Self Storage Millionaire

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!

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We track the source of new business by asking our new clients how they found us.  As with many industries today, it is clear that our customers are moving away from yellow pages and toward the internet.  Our personal numbers indicate that a large percentage of people are finding out about us from internet searches.

It looks like atleast one self storage software company has picked up on the trend.

Centershift is now offering a website and SEO (Search Engine Optimization) service along with their self storage management software.  Read more about the partnership here!

Great move guys!

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When you are considering the management question (DIY, hire an employee, or hire a management company) keep in mind the technology that is available to you.  A wise use of technology can increase your efficiency ten fold.

CELL PHONES:   I know, cutting edge technology, right?   We use a cell phone for our self storage business phone calls.  This allows us to be away from the office, but still take care of business.

REMOTE CONTROL:  Occasionally someone calls and needs to be let into the facility (the gate has them locked out).  Rather than getting in the car and driving down to the facility, we can log into the office computer and change their status in the gate software.   The entire process takes 2 minutes, and I can go about my day!

KIOSK:  We use an Insomniac Kiosk at our self storage businesses.  This kiosk looks similar to an ATM machine.   It allows a new customer to sign a lease and move into a unit, and buy a lock.  It also allows current customers to look up their account and pay their bill.   Often, we will have new customers move in, and we had no idea they were even considering using our self storage business.    It is fun to go down and collect our money for the week and see that we have new customers.  Talk about passive income!

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When we started our first self storage business, we handled all the management ourselves. It can be a great way to go if you have limited funds for your first facility. It can feel a little daunting to think about coming up with payroll for an employee.

We used a cell phone and routed all the storage calls to that phone. That way, we knew we could go about “life as usual” but we would still make sure that business was being taken care of. When someone called to rent a unit or pay a bill, we could either arrange things over the phone, or schedule a time to go down and meet them.

It is difficult to try to estimate how many hours per week we had to work on the self storage business. Sometimes it was as little as one or two. Other times, it may have been closer to five to ten.

Working the self storage business ourselves gave us the immediate knowledge of the “ins and outs” of managing a self storage facility.

On another facility, we made the decision to hire an office manager. We have noticed that customers really like having someone onsite during regular business hours. It makes it easier for them to drop by and pay a bill, get a unit or ask a question.

Having someone at your self storage business during regular business hours opens the doors for additional sources of revenue as well. If you have the space, you could consider a contract with Uhaul or Budget truck rentals. These companies require someone to be onsite during regular business hours, but they are an additional source of revenue. You could also get into records management with a full time staff person. (I’ll cover that topic soon).

Our office staff does not have enough storage related work to keep her busy all the time. We made the decision to hire her as a “personal assistant” as well. When she has done all the storage business for the day, we have a list of other items that will keep her busy for the rest of the day… (and make our life easier in the process!)

When you are making the choice between doing it yourself, and hiring an office person, here are some things to ask yourself:

• How much time do I have to manage the facility myself?
• What would a full time office person cost me a month? (remember to include all your payroll taxes)
• What other revenue sources would be available to me?
• After considering additional revenue and expense, how would this decision affect the bottom line?

Of course, these two options are not the only option. Some people opt to hire a management company. Other’s decide they would like to have a live-in manager for their self storage facility.

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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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