Self Storage Millionaire

We have all heard about the sub-prime mess and how it is currently influencing lending practices.  But what is happening in the commercial lending world?  Well, a few weeks ago, we had a conversation with a commercial loan broker.  It was an interesting conversation!

Here are some of the changes that have taken place over the last few years in the world of getting financing for a self storage buisness:

3 Years ago:  Conduit loans were available for about 6%.  These loans were available for facilities that would have a loan of $1,000,000 or more.

Today:   This loan product is now available for 7% – 9%.  The minimum loan amount has also been raised to $2,000,000.

3 Years ago:  Local banks were offering financing to self storage facilities.  Of course, the rate is highly dependent upon the bank and the relationship the bank has with the person applying for the loan, but generally speaking, these banks were offering an interest rate of 7.5% – 9.5%.

Now:  Local banks are financing self storage facilities at 6%.

We have had a complete reversal in the last few years.  I wonder what will be next?

Technorati Tags: self storage development, self storage financing

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!

Technorati Tags: self storage management, self storage software

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!

Technorati Tags: self storage management, technology

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.

Technorati Tags: self storage management

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.

Technorati Tags: self storage management

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.

Technorati Tags: self storage revenue

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!

Technorati Tags: self storage advertising, self storage marketing

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.

Technorati Tags: start a self storage business

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!)

Technorati Tags: self storage

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.

Technorati Tags: self storage marketing