure sales, but we are following through the process up to the point of advertisement and sale.

What steps did you take to ensure continued operation as an essential business?

Raheem Amer:  As different states and cities shut down, we contacted legal to get every manager a letter saying that we are an essential business, the reason we are an essential business and that the employee is either on their way to a property or coming back from a property.  Each manager has a digital copy and a hard copy of it in their wallet.

Troy Sheppard:  We are not taking any extraordinary measures. We have one location that the city has deemed us non-essential despite our arguments to the contrary. We currently operate that facility with the office door locked and manager on site. We have elected not to challenge this ruling for now to avoid any further disruption by city law enforcement.

What are you doing at your facility to combat the impact of the COVID-19 crisis?  

Let us know.

 

 

 

COVID-19-Response-Across-Multiple-Facilities

10 Ways to Boost Your Value

by Mike Miggins, CBRE

1. MARKET INTELLIGENTLY

Are you maximizing your marketing dollar? Are you thinking creatively? An effective website can be essential to capturing today’s savvy consumer. Approximately 80 percent of your tenants will come from a certain demographic and are coming from a select few marketing programs. Know your demographic!

2. DON’T GIVE IT AWAY FOR FREE

Are concessions hurting or helping you? Concessions are a powerful tool to attract tenants. However, be careful not to advertise blanket specials. Instead, concessions should be strategically targeted to increase income by discounting specific unit types that have historically low occupancy levels. This will not only increase the productivity of those unit types with higher vacancies, but will also sustain the economic productivity of unit types heavily demanded by the market.

3. IMAGE IS EVERYTHING

What first impression does your facility give to potential customers? The best tenants will be looking for high-quality, attractive facilities. Simple practices such as a fresh coat of paint, pressure washing doors and exteriors, picking up trash, and sweeping out units are all affordable ways that please those paying attention to detail. A few flowers and nice landscaping will also add greatly to your facility’s curb appeal.

4. MAXIMIZE UNIT EFFICIENCY 

Is the layout of your facility negatively affecting your income generating potential? Maximize the productivity of your property. Remember that overall income trends upward as unit sizes decrease in most markets. To the degree that the market will absorb them, partition unnecessary large units into unit sizes that rent at a higher price per SF to recapture lost potential income. Again, know your demographics! Ending up with too many 5x5 units could result in low occupancy and unsatisfied income expectations.
 

5. LEVERAGE ZONING

Are you aware of the extra value hidden in the land beneath your facility? Knowing the zoning code that governs your parcel can open up opportunities to create substantial income streams that are steady, dependable, and low maintenance in nature.

6. PUT YOUR BEST FACE FORWARD

Who is the face of your facility? Your choice of staff will be the face of your business. Managers who can give a good impression to potential tenants with charisma and attentiveness as well as capture your vision of professional service will attract and retain your tenants.

7. TRACK YOUR PERFORMANCE 

Do you know exactly what your facility’s weakness is? By keeping detailed records on a per-unit basis you can address individual supply and de- mand issues. By keeping track of your customer service and tenant flow you should notice trends that may help you capture more business. In both instances, tracking your performance can help you chart your path to increased value.
 

8. KNOW YOUR NEIGHBORS

Do you participate in your community? Get involved with businesses and residents, and you will gain a more intimate knowledge of your market area, which will allow you to customize yourself to their needs.

9. UTILIZE SECURITY

Do tenants know your facility is safe? Reliable and visible security features will attract high quality tenants and lend to the credibility of the facility. Video surveillance, electronic gates, fencing, individual unit alarms, and on-site management are all becoming standards in the self-storage community.

10. STORAGE INCOME IS NOT EVERYTHING

How much ancillary income does your facility produce? The most successful operators in this industry have recognized that income is not limited to the monthly rent of their units. Additional income generators include RV/boat storage, specialized wine storage, safe deposit boxes, and a host of other creative ideas. Also, look at miscellaneous income items which could include administration fees, late fees, merchandise sales, truck rental, video conference rooms, and auctioning services.

 

 

 

10 Ways to Boost Value

Find the Perfect Fit
Hiring the Right Manager for Your Self-Storage Business

by Jennifer Jones

Your facility manager is the face, heart and soul of your business, which means finding, hiring and training the right person is key. While that perfect fit will differ from store to store, it’s important to take your time to hire for the position. “Take the time up front to look for the perfect fit,” says Tristina Volesky with Lockaway Storage, San Antonio. “It will be time worth spent. Rushing to hire someone can sometimes cause more time and money down the road if you find out they are not a good fit.”

“It’s beholden on all of us, who own stores or who are in the industry, to elevate the profile of the staff we hire, not just through training, but also through coaching,” says Bob Vamvas with Storage Revenue Solutions, Richmond. “We may need to pay them differently. You need to ask yourself: Do you want a gatekeeper or an expert? Where are you going and growing? Make sure the person who represents your business is someone you are proud of and a professional in the industry. By hiring the right person, tremendous things happen in stores and portfolios.”

Job Description

You need a good job description so you know what you are looking for and attract the right candidates. “A job description is important in two ways: for candidates to understand what they are doing and for legal reasons,” says Mike Gately with Daughtry Properties, San Antonio. “If they think they will be in an office and you ask them to clean up a unit, and they balk, then you have a problem. For legal reasons, if you have an issue and you haven’t completely explained the job and have to terminate, then you may have to pay an unemployment claim.”

The job description will also help you narrow your focus. “The criteria we look for in a manager can differ for different sites,” says Volesky. “If we have a facility that is in lease up, then we need a manager who is strong in marketing. If we have a facility that is a busy location then we need a manager with energy and a can-do attitude to get things done. If we have a facility with storage, truck rentals, and mini offices then we need a manager who can multi-task.” 

Job Posting

“Expand your resources in searching for a new manager: different job posting websites, use signage, ask for trustworthy referrals,” says Volesky.

Gately also advises to put the word out to current employees and suggests Craigslist. “We’ve tried other things, but have had the most success with referrals and the information we keep on file from past people who were looking.”

Vamvas adds, “A manager who’s a high performer will refer someone who is like them. They won’t refer someone who won’t put in the same effort they do.” He also suggests using Indeed.com.

Experience

While some prefer to hire someone with self-storage experience, others prefer different skill sets. Gately says the best managers are: motivated to help people, friendly, good listeners, enjoy the work they do, have an entrepreneurial spirit with a strong work ethic, and welcome responsibility.

“I look for someone who has worked in a managerial capacity that proves they are a hard worker,” says Vamvas. “Boutique fast food restaurants like In-and-Out Burgers are good for showing that. I also look for community involvement.

“I also like people with marketing backgrounds who aren’t afraid to get a little dirty by spraying for weeds and sweeping out. They tend to be more outgoing, customer-service driven and articulate. People who have worked as a recruiter or at a staffing agency make good self-storage managers as well as people who have experience in apartment leasing and are involved in the community.”

“I believe that to be successful, first and foremost, a great self-storage manager must possess superior customer service skills,” says Stephanie Skinner with Seguin Self Storage, Seguin. “This is a service industry, why wouldn’t one strive to provide the absolute best service possible to their customers?”

Gately recommends, “Hire for attitude even more than experience. Within a few weeks or months, you can train people to learn the skills, but attitude is not a trainable item­. There will be a certain way they conduct themselves with the public. If they have a down-beat attitude, you start with a deficit you can’t overcome. Determine if they welcome new challenges.”

Since we need customers to survive, “We look for candidates who have had longevity,” says Volesky. “If they do not have self-storage experience, then we are looking for someone who has customer service experience. Someone with management experience is also a plus. We also make sure they have basic cash handling skills and computer skills.”

The Interview

“Set up multiple interviews before you hire,” says Gately. “Depending on logistics, have one of your senior managers interview at the site, or at your corporate office. Have two to three different interviews. Note if they get there on time. Have them interview with different people in addition to you. I may think they are a great fit, but a manager or marketing director has different perspectives, which improves the chances that we will have a good hire. We each have our own biases and someone else may be able to pick up on something I miss.”

Interview more than once, so you have spent more time with the candidate(s) that are potential new hires,” says Volesky. “Be organized in the interviewing process: review resumes, ask the right questions, ask the important questions, and ask the same questions.

“We are sure to ask questions that help us figure out if the candidate is going to be a good fit for our company and the culture we have created.  We also ask questions that help us get a good idea of their work history, why they feel they will fit our position, how they work with others, and how they present themselves professionally. Some of our interview questions are:

  1. Name two accomplishments in your last position.
  2. What specifically about your past work experience makes you a strong candidate for this position?
  3. What specifically about our open position interests you?
  4. Tell me something you have accomplished as part of a team.
  5. What motivates you?
  6. Name a time that you wow-ed someone.
  7. What techniques do you use to keep yourself organized?
  8. What does good customer service mean to you?

If Volesky interviews a candidate that has self-storage experience, then she asks questions that will let her know how much experience they actually have. Some example questions:

  1. What size facility have you worked, sq. ft, and number of units?
  2. What did a normal day of work look like?
  3. What did you do to market the facility?
  4. What did you do to bring in more income to the property?

Gately adds, “A good prospect is interviewing you as much as you are interviewing them. If you are taking calls when you are interviewing them then they may not want to work for you. It’s a two-way street. Every candidate deserves respect and your undivided attention. Also, if you get a good candidate, then move fast, because you will lose them if you don’t.”

Characteristics

When interviewing, Vamvas has a variety of questions to find out what characteristics a candidate has:

  1. Describe for me your closet? How do you hang your shirts?
  2. Where do you keep your car keys?
  3. Where do you keep your tools? Would I have a hard time finding a screwdriver? Hammer?
  4. What did you do the last two weekends? When did you plan those?
  5. Describe an adventure you’ve had.
  6. Would you be embarrassed to have someone come to your home right now? Why or why not?
  7. What was the biggest failure you’ve ever had on any job?
  8. What are/were the strengths/weaknesses of your last boss?
  9. Explain a way you sought a creative solution to a problem.
  10. What MS Office products do you use?

 

As the candidate answers, Vamvas looks for the following characteristics:

  1. Adventurous – from renting units to selling ancillary products to marketing, I look for someone who doesn’t mind trying.
  2. Self Sacrificing – for superior customer service look for someone who wants to help.
  3. Refreshing – when you walk into this person’s office you can feel their positive attitude; they never have a down day.
  4. Self Reliant – someone who requires little hand holding.
  5. Faithful – one who won’t quit on me.
  6. Leader – one who will take charge but not be bossy; one whom others gravitate to.
  7. Productive – someone who likes to be busy and will find ways to do so during the slow times of the month.  Also, they will want to work on all managerial responsibilities, such as cleaning the inside of a storage unit and wiping doors down just to make sure the climate control building is spotless. They’ll take the initiative to prepare for the oncoming leasing season by putting together packets. We want a person who will find ways to stay busy and not sit around watching YouTube videos all day.

 

Training

Depending on your facility, training may look different from one to the next. However, it’s a must and there are a number of things you can do to help your new hire integrate into your business and set them up for success.

Gately and Vamvas suggest buddying up your new hire with an experienced mentor manager. “I recommend two weeks of training, four if your new employee doesn’t have storage experience,” says Gately. “An experienced manager who is doing the same thing day in and day out will be in an excellent position to show your new hire the ropes.”

In addition to pairing up the new manager with another manager, Gately recommends giving managers the big picture. Include them in financial reviews and ensuring they understand owner goals, why decisions are made and why each lease matters.

“Empowering the manager to solve problems for the customer and be responsive so that each customer has a pleasant experience is something we can offer over the REITs,” says Gately. “We take our smaller size and make it an advantage by allowing the customer to deal with a decision-maker. For example, if a customer has three units and wants four, then your manager will come back with a price. The customer may decide it is too much for their budget. The manager may opt to cut them a deal because they understand that the customer is valuable and will make money for the facility over time.”

“Managers need the ability to make decisions on their own,” says Skinner. “Giving a manager the authority to make decisions based on what is best for the customer, as well as the facility, speaks volumes. Empowerment creates leaders on every level. Lastly, I believe a truly great self-storage manager must be humble, have integrity, and maintain the highest level of accountability at all times.”

Vamvas uses the following training checklist:

  1. Send a formal welcome email to staff.
  2. Review and signature of business controls.
  3. Conduct one-on-one training with an experienced manager (takes 3-5 days).
  4. Partner new manager up for another 5 days with experienced manager.
  5. Cover the following:
    1. Summary of key contacts
      1. Owner, other managers and staff
    2. Summary of technologies in place
    3. Login into and using site management system
    4. How to get callers off the phone and into the store
    5. Renting a unit
    6. Controlling delinquency
    7. Tracking information
    8. Review and signature of other business critical information (responsibilities, marketing, safety and environmental)

 

No matter the size of your facility, or how many you have, hiring a manager who runs it like it’s their own is the holy grail of managers and may seem like a hard task. But, taking your time to find, hire and train the right person will pay off in spades over the long term.

Additional information, forms and a checklist for hiring and firing employees can be found in the Goldbook©.

 

 

 

Finding The Right Manager

Management is the Key to Your Success

by Pamela Alton

The key to success is not just finding and hiring a good manager or what wages and bonuses you should offer, but you must also consider training your self-storage staff to be successful! Once all of this is in place, then there are other things to consider such as regular audits and inspections, site visits, employee reviews and "de-hiring" staff, all worthy subjects to touch upon down the road.

Obviously I can't possibly go into depth on each subject; however, I am going to do my best to try to give you some insight from my 26 years in the self-storage industry and hopefully I can get your creative juices flowing by giving you some ideas to help you be a better self-storage owner or operator and increase your bottom line!

 

FINDING AND HIRING MANAGERS

 First let's talk about finding and hiring good managers. As we all know, the people you choose to manage your facility will make the difference between a highly successful operation or a mediocre one. Finding that perfect management staff is not always an easy task to accomplish!  Where do you find them and what do you do with them once you have them?

To find managers, you can place an ad on any number of employment websites available today, such as Monster, ZipRecruiter, Indeed, CareerBuilder, Craigslist, WorkingCouples.com (if your position is for a resident manager team), trade magazines or use one of the placement services such as my company, Mini-Management Services, or Kelly Services. You can also ask for referrals from your current managers or other owners or operators in the industry. Getting people to respond may be the easiest aspect of your management search.

However, interviewing and matching the right manager with your facility is not so easy.  Everyone can be on their best behavior for an hour, that is why it is important to interview your selection of candidates more than once. If they are currently employed at a facility close enough for you to visit them, you should consider that, providing you get their approval. Most managers seek new employment confidentially and don’t want to jeopardize their current position.

When interviewing candidates, consider their individual talents and match the management personality with that of the facility position you are trying to fill. Traditionally, if you have on-site housing, most full-time resident management staff consists of a husband and wife team. Just because the woman is usually the one that is behind the desk and the man is the one that is responsible for the maintenance, doesn’t mean that she is better at office work and he is better with repairs.  Sometimes she is better at maintenance and he is better with the computer! Perhaps he is more outgoing than she is and would be better at outside marketing.  Again, look at the talents of each manager and consider giving them job responsibilities that are best suited to their strengths.

           

REFERENCES AND BACKGROUND CHECKS

Once you have narrowed down the best possible candidates, then you must check their work references, and when I speak of "work references," I mean past supervisors or owners, not tenants or co-workers, friends or relatives. Do you think they will provide references from friends[TU1]  or family who will speak ill of them? Of course not!

Some large companies will not verify anything more than employment dates and job titles. I have been in this business for a very long time and know a lot of people, and thank goodness I am lucky enough to get a little more information than most because people know they can speak candidly with me about an employee and it won’t go any further than me! 

I also suggest if a candidate is currently employed, have someone telephone shop them to evaluate their telephone skills. You want to make sure the person you hire answers the telephone in a timely and professional manner.  In addition, you want to make sure the person you hire tries to close the sale by scheduling an appointment to visit the facility and rent a space. We all know how much it costs to generate a call, and we want to make sure it pays off by having a professional answer the phone! 

Next, you will want to conduct a background check. There are numerous companies that specialize in background checks, personality tests, drug tests and credit reports.  You can find these companies on the Internet or ask other owners for recommendations. 

LETTER OF EMPLOYMENT AND APARTMENT LEASE

 Once you have done your "due diligence" on the possible candidates and have selected your management staff, then you should have them sign a letter of employment and an apartment dwelling lease if you have a resident manager apartment on-site. Your letter of employment should spell out the manager’s typical job duties, their rate of pay and bonus structure as well as the goals you have set for the manager to achieve. This way, you and your manager are on the same page as far as what is expected by both parties. Most states are "employment at will," meaning you can give notice to the manager or the manager can give notice to you to end employment with your company.

If you have a resident manager’s apartment on-site, and yes, I still see new facilities being built with resident manager apartments, please make sure it is someplace you would live.  If possible, have an outside patio or balcony so the manager can get outside with some privacy.  No one wants to drag their BBQ out onto the driveway to grill a steak with moving trucks or tenants driving by! You will attract a better quality manager with a nicer apartment and amenities.

This is where the apartment dwelling lease comes into play! It should cover things like:

  • Manager will reside in the apartment rent free as long as they are employed by the facility;
  • Manager will vacate the apartment once employment ends;
  • Apartment is to be used as a residence for the manager and cannot be rented out;
  • Manager is responsible for any damage caused by themselves, their pets or children, etc.

The lease comes in handy for the eviction process if you fire a manager because things went south and they won't vacate the apartment. I personally have never had this happen. However, I have heard the horror stories of a manager who squats down and won't vacate the apartment. Will a lease stop this from happening? No, but it will make it easier to evict your ex-manager and get your apartment back!

MANAGER WAGES AND BONUS PROGRAMS

While I am on the subject of letters of employment and apartment leases, let's talk about manager wages and bonuses I see offered in the industry today. Please keep in mind that most managers do not contact me for placement to make more money, that is usually their third reason on the list of why they are looking to make a change. However, paying a good manager a few hundred more per month than the owner down the street is a drop in the bucket for a manager who can make you thousands more per month! When I mention wages, there are a couple of factors that need to be considered, such as on-site or off-site, team or single, hourly or salary and don't forget relief managers. I am going to be brief and to the point on this one. 

RESIDENT MANAGERS:

Team salary: $3,400 to $5,000 per month

Single manager salary: $2,200 to $3,000 per month

NON RESIDENT:

Usually single, hourly employees: $12 to $20 an hour

RELIEF MANAGERS:

Hourly: $11 to $13 an hour

*These numbers are general and based upon Pamela Alton’s experience in the industry.

 These wages are general in terms. Some managers may make more and the size of your facility may come into play. I currently have an opening for a resident manager at a facility with 450 units north of the San Francisco Bay area.  The position provides a single, two bedroom, two bath apartment. In addition to the apartment, it pays $17.00 an hour with some participation on medical and a bonus program. 

People will say, yeah, but that's in the San Francisco area. Yes, it is, but a gallon of milk and a loaf of bread is still pretty much the same everywhere. Yes, it is probably higher to live in that area and rental rates are going to be higher as well. The point is, pay your people well for your area and keep in mind that you cannot use the cost of the housing to offset any minimum wage deficiency. In other words, you cannot say to a manager, “I am going to pay you $2,000 per month, but $600 of that is for the apartment, so I will pay you $1,400 per month and along with the $600 for the apartment, your wage package is $2,000 per month. Oh, and by the way, I expect you to work six days a week.” You can do that, but you may find yourself in a situation down the line with the labor department and owing your managers back wages! Not to mention having one heck of a time trying to find a manager to work for that.

Let’s move on to bonuses. Keep in mind, the best bonus program is one that motivates and is achievable. There is nothing more "de-motivating" to a manager than a bonus program that is over complicated and can’t be understood or achieved.  Also, what motivates one manager may not motivate another. Money is always a good bonus, it is usually the right fit and color and will never be returned to the store.

Bonuses can be based upon different variables such as: increasing occupancy levels and monthly income, reducing delinquency and collecting bad debts, being paid for each signed lease, making or exceeding the annual budget figures, renting spaces at full price without discounts or free rent. They can also be based on cleaning up a distressed or dirty facility and office, by doing an outstanding job on the telephone when shopped by a telephone shopping service, by selling merchandise, packing and moving supplies, property protection or renting rental trucks, etc.

Bonuses can be paid in different ways. They can be paid annually, quarterly or monthly.  Besides giving the manager a monetary bonus, bonuses can take other forms such as: vacations or mini-trips, gift cards or other luxuries such as a flat screen TV, video camera or stereo, etc. There is no black and white when it comes to manager bonus programs. 

TRAINING YOUR NEW MANAGER

Now that you have hired your new manager and wages and bonuses are in place, it's time for orientation and training. If you don’t have a clear and concise policies and procedures manual, then you need to design or purchase one, or several, that are available today and customize them to suit your company’s philosophy. (You can even purchase one from TSSA.) Review the manual with the manager.  Discuss job duties and responsibilities.  Be sure to cover company policies and procedures, sales and marketing, daily operations, company forms, rental agreements, chain of command, etc.  Make sure you are both on the same page.

It doesn’t matter if a manager has been in this business for 25 years or this is their first trek into the industry, all management staff needs to be trained, and in some cases, re-trained. Just because a manager has years of experience does not mean they are doing things the way they should be done, or how you want them done. Training is an essential part of your success in this competitive business. Remember, it’s the little things that will set your staff apart from the competition.

If possible, before the new management staff sets foot on the property for their first day, you should set up a week’s worth of training at your corporate office (if you have one). You both need to give each other your undivided attention in this training session. If you have relief staff in place, then have them run the office during your training sessions with new managers. Obviously, an experienced management staff will have more understanding of the operations of a self-storage facility than someone who has never managed a facility.

When it comes to training, please don't ignore your relief staff and leave it up to your site managers to train them. Yes, they can train the relief staff in the mundane day-to-day duties such as taking a payment or doing a move-in and move-out, but relief staff traditionally have been thought of as someone who will "hold down the fort" while the manager has their day off, but relief staff, if trained properly, can be a ready source of management staff ready to move up when you acquire or build your next project.

Things change rapidly in our industry, new lien laws, new ways to market through social media, call centers, etc. Your managers need to have "refresher" courses to keep up with changes. Get them a subscription to industry magazines. Send them to TSSA classes, seminars and conferences. Give them the tools to be successful.

If you show your appreciation and support by paying them well, rewarding them with obtainable bonus programs, patting them on the back for a job well done, or sending a hand written "thank you for your hard work" note, those things go a long way in showing your appreciation for your manager as part of your team. After all, they ARE your operations manager, and without them you could not be successful. Good management is the key to success!

 


 

 

 

Management is Key

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