Most self-storage tenants are respectful and pleasant. Occasionally, however, facility operators must face off with an enraged customer who might be swearing, slamming a hand on the counter, threatening to sue or otherwise acting in a hostile manner. How can you stay calm yet appease these outrageous people?

Members of Self-Storage Talk, the industry’s largest online community, are discussing strategies for keeping their cool when dealing with an upset tenant. Join in the conversation as they share real-life scenarios and how they expertly diffused some very tense situations. What can you add to this hot topic?

A man who purchased the contents of a self-storage unit for $500 discovered a safe inside containing $7.5 million in cash, according to Dan and Laura Dotson, owners of American Auctioneers, the company that presided over the sale. The couple, who star on the A&E reality television series “Storage Wars,” learned of the discovery through a third party earlier this month and shared the story via Facebook video. They didn’t reveal the man’s identity or where the auction took place.

Dan Dotson was attending the Cars, Stars, Rock ‘N’ Roll & BBQ Festival in Indio, Calif., Nov. 2-4, when a woman whose husband works for the lucky auction winner approached Dan and shared the tale. According to the video, the man sought the services of two locksmiths before finding one who could or would open the safe.

After the discovery, the man was approached by an attorney representing the safe owner, who offered him $600,000 to return the money. He declined the original offer but settled on $1.2 million, refunding the remainder of the cash. It’s unclear how the attorney learned of the auction or tracked down the winner.

The Dotsons have asked their social media followers what they would do in this situation. Hundreds of people have responded, according to the source.

Dan Dotson founded American Auctioneers in Riverside, Calif., in 1983, to specialize in collectibles, dolls, furniture and pottery. After he met Laura in 1996, the couple expanded the company to handle self-storage auctions, business liquidations, estate sales, foreclosures and other sales. They launched Storageauctions.net, a database of online self-storage auctions, earlier this year.

Source:
Daily Mail, Buyer Finds a Safe Containing $7.5M Inside Unit He Bought From Storage Wars Host Dan Dotson for Just $500 – But Will Only Get to Keep $1.2M

Lock America International (LAI), a provider of locks and security components for self-storage and other industries, has hired Bo Bowditch to its sales team. He’ll be responsible for accounts in Canada and the western United States, according to a press release.

Bowditch has more than 30 years of experience in serving clients in the OEM (original equipment manufacturer) market for industries such as petroleum marketing, electronics-manufacturing service and vending.

“Bo will be an important member of our team as we continue to move into new markets and expand our product line in our current markets,” said CEO Frank Minnella.

For more than 30 years, LAI has developed and marketed locks and security products for the amusement, fuel-distribution, gaming, information-management and self-storage industries. The company is headquartered in Corona, Calif.

As a self-storage operator, you have a captive audience when it comes to retail merchandise. Most people who enter your office are in the process of packing. Whether they’re relocating, downsizing or using self-storage for a life change such as a divorce, death in the family or new baby, your customers are uniquely amenable to the idea of buying boxes, locks, tape and other moving-related items. If you’re looking to increase your ancillary profit stream, don’t miss this opportunity to meet and capitalize on their needs!

But what if you don’t know the first thing about operating a successful retail space? If you’re already running a busy storage facility, designing a merchandise area, choosing inventory, determining prices, and selling and marketing new products can feel like an entirely new business. Don’t worry! Retail doesn’t have to be a massive undertaking. Consider the following and start today.

Design

Before you start ordering products (we’ll tackle that in a bit), look at your potential retail space. Most likely, it’s part of your management office, and you need to work with what you’ve got. How much room can you devote to this profit center? It’s important to use exact measurements, so consult a blueprint or take them yourself. You’ll use these to order your own displays or provide them to a retail-supply company, as it may be able to help with design.

What if your available space is quite small? No problem. You can still have a comprehensive inventory of moving and packing products. The solution is right under your nose: Use a storage unit! You can display a few key products in the office but keep the bulk of your inventory out of sight. You can even use a poster, digital display, or binder with photos and descriptions to show customers what’s available. Once they’ve selected what they want, you simply gather their purchases from the unit. Even facilities with no office space can still operate a thriving store using this method.

Just remember that a successful store is visually appealing. Think about the last time you walked into a retail space. Was it well-lit and organized? Follow these simple tips to keep your store clean and inviting:

• Avoid harsh, fluorescent lighting.
• Keep all products in their proper place. Use downtime to organize any items that are out of order.
• Dust and sweep the area regularly.
• Make sure products are well-marked. A customer shouldn’t have to ask how much something costs.
• Consider using digital signage to reduce paper clutter.
• Consider playing music over a speaker system, but choose something isn’t polarizing or distracting.

Inventory

Use these two words your retail mantra: Start slow. No matter what your product supplier says, there’s no need to offer all the bells and whistles right off the bat. At first, you only need basic items such as boxes, locks, tape, box cutters, bubble wrap, packing foam, labels and tape measures. Then track which items are popular and ask customers what other products they’d like to see. From there, you can determine what to order in bulk and what to add.

Once you’re ready to expand your offerings, consider items that are related to your local market or other services you offer. For example, if you offer RV storage, you could sell levelers, holding-tank treatment and antifreeze. If you offer wine storage, you might sell bottle keys and stoppers or glass decanters.

Think about the last time you bought a pack of gum from the grocery store. You probably didn’t go to the store with the intent of buying gum. You went to get things you needed and then, while waiting in the checkout line, you saw the package and thought, “Sure, why not?”

Quick-sale items are often referred to as “impulse buys,” and you can certainly work them into your self-storage retail plan. Keep low-cost, enticing items by your register so customers can easily grab and add them to their order. They should be inexpensive, so customers can justify purchasing them. Options might include gum, candy, markers, packing tape and box labels.

Pricing

Pricing is all about balance. You need to strike an equilibrium between capitalizing on your captive audience and establishing fair, attractive prices. Yes, you can markup products by as much as 100 percent on the wholesale price—for example, if a lock costs you $7, you can charge $14—but don’t get so carried away that you deter customers from buying. If you’ve ever forgone a drink at a concert because the bar was charging $12 for a beer, you know where this line is. Anything over $20 is going to start turning people off.

Sales

The key to any profit center is to view it as an add-on rather than an essential. Your primary focus should always be your self-storage offerings. With that in mind, don’t be discouraged if your retail space doesn’t generate a massive amount of revenue immediately.

To increase sales, incorporate your retail offerings into your self-storage sales presentation. Mention the items you sell to new and existing customers. You can also offer specials, such as a discounted lock to a new customer or a 20 percent coupon on retail purchases as a thank-you for a long-term tenant. This will put your retail space in customers’ minds and make them more likely to purchase moving and packing supplies from you.

Customer service is also crucial to increasing sales. All employees should be trained to mention products during the leasing process and know the ins and outs of your retail offerings. For example, every team member should be able to explain the benefits of various locks and recommend products for storing certain items.

Marketing

The bulk of your retail revenue will come from tenants, but don’t limit your customer base by neglecting to market to the community. Post signage outside your facility that clearly promotes your retail center to the public, letting them know you sell moving and packing supplies.

In addition to this curbside marketing, use social media. You can also write a blog on your facility’s website related to retail products. For example, you might create a post on how to store a mattress in which you mention that your facility sells mattress covers.

Lastly, if possible, put your logo on your retail products to increase brand awareness. Many retail suppliers are willing to assist with this.

When introducing merchandise at your storage facility, start slowly, stay aware of which products are popular in your market, and be proactive about getting the word out. Having retail space is a great way to garner more revenue without dramatically increasing your overhead. It’s also a smart way to increase the value of your self-storage business by upping your net operating income. Whether you go big with an expansive store with specialty products or stick with the essentials, it’s easy to find success.

Krista Diamond is a staff writer for StorageFront, which allows customers to custom search and compare thousands of self-storage facilities. She’s a graduate of the University of New Hampshire and lives in Las Vegas. When she isn't writing about storage, she’s climbing mountains in the desert. For more information, visit www.storagefront.com.

Now that you’ve had your last pumpkin latte, made your final turkey sandwich and put the finishing touches on Santa’s arrival, it’s time to plan your self-storage facility’s annual budget for 2019. If you’ve never created a financial plan, there’s no better time than the present to start.

The budget process is necessary for several reasons:

• It creates a fiscal “road map” for the year. What do you expect from your operation each month, quarter, etc.?
• It allows you to review the performance of the previous year in detail. What challenges, unexpected expenses or revenue surprises did you experience?
• It gives you the opportunity think about your capital projects and investment goals. Will you need to refinance your property, or do you need to expand your square footage?
• It will give you and your team a score card to help grade your operational strategy.

The five areas on which you need to focus when building your 2019 self-storage budget are facility revenue, marketing expenses, payroll, site-maintenance costs and property taxes. Let’s look at each.

Facility Revenue

What factors do you consider when projecting facility income? Do you expect revenue to be higher, lower or about the same? You’ll need to reflect on the following:

• What are your expected street rates?
• What’s the average stay for a new customer?
• What kinds of discounts and specials do you offer?
• Will you charge admin, late or lien fees?
• What ancillary items will you offer, such as truck rentals, retail merchandise or tenant insurance?
• Have you implemented any revenue-management systems? If so, what kind of income should be created?

Finally, do you have any new competitors that have opened or plan to open in your area that could derail your expectations? Markets experiencing heavy self-storage development are feeling downward pressure on street rates. Even if you’re confident that some of these factors won’t affect your projections, now’s the time to stress-test them to ensure your facility can handle any sudden changes in your market.

Marketing Expenses

Next, it’s time to consider expenses. Over the last few years, many self-storage operators have cut costs from critical areas such as marketing and sales training without any negative impact to facility occupancy or revenue. In most markets, exceptionally strong demand has offset these cuts. However, as additional competition creeps in, funds for these items won’t only have to be more substantial than in previous years, it’s possible they’ll have to be significantly increased.

When building your marketing budget, consider the following:

• In which kinds of online marketing will you invest? Pay-per-click, social media, aggregator or search engine optimization services?
• What kind of website will showcase your property to customers?
• What programs will you offer to promote online reviews and testimonials?
• Will you offer a referral program? If so, what kind of expenses will be associated with it?
• What programs will you implement to market to local businesses such as apartment complexes, realtors and movers? Have you considered the costs involved to design and print materials?
• What kind and in what condition is your property signage? Does it need to be upgraded or replaced?
• What tools will you use to track the effectiveness of your marketing programs and sales efforts?

If you’re thinking about adding new marketing methods, consider the effect they’ll have on your cost-per-tenant acquisition. It’s also important to note that many standard marketing costs will likely be higher in 2019.

Payroll

Payroll is another area to review for 2019. It’s been reported that retailers such as Walmart and Target are starting new associates at $11 and $12 per hour. That means the pay variance between entry-level retail associates and self-storage employees is most likely diminishing. How will that affect your pay rates?

Payroll will continue to go up as the overall cost of labor increases, and experienced self-storage managers will become more valuable as additional facilities are brought online. If you have a successful management team, make sure you’re ready to pay them competitively. If you need to hire staff, be financially prepared for that, too.

Site-Maintenance Costs

You also need to think about your site’s overall curb appeal and maintenance needs. To compete with new self-storage supply, existing properties must have great aesthetics and be in good working order. Items such as landscaping, driveways and parking lots, building exteriors, gates, hallways, unit doors, security components, HVAC, and the rental office all need to be reviewed for the new year. What will you need to spend to whip them into shape?

Property Taxes

Finally, an expense that seems to increase without end is property taxes. The word is out, and cities have caught on to the success of self-storage. Due to the robust economy, property valuations continue to increase, and municipalities are adjusting millage rates. Any benefits our industry received regarding property valuations during the Great Recession are over. Facility operators need to plan for annual increases.

If you believe your facility has received an aggressive property valuation, you have the option to challenge the municipality. The overall increase in taxes is something all owners in our industry will have to address annually.

A Head Start

These five areas will likely be the most variable budget line items as operators compete with new self-storage supply. Other expenses such as office supplies, utilities and insurance will likely increase as usual, but not as dramatically.

As you build your budget for next year, remember that you’ll possibly be competing with new facilities in your market. There’ll be more street-rate fluctuations, higher interest rates and an economy that may begin to slow. Preparing now will give your business a head start on a successful 2019.

Matthew Van Horn is a co-founder of 3 Mile Domination Self Storage Services, a full-service management company specializing in self-storage management, feasibility studies, marketing and consulting within the self-storage industry. He’s also the co-author of “Self Storage Domination.” To schedule a free 60-minute self-storage strategy session, visit www.3miledomination.com.

AMERCO, the parent company of U-Haul International Inc., is eyeing a vacant Kmart in Pocatello, Idaho, for conversion to self-storage. The planning and zoning commission last week unanimously approved a conditional use permit for the property at 3945 Pole Line Road, which AMERCO has under contract, according to the source.

“We still haven’t closed on the property yet, but now that we know we can operate in that location conditionally, we are going to put the project in front of our board to sign off for approval,” said Casey Jones, president of the U-Haul Co. of Idaho. “If our board signs off on it, which I expect that they will, then we will complete an expansion of the old Kmart building.”

The 96,000-square-foot structure will be transformed into at least 700 units of indoor, climate-controlled storage. Additional offerings will include hitch installation, a retail store that sells moving and packing supplies, portable-storage containers, propane sales, and trail and truck rentals.

As part of its approval, the commission requested that AMERCO refresh the landscaping and exterior of the building, which Kmart vacated in 2016. The AMERCO board will also need to decide whether to purchase or lease the property, Jones said.

AMERCO’s corporate sustainability initiatives, which support infill development to help local communities lower their carbon footprint, has led to dozens of conversion projects in recent years. Many of these projects include former Kmart stores. Last summer the company purchased a 103,977-square-foot vacant Kmart in Ammon, Idaho, which it plans to repurpose to indoor self-storage.

AMERCO is also the parent company of Oxford Life Insurance Co., Repwest Insurance Co. and Amerco Real Estate Co. Established in 1945, U-Haul owns more than 55 million square feet of storage space throughout North America.

Source:
Idaho State Journal, U-Haul Has Plans to Turn Vacant Pocatello Kmart Building Into Indoor Self-Storage Units

 

The Jewett Family has purchased 180 Lafayette Road in North Hampton, N.H., which includes Route 1 Self Storage as well as three retail buildings and other structures. The property is part of the North Hampton Industrial Park.

The 336-unit storage facility comprises 50,000 square feet, 14,400 of which are heated. The business park totals more than 27,000 square feet and houses 15 tenants, four of which are retail, according to a press release. No significant changes are planned for the operation of the various properties, which will be managed by J Management Inc. under the direction of Kellie Jewett.

“The purchase culminates several months of work between the Jewetts and the sellers, Maggie Fucci and her brother-in-law, Chris Fucci,” said a Jewett Family spokesperson.

The Jewetts were attracted to the property because of its quality and management history under Fucci, the release stated. “This property reflects our confidence in the economic strength of this region as well as our belief in the long-term benefit of good properties that are well-managed,” the spokesperson added.

The purchase was made through a combination of funds from a recent 1031 sale of a Windham, Maine, retail mall, surplus buyer cash, and financing from Enterprise Bank & Trust.

Headquartered in Raymond, N.H., the Jewett Family owns commercial and multi-family real estate investments in Maine and New Hampshire. Its portfolio includes two age-qualified mobile-home parks, two self-storage facilities, several apartment complexes, an industrial park, office buildings, and miscellaneous commercial and industrial buildings.

Stor-Age Property REIT, which operates self-storage facilities in South Africa and the United Kingdom, has released its interim earnings report for the six months that ended Sept. 30. The company reported gains in occupancy and rental rates. Property revenue nearly doubled, while operating profit increased 86 percent to R166 million year over year.

The company continued to perform well despite a “a tough macro landscape,” driven by organic growth, expansion and strong operating numbers in its South Africa and U.K. portfolios, CEO Gavin Lucas said in a press release.

Rental income for same-store facilities, which excludes the U.K. Storage King brand and recent acquisitions in South Africa, increased 9.4 percent, driven by a .7 percent increase in average occupancy and an 8.7 percent increase in average rental rate.

Rental income and net operating income (NOI) for the company’s South Africa portfolio were up 17.4 percent and 14.2 percent, respectively.

Stor-Age recently acquired 13 properties, including a 12-property portfolio subsequent to the period that had been under its management. It also opened one new location during the period and began work on a new development.

The U.K. portfolio increased occupancy by 4,000 square meters year over year, with same-store occupancy growing 1,300 square meters. Overall, Storage King contributed R64 million to the company’s NOI.

“The U.K. self storage industry experiences a more marked degree of seasonality, with occupancy peaking in the spring and summer months,” Lucas said. “Accordingly, we anticipate some occupancy loss to come through over the U.K. winter months but remain on track to meet our full-year expectations.”

Though short-term forecasts for the South Africa economy haven’t been positive, Lucas believes Stor-Age is positioned to perform well. “We do not expect the [South African] economy to show significant signs of improvement in the short-term,” he said. “However, we believe Stor-Age will continue to demonstrate its resilience through the downcycle.”

Headquartered in Cape Town, Stor-Age was established in 2005 by Stor-Age Property Holdings Pty. Ltd. to acquire, develop and manage self-storage assets. Today, Stor-Age operates a 63-property portfolio, primarily in four South African metropolitan areas, that comprise approximately 414,000 square meters. It also has 10 projects under development. The company was listed on the Johannesburg Stock Exchange in November 2015. It acquired the U.K. Storage King portfolio in 2017.

Strategic Storage Trust II Inc. (SST II), a public, non-traded, self-storage real estate investment trusts (REIT) sponsored by SmartStop Asset Management LLC, has released its financial statement for the third quarter of 2018, which ended Sept. 30. In general, the company showed year-over-year gains in total revenue, same-store revenue and net operating income (NOI).

SST II increased total revenue 1.9 percent to $400,000, while same-store revenue and NOI grew 1 percent and 1.4 percent, respectively, compared to the same period in 2017.

Same-store occupancy was 89.3 percent at the end of the quarter, down from 93.7 percent the previous year. The REIT reported growth in same-store annualized rent per occupied square foot, showing an increase of 6.2 percent ($16.01) year over year. Modified funds from operation increased 12.5 percent to $600,000 compared to the same period last year.

“Our results for 2018 kept pace with our expectations, with strong performance from the Southern California and Las Vegas markets,” said H. Michael Schwartz, CEO and chairman. “Additionally, we are excited for the opportunity to consolidate Strategic Storage Growth Trust, Inc. with SST II in early 2019. The SSGT portfolio will infuse SST II with a key growth driver, along with adding assets in strategic SST II markets for further economies of scale. The combined entities will create a portfolio of over 100 properties with combined value well in excess of $1 billion.”

After factoring operating and other expenses, SST II reported a net loss for the quarter of about $457,278, an improvement from a loss of nearly $3.9 million from the same period a year ago. The REIT took in more than $19.7 million in self-storage rental revenue and $516,930 in ancillary operating revenue during the quarter.

The SST II portfolio includes 83 self-storage facilities in Canada and the United States. It comprises approximately 51,300 self-storage units and about 6 million rentable square feet of storage space. Both companies are sponsored by SmartStop Asset Management, a diversified real estate company with a managed portfolio of 126 self-storage facilities in Canada and the United States. Its managed properties comprise approximately 9.3 million rentable square feet.

A lender’s decision to loan money to a self-storage owner, developer or investor isn’t based on rocket science but rather a few key principles. The core of any loan process is the credit analysis, which is used to determine the risk associated with making the loan and the likelihood it’ll be repaid. In business financing, it’s not just a matter of evaluating the company but assessing the person or people associated with its ownership and operation.

Most credit analyses use five categories, known as the five Cs, to evaluate loan risk: character, capital, conditions, collateral and cash flow. Documents such as personal tax returns, personal financial statements (PFS), resumes, business tax returns, interim profit-and-loss statements, balance sheets and business plans all help paint the picture of a borrower’s five Cs. Let’s take a closer look at what the categories mean and why you should pay attention to them before you seek self-storage financing.

Character

Can the lender trust you? Your aggregate traits define your character. Through each interaction the lender has with you, it evaluates and determines your honesty and integrity. It needs to feel confident that applicants have the background, education, industry knowledge and experience required to operate the business in question. This all amasses to answer whether you can be trusted to run the self-storage operation successfully and, ultimately, repay the loan.

All business owners have a personal financial history that helps forecast a picture of future behavior. There are many factors that influence loan approvals, and personal finances and credit can have a significant impact on your ability to borrow money for business purposes. A lender will examine personal credit reports and the PFS of borrowers and guarantors associated with the loan.

Your credit report is your payment track record. It compiles your debt story in one place and reveals how successful you’ve been at repayment. Payment history is one of the largest factors to your credit score, which is also based on revolving credit availability, age of accounts, collections, personal bankruptcies, and liens and judgments. Balances, credit limits and payment history are reported from credit cards, student loans, mortgages, car loans and other lines of credit. It’s wise to check your reports before speaking with a lender. If there are any delinquencies, be prepared to explain them.

Capital

When you ask to borrow money, it’s only natural for the lender to question the personal investment, or capital, you plan to make or have already made in the business. Contributing your own assets shows you’re willing to take a personal risk for the sake of the business, that you have “skin in the game.” The amount needed varies depending on the size, use and type of loan you’re requesting.

To assess your personal financial position, the lender will request a PFS. This is simply a summary of your assets (things of value that you own), liabilities, debts or obligations. From these numbers, you can calculate your net worth, which equals assets minus liabilities. Keep in mind that depending on the lender and type of loan, a positive net worth may not be required to qualify.

Your PFS is another indicator of your financial responsibility. The types of assets and liabilities you accumulate begin to reflect long-term planning or short-term spending behaviors. Accumulating credit-card debt, even in small amounts, can appear as a less-favorable type of spending behavior than large student-debt balances used to invest in your education or a reasonable mortgage for a house. Savings is also important, as it shows the lender you’re living within your means. There’s no silver bullet; your PFS will be looked at differently during each stage of your life.

When it comes to your PFS, consider these two questions: Does it align with your past and current job positions, and does it reflect a history of responsibility when it comes to managing your personal finances?

Conditions

This is how the lender determines what the money can be used for and the health of the industry. There are several things that factor into a lender’s evaluation of industry conditions at any given moment. The overall premise is the lender is gaining perspective on what the loan will be used for, what will be taking place, the status of the business, and the status of the profession and marketplace economy. Lenders like to see positive trends and strong business plans with thought toward growth and continuity, but any business will be analyzed based on its unique marketplace and industry dynamics.

Collateral

Lenders aren’t interested only in what happens if everything goes well. They also must consider worst-case scenarios. For instance, what if you choose to not repay the loan?

Collateral helps solve this problem by acting as a secondary source of repayment. Lenders will consider the value of the business and personal assets of the guarantors as potential security for the loan. Collateral also acts as a psychological motivator, as people tend to get more resourceful when they have something to lose. It’s an important consideration, and its significance varies based on loan type. Any lender should be able to explain the types of collateral needed for your specific situation.

Cash Flow

To ultimately approve the loan, your lender will want to be comfortable with how successfully your firm can repay it. In business financing, there’s a different paradigm in evaluating repayment ability than in consumer financing. With business loans, repayment ability comes from the performance of the business being evaluated.

The capacity to repay comes from cash flow, which is the amount of cash available after ordinary expenses have been paid. Your business should have sufficient income to support its expenses and debts comfortably, while also providing principals’ salaries sufficient to support personal expenses and debts. Cash-flow management is an imperative skill for any small business owner, including one in self-storage.

The five Cs are the pillars of a typical credit analysis. They help lenders evaluate self-storage owners and their business to better understand the risks in making a loan and determining the likelihood that it will be successfully repaid.

Terry Campbell is general manager for the self-storage lending division of Live Oak Bank, which specializes in financing for facility acquisitions, construction, expansion, refinancing or renovation. He has more than 23 years of self-storage industry experience as a supplier as well as ownership in self-storage projects. For more information, call 910.202.6933; e-mail [email protected]; visit www.liveoakbank.com/self-storage.