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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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.

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:

• Commission on Truck Rentals
• Retail sales of boxes, tape, etc.
• Commission on dolly, blanket and other non-truck rentals
• Extra exposure to our self storage units. We may increase the rate of our lease up phase move-ins. We will be listed in the UHaul network of storage facilities. Some people that are moving to the area may decide to store their possessions with us, since they have to have the truck there anyway!
• They pay the yellowpages ad!

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.”

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Security Self Storage in North Carolina is using solar panels to help reduce their footprint upon the earth.

Check it Out!

Each quarter, MiniCo Publishing, The Parham Group, and Cushman & Wakefield, Inc put out a survey to self storage owners. The results are complied and put into what they call the Self Storage Confidence Index.

A survey such as this is interesting, because it really isn’t about “hard data.” Rather, it is about how current owners feel about the future of their business. There is some value in that, I guess – but it is important to distinguish between how current owners “feel” about the future, and what is actually occuring.

Take the topic of rental rates, for example:

In the 3rd quarter results, 59.6% of owners felt that rates would go up. Another 23% felt that rates would remain the same. 17.3% felt that rates would go down. Interesting to know, but the report goes on to reveal:

“Comparing second quarter 2008 with the same quarter 2007, 51.4 percent of respondents indicate rental rates have increased, and a third indicate rates have stayed constant. Of the respondents, 12.3 percent report rate decreases from the same quarter last year. All these figures are slightly down from last quarter’s year-to-year figures.”

That information just packs more of a punch for me. I would rather know what is actually happening.

Get the entire report at:  http://www.selfstorageconfidenceindex.com/US_3Q.html

Technorati Tags: self storage business, self storage industry

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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• 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.

Technorati Tags: management, self storage