DEAR WALDMANS: I love all the new computerized products for this industry, but I don't think the inventors ever try them out before placing them on the market. The security-system keypads I use at my facility seem to create a lot of griping. They are either too low or too high, depending on what kind of vehicle a tenant is driving at the time. It seems like a small thing for me to complain about, but my customers constantly nag me about this. Do you ever have this problem? What can I do to solve it?

--PUZZLED

DEAR PUZZLED: As trivial as it may seem, this is a realistic problem--I find myself grumbling about this very same issue. It was so exciting when we finally got to the point of using a keypad, because the manager no longer had to open and close the gates by hand. To be honest, though, we have had some problems with malfunctions of the automatic gate. The motor had to be replaced or maybe it needed some reconditioning. But through all of the malfunctions, we still prefer the keypad to opening and closing the gate by hand.

We, too, have had our share of complaints or problems. We have had the keypad post hit because tenants try to pull their car up closer to it. One of our tenants tried to get so close her car was sitting on the keypad. Needless to say, she never did open the gate that day. Instead, we were blamed for her mishap, and she wanted us to pay the repair bill.

I know from experience that when I go to the post office to mail a letter from the car, I seem to try and hang out the window to slide the mail through the opening. Frustrated, I have dropped the letters on the ground, had to open the door, get out of the car and slide the letters in again. Sometimes, I have put my car in reverse and then tried to get closer to the bin, hoping I would not rip off my outside mirror. Now, thinking about it, it would certainly be easier just to open the door, insert the mail and carry on with my day.

Just the other afternoon, I was in line at the drive-up ATM machine. I was watching the person ahead of me and had to laugh to myself. He was not close enough to the machine and the ATM was much higher than his car, but he attempted to reach it and his card fell to the ground. When he tried to open his door, he banged it on the machine.

Small things do seem to get the best of us. Maybe if we practiced being patient, things would go smoother. So, when your tenants complain about the height of your keypad, refer to some of the other "convenience" items we use in our day-to-day lives. Unfortunately, there are no mechanisms to raise and lower these items to suit our tastes. Maybe the next invention will accommodate us with this problem. My suggestion is to listen to your customers' concerns and tell them you have the same problems. The creator of the keypad pedestal seemed to know only one height. Whether or not he tried out his own invention, we will never know.

A father-daughter team, the Waldmans are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. The Waldmans are co-authors of the industry's leading series of books on self-storage operations: Getting Started, Forms, Policies & Procedures and South Carolina Tools. Another creation of Ask The Waldmans are their colorful posters designed exclusively for the self-storage industry. Comments and questions for ASK THE WALDMANS may be sent to: The Waldmans, P.O. Box 21416, Charleston, SC 29413. E-mail: [email protected]; Web: www.askthewaldmans.com Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

DEAR WALDMANS: We are a small business in rural Utah that is afflicted with a growing problem with mice. We are trying to stay on top of this problem and, in order to do so, we have decided to use rat bait to kill the mice and rats. The problem is, many of our tenants have pets and let them run loose while they utilize their rental unit. When placing poison in each unit, I have explained to the tenants what we are doing and the possible dangers to their pets and children. What are our legal liabilities should the poison be ingested by an animal or child? Would it benefit us to have a disclaimer, or would a simple authorization for the placement of such a substance with the tenant's signature suffice? What are the possibilities if a legal situation should occur? I am convinced this situation is not unique to our facility. If you decide to address this issue in your column, I am sure it would help a lot of facility owners.

--Yikes! Mice! in Ogden, Utah

DEAR YIKES! MICE!: You are right in your conclusion that mice are not just a problem for your facility. Mice and rats are a universal problem. These little creatures travel all around, and not just in rural areas. We have seen them at our own facility.

Let's start with your first concern: the mice. Most people don't know this, but mice bait is free in many states, counties and cities. All you have to do is request it. So, I would start by doing some research and see if this free bait is available. We tell renters about the bait when they rent. We do not have a problem, but we are preventing a problem from multiplying.

As to the liability of this poison to children and animals--this should be considered a major area of thought. We never allow animals or children to run around our storage facility because the liability is huge, and most insurance companies would cringe if they knew that was happening. Additionally, most insurance companies do not approve of guard dogs either.

First of all, animals have fleas. By allowing animals to run around the facility, you are asking for yet another problem. A storage facility is not the place for animals to run free. Not only are they a danger to themselves, but you are placing yourself at risk for the other tenants. What if one of the dogs bit another tenant? Or what if a dog attacked a child, or even frightened a child by their excitement? It is beneficial to you and the facility to set the rules that no animals are allowed to run free. This not only solves your poison problem, but your concerns of liability to other tenants.

Now, this fact applies to children, too. It is not in the best interest of the children to run and play at the facility, not only because of the poison, but what about other traffic in the area? Due to the possibility of a lawsuit on any one of these issues, protect yourself. Post signs and make it known that animals running loose are not allowed and children are not to be left unsupervised by an adult while on the storage premises. This will not only save you from the heartache of possible mishaps, but allows you to create rules that will benefit all.

A father-daughter team, the Waldmans are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. The Waldmans are co-authors of the industry's leading series of books on self-storage operations: Getting Started, Forms, Policies & Procedures and South Carolina Tools. Another creation of Ask The Waldmans are their colorful posters designed exclusively for the self-storage industry. Comments and questions for ASK THE WALDMANS may be sent to: The Waldmans, P.O. Box 21416, Charleston, SC 29413. E-mail: [email protected]; Web: www.askthewaldmans.com Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

Bob Bader grew up in Detroit and attended Wayne State University, where he earned an MBA in marketing and finance. His background includes experience as an Army Finance Officer, retail and commercial sales with Firestone Tire & Rubber Co. and advertising sales with Maryland Match Corp. In 1973, Mr. Bader was offered a position with one of the country's leading credit-insurance agencies and within two years was one of their top salesmen. He developed a model for strategic planning used by the company to open new markets, helped pioneer development of customer-support teams and was a member of the company's sales-advisory board. A promotion to Mid-West regional manager made him responsible for nine agents and the company's largest block of business. A later promotion to vice president in Life Investor's (the agency's parent company) collateral-protection division rounded his experience in policy administration, claims settlement and reinsurance.

In 1984, Mr. Bader left Life Investors and formed his own agency to cut back on his extensive travel and spend more time with his family--his wife, Toni, and four children. He began on his own by developing a successful mobile-home-insurance direct-mail program. In 1987, he began working with several people in the rent-to-own industry to develop extended warranty coverage. That eventually developed into a "club" program, packaging several insurance products with travel, entertainment and home-healthcare discounts sold through more than 2,500 rent-to-own stores. In 1991, at the request of a colleague involved in the self-storage business, Mr. Bader began developing an effective approach to maximizing tenant-insurance participation. As interest grew in his approach, he began phasing out of his other operations to focus on building the stored-property insurance program.

An now, Inside Self-Storage is please to present an interview with Bob Bader...

How long have you been in the insurance business?

In 1973, I started selling credit life and disability coverage to credit unions as an agent. After a number of promotions and some company consolidations, I wound up as vice president of marketing for the collateral protection division of Life Investors, a major writer of credit insurance. Aegon, the second largest insurance company in The Netherlands, acquired Life Investors. (By the way, Aegon also just purchased Transamerica Insurance Company.) In 1984, I left Life Investors and formed Bob Bader Co. to focus on developing mass-marketed property and casualty insurance programs.

Why don't you tell us a little bit about Bob Bader Co.?

Bob Bader Co. is a national insurance marketing and administrative organization. We develop and provide mass-marketed insurance programs that help our clients reduce liability, improve relationships with their customers and allow them to make money from insurance. Specializing in insurance add-on profit centers allows us to provide our clients with the highest value and lowest cost product, dedicated support and the largest share of profit-sharing in the industry. By limiting our product offering we can focus on being the experts in our field.

What makes your company different from other insurance agencies?

Most insurance agents/agencies may issue policies and pay small claims, but they can only offer products commonly found in the marketplace. As a managing general agency (MGA) we have total control of our insurance programs--from design through marketing and administration to claim settlement.

Our focus is on marketing. In fact, we look at ourselves as a marketing organization more than an insurance provider. Our scope is national and, although we do work with agents, unlike most MGA's, we prefer to develop relationships directly with our clients. By concentrating on a few products, such as our stored-property insurance, we've become experts on point-of-sale training, client support, how to minimize administration and how to handle claims efficiently. That helps build volume, control losses and helps our clients make money.

What kinds of insurance do you write?

We limit our writings to products we understand and that we can manage. Our expertise is in point-of-sale products. We look for areas where there is a fundamental need for protection, where there is a built-in payment stream, and where we can partner with our clients and help them use insurance as a profit center. In the self-storage business, we write stored-property insurance, an optional tenant-insurance program that our clients offer their customers.

Why have you chosen to focus on tenant insurance?

All self-storage companies need tenant insurance. They need it to protect themselves and to reduce their liability when tenants' property is damaged or destroyed. Tenants need insurance, too--most do not have coverage. More than 75 percent of home and apartment renters do not have personal-property insurance. And today, more and more homeowners' insurance companies are excluding off-premises coverage in self-storage facilities because of the high number of break-ins.

Tenant insurance is a vastly underserved market. Although most storage-facility managers offer coverage, most tenants don't buy it. That's either because mail-in brochure programs don't work or because managers don't know how to present or are afraid to present insurance. That's where we can help. Training and support are two of our greatest strengths--because of our focus as a marketing organization.

Is all tenant insurance the same?

No. There are two types of tenant-insurance programs, and there are variations in the coverage they provide. Most storage companies offer mail-in brochure programs because they're simple, they require no involvement or commitment, they don't require an insurance license, and because that's the way it was done 20 years ago. The most recent (in the last 10 years) innovation in tenant insurance is pay-with-rent coverage. In a pay-with-rent program, customers sign up for coverage when they rent and pay their premiums along with rent each month. Pay-with-rent programs are legal, don't require an insurance license in most states (except Texas and, depending on the program, possibly Florida) and, with today's data-processing systems, are so easy to offer and administer that they're almost transparent.

What's the secret to having a successful tenant-insurance program?

The secret is to keep it simple. The less a manager says about insurance, the more likely his customer will buy it. Of course, the manager has to say the right thing at the right time. What is said, and when, is critical. There is a right time to present insurance--when the lease is being completed. Any other time, regardless of what is said, is the wrong time and will likely result in a "no sale."

The other element--what to say--shouldn't take more than 15 seconds. Managers need to tell customers that insurance is not included in the lease; it is available and that premium can be paid with rent. Tenants rent space because they want a safe place to keep their property. An insurance policy is a tangible representation that the facility is a safe place--otherwise the insurance company wouldn't offer coverage.

What kinds of tenant insurance do you offer?

Our stored-property insurance is a pay-with-rent program. We only offer pay-with-rent coverage because it's the only kind that works. Less than 1 percent of tenants buy mail-order coverage through brochure programs. What good is a tenant-insurance program if nobody buys it?

Customers will buy insurance if it is offered properly and is affordable, and if it's easy to make payments. Although we have some managers with 80 percent sign-up rates, 10 percent to 20 percent participation is more normal.

How many storage companies use pay-with-rent programs?

Eight of the 10 largest self-storage operators offer pay-with-rent coverage. Ten of the next 40 largest operators offer pay-with-rent programs. Although it's hard to determine exactly how many companies offer this coverage, we estimate that about 15 percent of sites and 7.5 percent of operators offer pay-with-rent insurance.

If pay-with-rent insurance is so good, why don't more companies offer it?

Good question. That's something we've been trying to figure out for some time. I suppose that inertia plays a big part. Since most companies have a mail-in brochure program, owners feel they're protected because they've offered coverage. I've made cold calls on facilities and been told by managers that they have coverage available: "If you want to buy it, but it's expensive and not very good." Imagine a mediocre lawyer repeating that to a judge in a lawsuit after a catastrophic fire. How much protection will that mail-order program provide when an owner has to admit that none or maybe one or two of his customers were insured? Wouldn't saying that 25 percent to 30 percent of tenants are insured provide a whole lot more protection? That's the type of protection pay-with-rent programs provide.

Another reason more owners may not be offering pay-with-rent coverage is that their fear or dislike of insurance keeps them from looking at alternative programs with an open mind. It's a fact of life that most people don't like insurance. Insurance is associated with bad things (death, fire, accidents, theft, etc.) Agents are pushy. Premiums are high--and they keep going up. And, sometimes its difficult to get what you feel you are due from an insurance company. I'll be one of the first to admit that the insurance industry has a bad reputation. Our job is to show people that insurance can be friendly and can help them provide better service to their customers, better protection for themselves and more profit.

Is it legal to sell insurance the way you suggest? Don't managers have to be licensed agents?

Offering pay-with-rent insurance the way I just described is legal. Pay-with-rent insurance policies are usually filed as "group insurance." Employees are generally allowed to offer enrollment in their company's group insurance program as long as their primary duties are not insurance related. Furthermore, managers are not insurance agents. They do not solicit the public, and have no authority to bind coverage, change the policy or settle claims. As long as a licensed agent is involved (usually in writing the group-insurance policy) managers do not need insurance licenses.

Aren't there several states that have stopped the sale of pay-with-rent insurance?

No. The Texas Insurance Commissioner and Attorney General recently won a court ruling against U-Haul barring the company from selling pay-with-rent coverage in Texas. The merits of the suit dealt with U-Haul's marketing practices and not the issue of propriety or legality of pay-with-rent insurance.

Can companies without sophisticated computer systems offer tenant insurance?

Yes. Keeping track of insurance premiums with a one-write peg-board or ledger-card accounting system is easy. In fact, we have some clients who prefer keeping a manual insurance payment ledger even though their computer system provides printed monthly reports.

Do all the data-processing companies support pay-with-rent insurance?

Most do--certainly the larger companies like Sentinel, Domico, Space Control, Hi-Tech, MSTC and Umbrella.

What are the biggest problems with tenant insurance?

At the facility, it's manager resistance. It's amazing how often an owner decides to offer a pay-with-rent insurance program and managers flat out resist it. It's common to hear managers say, "I've got to much to do already," "Insurance is a rip-off," or "My customers don't need it." All of these negative comments mean that insurance won't be properly or impartially presented and that few customers will buy it. That doesn't help the storage company, or its customers.

With customers, fraud is the biggest problem. When you consider that we make insurance very inexpensive and easy to get--easier than through an independent agent--it's understandable how attractive fraud is to tenants. Some seem to think that paying a $5 insurance premium has better odds of paying out a $2,000 claim than winning the lottery. Fraud takes many forms. Some of the types of fraud we regularly encounter are where property never put into storage is claimed stolen, where a real burglary takes place and the customer pads his loss report with items that were not in the unit, or where customer's property is damaged before it's put in storage. This last is a common problem with property damaged by flood.

How do you fight fraud?

The advantage belongs to the customer. We have to prove that the loss didn't occur as claimed, or that it wasn't covered by our policy. Sometimes we get beaten and pay because we can't disprove the loss. For the most part, however, people filing fraudulent claims trip themselves up. We've been handling claims for a long time and our adjusters are experienced in spotting things that aren't right. Overall, we're able to do a pretty good job weeding out the fraud.

What do you see for the future of tenant insurance?

First, as long as self-storage operators are considered landlords--one of the basic principles of the storage business--there will be a need for optional tenant-insurance programs. Second, as more storage companies become computerized, managers become more familiar with computers and software continues to become more user-friendly, we will see more storage companies offering pay-with-rent insurance. Third, insurance offerings will continue to improve. We were the first to offer 100 percent burglary coverage. Deans & Homer added it last year and MiniCo just added it to their TenantOne program. We've offered earthquake coverage from the beginning. Deans & Homer now includes earthquake coverage in their CSI+. We're always looking at other improvements we can make to give the insured tenant more value and help the storage operator achieve higher percentages of insured customers.

Do you foresee more competition in this area?

That's a hard one for me to answer. Success always brings competition. We started offering stored-property insurance eight years ago because there was a need. Customers weren't buying insurance; the mail-order programs weren't working. We brought mass-marketed, point-of-sale concepts we've used in other industries to the self-storage business. That helped facility owners give their customers better service, get more protection for themselves and make more money.

On the other hand, tenant-insurance premiums are small, there is an unbelievable amount of fraud, every state has different insurance regulations, and collecting thousands of $5 payments every month can be expensive. I believe we were fortunate to be in the right place at the right time. We had extensive group-insurance experience, an underwriter who understood our business, substantial other business, and we could afford the time it takes to build our program. All these things may be difficult for another company to duplicate.

Do you plan on expanding your programs?

We are successful because we focus on specific coverages and needs. That allows us to become the experts in those programs. Although we help some of our clients with their commercial-property coverage, that's not our area of expertise. We will not be expanding our business-property-insurance offerings. Our next venture will be in the multi-family housing field. We have been working in the apartment industry for the past year, developing a new approach to renters' insurance--again, a mass-marketed, point-of-sale program.

How do you plan to grow your business?

The same way we got to where we are now: hard work, attention to customer needs and a strong sales effort. One fact of business life is that you have to grow. If a company doesn't grow, it will begin to stagnate and customers will take their business elsewhere. We've just finished laying out some of the most ambitious marketing plans we've ever made. Everyone in our company understands that we are a sales and marketing organization more than we are an insurance agency. We will continue to grow by plowing our earnings back into the development of our business. That will help us give our clients better service, help attract new clients and payoff with continued growth.

DEAR WALDMANS: My question concerns giving prorated refunds if a customer leaves in the middle of the month or any other time before the first of the month. My manager says it's good customer relations to refund the balance of the month along with their refundable deposit of $20. I say, if you let them know up front (for example, that we only prorate if they are out before the 15th), they will accept this as part of the rules to be abided by in the lease. What are your opinions on this matter?

--To Do or Not To Do in Calaveras, Calif.

DEAR TO DO OR NOT TO DO: Your question is a good one. Prorating is a practice that is often misconstrued in the business world, being coupled with the belief that it's good for the customers because it will make them come back again, they will remember our facility forever, etc. The truth is, however, sometimes people are very loyal and remember that you saved them some money or time, but when you have a business and you have a lease, then consistency is always the best way to go.

The logic is: You set the rules and you follow the rules. This kind of thinking makes it easier for everyone. What if Mr. Doe returned to your facility two years later? He tells the new employee (let's pretend that you have been replaced), "Whoa! Wait a minute. You can't charge me that price--I want more of a refund. Ms. Mary, a former employee, always let me pay for only 15 days." You, as the new employee on the block, would feel a little nervous about this situation. Maybe your manager isn't feeling so liberal with the money lately. Maybe the facility had a couple of really bad months. This places you in a difficult situation and makes it hard because the rules have been changed.

We agree wholeheartedly with your belief. Apply the rules in the lease up front, explain the refund rules and your prorate policy. Remember, even if the customer completely misunderstands and he did sign the lease and rent the unit, then he must abide by the lease. This kind of business operation will make it simple and easy, not only for the employee, but for the tenant as well. Everyone knows from the beginning what is expected of them. Whether you use a prorate date or anniversary date, there are no surprises and no misunderstandings.

In our state, we are required to use a prorate date, but states differ. Many give you the choice of either a prorate or anniversary date. We have to go by the first day of the month, known as the prorate date. We are overwhelmed with payments the first of each month. If we had a choice, we would prefer to use the anniversary date, which keeps the business more staggered, allowing more freedom to keep things running on a constant basis throughout the month. Using the prorate date is a lot more tedious. Whatever option you use, stick to the rules. Many self-storage facilities completely ignore the codes that are set by their state's regulations. This is great until they get caught for not following the rules--and lawsuits are no fun.

Finally, approach your manager about consistency. But be careful--he still is the boss. He sets forth the rules. If you choose to try and change his mind, we wish you luck in enrolling him in your way of thinking.

A father-daughter team, the Waldmans are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. The Waldmans are co-authors of the industry's leading series of books on self-storage operations: Getting Started, Forms, Policies & Procedures and South Carolina Tools. Another creation of Ask The Waldmans are their colorful posters designed exclusively for the self-storage industry. Comments and questions for ASK THE WALDMANS may be sent to: The Waldmans, P.O. Box 21416, Charleston, SC 29413. E-mail: [email protected]; Web: www.askthewaldmans.com Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

A developer of self-storage facilities, National Development Services Inc. (NDS) has completed more than 125 projects throughout the United States since the company's inception in 1987--that's almost 4.8 million square feet and as much as $140 million worth of development, says Mike Parham, owner and president. "I started the company based on seeing a need for someone who could provide development services within the self-storage industry, and those services include everything from consulting to developing to construction to management," Parham says. With as much as 80 percent of the company's business being design/build projects--and a majority with institutional developers such as Shurgard, Storage Trust, Security Storage and Sovran--NDS provides its clients the organization of its complete building program, from market selection to land acquisition, design, construction and management of the improvements.

"We're doing all of the architecture and engineering in house, and we've been very successful in that we've been able to go in and cut the period from the time the client picks out a site to the time they have the whole design planned. And, we guarantee a price from the very beginning," says Parham. One of the reasons the company has dedicated itself to design/build projects, he points out, is the experience he had during the company's first three years of business. "We spent about 50 percent of our time redesigning every project we received from an architect or engineer who had never done a self-storage project before. Their designs were too costly, and didn't incorporate all of the features that are necessary to be both cost-effective and user-friendly."

If 20 years in the self-storage industry hasn't schooled Parham in the needs of self-storage owners and what features a facility's design should include, his ongoing interaction with customers has. The company's corporate headquarters, a 6,000-square-foot building located in San Antonio, Texas, is adjacent to a self-storage project that NDS owns and operates. Each month, the company's 28 employees rotate the responsibility of managing that facility--whether it be a secretary, a project manager or the president himself.

"We do this so we can keep our eyes on what's important to the self-storage customer, because what we provide is all in relation to the end user. We need to be able to go to our customers and make recommendations based on what's happening in their market," Parham says. "That's another reason we've chosen design/build--we're able to take a cursory look at the market and recommend a different project design based on the most cost-effective method of building and the availability of material. Our objective is to make sure that what we develop is the best, most cost-effective, most marketable product."

According to Parham, NDS has never lost a bid to a local contractor when it comes to building self-storage facilities, and the company hasn't had to bid a project in eight years. The reason for that, he says, is because of the company's expertise, experience and buying power. "When somebody hires me to do something," says Parham, "they have immediate access to my expertise and my base of subcontractors and vendors. That's important, because there is a lack of skilled labor in the country today. Our clients see us as people they can depend on to get the job done, that understand their business."

In addition to running his business, Parham has contributed to the industry by speaking at numerous self-storage seminars and expos. "I want people to be educated so they don't go out and make mistakes that cause problems for us all as an industry," he explains. This also gives him the opportunity to learn more about his clients and their customers. "The thing that makes NDS unique is the amount of time we spend identifying our clients' needs and trying to fulfill those needs. From being a developer, ourselves, we understand that pretty well. Our clients can grow with us, and us with them. We're able to take a project and develop it with them over time."

With approximately 72 percent of the company's clients being repeat business, and completing anywhere from $15 to $25 million worth of work each year, the success of NDS is self-evident. Will the company seek to expand? "We're not going to be the largest company in the self-storage industry. If we do $25 million a year, that's probably our limit. We don't really want to do much more, because then we would lose the capability of the way we do business with our clients."

NDS does it all: regional market analysis, site selection, development due diligence, business plans, brokerage, site planning, subcontracting, value engineering, inspection services, operations management, marketing and more. Whether it be for an institutional developer or a smaller chain, NDS assists clients in more than the construction of a facility, but in the designing and building of a future for their business.

For more information about National Development Services Inc., contact Mike Parham at (830) 980-8250; Web: www.ndsinc.com.

DOMICO, a provider of management software to the self-storage industry, is celebrating its 15th anniversary this year. This fall the company will release its third product, DOMICO 2000, which will incorporate all of the functionality that has been the basis for the software's previous success together with many new and exciting features.

For more than two years, the DOMICO engineering department has been hard at work designing and developing new Windows^®-based software, and the company is extremely pleased with the fruits of its development labors. According to Glenn Hunter, president, "We have been fortunate to have many users who volunteered to run the new software parallel with their existing DOMICO package to help make certain that all functions operate correctly."

While the design team intended that the new software be a Windows product, it also believed that the only way to offer the usefulness storage operators need without sacrificing ease of use was to both automate and make invisible many of the routine choices that plague Windows users. This required a major investment in automating different functions to keep them behind the scenes.

"It is clearly the objective of the software industry to make the Internet as much an everyday part of our lives as television or radio," says Hunter. As a result, DOMICO sought design solutions by looking at Web-page design. In order to do this, the complexity of Windows had to be brought to the simple level of a push-button radio or remote control.

Hunter says he believes the Internet is the future of the software industry and that self-storage has the same potential that other industries have to be revolutionized by the Internet. "The all-new DOMICO 2000 is the first step in this evolution," he says. "It will initially look and act like traditional software that you install on your computer. It will only look different (more simple and clear) than other Windows programs. However, as we progress into the new millennium, DOMICO 2000 will also progress. We are building the future into the software at this very moment."

For more information, contact Stephanie Quick at (800) 688-6181; e-mail [email protected]; www.domico.net.

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Self-Storage Software

A Prediction by Glenn Hunter

Current state-of-the-art software programming is Web-design oriented. The average citizen comes to a Web site and instantly gets engaged--no training, no help screens, no questions. This is what the next generation of management software must provide--virtually instant usability. When we look back in time, the Windows 95/98 era and Windows-designed software will appear to be exactly what it is--an infinitesimal blip on the computer landscape.

What this means is that asking your software company if it offers a Windows program is a little like asking Noah whether he'd read the latest weather report--wrong question and way too late. The proper question to ask is: "How is your company going to assist me in taking advantage of the most important technology in the information age?"

This is where things gets really exciting and interesting. There is no question that server technology and sequential query language (SQL) programming will allow large, multi-location, storage companies to invest in corporate servers that will run all of their software and house all of their data. Their facilities will log in online through the Internet, and will transact business in real time. Data security will increase dramatically. Information access for management will also be significantly improved. It will be amazingly easy to custom design and implement reports that look at your multi-facility data. Software companies will be assisting you in writing reports that are customized to your needs. Upgrades and modifications to your software will be instantly available to all of your facilities.

But what about the smaller facilities and companies with just one or two locations? Will they be left out in the cold? On the contrary, software companies will be able to provide these smaller operators with the same benefits by offering them the opportunity to log onto their server and right into the software they want to use.

Within the next very few years storage customers will be renting space over the Internet. They will log onto a facility's Web site and examine the facility's space-for-rent options; they will speak face-to-face to the manager, since both will be on camera; cameras will even allow a tour of the facility and potential locker locations. The customer will fill out the move-in information, e-mail the lease, and pay for space with the swipe of their credit-card into a reader built into the computer keyboard.

Software companies will increasingly be differentiated by how well they use advances in technology to provide owners with the information they need to better run their businesses. This begins with the capture of information at the facility. Software design and development tools and approaches don't receive anywhere near the publicity that the latest hardware gimmick does, but advances in approaches to software development can offer immense benefits to users.

Mike McCune

When Mike McCune and his team of real-estate professionals became involved in the self-storage industry from a brokerage standpoint five years ago, they made some important discoveries. "We found this was a very difficult market to get your arms around, so we started exploring it, and decided that what the industry needed was a brokerage network," says McCune, a 30-year veteran of the real-estate business who serves as president of Argus Real Estate Inc. and the Argus Self Storage Sales Network (ASSSN).

"We thought self-storage represented a much better investment opportunity for real-estate investors than what was being perceived by the investment market," McCune says. "A number of people knew about it, but the rest of the world was relatively unaware or thought that the risks of the business were excessive." Contributing to these general perceptions, he says, is "the fact that there was no organized market for buying and selling, and that the information available was very uneven in quality."

The Argus Self Storage Sales Network, based in Denver, has become the only national alliance of independent real-estate brokers that specialize in self-storage transactions, with 36 brokers throughout the United States. "The network provides potential buyers and sellers of self-storage facilities immediate access to a broad market while still maintaining the advantages of local broker expertise," says Jason Laughton, the company's director of operations.

Specialization and Market Distribution

"Argus is the embodiment of two principles necessary to successfully complete real-estate transactions," says McCune. "First, the broker must be knowledgeable in both local and national markets. Even more importantly, he must have a specialty in self-storage so that he can offer experienced, informed and professional advice to the client, whether they are a buyer or seller. Without the unique knowledge provided by specialization in the industry, a broker cannot provide the insight and experience needed to help the client in pricing, marketing, negotiating and closing the deal in a timely manner."

Laughton points out that the second necessity of a successful transaction is distribution. "I--as well as my associates--believe in a tried-and-true formula for selling real estate: Maximum distribution of complete information leads to more qualified prospects, which in turn leads to more offers and the best sales price. Thus, Argus is designed to give an owner the confidence that his property will get the largest, professional exposure to the purchasing market," he says.

To accomplish this "distribution" of information, Argus has aggressively developed a marketing approach that connects with those interested in the self-storage industry. The approach has several facets to ensure that all interested parties are aware of a property's availability.

Print Advertising

Since the beginning of Argus' involvement in self-storage, it maintains a very active presence in industry publications.

Internet

Argus was among the first to utilize the Internet in distributing information about properties through it's home page at www.selfstorage.com. The Internet allows Argus to instantly provide pictures, maps, demographics and other detailed information on listed properties. An affiliation with the nationally known loopnet.com, the nation's largest source for commercial listings on the Internet, allows Argus and its clients access to information and is central source for searching self-storage listings.

Argus Market Monitor

Argus mails a monthly newsletter to over 15,000 industry professionals contained in a proprietary database. The Market Monitor features all available properties listed with Argus affiliates and provides a timely article on the real-estate aspects of the self-storage industry.

Tradeshows

Argus representatives and affiliated brokers attend at least five industry tradeshows each year across the country, where they meet other industry leaders and learn the latest happenings in the industry. At tradeshows, clients' properties are prominently displayed in the Argus booth, where prospects and brokers can meet and discuss what is available.

Database

Argus maintains one of the industry's largest and most comprehensive databases, including owners, investors and various self-storage affinity groups. This allows Argus and its affiliated brokers a broad reach in general marketing, and also allows special focus for certain types of properties or locations.

Property Presentations

Argus adheres to a professional standard of quality in its representation of properties. Since a property presentation is usually the first thing a potential buyer sees and the principle selling document of a property, it must be thorough, clear and attractive. Argus presentations usually contain site plans, pictures, maps, detailed descriptions, demographics, historical financial information, proformas and surveys of the surrounding competition.

Affiliated Brokers

Although Argus believes that its comprehensive marketing approach blankets the self-storage industry with about 800,000 individual contacts each year, by far the most important part of the marketing program is the affiliated-brokers network. This network of 36 brokers represents an experienced, professional group of independent brokers affiliated with the ASSSN. The average broker has well more than 15 years of experience in real estate, and 40 percent of the brokers hold the prestigious CCIM, SIOR or MAI designations. Their broad experience and focus on self-storage bring to a seller or buyer intimate knowledge about the local market and the industry. By being active in their markets, the brokers have developed extensive industry contacts and relationships. In large measure, it is Argus' affiliated broker's experience, reputation, relationships and hard work that make the selling and buying process work so well.

Fees

A party participating in the ASSSN receives the services and benefits of the network simply by working with an affiliated broker. "It costs nothing more to the buyer or seller to benefit from the network. They simply pay a traditional brokerage fee to the local (affiliated) broker," McCune says.

The fees for ASSSN brokers are comparable to those charged by competitors in their respective markets, McCune adds. "The difference is our brokers are going to be more efficient because they have access to a large network. It takes less time for them to move properties, so they are motivated to make more money for their clients and for themselves."

Summing Up

The ASSSN, like the self-storage industry itself, is a reflection of the rapid maturation of sophistication of the industry. "The development of Argus has brought a new standard to marketing properties and representing clients. The industry deserves the specialization and marketing energy that Argus and its affiliated brokers bring to the real-estate market," adds Laughton.

The bottom line on this network, explains McCune, is "that it is successful only to the extent that buyers and sellers believe they are receiving what they are promised. What we promise is professional, thorough representation, broad exposure, and presentation of the industry to the outside world in a professional way."

For more information about the Argus Self Storage Sales Network, contact Jason Laughton at (800) 55-STORE.

This year in our August issue of Inside Self-Storage, we were pleased to identify 116 of the nation's top self-storage operators in our annual Top Operator List. At the very top of that list are 10 companies that represent superior quality in management, customer service and development. These companies demonstrate what is possible in the self-storage industry, and behind each lies a unique story of success...

1. Public Storage Inc.
701 S. Western Ave., Suite 200
Glendale, CA 91201
818.244.8080
Fax 818.241.1792
1,417 facilities
81,000,000+ square feet
851,840 units
Serving 38 states, four provinces in Canada
Founded: 1973
President: Harvey Lenkin
Contact: Harvey Lenkin
www.publicstorage.com

Public Storage Inc., with assets of approximately $4 billion, is a fully integrated, self-administered and self-managed real estate investment trust that acquires, develops, owns and operates more than 1,400 self-storage facilities throughout the United States and Canada. The company is the largest owner and operator of self-storage in the nation, with locations in major metropolitan markets of 37 states, encompassing 700,000 storage spaces and representing approximately 80 million square feet of rentable space.

Public Storage was founded in 1972 by B. Wayne Hughes, the company's current chairman and CEO, and Kenneth V. Volk Jr. According to company president Harvey Lenkin, who has been with the company since 1978, "Our products and services are offered to consumers--we rent storage space and trucks; we sell moving and storage supplies; we have a public-storage pick-up and delivery service as an ancillary business."

Public Storage, with 20 regional offices, employs nearly 5,000 individuals. Based on the number of properties, Public Storage is approximately three times the size of its largest public competitor. The company has developed one of the most recognized brand names and trademarks in the consumer-service industry. Lenkin attributes this success to "a willingness to figure out new ways of doing things, the ability to raise large amounts of capital in a conservative and prudent manner, and a belief in a valid service offered to customers in a consistent, professional manner." Lenkin says Public Storage plans to continue to acquire and develop self-storage facilities throughout the United States. "We plan to continue to be not only the biggest, but the best in terms of what we offer our customers. The consumer is king. As a word of advice, operators should remember that."

2. Storage USA
165 Madison Ave., Suite 1300
Memphis, TN 38103
901.252.2000
Fax 901.252.2060
490 facilities
32,400,000 square feet
300,000 units
Serving 31 states
Founded: 1985
President: Dean Jernigen
Contact: Russ Williams
www.sus.com

Founded in 1985 by its current Chairman and CEO Dean Jernigan, Storage USA Inc. is a fully integrated, self-administered and self-managed real estate investment trust, engaged in the management, acquisition, development, construction and franchising of self-storage facilities. As of June 30, 1999, the company owns, manages or franchises 495 facilities containing 32.8 million square feet in 31 states and the District of Columbia. It is the second largest self-storage REIT in the United States.

From the beginning, with one storage facility located in Memphis, Tenn., the company expanded steadily over the next few years through the development, acquisition and management of self-storage facilities, virtually doubling in size every other year. On March 16, 1994, Storage USA completed its initial public offering and listed its common stock on the New York Stock Exchange. Since the initial IPO, Storage USA has grown from 73 facilities to its current size.

Storage USA recently announced an agreement in principle with Budget Truck Rentals, whereby it has the exclusive right to receive pre-qualified leads from Budget/Ryder's truck-rental prospects as well as exclusive rights within the self-storage industry to offer Budget/Ryder truck rentals at its facilities. Storage USA also launched its National Reservation Center, which handles rollover calls from facilities when the manager is not available.

The company's self-storage facilities operate under the Storage USA^® name and offer low-cost, easily accessible and enclosed storage space for personal and business use, primarily on a month-to-month basis. Storage USA strives to be a rent leader in its markets through an emphasis on customer service and satisfaction, employee screening and training, incentive-based compensation for its managers, and aggressive marketing programs. Facilities offer state-of-the-art security, climate-control units and, in most locations, resident managers and 24-hour access. The company's commitment to professional management and customer service is manifested in its Total Storage Satisfaction Guarantee^®--if any customer is not completely satisfied with his self-storage experience, he needs only ask the facility manager for a refund.

Over its 14 years of operations, Storage USA has sought to create shareholder value through acquisition and development, including both new construction and expansion of existing facilities. The company has been and will continue to be developing facilities in selected markets. In addition, Storage USA offers the industry's most comprehensive franchise program, with 41 franchised facilities open and operating and another 34 under development. Each Storage USA facility is computerized and linked by satellite to the company's headquarters. Through this technology, all levels of Storage USA management are provided essential operational reports to monitor and analyze the performance of each facility, district and region in the company.

At every Storage USA facility, customers are assured of receiving the best service from professionally trained and courteous staff. Every Storage USA manager and associate is trained to offer customers the highest level of service and to follow the Total Storage Satisfaction Guarantee. Each staff member is completely knowledgeable of his facility, and receives up-to-date training material on a regular basis to make sure he is fully informed of changes in the industry, as well as to his own facility.

Storage USA recognizes that, in the end, long-term success is really in the hands of the people at the properties. The reason the company keeps growing--retaining current customers and attracting new ones--is the relentless focus of its managers on providing "Total Storage Satisfaction." In short, the 1,800 people at Storage USA are its greatest strategic advantage.

3. U-Haul International Inc.
2727 N. Central Ave.
Phoenix, AZ 85020
602.263.6811
Fax 602.263.6772
924 facilities
26,624,000 square feet
307,000 units
Serving the United States and Canada
Founded: 1945
President: E.J. "Joe" Shoen
Contact: Carlos Vizcarra
www.uhaul.com

U-Haul was founded in 1945 as a practical and economical way for North American families to move their household possessions. There existed an obvious widespread need for do-it-yourself moving equipment on a one-way, nationwide basis. It was the visionary approach of U-Haul that recognized this need, acted upon it and literally created an industry.

With $5,000, L.S. Shoen, his wife, Anna Mary Carty Shoen, and their young child moved to the Carty ranch in Ridgefield, Wash. There, with the help of the family, the Shoens built the first U-Haul^® trailers in the fall of 1945, using the ranch's automobile garage and milk house as the first manufacturing plant for the budding company.

U-Haul currently maintains 924 self-storage facilities, 1,127 company-owned moving and storage center locations and more than 14,584 independent dealers across North America. U-Haul self-storage facilities consist of 26,624,000 square feet of storage space in more than 307,000 units. The company also offers truck and trailer rentals, hitches, boxes and moving supplies. The company employs 14,400 full-time employees in 110 regional offices, 1,100 U-Haul centers and 14,700 independent dealers.

The name U-Haul is as familiar to consumers as Kleenex and Coca-Cola. Branding is the cornerstone of the U-Haul corporate culture and has been for more than 50 years. The company's products are designed and built specifically for household customers, and its centers are located for convenience and easy access, offering one-stop shopping for moving and storage needs. U-Haul has made a long-term commitment to its customers and shareholders to remain a leader in the moving and storage industry, with the goal to improve service, acquire new customers and earn their repeat business.

The company's growth strategy is to develop or acquire convenient neighborhood moving-and-storage centers to meet customer needs. U-Haul aims to add 34,000 storage rooms, or almost two million square feet, through acquisitions and development during the current fiscal year. The company has 40 new centers under construction in select markets and has implemented a program to add storage where space exists at existing sites. U-Haul is also actively seeking the acquisition of existing self-storage facilities that meet or can be upgraded to its standards.

As advice to new owner/developers, U-Haul suggests joining with one of the major brand names in the industry, which will ensure that they receive more public attention in the marketplace. If new owners plan to remain in the self-storage business and grow, U-Haul suggests including truck and trailer rentals in their plans, as well as the retailing of boxes, rope, tape and locks to both moving and storage customers. New owner/developers should put at least a display pad in front of their storage locations during the planning stages, and they should plan to provide sufficient signage.

4. Shurgard Storage Centers
1155 Valley St., Suite 400
Seattle, WA 98109
206.624.8100
Fax 206.652.3700
350 facilities
22,442,882 square feet
190,000 units
Serving the United States
Founded: 1974
President: Charles K. Barbo
Contact: DeLise Keim
www.shurgard.com

The year was 1973. In Olympia, Wash., Chuck Barbo and his founding partner, both aspiring entrepreneurs, saw a unique business opportunity: to provide self-storage in mini-warehouses for communities whose residents have too much stuff, and for businesses that need to stow boxes of long-forgotten records and documents. Today, Shurgard Storage Centers Inc. is a New York Stock Exchange listed (SHU) real estate investment trust (REIT) and is one of the world's largest operators of storage centers. The company owns or manages more than 350 locations in more than 22 markets across the country and in Europe, totaling more than 22 million net rentable square feet.

"The company's mission is the same today as it was when we opened our first storage center more than 25 years ago--be the national leader by setting the standard for the self-storage market," says Chuck Barbo, president and CEO. "Providing a safe haven for wayward valuables requires a time-tested business plan that is fluid, innovative and turnkey, thus adapting to the constantly changing storage needs of John Q. Public and today's business professional."

Shurgard's business blueprint begins with high-quality, conveniently located and secure self-storage centers infused with exemplary customer service. From this base, Shurgard provides features and amenities that keep the company at the forefront of customer convenience, including the following:

• Extra-wide driveways, covered entries, well-lit hallways, fire alarms, climate control, electronic intrusion and perimeter-beam security measures.
• Shurgard Storage To Go: a portable, containerized storage service that the customer packs, seals and locks for Shurgard to pick up and take away until needed again.
• Shurgard Storage Stops: convenient, free-standing, customer-service centers located in high-traffic shopping malls.
• Shurgard's National Customer-Call Center: a service that allows customers to reserve and lease storage space via telephone.
• www.shurgard.com: the company's Web site that provides company information, a reservation system for Shurgard To Go and the Storage Estimator, an online, interactive program that determines space requirements and optimal unit size.

During the last 26 years, Barbo and Shurgard have attracted numerous investors and have undergone the changes that come with growing a company. In its first 20 years, more than $600 million--all equity--was raised from more than 80,000 individual investors in 24 separate, real-estate-limited partnerships. In March 1994, a consolidation of 17 of these limited partnerships was completed and a single, publicly traded REIT was formed. On March 24, 1995, Shurgard Inc., the private company that managed Shurgard's storage centers, merged with the Shurgard REIT. This merger resulted in a fully integrated, self-administered and self-managed REIT.

Today, Shurgard continues to grow with an emphasis on development. The company's development strategy is to build high-quality stores in premium locations. Although emphasis is placed on development, selective acquisitions are also added to the portfolio.

In addition to the 22 domestic markets that Shurgard operates in the United States, the company has expanded into Western Europe. Along with its European partners, Shurgard currently has a presence in Sweden, France and Belgium. European expansion plans are also underway in The Netherlands and the United Kingdom.

Shurgard is aggressively pursuing its plan to open 30 to 35 storage centers in 1999, both domestically and in Europe. Behind this growth is the company's determination to find new markets needing upscale storage, anticipate customers' growing and changing needs, and redefine and set the standards of what storage is and can be.

"Our vision of continued growth is pretty simple: innovative ideas coming from enthusiastic individuals. We make it a point to hire quality people and we listen to them," says Barbo. "Ultimately, front-line employees spot opportunities for growth and suggest ways to offer better customer service. They are the eyes and ears of our company and have a voice in determining the future of Shurgard."

Both Barbo and Shurgard are motivated to provide the best storage opportunities for consumers today and tomorrow. And, Barbo vows to keeps his employees motivated because he knows, regardless of the global changes in the past two decades, people still have stuff, and someone still has to store it.

5. Sovran Self Storage Inc.
5166 Main St.
Williamsville, NY 14221
716.633.1850
Fax 716.633.1860
221 facilities
12,400,000 square feet
112,000 units
Serving 21 states
Founded: 1983
President: Robert Attea
Contact: David L. Rogers
www.sovranss.com

In 1985, through a limited partnership of which it was a general partner, Sovran's predecessor developed its first self-storage facility in Florida. On June 26, 1995, Sovran Self Storage Inc. commenced operations effective with the completion of its initial public offering of 5,890,000 shares. With the closing of the offering, Sovran purchased 62 self-storage facilities that had been owned and managed by Sovran Capital Inc. and the Sovran Partnerships. The company has since purchased 159 self-storage properties from unaffiliated third parties, increasing the total number owned to 221--all of which operate under the name "Uncle Bob's Self Storage." Since 1985, the primary business of the company has been acquiring, developing and operating self-storage facilities.

Sovran's principle officers include Robert J. Attea, chairman of the board and chief executive officer; Kenneth F. Myszka, president and chief operating officer; and David L. Rogers, chief financial officer. These principle officers have been working together in the acquisition, development and operation of self-storage facilities for more than 14 years, during which time they have developed substantial expertise in facility management.

Sovran's external growth strategy is to increase the number of facilities it owns by acquiring suitable facilities in markets in which it already has operations, or to expand in new markets by acquiring several facilities at once in those new markets. The company also intends to expand and enhance certain of its existing facilities by building additional storage buildings on presently vacant land and by installing climate control and enhanced security systems at selected sites.

6. U-Store-It
6745 Eagle Road, Suite 300
Middleburg Heights, OH 44130
440.234.0700
Fax 440.234.8776
137 facilities
8,300,000 square feet
70,341 units
Serving 18 states
Founded: 1928
President: Todd C. Amsdell
Contact: Todd C. Amsdell
www.u-store-it.com

A former five-and-dime that was transformed into mini-warehouses has grown into a company boasting 144 self-storage centers with more than 70,000 units, eight million square feet and 360 employees.

U-Store-It, the Self-Storage Professionals, is a wholly owned subsidiary of the Amsdell Companies, a multi-faceted real-estate development company headquartered in Middleburg Heights, Ohio. The Amsdell Company history dates back to 1928 in Oil City, Pa., where family patriarch Carl Vesper Amsdell built oil refineries and steel mills. The Amsdell sons, Robert and Barry, who worked in the company in their teen-age years, took over the firm in 1973. They entered the storage business in 1975 when they decided to purchase the site of a large former department store that had gone out of business and transform it into small warehouse spaces.

The rest, they say, is history. U-Store-It now operates three regional offices--Cleveland, Ohio; Naples, Fla.; and Milford, Conn.--and 17 district offices. One of the company's largest growth spurts was between 1994 and 1998 when the company used several sources of funding to acquire 133 properties. Future plans call for developing and acquiring additional self-storage centers nationwide.

U-Store-It's number-one selling point is its people. Despite its rapid growth, the company hasn't forgotten the importance of human interaction. Therefore, many of its facilities have resident managers. "Our vision is to have the finest self-storage centers providing the best possible service from the most professional people," says Todd Amsdell, president. "Our vision is backed by the great people who work at U-Store-It."

The company, which received an Award for Excellence from the Self-Storage Association, is also an integral part of each community in which it locates, being involved in local youth sports programs, and fire and police safety organizations. In July, the Amsdell Companies donated the use of its corporate jet for the transport of athletes to the 1999 Special Olympics World Games in the Raleigh-Durham, N.C., area. "The Amsdell Companies was thrilled to be a member of the team," says Amsdell. "U-Store-It's reputation is rooted in honesty and integrity. That's why we are the self-storage professionals."

7. Derrel's Mini Storage Inc.
3265 W. Ashlan Ave.
Fresno, CA 93722
559.224.9900
Fax 559.224.1884
36 facilities
5,003,486 square feet
45,432 units
Serving California
Founded: 1968
President: Derrel Ridenour
Contact: Derrel Ridenour

For the owners of Derrel's Mini Storage Inc., the business of self-storage was a side project that became all-encompassing. "I come from a manufacturing background," explains company President Derrel Ridenour. "My dad had a metal-fabrication plant back in 1945. Around about 1960, a freeway was going to take our shop, so we bought another location to move to, yet the freeway wasn't going to be complete for several years, so we decided to build some fences and rent some space out for RVs.

Then in 1963, a mini-warehouse opened up here in Fresno with about 60,000 square feet, and it rented in about three months. We decided to keep our guys busy during our slow time by having them make doors and roofs and building components. We designed our own buildings and then made the parts."

This peripheral focus on building self-storage facilities continued for several years until about 1982, when the company shifted its full focus on building storage facilities. Derrel's still continues to manufacture its own building components. "We still manufacture our own doors and walls and have our own crews that put them up. We find our own locations and go through the planning process. We also have our own management company, but only for our own accounts."

Derrel's plans to expand by building approximately 300,000 square feet of self-storage each year, focusing primarily in California's central valley, from Sacramento to Bakersfield. The company has employed a strong radio and TV advertising campaign to target this particular area. "About 10 or 15 years ago," says Ridenour, "I decided that I had to build a storage facility within a two-mile radius of everyone who heard or saw our commercials. It was a costly, timely venture, but it really worked out well. Now we've become a brand name in the Fresno market."

Derrel's Mini Storage currently has 36 locations and 10 more under development. Ridenour attributes the company's success to "the efficiency of a family operation where the owner picks the land, where we do our own designing and manufacturing." To any new owners or operators, he suggests selecting an "A" location for your site, such as one close to a McDonald's. "Those are the ones that are going to survive," he says. "You'd also better be able to have a pretty good vacancy factor figured into your proforma. Try to build where you're able to limit your future competitors--be very selective."

8. Storage Inns Inc.
9909 Clayton Road
St. Louis, MO 63124
314.997.6603
Fax 314.997.0376
100 facilities
5,000,000 square feet
Serving 10 states
Founded: 1973
President: Frank C. Blumeyer Jr.
Contact: Frank C. Blumeyer Jr.

Unlike other top operators of the self-storage industry, Storage Inns Inc. is an association of independent owners, founded in 1973 by Frank C. Blumeyer. Although Blumeyer owned a few facilities of his own, he saw potential in a cooperative effort. According to Frank C. Blumeyer Jr., the founder's son and current president of the company, "Years ago, my father felt that there were too many mom-and-pop operators of self-storage--independent operators like ourselves. He thought it would be a good idea if we banded together under one name and did common advertising in the phone book, made common purchases of supplies, etc. So we adopted the name, similar to that of Holiday Inn, and began licensing individual owners, for a modest fee, to use it. And we gave them expertise on how to build, how and when to sell, that sort of thing."

There are currently 100 facilities licensed by the company and going by the name A Storage Inn. Although the Blumeyers have not solicited any new licensees in a number of years, their future plans include the fine tuning of their present operation. Because, in the past, many new operators would come to them for advice on site selection and feasibility, they were presented with multiple partnership opportunities. Of the 100 facilities now participating in the Storage Inns collective, the Blumeyers have financial interest in several, including those that they own and manage themselves. It has been a very successful venture for this family-owned business.

"The bottom line is luck, careful site selection and continued, hands-on management," says Blumeyer. "The best advice I could give anyone is to be careful in your site selection and realistic in your proforma. Anybody can make anything look good on paper, but that doesn't mean that it's necessarily going to turn out that way in reality. I could give a list as long as both my arms of people that went broke and lost their facilities because they were looking at this business through rose-colored glasses and thinking it was a sure thing--it's not."

9. Morningstar Mini Storage
10833 Monroe Road
Matthews, NC 28105
704.847.1919
Fax 704.847.1640
57 facilities
4,300,000 square feet
30,700 units
Serving North and South Carolina
Founded: 1981
President: Stephen E. Benson
Contact: Stephen E. Benson
www.morningstarstorage.com

He sold his Wendy's franchise to Dave Thomas in 1980, but not before he had learned a few lessons about customer satisfaction. "The philosophy I've borrowed from Dave Thomas is to take that knob on quality and turn it way up," says Stephen Benson, president of Morningstar Mini Storage. "What's a little bit different about Morningstar is that we've always done all of our own construction as a general contractor. We even do most of the subtrades as well. We are not just the operators, we are the owner, the developer, the builder and the long-term operator."

Morningstar owns and operates 57 facilities throughout North and South Carolina and employs approximately 220 staff members. The company also has a partner--Five Arrows Realty Security, which is a fund managed by the Rothschild Group of London. This allows Morningstar a $60 million line of credit with which the company plans to double its size in the next five years while still remaining in the Carolinas. "We really dominate this market," explains Benson. "Our thought is to stay close to home. It is tempting to move over to Richmond or Jacksonville or Atlanta, but we want to stay a day's drive away from home. We want to be able to know our employees by face and by name."

Morningstar is a company with some very unique policies. First, the company uses strictly masonry buildings. Its facilities have no chain-link fencing visible from the road and, according to Benson, the company has the lowest coverage per square foot, providing for lawn and flowers. "One of the business expenses we've got that no one else has is a couple of thousands of dollars for flowers twice a year at each location."

"We like our formula for success," says Benson, "and that is top-end amenities: picnic tables, restrooms, a diaper-changing station, a vending area, payphones, etc. We may not make as much money as the rest of the world, but in the long-term, we want to keep our market position secure."

The company also boasts a very unique corporate culture and a strong media diet. Morningstar produces its own TV commercials in house and employs a full-time marketing manager. The company's facility managers, chosen very selectively from a roster of applicants with more professional backgrounds, are not bridled by a strict rule book or a set of corporate policies. Instead they are given complete autonomy. Morningstar does not keep resident managers, nor does it offer an incentive program. But, according to Benson, there is virtually no turnover. "The most interesting thing about Morningstar is our unbelievable team spirit."

Employees also participate in the company's Share the Load program, where tasks such as payroll, maintaining computer databases, and ordering documents or uniforms are all handled by employees at different locations who volunteer to handle that particular responsibility. "As a result, we have a very small executive staff that can focus on the real meat of the business," says Benson. "This means I can focus on critical issues, not details."

Benson believes that, in the past, self-storage may have been a real-estate game, but is not so anymore. "It's a marketing game," he says. "The future will be very different: It will take a great deal of talent to succeed, and a lot of skill."

10. Dahn Corp.
18552 MacArthur Blvd., Suite 495
Irvine, CA 92612
949.752.1282
Fax 949.752.0301
68 facilities
4,000,000 square feet
40,000 units
Serving nine states
Founded: 1970
President: Brian A. Dahn
Contact: Kathleen N. White

In the 1970s, when the firm was known as C.J. Bonner Corp., Brian A. Dahn and his boss, C. J. Bonner himself, specialized in the construction of new storage facilities. Along with Public Storage, the Bonner Corp. held pioneer construction of storage sites in California. In 1988, when Bonner decided to retire from the industry, Dahn purchased the company, changing it's name to Dahn Corp. Today, he remains the president and owner of that company.

Dahn Corp. specializes in the acquisition, development and management of self-storage facilities nationwide. The company operates 68 storage facilities in nine states from one central office in Irvine, Calif., where a total of 14 employees are dedicated to making each Dahn facility a success. A core of four individuals visits each facility at least once every three weeks, meeting with on-site managers, analyzing market conditions and pursuing acquisition leads. They are supported by five administrative and accounting specialists who are familiar with each facility and manager.

Dahn Corp. has been successful because of its focus on developing and acquiring only self-storage facilities--the company does not diversify into other products. Dahn has maintained a conservative approach to site selection and financing, and its properties are held long-term. The company's ability to identify and take advantage of strong markets, while maintaining low overhead, is responsible for its success. In addition, the stability of Dahn's workforce has been a strong influence on its prosperity, with the corporate officers staying an average of 13 years with the company.

The Dahn Corp. continues to develop in the areas where it has existing facilities and will also expand through the purchase of additional sites. The company is proud of its success and will continue to operate as it has in the past, developing primarily for its own account and looking forward to future expansion.

According to Kathleen White, senior vice president, "The self-storage industry, like other types of real-estate development, can be extremely rewarding. However, it is a highly competitive industry, and it can be difficult to develop and manage the facilities." She points out that some common mistakes made by new owners/developers include building at a poor location, bad design, too much debt and improper management. "Using a conservative approach can help limit some of the many risks involved in the development process," she says.

DEAR WALDMANS: Tenants are constantly late or never pay. What can I do, legally, to try and contact them? What can I say to tenants on their answering machines, because they aren't going to answer their telephone knowing who is calling with the clever caller-identification unit? Also, how many times can you call a person? If they identify themselves on the answering machine, what kind of message can you leave? My delinquency used to be less than 4 percent, but now I am lucky to get it less than 6 percent. I could really use some help with this situation.
--Need Help in Birmingham, Ala.

DEAR NEED HELP: In our storage business, we have found that tenants that pay late fees once, usually pay late fees twice, three times, over and over. We share your dilemma. All businesses do. Harassment has become a big word in our world, so you must be careful not to harass your tenants. I know you think it helps to deliberately call them over and over again. Sometimes we believe that the tenant must surely become tired of having their phone ring all the time and not being able to answer, knowing it is a bill collector of some sort. It is hard for us, caring about paying our own bills, to understand that some people place so little in their commitments.

As business professionals, we must wear many different hats, including that of the bill collector. It is not easy to pressure someone for their rent, and deciding how to go about it is even harder. What may work for one tenant will not work for another. The best way to understand this is to realize you have many types of people and circumstances. Don't always assume your tenants realize their rent is late. For example, I have a tenant whose rent was several months late, and all the late notices had been sent out. When my manager contacted him at home, he immediately stated he would bring a check by to cover the past-due account. The next day he did just that. My manager verified with the bank that the check was good, closed out the work for the day and deposited the check. A couple of days later, the bank notified us there were insufficient funds to cover the check. I called the tenant's home phone only to find out the line had been disconnected. I immediately jumped to the conclusion that he had taken off and left me with the contents of his unit.

My next step was to call his place of employment. I left two messages over the next several days. He then called me and explained he had given my manager a check that was post-dated, though my manager had not realized this at the time. It turned out to be our fault for not realizing he had given us a post-dated check.

You may call your tenants a reasonable amount of times. If you leave several messages with no response, that seems to be a good indicator that the tenant does not intend to bring the bill current. I would certainly not harass any person to the point of being accused of abuse. Always use your business sense and maintain a sensible and reasonable time frame for collecting your rent.

A father-daughter team, the Waldmans are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. The Waldmans are co-authors of the industry's leading series of books on self-storage operations: Getting Started, Forms, Policies & Procedures and South Carolina Tools. Another creation of Ask The Waldmans are their colorful posters designed exclusively for the self-storage industry. Comments and questions for ASK THE WALDMANS may be sent to: The Waldmans, P.O. Box 21416, Charleston, SC 29413. E-mail: [email protected]; Web: www.askthewaldmans.com Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.

DEAR WALDMANS: I am the proud new owner of a self-storage facility. It has truthfully been an experience in developing all the essential elements that go into a storage facility. The facility is approximately 50,000 square feet, and will have a resident manager. As of now, I want my tenants to be able to have 24-hour access to their units. The manager that I have hired to fill the position has a background in sales and is great with people and numbers. My dilemma is down to which software to choose. Choosing a program really makes me nervous. Being new at all of this, I truly am afraid I will purchase the wrong program. After coming this far, it is very important that I feel comfortable with the software and that it meets my expectations. First, how do I find software packages for storage facilities? Second, are there certain items I need to investigate more than others? Third, what will really give me the feeling I have chosen the right program? Please give me some feedback on what, how and why on this very delicate choice. Your insight will be greatly appreciated.

--CHOOSING IS CONFUSING

DEAR CHOOSING IS CONFUSING: As you have found out, it is extremely hard but rewarding work to start your own business. You are not alone in discovering it seems as equally hard to choose a software program. After all, the program you choose operates the entire facility. A good source of locating programs is the Internet, or by attending a self-storage tradeshow where you can demo numerous programs on site.

First, take time to determine exactly what you expect out of a program. For certain, you will want the software you choose to be beneficial for your tenants, manager and accountant. Think about what it can do for you beyond the normal aspects of the day-to-day business.

Make sure to choose at least three vendors to give you a demo of their program. Ask about the ability of day-to-day operations of a facility. Make sure the sales representative is knowledgeable. Ask a lot of questions, such as: What is their length of time in the business? How many facilities do they service? What type of support will they give you, and what are the fees for this support? After asking a few questions, you will be able to determine just how much wisdom they have to back up their product.

You may want to call a few of the vendors' current customers to obtain their opinions on the software and their comments. Nothing is quite as effective as advice from a hands-on user of the product. Question the ability of the system to run reports and offer self-help. Likewise, make sure an operations manual is available. Running data statistics from month to month or comparing year to year is extremely useful.

Determine how the product handles client information, from completing the lease agreement to the receipt of monies to tracking payments, late fees, move outs, or generating letters for different incidents. Does it handle insurance if you collect the fees for the insurance company? Go over the accounting viewpoint and envision how you and your accountant will be able to deal with this part of it. If you have installed electronic gates, will it be compatible, and how does it work? Do you have the option of charging for extended or 24-hour access? What about the security system? The list goes on and on.

A father-daughter team, the Waldmans are self-storage owners/operators and attorneys. In addition, Ms. Waldman holds a master's degree in labor and employment law from Georgetown University. The Waldmans are co-authors of the industry's leading series of books on self-storage operations: Getting Started, Forms, Policies & Procedures and South Carolina Tools. Another creation of Ask The Waldmans are their colorful posters designed exclusively for the self-storage industry. Comments and questions for ASK THE WALDMANS may be sent to: The Waldmans, P.O. Box 21416, Charleston, SC 29413. E-mail: [email protected]; Web: www.askthewaldmans.com Views and opinions on legal matters are those of the authors. Professional counsel should be obtained before any determination or positive action is taken.