Self Storage Millionaire

When you are opening a new self storage business, one of the first decisions you will have to make is how you will handle management. There are three primary options to choose from:

1. Hire a property management company
2. Do it Yourself
3. Hire an employee

There are pros and cons to each of these approaches – and modern technology makes life much easier in all three instances.

Hire a Property Management Company

This eliminates some of the extra work that would be involved in hiring an employee. You won’t need to worry about employer taxes, extra filing requirements, and the other issues that go along with an employee. The property management company is simply hired to do the job. Your phone number can be forwarded to their business, and they can handle collecting rents, meeting customers onsite, and more.

Do It Yourself

If you are concerned about the operating expense at first, and if you have the time, you may consider taking care of the management yourself at first. It really doesn’t take much time, and you will save money during that critical lease up phase. If you do decide to do it yourself, your calls can be forwarded to your cell phone and you can schedule appointments with your customers as they call.

Hire An Employee

While the overhead will be more if you hire an employee, there are advantages.

• Customers like to have someone onsite so that they can just drop in and pay a bill, ask a question, or move in.
• Additional revenue sources become available to you if you have someone onsite during regular business hours. U-haul and records management are two examples of this.

We have used two of the three of the methods above, and I will write about our personal experience with these two options tomorrow. Later in the week, I will touch on technologies that make self storage management a breeze.

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When you own a self storage business, there are opportunities for additional sources of revenue. Here are a few ideas to get you going:

• Retail Sales: You can sell locks, boxes, other packing supplies.
• Billboards: If you have highway frontage, you can always add a billboard or two.
• Moving Trucks: If you will have a regular employee on site, you can also choose to set up shop with u-haul or budget truck rentals. You get paid a commission for every truck you rent, plus they offer products for retail sales.
• Records Storage: Again, if you have a full time employee, you may want to get into records storage. Many professionals have a legal requirement to keep archived records, but they don’t have the space and don’t want to pay for an additional staff member to deal with archives. You have the space, and you have the staff!
• Offer outdoor rentals. If you have more land for development in the future, you can offer outdoor storage in the mean time.

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A large part of your self storage business will come from drive by traffic.  People notice your facility – and they notice subtle changes too!

Just a few weeks ago we changed some of the banners on our fence.  A new one went up

Ski Boat Storage

Within a few days, we had several people stopping in and asking about ski boat storage!  It is a great way to get new business!  We like to change our banners every few months.  When we do, we get more drop ins!

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How we got our start in the self storage business.

We didn’t know anything about starting a self storage business when we got started. We had backgrounds in business and construction. A family member pointed out a piece of property that may work well for self storage.

It was a trailer house on a little over two acres.

• Highway Frontage
• No Zoning
• Decent Access

What are the things we needed to do before we decided to purchase?

1. Financial Analysis: Does it make financial sense?
2. Competitor Analysis: Is there room here for more self storage?
3. Financing: Where can we find a loan?

Once all that was worked out, we were able to move forward and close on the property.

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During every part of the calendar year, it is important for self storage facilities to keep up their appearance. Many customers will know about (and choose) your facility because they drive by it often. If you have weeds everywhere in the summer, or snow piled up next to the doors in the winter, you are sure to lose business.

Last year, we sent someone out once a week with some weed killer and a weed eater. Labor costs can start to run away from you by using this method. So this year, we went with a different method.

sheep doing their job

This is easier on the environment, easier on your wallet, and good for a little free PR too!

(Your local paper will love it. Just imagine the headline: Local Self Storage Facility goes green with Sheep!)

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Fall is approaching. What happens in the fall?

• People winterize their RV’s and look for a safe, secure place to store them for the winter
• Boats come out of the water and need a place to park for the winter
• You hear about spring cleaning…. But what about fall cleaning? The weather will be getting cold soon. It is the last chance before it gets ugly to clear out that garage. Wouldn’t it be nice to actually park the car in the garage this winter? No more scraping those windshields!

Fall tends to be a busy time for self storage businesses – because of these factors. When you have a self storage business, you can do a little advertising centered around these ideas.

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When you are starting a self storage business, it is important to decide early on what kind of self storage software program you will be using. Here are some things to take into consideration:

• Gate System Integration. Will you be using a gate system? If so, make sure that your gate management software system is compatible with you customer management software.

• Separate Users. Will you be hiring a manager for your self storage facility? If so, it is important to have some controls in place. Does the self storage software allow you to set up different managers? This is a nice feature because it allows you to see the specific activity of each employee. You can track the cash they receive, the reservations they took and more.

• User Permissions. Can each user be set up with different permissions? You may not want to give your employees the ability to delete tranactions such as move-ins or payments.

• Ease of Use. Some self storage software programs are much easier to use than others. See if you can download a free trial and poke around it for a while. Going with a program that is not easy to use will cause hours of frustration down the road.

• Website Integration. Would you like to be able to accept payments from your website? Some self storage software companies offer this feature.

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If you have considered investing in self storage, it is important to know your goal.

Why?

Because your goal will impact your strategy and level of investment.

• If you are simply looking for a place to park your wealth – self storage can provide you a nice return in a safe, low maintenance vehicle.
• If, on the other hand, you are growing your net worth, then it makes more sense to develop self storage than it would to buy an existing facility.

Here are some other levels of particpation to consider:

• Invest with someone else. If you know someone that is interested in starting a project, you can become a silent partner or investor in their project.
• Develop your own facility.
• Buy an Existing, Stabilized Facility
• Lend money to a self storage developer

Before you can make this decision – - – you need to know your goal!

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• No leaky toilets
• No Broken Pipes
• Low Overhead
• Tools to Automate your business
• A growth Industry
• Lower maintenance requirements (no appliances to fix or carpets to replace)
• Easy ‘eviction’ process
• Easy to add significant value
• Low per square foot construction cost
• High per square foot rental revenue

Ah. It is music to my ears.

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We are living in uncertain times. ‘Recession’ is on the lips of our financial professionals, media, economists and politicians. A recent poll shows that more Americans are uncertain about the economic future. Investors are thinking about what to do with their money during a recession. Could a Self Storage Business be the answer?

According to a recent article in the San Antonio Business Journal, the Self Storage Industry is touting itself as a recession proof or recession resistant industry. Why? There are a number of factors:

• As people cut back or get foreclosed upon, they are moving into smaller homes. However, they are reluctant to get rid of all that stuff, so they will get a storage unit.
• Businesses that are downsizing or going out of business need a place to store the inventory they have been unable to unload. Self Storage provides an answer for them until they are able to find another answer.
• Recession can mean a time of transition for many families. Perhaps they need to relocate in order to find a new job. A move often includes the use of a Self Storage Facility.

The other side of the argument is that as disposible income shrinks, people will choose not to use a self storage unit. I certainly see merit in this. I’m sure that some people will choose to move out of a self storage unit as the money dries up. Even as the desposible income dries up, I find that people are very emotionally attached to all that stuff, and are unlikely to let it go.

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