This month, I gathered a roundtable of experts to discuss the state of selfstorage in the Central United States. Lets hear what local experts have to say about their respective cities and regions. Our panel of brokers includes: Bruce Bahrmasel, The Preferred Realty Group, Lincolnwood, Ill.; Larry Goldman, Prudential CRES Commercial, Kansas City, Mo.; John Holthaus, Cushman & Wakefield, St. Louis, Mo.; and Peter Hitler, Investment Real Estate Specialists, Mequon, Wis. These are very unique economic times, so I wanted to ask local brokers some pretty straightforward questions every owner will find pertinent.

1. WHAT ARE THE PRIMARY REASONS OWNERS SELL THEIR SELF-STORAGE PROPERTIES?

BAHRMASEL: Besides personal reasons, one owner recently expressed concern that interest rates might soon rise, driving cap rates back up.

GOLDMAN: Life eventsrelocation, divorce, retirement. Others, often professional real estate investors, determine the market has topped out and are motivated to sell as overbuilding is adversely affecting their occupancies. In addition tofavorable financing terms for buyers, these sellers also feel they can sell for higher prices than we will see for several years.

HITLER: The only people I see selling are the ones going into retirement or sellers who have a property that is not performing. People fail to realize storage is a retail business, and to be successful, you have to be on call for your customers when they want information.

HOLTHAUS: I agree personal reasons top the list. I also think new competition in the market can affect their decision as well. Issues like bad partners, divorce and old age cause local people to sell. If the business is doing well, it is almost impossible to get them to sell because it is the best business there is. Low cap rates help, but if the seller pays taxes on the gain, he must reinvest the proceeds in something, and its hard to invest in anything at a cap rate high enough to replace the income. Replacing the income stream is the hard part. Trading up to NNN (triple-net) deals makes sense, but they are hard to find, and all your eggs rest with one tenant.

2. ARE THE OWNERS IN YOUR AREA BEING INDUCED TO SELL BY LOWER CAP RATES?

BAHRMASEL: They are certainly realizing this may be a great time to sell. But on the flip side, there is concern on what they can buy to replace their current income with cap rates at such generally low levels.

GOLDMAN: Yes, especially if the facilities do not fit in their overall strategic plan.

HITLER: The lower cap rates help influence someone to sell, but I dont feel it is the overriding issue. The primary problem is there are few places to put your investment dollar that are better than storage.

HOLTHAUS: Yes, but the new capitalgains rate should also help.

3. DO BUYERS REMAIN INTERESTED AT THESE LOWER CAP RATES?

BAHRMASEL: Those in the business are still cherry picking sites, and others who are working on exchanges are considering storage as an alternative investment to what they sold. However, these exchange investors need to be educated about the business, since they usually are coming from very different real estate investment backgrounds.

GOLDMAN: Competition remains stiff for the acquisition of well-designed, reasonably priced properties. This demand for quality facilities translates into lower cap ratesas long as the properties receive strong exposure to a large number of qualified buyers. While this comment may seem broker-driven, I can show you the irrefutable statistics in my area.

HITLER: When cap rates get under 9 percent, I find buyers are not interested.

HOLTHAUS: Sure, lower is better for the seller; lower interest rates help the buyer. Replacing the income stream for the seller is the problem we need to cure.

4. WHAT IS MOTIVATING BUYERS TO REMAIN INTERESTED?

BAHRMASEL: Interest rates and generally better ROIs than in other real estate investments.

GOLDMAN: The ease of management, the spreads between the costs of capital and cap rates, and investment-portfolio diversification. Successful investment in the stock market does not appear to be as idiot-proof as it did five years ago.

HITLER: Buyers like to buy a property that is under-utilized. It may mean the business can be expanded or improved in some way to increase the profitability.

HOLTHAUS: Noneconomic situations are the key drivers. Its a great business. Once it is set up properly, it is a rather passive investmentno bathrooms, no tenant improvements, many tenants vs. being dependent on only one or two tenants. Its an easy-to-understand business.

5. DO YOU SEE A GENERALIZED OVERBUILDING SITUATION IN YOUR AREA?

BAHRMASEL: Yes! There is definitely an overbuilding situation in my area. Overbuilding creates more competition, forcing managers and owners to reduce rental rates. The entire market suffers as a consequence.

GOLDMAN: Absolutelyoverbuilding in the primary and secondary markets is reducing rental and occupancy rates to record low levels. Management expertise is more important than ever in maintaining market share in these very competitive markets.

HITLER: There has been a lot of building in our area. However, I have not talked to owners who are complaining about low occupancy. I do feel owners are becoming more cautious about building or expanding their businesses. If there is much more building, I think there may be an occupancy problem.

HOLTHAUS: Yes, the market is full; occupancy is running 70 percent to 90 percent.  

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In January 1994, he created the Argus Self Storage Real Estate Network, now the nations largest network of independent commercial real estate brokers dedicated to the buying and selling of self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com. 

With the continuing popularity of recreational travel and boating, stringent CC&Rs that dont allow parking of recreational vehicles within their neighborhoods, and stricter city ordinances, boat and RV storage is becoming more of a necessity then ever before. More and more self-storage facilities are being designed to accommodate RVs along with traditional self-storage units. In fact, more are being built every year dedicated to RV parking.

Historically, boat and RV storage facilities were open areas with the bare-minimum chain-link fence. With no security but the fence, these areas were typically afterthoughts of self-storage. But todays RVs can be extravagant, long-term investments. Theft, burglary and vandalism are ongoing concerns of prospective tenants. They are looking for a higher standard of security. Owners of these vehicles want to be sure their investments are safe and secure. With the availability of sophisticated security systems, boat and RV storage operators can now offer these customers the security they demand.

Lines of Defense

Naturally, the first line of security is a perimeter fence, which must be tall enough to discourage would-be intruders from simply climbing over it. The added protection of razor wire will further discourage them.

Infrared perimeter beams are also a very effective means of preventing security breaches along the fence. They are set up at specific points along the perimeter of the gate. When the infrared beams are broken by unlawful entry, audible alarms, such as sirens and/or strobe lights, can be set off throughout the facility while relays are triggered simultaneously for alarms to contact the facility manager, security-monitoring company and the police.

Adequate lighting is another positive addition to the security of boat and RV storage facilities. Effective lighting provides clarity with night-time video-taping capabilities and acts as another deterrent to intruders. Lighting also creates a safer, more comfortable environment for tenants picking up their vehicles or arriving home during the night.

Security must also be applied to the most common threat of invasion: other tenants. There is no better way to obtain access to a storage facility than being an existing renter. Computerized security-gate access is one of the most effective means of security for any type of storage facility.

A good access system will track the entrance and the exit activity of the facility and maintain an infinite history. Keypads can be set up strategically throughout the site to create security zones. A standard storage tenant can have access to the front gate, but there is no need for him to have right of entry to the RV-parking area. Security zones prevent unauthorized tenants from entering those limited access areas. The access system should also lock delinquent tenants out of the facility automatically and remain locked out until paid, weeding out higher-risk tenants.

Keypad Entry

Many RV storage facilities have made gate access easier by mounting two keypads at every entry and exit gate. The shorter keypad, mounted approximately 42 inches from the ground, allows access for standard cars and trucks. Keypads mounted approximately 66 inches from the ground allow RV drivers to access the facility without having to exit their vehicles.

Other security-gate options can be added to enhance accessibility for RV drivers. The addition of a proximity reader allows entry to the facility by waving a card, comparable to the size of a credit card, up to the access device. A remote-entry device, similar to a garage-door opener, can also be used. Remote-entry devices allow customers access to the facility with the push of a buttonthey dont even have to open the vehicle window. These convenient features can be offered to boat and RV customers for an additional charge, turning a security system into a revenue-generating service.

Wireless Options

With security gate access comes the ability to arm each individual door with an alarm. Of course, this method is not possible for most boats or recreational vehicles; but with the advancement of wireless technology comes wireless security. Many of the more sophisticated security companies have embraced this new technology and created wireless alarm systems designed specifically for self-storage.

Wireless brings a new and unique diversity to boat and RV security. These facilities can now offer security using motion detectors, which are simply placed in the vehicle. The detector checks in consistently throughout the day. When the owner is granted access to the facility using the security gate, the motion detector is disarmed. If an unauthorized person enters the vehicle, it senses the activity and the security system will be activated. Audible alarms, strobe lights and/or triggering relays will be used to contact the manager, security-monitoring company and/or police.

Video Surveillance

One of the most obvious means of preventing intrusions in an RV storage facility is a surveillance system with cameras. CCTV and digital-video recording is vital to the security of any such facility. Cameras throughout the boat and RV storage area recording all activities and persons entering will promote the highest confidence in potential tenants.

Owners and operators can monitor each cameras view from anywhere, anytime using high-speed Internet connections. Digital-video recorders commonly come with this feature to accommodate off-site surveillance. Not only can owners and operators view video of the facility, with operator-provided web addresses, customers can access the video via the Internet to check on their prized possessions.

Sleek and attractive lexan panels can be prominently displayed in the storage facilitys office, showing customers and potential tenants the security measures in place. Aesthetically pleasing site maps can be added to the prominent display showing the layout of the facility and the status of each storage space, whether it be traditional self-storage or boat and RV spaces.

With todays focus on recreational relaxation, lifestyle and luxury, and all the latest enhancements in technology, boat and RV storage has become more competitive than ever. It is imperative potential storage developers examine each areas demographics and customer base. What exactly are customers looking for when it comes to boat and RV security? As a storage owner, it is wise to invest in a higher level of security, win the confidence of tenants, and maintain customer loyalty and continued business.

Karen Genualdi is a marketing representative with Scottsdale, Ariz.-based PTI Integrated Systems Inc., which offers a complete, integrated management-control system for self-storage. Courtney Doerfler is business-development assistant for PTI. For more information, call 800.331.6224; visit www.ptiaccess.com. 

If you are a self-storage owner who has just purchased a facility but have no industry experience, you may find the tasks involved with starting a new business a bit overwhelming. Management companies are available to assist and guide you through the beginning stages and help you maintain a well-run operation throughout the life of the project.

These companies have the resources to oversee every aspect of the business, from computerization, hiring and training of personnel, accounting, rent collection, building maintenance, even sales and marketing. Their guidance allows you to save time and money by avoiding the costly mistakes most new owners make. Some financial lenders may even lower your interest rate if they know you have a management company assisting you throughout the first year of your project, as you are at a lower risk for common errors.

Why a Management Company?

Some owners who have owned and operated for years seek out management companies because having someone else run their facilities eases the strain of having to be on site every day. If they are close to retirement but not quite ready to sell their business, they can hire a management company to take over the day-to-day operations while leaving them time to relax, travel and start new projects. Other owners partner with management companies when their business is ready to expand to multiple locations. The work involved with acquisition and construction of new sites requires focus. Having the freedom to be away from a facility gives them the time they need.

If a facility has hit a standstill or the business is underperforming, seeking the expertise of a management company can benefit an owners bottom line. Most of these companies are run by seasoned industry professionals. Who better to hire and train a new staff?

Their status and training usually attracts higher quality employees, providing tenants the quality customer service they deserve. Management companies offer exceptional marketing strategies and know how to use appropriate mediums, such as signage and brochures, to increase visibility to prospects. They usually have connections to secure discounted advertising rates with print media as well, such as the Yellow Pages.

Managing Risk

Turning over a facility to a management company is convenient and the benefits are plentiful. But one should keep in mind that handing over the keys means handing over responsibilitywhich means potential risk. Even the most experienced professionals err on occasion. Before hiring a management company, you want to know it is prepared and properly insured if an incident should occur.

When hiring a management company, treat the situation similarly to that of hiring a vendor. Have the company listed as an additional insured on your current business owners policy. Next, check to see if it has an adequate property-management errors and omissions (E&O) policy in force. This coverage is designed to protect property management companies if they fail to render the professional services contracted and also provides the owner assistance with defense costs associated with responding to lawsuits and investigations.

Request a certificate of insurance from the management company as evidence it is insured by a financially stable entity and carries appropriate amounts of insurance for the type of services performed. The certificate should have information on the insurer, insurance agency, types of insurance, policy numbers, effective dates, limits, certificate holders and any special provisions it may have. Check to see the policy limits are equal if not greater than your facilitys limits.

More About E&O

Here are a few reasons property-management E&O coverage works. Lets say you bring in a management company and its contracted services include paying property taxes on your commercial building. The property manager fails to make these payments in a timely manner, and you, the property owner, are slapped with a fine and a penalty. Since the management company breached its contract by not paying on time, you would most likely make a claim with the companys insurance company, requesting it pay the fine and penalty on your behalf.

What if you authorize a management company to have maintenance work done at your facility? Lets say the cost of the project is $500,000, and the repair company is to be paid in increments of $100,000 as each stage is completed. However, your property manager advances money to the repair company prior to completion and neglects to identify the licensing, bonding and insurance company of the contractor.

The repair company leaves the work site prior to repairing several buildings and, because it wasnt licensed or insured, you now have to hire and pay a new company to finish the work. You want to ensure your management company has the resources and insurance coverage to allow you to recover amounts improperly paid to the first repair company. It is never easy to point the finger and cast the blame when mishaps occur; however, when everyone involved has proper insurance coverage, the end result is less costly all around.

Universal Insurance Facilities Ltd. offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; call 800.844.2101; fax 480.970.6240; e-mail [email protected]; visit www.vpico.com/universal.

One of the most common mistakes a self-storage operator makes is to keep spending money on Yellow Pages or other advertising in an attempt to boost profits. In many cases, it can decrease profits because the added expense ends up being more than the additional revenue it generates. Why? Because there is a lack of attention to the phone-sales presentation! In other words, we can spend as much as we want on marketing and advertising, but if we cannot convert the caller to a renter, we are wasting our money and time.

What about the self-storage caller we perceive to be in a hurry? Maybe its a businessman on his cell phone and all he wants is a quick price, or the customer who says, All I want to know is how much your 10-by-15s are. What about the customer who is a little more aggressive and wants to hurry along the conversation? How are you handling these types of customers on the phone?

If you are spending $1,800 per month on advertising and marketing to make the phone ring, and you are averaging 60 calls per month, this is a $30 phone-sales presentation. And what about the incremental value of each rental you are losing? For example, if your average rental is worth $80 per month and the average length of stay is seven months, this is a $560 rental. Lets say you lose eight rentals per month because you are not equipped to handle these types of customers. How much are you really losing? In this example, you are accruing $4,480 in lost revenue.

Its not always best to throw money at advertising and marketing to make the phone ring. In many cases, its better to spend the money on education and training to equip your staff to become better at phone sales.

The Short Version

One way to handle the caller who is in a hurry or just wants a price is to prepare a two-minute presentation. This is a modified version of the presentation you would normally give. Even though every phone-sales presentation is a little different, it is important to list the features and benefits most important to each individual customer. If you only provide him a price, that is all he will remember about you!

We are often too quick to give the customer what he wants. It is important to overcome the urge to divulge the price right away and take control of the conversation. Always remember: Never give the price of a unit until you have built the value of your store. This will minimize any pricing objections and give the customer something to remember about your store. If you know the differential advantages you have over your competition, this will help you tremendously in setting yourself apart from the rest of the marketplace. It is important to give those key features and benefits that will make the biggest impact on the customer.

In a typical sales presentation, it would be important to provide a list of six to eight key features and benefits about your facility. This will help you to educate and build value with the customer. If he is in a hurry or just wants price, you can streamline the features and benefits and give just three or four. This will shorten the presentation and still give you the opportunity to set yourself apart from competition.

It is even more critical to educate and build value with a customer if you are the price leader in your market. For example, if you offer the highest rates in town and only give the price to the customer, he will only remember you are $8 more per month on a 10-by-15 than everyone else he called. However, if you avoid the price issue at the outset and give three or four key features and benefits, it will help you overcome any pricing objections and give you a much better chance of setting an appointment.

Many times, we perceive a customer to be in a hurry when in reality he is not. It is imperative not to get caught up in the moment, to slow down and listen to the customer. When you slow down, listen and take control of the conversation, the customer will often want to hear everything you have to say. If he is calling around for prices and your competition has obliged him, this is a golden opportunity to educate the customer on his specific needs and what to look for when using self-storage.

Once you have done this, setting the appointment becomes much easier. If you approach every customer in this fashion, you will be amazed how many will slow down and open up during the phone conversation. Once you have made a connection with the customer and given him some real value, he will be ready to visit the store.

Prepare a two-minute presentation for those customers who are in a hurry or only want a price. This will equip you to handle this type of caller and will give you an advantage over the competition. To grow any organization, we must grow the people within it. The self-storage industry is becoming more competitive every day. To overcome this, we must equip and educate ourselves to become the best we can. The biggest asset any self-storage operation can have is the people running it.  

Brad North is founder of Advantage Business Consulting and specializes in sales and marketing training to the self-storage industry. He has produced two live videos along with a workbook called Maximizing Your Sales and Marketing Program. This resource will help managers take their sales and marketing programs to a higher level. Mr. North also offers comprehensive on-site sales, marketing, feasibility and operational training to the self-storage industry. For more information, call 513.229.0400 or visit www.advantagebusinessconsulting.com. 

One of the most difficult issues for a selfstorage facility to handle is the disposal and sale of a vehicle when a tenant is in default. Storage of a car, boat, RV or other vehicleespecially outdoor storagecan be a lucrative part of a storage business, but when a tenant fails to pay rent, profits seem less than worthwhile compared to the problems created.

Vehicles are unlike anything else stored at a facility because they have titles, and titles often have liens attached to them. Getting a title into your name to sell an abandoned vehicle is one problem. Getting around the lien on the title is a second. While some states require you to ask tenants to declare liens on stored property or check for liens before a sale, you often do not find them on household goods and furnishings. That does not mean there are no liens on the property certain types of liens are simply not recorded. With vehicles, there is no way to avoid knowledge of a lien. To further complicate matters, details regarding vehicle sale and disposal may not be addressed in your states self-storage statute. So what is a storage operator to do?

State Statutes

Several states have procedures set forth in their self-storage statutes specifically setting out an operators rights when it comes to vehicle disposal. They outline how to retitle and sell a motor vehicle stored at a facility when a tenant is in default. The statute may also discuss what happens to prior lien holders. This could be a blessing or a curse.

For example, California has a lengthy, complicated procedure for selling a motor vehicle stored at a self-storage facility. The states statute goes so far as to draw a distinction in sale practices between cars and boats. If you are in a state like California, you need to follow all of the time lines and notice requirements of the states statute to sell a vehicle legally. If you are able to follow this maze of guidelines properly, you will generally be able to get a title to the vehicle, sell it, and pay off the lien and your sale expenses.

There are other states that have requirements for the sale of vehicles in their self-storage statutes, and some give some hint of law to secure the title or sell without being as difficult as the one mentioned above. For example, the Michigan statute gives some direction of what to do to sell a vehicle in default and handles the title issues. Other states, such as Arizona and New Hampshire, offer some procedures for safely selling vehicles. North Dakota, Oklahoma and Wyomings statutes provide for the transfer of title on sale of a vehicle. Virginia grants priority in the first $150 of storage fees if you sell a vehicle. Unfortunately, in other states with self-storage statutes, disposal of a stored vehicle is not even mentioned.

Protect Yourself Against Claims

There are several things an operator must consider to protect himself from a lawsuit over the wrongful sale of a vehicle or having the lienholder sue for wrongful conversion of his liened property. The first consideration is whether the state statute speaks to stored vehicles in default. If not, he must look at whether his lease speaks to the issue of default and if he has provided himself any specific rights to remove vehiclesspecifically, the right to tow a vehicle after the default has been declared.

An operator must also determine the approximate value of the vehicle to be disposed/ sold. Several states have junk-vehicle statutes that allow anyone who has an abandoned vehicle with a certain maximum value on their property to have the vehicle retitled as junk and dispose of it.

If an operator does not have a self-storage statute that speaks to vehicle disposal, or his lease or statute does not allow him to tow a vehicle, he must look at other laws that might allow him to remove or sell. While many state statutes do not actually deal with statutory lien sales of vehicles, many have separate statutory sections that protect other industries, such as towing companies who charge storage fees or mechanics who make repairs and are not paid. This is the next place an operator should look. I recommend you consult an attorney for assistance at least on your first attempt to find and apply these statutes.

Often, if you find an applicable statute, it will provide for a specific lien and process for disposal of a vehicle in storage with a towing company or auto mechanic. Selfstorage facilities may be able to assert a lien right under these statutes because they are, in fact, storing the vehicle. You should be able to follow the disposal or retitling procedures set forth in towing and storage statutes (sometimes called livery statutes) in your state. These may make the most sense to follow because you cannot convey clear title to a purchaser at a lien sale, public sale or auctionyou have to be the titled owner or power of attorney to do so.

Next, do not overlook the possibility of contacting the lender who has the security interest in the vehicle. That lender will often pick up the vehiclealthough it may not be willing to pay the full storage charges. Still, you are better off to have the vehicle off your property and make space available for a paying tenant than to squabble over a few dollars. You will have avoided the issue of securing the title, extinguishing the lien and removing the vehicle.

Remember, if you sell the vehicle without resolving the first lien, in many states, you will be doing all the work for the secured lender. However, the towing and livery statutes in your state may have a trumping mechanism over secured lenders for the storage lien. If at all possible, follow that procedure (which, unfortunately, varies widely by state and cannot be discussed in this short article) to obtain a title. This will make your storage lien superior so you can hopefully recoup some of your selling expenses and lost rent.

If you are really sharp on your rights and know the livery or storage statute in your state, you can possibly explain to the secured lender why it may end up taking a second position to your lien if it does not claim the vehicle and pay storage charges. You will be able to get more secured lenders to pay storage fees and remove abandoned vehicles from your property.

A Final Option

While the first and best option for a storage operator may be to use the livery or towing storage statute and its lien-sale procedures, he does have another option: eviction. Selfstorage facilities often spend a great amount of time and money finding liens, pursuing changed titles, notifying lenders and selling vehicles. After all this, he may find:

1. The secured lenders lien trumps his lien and he gets no money.
2. He does not recover enough money to pay all costs.
3. He is being sued by the owner or secured lender for making some procedural error.

In most states, you can file a forcible entry and detainer action (eviction) for any storage unit or space at your facility. The default clause in your lease must provide that you may exercise all other remedies available in equity or in law. This would mean that, if permissible under the eviction statute in your state, you would have the right to commence an eviction action against the tenant.

The logic in considering this option is the time period for an eviction is generally short. The court will grant you restitution of your premises and, normally, for an additional fee, you can have a sheriff or bailiff come out to enforce your writ. Enforcing your writ, in most circumstances, means having the court appointed towing company take the vehicle into custody. In other situations, it means the bailiff/sheriff may simply watch you tow the vehicle off the premises. Again, laws and rules for writ enforcement vary almost by jurisdiction, let alone by state.

If you are allowed to have a sheriff tow the vehicle into the courts impound lot, retitling and disposal becomes the sheriffs problem, not yours. Better yet, if you are allowed to tow the vehicle elsewhere, you may have an interesting option available to you:

If your state permits execution of personal property, such as a vehicle, to satisfy your judgment, and your states exemption in a vehicle is not a large dollar amount, you may consider filing a complaint against your tenant for damages along with or after your eviction action. If the tenant does not answer the complaint, you will be allowed to take a default judgment against him and collect the money due you. You can order the sheriff to execute against this vehicle to satisfy your judgment. He would take the vehicle into possession and sell it. Proceeds from the sale may be distributed to you on the execution of your judgment or, in some states, any prior lien is paid first.

Even if you do not get much or all of your proceeds, think about what you may have accomplished. For the cost of a complaintfiling fee and maybe an execution fee, the sheriff, who has much better resources to accomplish retitling of vehicles, has done all of the title and lien-check work with the Department of Motor Vehicles. If any procedural errors are made by the sheriff, the liability for those errors lies with him, not you. For a smaller sum of money and a shorter time period, you have saved yourself an enormous amount of work, gotten your space back sooner, and done a good job of insulating yourself from certain liabilities. If your jurisdiction has liberal execution procedures, this may be a concept worth pursuing.

In sum, short of never disposing of stored vehicles, your options are:

1. Have the secured lender take the vehicle off the property.
2. Revise or enforce your lease provisions to allow you to tow vehicles to a towing yard that can exercise its towing and storage lien rights.
3. Follow the towing and storage/livery lien laws in your state, having the vehicle retitled under the storage and towing statutes.
4. Try the eviction and execution route.

The most important thing for a storage operator to understand is he takes on a great deal of risk if his states self-storage statute does not speak to the disposal of vehicles. Selling an abandoned or defaulted vehicle requires jumping through many hoops.

Jeffrey Greenberger practices with the law firm of Katz Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including selfstorage. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, Mr. Greenberger can be contacted at Katz Greenberger & Norton LLP, 105 E. Fourth St., Suite 400, Cincinnati, OH 45202, or by calling 513.721.5151.

With market saturation and overbuilding a continuing problem, self-storage owners and developers are looking for ways to stay competitive. Marketing has become more valuable than ever. And traditional marketing avenuesmailers, Yellow Pages and billboardsare commonplace. To stand out, selfstorage owners need a marketing edge. Some have discovered wine storage can provide it.

While not for everyone, wine storage can be rewarding for storage operators on several levels. The per-square-foot return can easily exceed that of traditional climate-controlled storage, making wine storage a very profitable business when full. Also, unlike boat or RV storage, wine storage is typically not seasonal. And because wine has such an upscale image, offering this highly specialized service can enhance a facilitys overall character.

Above all, wine storage is considered a unique service. There are a few more people exploring wine storage for their facilities, but it is still a niche market, says George McCord, owner of Southeast Storage & Development Co., which owns and runs four facilities in South Carolina under the name Plantation Self Storage. All four facilities offer wine storage. It will never be elevated to the level of importance of your basic business, which is the rental of storage units. But it certainly can be an asset to marketing those storage units, he adds.

Drawing a Crowd

Because of its distinctiveness, wine storage can draw attention where a typical self-storage facility might not. It has brought people on to our property who might not have otherwise been there, McCord says. And weve also found about half the people who rent wine lockers from us also end up renting storage units. That was something we hadnt anticipated.

Jay Sundher, general manager of Hollywood Storage Center in Newbury Park, Calif., anticipated his upscale wine-storage center would bring in more customers when it opened last May. He estimated 30 percent to 50 percent of his wine customers would rent traditional self-storage units. It also expands your market area. If youre target market area is 3 miles, with wine, because it is unique, it can reach farther distances. So youre expanding youre market area up to another 10 miles,he says. Now Im reaching a whole other market that wouldnt come to me for regular storage.

The single-room wine storage at Nantucket Storage Center in Nantucket, Mass., has also brought new tenants to the facility, according to Jim Chiswell of Chiswell & Associates LLC. Chiswell was involved in the initial feasibility study for the facility and continues to consult with the owners and management company. We will be able to better judge how well the wine storage brings in new business in the next two years or so, he adds.

Wine storage has opened new avenues for Guarantee Wine Storage in Jersey City, N.J., as well. It is definitely opening up connections for art storage, into which our parent company is starting to venture, says Elizabeth Van Dyk, Guarantees vice president of business development. While wine storage hasnt brought in new customers for Lock Up Storage Centers, it has added some prestige, says co-owner Bob Soudan Jr. People think, Hey, if the facility can store wine at the proper temperature and humidity, itll do great with my furniture, he says. It tends to make them feel a little more comfortable. Its kind of a neat thing, and its something for small talk with the manager. They may mention it at the next dinner party they attend, but were not going to the bank on it. Its not something that drives people to our facilities.

Filling a Need

As with traditional self-storage, location seems to be a key factor to success in wine storage. Depending on the character of your market if youre in an upscale market or in an area with wine drinkersit can fill a need for them, McCord says. Wine storage enhances the overall image of your facility, if youre trying to market to that kind of clientele. If youre in the middle of an Iowa cornfield, you might not have the same effect as you would if you were in downtown Chicago, where there are high-rise condominiums and wine merchants looking for places to store wine.

It certainly is not for every self-storage location. In fact, there are very few markets where you can make a success of wine storage, agrees Chiswell. A year after opening, the Nantucket facility has been slow to fill. Currently only eight wine-storage units are occupied.

Sundher imagined his locationSouthern Californiawould be ideal for wine storage. I knew there was a market for it in my area. The average income in my neighborhood is $85,000. So a good location is important.

Lock Up Storage Centers has been hit and miss with its four stores offering wine storage. Two are doing well, two are not. In fact, one facility is nearly fully rented, while the wine storage has only four customers. Soudan attributes the success and failure to location.

Wine storage doesnt work in all places, he says, echoing Chiswell. Only a select type of person uses it. Its definitely a luxury. It works in major metropolitan areas where there are fancy restaurants. In places like Chicago, New York and Grand Rapids, Michiganno way. Even though theyre a big cities, it will never work. Because of the lack of success, Lock Up wont be adding wine storage to new developments, Soudan says. Its not quite what we thought it was going to be.

Marketing Savvy

Jay Sundher has three business cards: one for self-storage, another for records management and a third for wine storage. The business card for wine storage features a bulleted list outlining the main features, including the storage temperature, and boasts about a wine-tasting room and gourmet kitchen. Its a unique service, a unique environment, so we wanted to treat it as such, he says.

Creating a separate identity from the traditional self-storage units is crucial. Plantation Self Storage has its own logo and brochures. It helps us address the different clientele, McCord says. The company also markets to local wine merchants. We have ads in the local restaurant guide, and those are totally dedicated to wine storage. Were isolating that aspect of our business. In target marketing, people will respond to that rather than a general self-storage advertisement.

Nantucket Storage Center includes information on the unique storage option in all of the stores general literature and promotional pieces. In addition, we have participated in the past as an exhibitor at the annual Nantucket Wine Festival, Chiswell says. We have also talked with several liquor stores on the Island, so they are aware of this option for their customers. But, just like in the regular storage business, the best advertising is word-of-mouth.

Partnering with wine retailers or restaurants is another way to bring in new customers. Lock Up Storage Centers found success with this when it partnered with a large wine retailer near its Chicago location. That has driven a lot of customers to our downtown Chicago location. Thats why that wine storage is successful, Soudan says.

Sundher took the idea a step further, hiring outside salespeople to meet with restaurant managers. My salesperson will tell them how our services will help them and ease their problems regarding storage of wine. Wine-storage sales are also introduced inhouse. Potential customers taking a tour at Hollywood Storage are introduced to the wine-storage area and given an overview of how it works.

Co-hosting a wine tasting with a local wine merchant is one of the best ways to draw in wine connoisseurs, says McCord. That brings their customers to your site. It introduces them to the storage facility and the wine storage. It all works hand-inhand. The wine merchant typically handles all the expenses and will help market the event. Wine merchants can be a natural ally, McCord says. If they have a place where their customers can store wine, they have a better chance of selling more wine to them.

Hollywood Storage Center turned to the local chamber of commerce to help market the opening of its wine storage. Billed Hollywood Nights: A Wine-Tasting Affair, the event drew nearly 400 attendees. Sundher spread the word about the event with fliers to the chambers 1,600 members; postcard invitations to local media, corporate facility managers and other business contacts; and media coverage. It was very successful, he says.

Elaborate murals depicting European countrysides, soft lighting, spacious booths and trendy posters can also serve as distinctive marketing tools and create a magical atmosphere. Plantation Cellars is set apart from the rest of the self-storage facility by a hand-carved mahogany door designed with a wine motif. The wall surrounding the door is painted to look like the exterior of a vineyard in France. Inside the room, a mural portraying a wine cellar lined with barrels gives the illusion of depth and dresses up a back wall between lockers.

Entry to the wine-storage area at Hollywood Storage Center is in the retail store. There is a rock façade and an old, wooden wine door with wrought iron and a large window. Inside, there is an illusion of an old-fashioned cave with barrels of wine. Sundher even added a wine-tasting room and a gourmet kitchen. Customers can add food to their event by contacting a local catering company with which the facility is affiliated. Were setting it all up and making it really simple for them, so its enjoyable and relaxing, he says.

In the right setting, and with the right marketing campaign, many self-storage operators have found wine storage can be an effective marketing tool. I never looked on it as a real money-maker in terms of the base business of running units. I looked at it as more of a marketing tool, McCord says. If it rents up, I certainly make money at it. It gives a character to your facility that enhances its marketability in the community. Its unique enough that we get more notoriety out of wine storage and publicity than we could buy through advertising a storage facility.

Casaforte Self-Storage S.p.A.’s marketing strategy has evolved over the last six years, becoming an increasingly more targeted and professional process. As a team of people who believe in the project, the Casaforte group has worked on this process, turning its marketing strategy into a highly responsive mechanism. It is always sensitive to market changes, but also aware of the practical aspects of each individual advertising campaign. This is especially required when approaching the Italian selfstorage market, where customers still must be sensitized to the service, and marketing tools must continuously be readjusted to the public’s changing needs.

Casaforte’s marketing strategy is flexible and structured through a series of steps. First, the staff performs a study to identify the perfect location for a self-storage facility. The objective of this analysis is to verify the existence of a potential target market in the area.

Second, more research is done to profile the local target market. Size, age, income and lifestyle of the resident population are some of the evaluation criteria. This phase is critical to the definition of the marketing plan. The marketing staff uses official statistical data, interviews and the support of local partners to identify specific categories of consumers within the target market to design direct marketing actions devoted to them. While addressing its communication efforts to the general public, Casaforte considers subgroups of potential customers with particular needs in terms of storage services.

The local market is examined in regard to many aspects, including:

• What types of media do the consumers prefer and trust?
• How do these consumers use the Internet?
• What type of marketing contact do they like best (telephone, direct mail, newsletters, etc.)?
• What contexts (local fairs, trade fairs, special events) are more suited to the presentation of self-storage, and which events do these target groups attend?

The Marketing Plan

After the analysis, the marketing staff draws up its final plan, which usually includes different types of intervention. Casaforte has always achieved the best results by applying a mix of marketing tools. National and regional differences in Italy and Europe—in media preferences, habits, language and lifestyle—mean frequently changing the mix, making the experience more challenging but ultimately more successful.

Casaforte’s communication to the general public aims to be attractive, to encourage people to visit a facility and help them understand the core concept of the new service. Massive distribution of leaflets, availability of detailed information through the Internet, presentations of the service in malls or at local fairs or trade exhibitions, numerous ads in the local newspapers, and commercials on local radio and television are all means of making contact with potential customers. These means are defined and scheduled through a specific advertising plan.

In addition to these standard marketing actions, Casaforte has successfully experimented with a very “Italian way” of getting in touch with people and effectively spreading the word about self-storage. It is very easy: You just need a small portable gazebo, leaflets and brochures to distribute, a couple of outgoing and nice people from the management staff, sweets and chocolates, and the right place to set up your stand.

Casaforte typically uses a stand during the spring and summer months on a few select Sunday mornings. It chooses strategic spots, like central plazas, with high levels of foot traffic. In this relaxed context, people stop, ask questions, exchange opinions with the staff, collect advertising materials and eat the sweets. The occasion ends up looking more like a family reunion than the promotion of a new service. Also, the feedback has always been very encouraging: One in six people who stopped by the stand called the self-storage facility to ask for more information.

For direct marketing, Casaforte produces letters addressed to people with filing needs that require increased archives: lawyers, professional accountants and notaries. In some areas, where particular customer groups could be interested in the self-storage business—such as Chinese Importers in the center of Italy—commercial letters have been written in the language of the addressees, taking into consideration their cultural habits and usages.

The Advertising Plan

The advertising as well as the marketing plan always involves a mix of media. The ideal mix includes newspapers ads, and radio and television commercials. Casaforte facilities are always located in points of greatest visibility, which already represents a strong advertising medium.

Usually, the plan provides for a launch phase. During this period (usually three to four weeks), the incisiveness of different media is tested and customers’ reactions are monitored. People who visit the facility or call for information are always asked how they heard about the facility. Strong relationships are developed with the press, television and media agencies.

In Italy, it is critical to the visibility of the business to organize an event for the opening. Journalists, opinion-makers and representatives from the local media are invited personally to the event through letters of invitation and follow-up calls. Usually, they enjoy a visit to the facility and a presentation on the business by the investors. They are then invited for lunch or a cocktail (our popular “aperitivo”), the Italian way. Thanks to this friendly way of managing public relations, Casaforte has gradually gained spontaneous attention of the mass media and, as a consequence, a lot of free visibility.

After the launch phase, the efficacy of each advertising medium is evaluated. Following the results of this evaluation, a maintenance-advertising plan is defined. The maintenance plan aims to preserve public interest in the topic, widen public knowledge about self-storage, and attract specific target groups.

The Internet as a Source of Interaction

Casaforte devotes a great deal of resources to the development of its increasingly interactive website. The site, www.casaforte.it, contains a detailed description of what selfstorage is, for what it is used, and who uses it. Each facility is fully reviewed in the “Where We Are” section. Maps and interactive-map services are provided to help people locate and reach the facilities. Pictures of the facilities with interiors and details of each structure are displayed on every link.

The website also offers interactive tools. The “Space Calculator” and “Transport and Handling” help a customer get a detailed estimate. The “Casaforte Store” is the virtual store where customers can buy packing materials. “Logistics” estimates shipping or transport costs that can occur during a move.

Involvement and Collaboration

In defining the marketing and advertising plans, Casaforte’s marketing staff involves interlocutors from various local institutions who have a thorough understanding of regional habits and cultural peculiarities of the resident population. These interlocutors are always professors from local universities, opinion-makers and intellectuals who actively participate in the formation of public opinion.

Direct contact with locals is also highly regarded. In fact, the managing staff is always made up of people selected from the area. These people are asked to collaborate in the development of the marketing and advertising strategy. Involvement of local interlocutors, along with collaboration with the resident staff, has proved to be the most effective way to meet public expectations in terms of communication of what self-storage is and what the service itself involves.

Branding, Branding, Branding

Casaforte’s brand name is identified by specific colors (yellow, black and red) and identification marks. Bright, distinctive colors and strong unmistakable marks have proved to be very effective in attracting attention and affirming the brand.

Great effort is made to adhere to the image standards in the production of ads and other communication material. Free gifts bearing the company logo, such as pens, hats, lockers, stickers and pins, are distributed to customers and people who visit the facility.

To reinforce the idea of a strong coherent image, all Casaforte facilities respect the same standards of structural efficiency and customer care. The managing staff is trained according to the same program, and they approach and take care of the customers following the same procedures. Either in defining standards of structural efficiency, human-resources management, and customer- care standards, Casaforte has codified specific procedures, which have to be followed in every facility. By sharing the same procedures, every facility can provide customers the same high-quality service, strengthening the branding coherence.

With its strong brand name, Casaforte is working toward becoming something more than a self-storage service. It aims to become a common concept where customers feel they are home.

Sabrina Tordo is the marketing and communication manager for Casaforte Self Storage S.p.A. For more information, visit www.selfstorage.it.

Starting in 1993 with zero customers, zero employees and zero revenue, today, INFO STORs three facilities are collectively billing in excess of $5 million annually, with the very real prospect of doubling that number in the near future.

Vince Gaeta, INFO STOR

Records storage is highly profitable, with profits increasing every yeareven if you do nothing. But youre in self-storage, not records storage. How do you operate a records business in the day-to-day? Here is Records Storage for Dummies, so to speak. It illustrates the basics: storage and services. You will quickly see that what should be complex is completely automated via software. Armed with the facts, you can decide if this business is the add-on for which youve been looking. Odds are, you already have the client base. What customers wouldnt want the option of having their information delivered to their doorstep? For your customer, it means convenience; for you, it means a chargeable service.

Outlined below are the very basic methods for operating a recordsstorage business. Keep in mind that methodology can vary from software to software. You can get more complex and also have a great degree of flexibility. With a few simple steps, you can get started storing, servicing and billing your customers in the profitable business of records storage.

Step One: Setting Up Racking and Charging for Storage

When storing boxes, you will need racking. You can rack as you go, or rack-out a certain percentage of your facility. There are many designs with regard to mapping your facility but Ill save that for another article.

Your racking is broken down into sections and barcoded with individual location stickers. Typically, a single location will hold nine one-cube boxes that are stacked three high and three deep. Each barcode location sticker is assigned in your software to an associated container size, one cube, two cubes three cubes and so on.

Each new account is given barcodes, and those barcodes are placed on the containers. The barcodes are either assigned to the account prior to being released or, when a work order is created to pick up those containers, the boxes become assigned to that account via the work order. When the account returns its containers with the barcodes applied, you place the boxes on your shelving. As you place each box, it is scanned to the location (first you scan the location barcode, and then the box barcode). When the scanner is downloaded, the system knows whose box it is by the box barcode, and how big it is from the location barcode.

In records-center software, you will establish pricing. You will set up service and storage prices for each account, or you may use a standard default. Right now, Ill focus on storage rates.

When establishing storage rates, you can give a rate per box or a price per cubic foot. With the latter, the system will calculate a price per box, i.e., 25 cents x 1.2 cubic feet (the standard box size) = 30 cents. When you run your invoice at the end of the month, the system will tally how many boxes each account has by counting box barcodes. It will know how big the box is from the location barcode. It then multiplies the number of boxes by their size to calculate your total storage charge.

Just thinkyour storage charges are all completely automated, and all you did was scan boxes to the shelf. Not to mention when a customer calls you for a box, you know exactly where it is to be found by the location number.

BOX BARCODE	PROVIDES	ACCOUNT
LOCATION BARCODE	PROVIDES	BOX SIZE
ACCOUNT PRICING	PROVIDES	RATE
INVOICE	TIES TOGETHER	TOTAL BOXES PER ACCOUNT X BOX SIZE X RATE = MONTHLY STORAGE CHARGE

Step Two: Servicing Customers and Charging for Services

When storing boxes, one expectation is that, upon request, a box or individual file will be delivered. You can accomplish this via your own vehicles or a courier. In the long term, your own vehicle is far more profitable and more marketabledue to associated confidentiality and security issuesthan using a third party.

When a box is requested, you will charge to pull the box from the shelf and for the delivery. If the customer wants the delivery expedited, you will also charge a rush delivery charge. If he wants a box picked up, you charge for the pick up and the re-file (to put the box back on the shelf). All these service charges can be set up in your software on an account-by-account basis or as a standard default.

Now automation comes into play. With every service requested from a customer, you create a work order, select an account number and add the delivery items. You print the work order and give it to the driver or courier. The customer signs upon receipt. Your service is complete.

By placing a box on the work order, you have told the system the box is now out. It knows to bill for delivery as well as a pull for this box on this account. At the end of the billing cycle, the system ties the service completed to the associated rate and bills the customer.

The same applies to a pick up. A work order is generated. The boxes are picked up. The boxes are scanned into locations. The system now says these boxes are in, and charges for the pick up and the re-file. At the end of the billing cycle, everything ties back to invoices. You have complete automation:

• Services are placed on a work order.
• The box status is changed from in to out or vice versa.
• At the end of the month, an invoice is run.
• Services times your account rate equals your service total.

Ancillary Profit Sources

As I said earlier, storage and service are basics. Your storage revenue will grow annually for each customer. The industry average is between 10 percent to 20 percent, which not a bad increase. Yet there are many other services and profit streams.

For example, your customer base will need and purchase boxes. Just add the box-order purchase to your work order. Your customer may also want you to complete data entry on each box so you have an inventory of what he has in storage. You can then sell him a report of his inventory. You can complete inventorying projects for your customer and catalog the contents of his containers. The one thing to keep in mind is for every service you provide, you bill the customer. Service means revenue and can make up to 60 percent of your profits.

Summary

Records storage was made easy by the advent of barcode technology, scanners and sophisticated software. If you can scan boxes to shelving and deliver them to the customer, you can master the fundamentals of records storage.

As time goes by, you may become a more sophisticated operation and offer web access and other services. But in the beginning, the most important thing is to set up the system correctly from the get-go. Attend a training class, learn your software and do it right the first time. Buy your last system first. Then sit back and watch your inventories growas well as your profits. Records storage is beautiful thing.  

Anne Sommi Edmonson is the director of marketing for ONeil Software Inc. For more information, e-mail [email protected]. 

What do you think of when you think of RV and boat storage? The word booming should immediately come to mind. There is an RV craze sweeping the nation as baby boomers retire and, for the first time in their lives, invest in fun and leisure. A popular bumper sticker sums it up nicely: We are spending our kids inheritance.

The younger generation isnt left out of the RV trend, either. Busy parents want to spend quality time enjoying the outdoors with their children. However, they are unwilling to give up all the conveniences of homean indoor toilet, a comfortable bed, cooking appliances, etc. An RV vacation offers the best of both worlds. Families that RV also benefit financially. On average, a family of four saves more than 70 percent on vacation costs over other forms of travel. More than 16,000 public and private RV parks, ranging from simple campgrounds to luxury resorts, cater to this crowd.

There are several other reasons RVing has become so popular. Concerns with terrorist threats and emerging patriotism have caused many folks to avoid air travel and explore vacation spots such as national parks and monuments. RVing can also provide a great tax break. What most people dont know is if you finance an RV with a kitchen and bathroom, you qualify for a tax deduction as long as you occupy it 14 days out of the year. It can actually be considered a second home.

Still not convinced? Current statistics from the Recreational Vehicle Association show there are more than 7 million RVs on the road and more than 30 million people using them. These numbers are expected to rise a whooping 15 percent in the next seven years.

In August 2002, RV shipments to dealers were reported to be 17 percent higher than the same seven-month period the year before. Additionally, six out of 10 RVers say they plan to purchase another unit in the future, with 40 percent indicating it would likely be a new vehicle. Of those who dont already own RVs, a recent study showed one out of six households intend to purchase some type of recreational vehicle in the near future.

Finally, an article from Naples News earlier this year stated the weak economy hasnt put the brakes on RV sales. In fact, according to the Frommers Travel Guide, RVs are getting hotter and hotter.

RV Storage Skyrockets

With the RV market growing so quickly, the RV-storage business has really taken off. The average RV ranges from 12 feet (a small travel-trailer) to 40-plus feet (a large-class motorhome). Even when there is ability to store RVs in driveways, they are cumbersome, block normal use of the driveway, and are an eyesore to neighbors. This also leaves vehicles open to the elements and vulnerable to vandals.

Many local ordinances prohibit larger RVs, usually those longer than 22 feet, from being parked at curbside for longer than 72 hours. With sideyards basically nonexistent in newer housing developments, RV owners are left with no choice but to pay for RV storage. Current market trends show that not only will RV owners pay for storage, they will pay top dollar for good storage.

RVs are a major investment, costing from an average of $25,000 up to $1.5 million for luxury models. The majority of damage to RVs and boats is caused by exposure to the elements. Prolonged exposure to the sun can damage siding, tires, gaskets and seals, and will cause interior deterioration. Similarly, marina storage for boats is becoming increasingly difficult to find and leaves boats open to harsh weather conditions.

With the demand for RV and boat storage being so high, one might think the market was saturated with storage facilities. Think again. There are huge opportunities in this expanding business. There are few dedicated RVstorage facilities and, of those that exist, most are strictly open-storage facilities with few amenities.

The future of RV and boat storage looks promising. Research shows younger generations are even more interested in the outdoors and openair sports than those preceding them. It is likely their sense of adventure will continue into their adult life and be passed down to their children.

Storage Options

RV-storage lots of yesterday provided little more then a gravel road, chain-link fence and padlock for security. RV storage of today provides covered and enclosed parking in secure lots. Common amenities include security cameras and touch-pad entry with 24-hour access. Higher-end lots may even provide climate- controlled enclosed spaces with running water, electricity, wash bays, dump stations and propane.

There are three basic types of RV- and boat-storage options (aside from open parking). Fully enclosed units are similar to garages. They have roll-up doors and offer the most security. Often times, these units are sold like condominiums. This type of storage offers the best security and protection.

Units covered with three walls provide upper, rear and side protection. This protects an RV or boat from sun as well as wind. It also provides better protection for sites with property-line divisions. Covered (flat or angled) units are similar to a basic carport design, but are taller and wider to accommodate RVs and boats. Angled covers generally provide better site coverage and space utilization, and more spaces per acre.

Investing in RV Storage

There are four reasons to invest in RV storage: easy construction, simple maintenance, an untapped market and the rising popularity of recreational vehicles. To make the most profit, investors need to ride the wave of the RV craze and build now. Many dont know the return investment on RV storage can be greater than that of self-storage, since the building costs are less. Structures are easy to build since there are no moving parts (except with enclosed spaces), and the sites are virtually maintenance-free once operational.

RV- and boat-storage investors need only follow these simple steps to get their project off the ground:

• Locate a property. There are several factors to take into consideration when choosing property for RV and boat storage. Properties near freeway entrances and those visible from the freeway do well. Sites near vacation spots, such as lakes, have an added bonus. Boat owners typically want to park their vessels closest to where they launch. Owners can actually save money this way, as savings in gas often makes up for storage costs.
• Consider the marketability of the area. Is it a safe area where people would likely want to store their belongings? A few hours on the Internet can sometimes show you the demographics of a location. This is important, since we know the average RV owner is married, owns a home and has a median household income of $56,000. We also know through research that the baby boomer population (those ranging in age from 35 to 54 years old) is the leading force behind the upswing in the market.
• Find out if market competition is fierce or loose. Dont be discouraged if there is already a facility in town. If the market is right, several facilities can exist at 100 percent occupancy without a problem. In fact, once you begin looking around, you may find several have waiting lists of customers needing storage.
• Look into zoning. The city-planning center or a commercial real estate agency can tell you if the property is zoned for a storage facility.
• Secure financing. You can obtain financing through small-business administrations, banks, personal loans, etc. Some steel companies will lease you the materials needed to build the storage facility, thereby reducing initial start-up costs.
• Choose a design. An RV- and boat-storage professional can suggest the best design based on property size and your budget. He will provide pictures of facilities he has built in the past and will work with you one-on-one throughout the design phase.
• Hire an engineer. Many construction companies provide in-house engineering. Engineers will create the blueprints and calculations needed to obtain permits. Unless other arrangements have been made, customers will usually need to pull building permits from the city themselves.
• Build the structure. Construction time will vary depending on the size of a project. Generally speaking, it will take two to three weeks to build 40,000 square feet, once engineering is complete and materials are on site. Construction costs vary depending on the structure. Fully enclosed units will cost between $6.50 and $9.50 per square foot to build; covered units will cost between $3.50 and $6.50 per square foot; and three-walled units will cost between $4.50 and $7.50 per square foot.
• Create a marketing plan. RV- and boat-storage business owners can market through the Yellow Pages, the Internet, direct mail, etc. Many who hire a professional to create a marketing program are surprised to find they have actually reduced their marketing costs.

Associated Costs

The daily operating costs associated with running an RV- and boat-storage facility is minimal. Most storage facilities have an on-site manager residing in an apartment to keep constant surveillance. Insurance fees can be obtained through an agent/broker or self-storage specialty insurance agency. This insurance will cover losses due to theft, etc.

The cost of security will vary depending on what you provide. The most desirable storage facilities will have locked gates with keypad entry, security cameras, perimeter fencing and special lighting.

The money you spend on advertising is worth its weight in gold. The best advertisement by far is a good location, visible from the freeway or a main street. Many facilities have had great luck advertising in the Yellow Pages, on the Internet, through direct mail and through local RV clubs. One storage owner launched a successful advertising campaign and, as a result, had 75 percent of his RV spaces reserved even before construction began. Other miscellaneous expenses to keep in mind are property taxes and repairs.

Getting the Most for Your Dollar

Geo Self Storage designed a graph that concisely describes how vehicle-storage investors can get the most for their money. In general, it shows the best return on investment for land that costs from $2 to $4.50 a square foot is RV covers. At $2 a square foot, its a 40 percent cash-on-cash return. For land that costs $4.50 a square foot and up, the best return on investment is underground self-storage with RV covers above.

Whether you choose to build enclosed units, covered units, covered units with three walls, or combine RV and boat units with self-storage, it is important to act quickly. Now is the perfect time to cash in on the RV craze. Its really quite simple: Find land. Build project. Start renting.

Robert Hayworth is CEO of Baja Construction Inc., which has been at the forefront of the turnkey metal-structure industry for more than 30 years. The companys structure gallery includes self-storage, carports, and RV and boat storage. Baja maintains the highest standards while keeping costs low and construction time to a minimum. For more information about starting a project in your area, call 800.366.9600; visit www.bajacarports.com. 

Popular Q & A Q: How much rent can you charge for RV- and boat-storage spaces? A: Spaces range in price from $45 to $750, depending on the type of structure (coverage) and amenities offered. Q: What happens if a tenant doesnt pay his monthly fee? A: Similar to self-storage, liens are the most common remedy for tenants who refuse to pay their rent. Access to property can be denied by changing access codes. If rent remains unpaid, you can place a lien and sell items within the states guidelines. Vehicles abandoned on property can be towed. Customers will have to deal with towing companies to reclaim their vehicles. Q: How much land do you need? A: The optimum amount of land is 10 acres. Although you can build a nice facility on 1 acre, you will not have any room to expand in the future. Q: What kind of coverage can you get per square foot? A: You can typically get about 40 percent coverage. Q: Whats the best layout design? A: I recommend putting the buildings back-to-back, with spaces on a 60 degree angle11-by-30-foot spaces with 35-foot driveways. Spaces designed perpendicular would require 50-foot driveways. Q: What size spaces do you recommend for the units? A: I usually recommend 11-by-30-foot units set back-to-back.

 

Auctioning goods from a self-storage unit in default is complicated enough for any self-storage owner, but do you know what to do if wine is part of those goods? Wine is a valuable commodity and is usually kept by collectors under controlled conditions. However, there are times, such as divorce or death, when the storage unit goes into default. It is then the facility owner has to do more than the normal procedures to auction off wine and reclaim his costs.

Jeffrey Greenberger, with the law firm of Katz Greenberger & Norton LLP in Cincinnati, says some states have a limited license to accommodate a lien sale of wine, although there are state-by-state differences. The place to start is to call your state department of liquor control and find out what their requirements are. Generally, the state regulates sale of beer, alcohol and wine because of taxation, he says.

Greenberger recommends facility owners consult an attorney and get a formal ruling from a state authority before acting. For example, under Ohios revised code 4301.29, a lien alone does not get it done, he says. I suggest you prosecute to obtain a judgment against the tenant. The judgment can be executed against the wine, which can be taken by the Sheriffs Department and turned over to the liquor-control board for sale. The proceeds are turned over to an officer of the court, who will give the money to the facility owner.

D. Carlos Kaslow, legal counsel for the Self Storage Association and author of The Self Storage Legal Review, says, If I were dealing with wine, theres a possibility it could be extremely valuable, or more valuable than goods found in a typical self-storage space. Unless there are state regulations prohibiting selling wine at a lien auction, instead of holding a typical lien auction, Kaslow suggests making inquiries of people who regularly deal with wine.

Wine is an item for which there is a recognized marketplace; and the value of the wine would depend on what kind of storage space it is, Kaslow says. If kept in a wine-storage facility, it would command a better price, because there would be greater confidence it had been stored properly than if it had been kept in a regular storage facility. Its not hard to get a sense of what its worth and who would want to buy it, Kaslow says.

If a sale is legal, theres nothing wrong with contacting people in the wine business to take a look. We requested an opinion from our state Attorney General as to whether we could legally sell wine pursuant to an auction without a liquor license, says George McCord, co-owner of Plantation Cellars, Bluffton, S.C. It was his opinion that, since the sale of wine was really not in the ordinary course of our business, but would merely be in the liquidation of a security interest in the wine, it was incidental only to foreclose a security interest in that property. We would not need a liquor license to sell it.

Plantation Cellars lease includes the same lien rights as any other storage lease under South Carolinas state statutes. In the event we have to foreclose and we havent yetwe would go through the same procedures to foreclose the interests of a tenant and sell his goods at an auction, McCord says.

McCord suggests facilities in other states contact their attorneys and get an opinion. They could also obtain a formal ruling from the state authority on the legality of a sale pursuant to the lien rights granted by state statutes to a self-storage facility when it involves wine.

We always go through our lawyers and then go through the court system, says Vaughn Clarke, manager of Katonah Storage, Bedford, N.Y. A judge has to authorize the sale of any wine product, and then we have to advertise it. Katonah Storage has only been open for a year and so far, Clarke reports, it has had no defaults.

Goleta Valley Mini Storage, near Santa Barbara, Calif., offers wine storage as part of the facilitys unit mix, which also includes gown and fur storage. The facility has not had to enforce any lien sales on our wine storage, says Joanna Von Yurt, the facilitys owner. But if we did, it would be handled the same way as other tenant liens in accordance with our state laws. Prior to enforcing a lien sale, Goletas management makes every effort to contact the tenant.

Differences in State Requirements

Each state has its own regulations pertaining to the lien sale of alcohol from a self-storage facility, and they vary widely. A few examples are:

Arizona. Arizona Department of Liquor Licenses and Control has no provision for a special permit to sell wine at a lien auction.

California. Although Rule 79 of the California Code of Regulations states all sales of alcoholic beverages in California require a license, subsection (d) of Rule 79, titled Sales Without a License, covers the sale of alcohol when there is a lien due to default on payment. It reads:

Sales to Enforce Warehousemans Lien. A warehouseman, making a sale of alcoholic beverages to enforce a lien acquired under the Warehouse Receipts Act, shall sell distilled spirits only to distilled-spirits manufacturers, manufacturers agents, rectifiers and wholesalers, and shall sell beer and wine only to beer manufacturers and importers and to wine growers and importers. Written notice of sale shall be given to the California Department of Alcoholic Beverage Control at least one week in advance of sale.

Delaware. Under Section 4301-29 (a), Delawares liquor license law states:

Subject to the provisions, restrictions and prohibitions of this title, the commissioner may grant a wine auction license to each qualified applicant therefore. No person shall operate a wine auction unless licensed to do so by the commissioner. For purposes of this section, a wine auction shall mean a person, partnership or corporation that sells rare or fine wines on consignment from the owners of said wines at public auction to those persons who are of legal age to purchase such items. A nonprofit organization may apply for a wine auction gathering license for a specific date upon application to the Commissioner as a fund raiser for their organization.

Florida. Floridas Division of Alcoholic Beverages and Tobacco will issue a license for a one/two/three day permit or special sales license under Florida Statute 561.20(12)(a), Special Sales License. According to law:

This special sales license may also be obtained from this application for the sale of alcoholic beverages for a period of up to three days. This license does not permit the sale of alcoholic beverages for consumption on the premises, and only allows package sales in sealed containers.

Upon the filing of an application and payment of a fee of $25 per permit, the division may issue a license authorizing the sale of alcoholic beverages in sealed containers only, for a period not to exceed three days. This license is issued only for the purpose of authorizing a sale pursuant to: levy and execution; bankruptcy; insurance companies in possession of alcoholic beverages; license suspension or revocation; goods damaged by a common carrier; bona fide wine collector; pursuant to part 5 of chapter 679; or a bulk transfer pursuant to chapter 676.

Illinois. According to the Illinois Compiled Statutes Liquor Control Act of 1934, 235 ILCS 5, to sell liquor in Illinois, the seller must have an auction license. An Auction liquor license requires a person to obtain prior written approval from the state commission to sell or offer for sale at auction, on a specified date, wine or spirits for private use or consumption, or for resale by an Illinois liquor licensee in accordance with the provisions of this act.

The license will allow the licensee to sell and offer for sale at auction wine and spirits for use or consumption, or for resale by an Illinois liquor licensee in accordance with provisions of this act. An auction liquor license will be issued to a person and it will permit the auction liquor licensee to hold the auction anywhere in the State. An auction liquor license must be obtained for each auction at least 14 days in advance of the auction date.

The most recent requirement, which was imposed on applicants for an auction license, is that the applicant must first become licensed pursuant to the Illinois Auction License Act (225 ILCS 407/5-1, et seq.). This practically limits liquor-auction licenses to professional auctioneers. The Illinois State Office of Banks and Real Estate should be consulted for additional information concerning the issuance of auctioneer licenses.

New York. The New York State Liquor Authority MW-735 Lienor (One Time) requirements authorizes a warehouseman, railroad company, steamship company or other person who has acquired a lien pursuant to the law for the storage or carriage of alcoholic beverages, to sell alcoholic beverages to a licensee under the following conditions:

1. The alcoholic beverages will be sold and delivered only to duly licensed manufacturers, wholesalers and retailers.
2. The sale will be held on premises for which a warehouse permit has been issued.
3. The alcoholic beverages will not be stored at the place of sale in excess of 48 hours after the date of sale unless stored in the name of the purchaser.
4. Only alcoholic beverages in the original sealed containers, which comply with the provisions of the law with respect to labels and sizes of containers, will be sold.
5. The duplicate permit or a photostat copy thereof will be delivered to each purchaser.
6. The permittee will pay all excise taxes imposed by or under the provisions of the tax law.
7. Such permit shall be valid for one transaction only.

The application must be accompanied by a typewritten list, signed by the applicant, listing the alcoholic beverages to be sold and stating quantity, type, brand name and the size of the containers.

Conclusion

Regardless where a self-storage facility is located, it is obvious disposing of wine found in a defaulted unit can involve legal complications not easily solved through the usual liensale process. It is critical to find out if your state allows the sale of wine without a liquor license. It is also critical to follow all the guidelines set forth by any state that allows the sale of wine under a lien sale.

Facilities should contact their attorney and also get an opinion or a formal ruling from the state authority that a sale of wine goods, pursuant to the lien rights, can be granted by state statutes to a self-storage facility, McCord says.  

Sources: Arizona George Graham Deputy Director Arizona Department of Liquor Licenses and Control 602.542.5141 California Patrick Deasy Chief of Business Practices Department of Alcoholic Beverage Control [email protected]  Delaware Donald Bowman Delaware Department of Public Safety 302.577.5210 Florida Application of One/Two/Three-Day Permit www.state.fl.us/dbpr/abt/forms  Illinois Karen Faltin Director of Media Liaison State of Illinois Liquor Control Commission [email protected]  New York Joanne Miranda Department of Public Affairs Copy of Alcoholic Beverage Control Miscellaneous Permits 518.486.4767 www.abc.ny.us  For a list of state liquor-control boards, visit www.aft.treas.gov/alcohol/info/faq/subpages/lcb.htm