Thursday, 11 of March of 2010
Start a Self Storage Business and Find Your Fortune!
The stock market has tanked. The Real Estate Market has lost approximately 50% of it’s value in some areas. Where should an investor turn with his money? Learn why Self Storage is the answer for more and more people in today’s environment.
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While overhead is relatively low in the self storage business, it is still something to keep an eye on. The prudent real estate investor will always pay attention to their expense line items and be sure to keep them under control. In the current recession, it is even more important to evaluate the bills and keep those expenses down.
One of our self storage facilities recently received our property tax bill. Upon close review, we realized that we were being charged $5 for television service! When we called, the person on the other end of the line said,
“Oh, we are trying to determine who uses our service.”
What? You’ve got to be kidding me!
In order to get our refund, we have to fill out a form swearing to the fact that we do not use their television service.
On a much larger scale, a self storage owner recently received a bill for $8,000 – due to the mistake of the city!
Large or small, mistakes in billing occur all the time. It is worth it to take the time to review all those charges and make sure they don’t contain errors. Over time, it adds up thousands of dollars.
When you are the owner or manager of a self storage business, one of the decisions you need to make is how to handle your late fees. With the large number of tenants your facility will generate and the relatively small monthly expense, you are likely to run into several late payers.
If you end up with a large number of tenants paying late, you may find yourself in a cash crunch. In order to prevent that from happening, it is important to pro-actively collect from your late payers.
One effective method for giving your customers a reason to pay the bill is the use of a late fee. I’ve seen several different structures regarding charging late fees to tenants.
We have always gone with the first option, charging just one late fee a month, after the grace period. Most of our tenants do eventually pay – and it turns into a nice little revenue booster for us. I am considering trying out one of these other structures, however. It would be interesting to see how a change in late fee structure would impact:
Our late payers (will they pay up more quickly?)
Our bottom line (additional revenue in the form of additional late fees.)
Perhaps we will make the change at just one of our facilities to test it out. If we decide to do that . . . I will be sure to report the results here!
On a recent trip to Mexico we had noticed a new addition- self storage. At first thought I was surprised to see self storage facilities in Mexico. If you think about it many Mexican families don’t collect toys like we do in the U.S. nor do they have the disposable income to pay for storage. So who is using these facilites and how is their occupancy? Well with a little research we found that it is Americans who have not only filled up units in the U.S. but are now filling them up in other countries as well. Many vacation properties in Mexico are condos with little to no storage space for water toys, boats and even additional cars to use while on vacation. The rents are similar to those in the U.S. and their occupancy rates were high. Even though there are still plenty of good markets in the U.S. there are many foreign markets that are virtually untouched.
If you decide to build your self storage facility in phases, it is important to track your occupancy rates. We made the decision to begin construction on a new building when we reach 80% occupied on the last building. However, as time went on, we realized this was not an effective way to make our decision. Why?
It is not effective because it does not take unit mix into consideration.
Not only do you want to know your overall vacancy rate, but you will want to know the vacancy rate on each unit size. You may find that your 10×10 units are filling up quickly, but your 10×20’s are sitting vacant. If this is the case, you may decide to go ahead and build (more 10 x 10 units) even if your overall numbers are not yet at 80%.
Well, we have decided to bring UHaul into one of our facilities.
One facility has no full time manager onsite. We use the insomniac kiosk – and have a part time manager that goes out to the business when duty calls. The other facility, does however have an employee on site. This employee doubles as our personal assistant, but we figure – since she is there, we might as well make the additional revenue that UHaul could bring us.
Here are the benefits of adding UHaul to our facility:
We signed the contract today, and the area rep will be back in one week to get us trained up. I’m looking forward to doing something “new.”
When you are planning your buildings, remember to think about the size of your doors. If you will be offering boat storage, vehicle storage, and/or RV storage, the height and width of your doors will be really important. A 10 foot wide door will give your customers plenty of space to park these toys inside the unit.
Security Self Storage in North Carolina is using solar panels to help reduce their footprint upon the earth.
What do you get when you cross a vacant school building with an innovative company?
A new Self Storage Business, of course!
With rising fuel costs, an growing concern about the health of the environment, and tighter family budgets, more people are eliminating a car, and turning to a car share service instead.
More and more companies, such as ZipCar are popping up to fill a need in this growing trend. When you start a self storage business, it is tempting, of course, to look for additional sources of revenue. Why not look for a Car Share Program?
Why not?