Self Storage Millionaire

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.

Technorati Tags: business expense

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.

• Some charge a late fee one time a month – after a grace period of about 7 days. Perhaps a one time fee of $5 to $20.
• Other owners may charge $1 a day after a grace period until the balance is paid.
• Still other’s may charge a fee after 7 days, and another fee at day 14.

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!

Technorati Tags: self storage late fees

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.