I just rented my fourth storage locker. I now pay monthly rent on two 10’ x 10’ and two 10’ x 20’ units. Am I crazy? Well, let’s look at the math. For about a decade, I’ve had two units, a 10’ x 10’ and a 10’ x 20’. But then my mother-in-law passed away, and I was faced with jamming those units to the roof to accommodate the items that came with that estate, so I rented the additional 10’ x 20’. And then I got tired of fighting the clutter to get at the essential household parts I need throughout the seasons, such as pool equipment in the summer and Christmas trees and ornaments in the winter, so I rented the new 10’ x 10’ as being 100% dedicated to this purpose. That’s a total of 600 square feet of storage. I’m paying, for all the units combined, $250 per month. That’s all bills paid. If I tried to build a 600 square foot structure to store my items, it would cost at least $30,000 – even I was the greatest builder in history. The sum of the taxes, insurance and operating costs (such as mowing and R&M) would be at least $250 per month. So I’m storing these items at an insanely low cost. And my house is valued at around $250 per square foot, so if I stored them there it would cost me around $150,000 in opportunity cost. Could I sell these items? Not really. I can’t sell family heirlooms, or records that need to be stored. And the seasonal items will be greatly missed. So I’ll just keep paying my monthly rent. So even though I’m a self-storage facility owner, I’m also a customer. And that makes this business even easier to understand.
Memo From Frank & Dave
Charles Swindoll Says "Attitude Is Everything"
Zig Ziglar once told the story of a woman who had a very negative attitude. All she did was complain about her job and employer, and she weighed the business down, despite the fact that she did her job extremely well. So he assigned her a new task of making a list of what she liked about her job and employer, and that she was only allowed to talk about these things going forward. Months later, he found that she was much liked by her colleagues, her productivity was up, and she was a much happier person. Indeed, attitude is everything in business. So how do you foster a positive attitude at your self-storage facility?
Enthusiasm is contagious
A positive attitude begins at the highest level. If you are at the top of the pyramid, then it’s up to you to create a positive atmosphere for employees. If you are enthusiastic about providing a great value for your customers, the rest of your team will jump on board. Most people like to think positively, but use negativity as a defense. Make good things the priority, and use compliments and positive energy over scolding and abuse. If you create a winning attitude, it will permeate through the organization and take root in greater occupancy and customer retention.
Customer service is a mindset
If you follow the Golden Rule of “do unto others as you would have the do unto you” your customer service will be fantastic. But what holds back many employees is that they do not feel that making the customer satisfied is a top priority, and they will be criticized if there are any financial consequences to doing so. At the Ritz Carlton, they give each employee a budget of up to $1,000 per day to make sure that all guests are completely satisfied. Room service showed up late, then there’s no charge. Hot water is not working, then the room is free. Of course, you don’t need to take your self-storage facility to that level, but you will be miles ahead writing off a late fee occasionally than losing a good paying customer.
It’s a competitive world, and a positive attitude can give you the edge
Thirty years ago, all you had to do to fill up most any self-storage facility was to put a “vacancy” sign out front. But millions of square feet later, it’s a much more competitive world. As a result, all operators need an edge. And a positive attitude can give you that edge over your competitors. It’s not going to replace aggressive marketing, keeping costs at a minimum or buying a facility in a great location. But when a customer is looking at two different self-storage properties, they’re going to lean towards the one that permeates a positive attitude. And, best of all, it’s free. And it’s also good for you; relieving stress and making your day go faster.
If you want to increase your revenue, improve customer and employee retention, and just generally have a happier life, then consider promoting a positive attitude. It’s the edge that all operators can afford.
Self Storage Home Study Course
Our Home Study Course is not like anything you have ever listened to or read before. We do not fill it with a bunch of fluff on how your are going to make a million bucks with no money down. We tell you the whole story... the good, the bad, and the sometimes ugly.
Click Here for more information.
How To Be A Big Fish In A Little Pond
Fish live in a very confined area. They move around all the time, but never outside of that glass tank. And self-storage customers are similar, only choosing facilities that are in their immediate neighborhood. So how do you best harness the fact that your customers are contained in a 5 mile radius of your property?
Be extremely aggressive in marketing
One benefit of having a limited audience is the ability to heavily concentrate your marketing. When you are trying to reach customers throughout the metro area, it is impossible to spend much time or money on any one section of town. Think about a Ford dealership, for example. Their customers come from as far as 100 miles away. Therefore, they have to spread their ad dollars over a huge area. Self-storage, however, has a very small footprint and that allows you to have a much more focused attack plan.
Build your brand
With a compressed market, you can build a real brand. It’s an opportunity to create a great name, logo, tag line, and make sure that everyone knows it. If you’re doing a great job, people know your self-storage facility by simply seeing the shape of your logo. And you can take on even big outfits like Public Storage because you can hammer the folks within 5 miles as hard as they do. You don’t need national ads when you can do grassroots marketing that is even more effective.
Be an expert on your competitor’s rates and specials
To be the most competitive in your 5-mile radius, you need to know everything about your competitor’s rates and specials. You should start off by building a matrix of every competitor in your territory. Then call each one, posing as a customer, and see what they are charging and offering as specials. Repeat this step at least monthly. Additionally, you should constantly be on top of all your competitor’s ads – on-line, direct mail or in the media – and add that to your competitive information list. Remember those scenes in World War II movies where people in white lab coats are constantly moving pieces around that represent where the opposing army is located? That needs to be you. You need to know more about self-storage in your market than anyone on earth.
Follow new developments that might create demand for units
You should not only be an expert on your competitors’ businesses, but also on any new developments in your territory that might lead to new customers. Any apartments being built should lead to a call to the developers to see if you could offer new residents a special deal. You can get lists of new homes sold, and put together a special “welcome” package of offers to store their excess stuff with you. Keep your eyes open to anything that might create customers, and take advantage of those opportunities.
Take advantage of the small footprint of your customer base to dominate it. Be an absolute expert, and use that knowledge to be the most aggressive marketer imaginable.
Why The Public Storage Sign Is Orange – And Why You Should Care
Stare at the image above for 30 seconds. Then look at a white sheet of paper. What do you see? The U.S. flag in full color. Why is that? The human mind seeks out the opposite of the color that it sees. This has long been known and exploited. The bottom line is that you want your signage to be the exact opposite of the colors you see in nature (the sky is the backdrop to most signs). The color opposite of blue is orange. So Public Storage chose orange as their color, not through random thought, but through scientific theory. That’s the same reason that many signs are red (McDonald’s, Wendy’s, KFC, etc.) to attract attention in a sea of green trees and vegetation. Should you follow this example in your signage?
Is There A Bear Market Ahead For Self-Storage? Think Again
Some people think that self-storage is simply a luxury and that it is subject to market reversals and can easily be destroyed by people selling their excess items on eBay and terminating their lease. Is this thinking accurate?
The big test came in 2007
Self-storage had never faced a major recession/depression until the Great Recession of 2007. Nobody was sure what would happen when the economy collapsed and millions of self-storage users suddenly lost their jobs and homes, or had huge reductions in their earnings. And it wasn’t just a small test – it was the biggest downturn since the Great Depression of 1929.
Self-storage proved that it’s a necessity, not a luxury
So here’s what the results were of the greatest economic collapse in nearly a century: occupancy increased. How is that possible? What happened was that the average American, when faced with uncertainty, elected to store their material possessions, so they were safe and they didn’t have to worry about them. Then, with their things safely tucked away, they went on the road in search employment, moved back in with their family, or downsized their housing. For the first time, it was scientifically proven that self-storage is not a luxury but actually a necessity.
However, there were lessons learned
But there were lessons learned. The types of self-storage that were founded on the premise of runaway materialism – such as refrigerated wine storage – got destroyed. So did boat and RV storage in some markets. While securing your material goods in times of uncertainty is a necessity, placing items that you can’t afford in places that they can never be used is not of much interest.
Terrific performance on mortgages
Last year, self-storage had the lowest default rate of any sector of real estate. Effectively, no other real estate niche did a better job of paying their bills and mortgage payments. Considering the fact that the industry scored this record amidst the biggest downturn in modern U.S. history was extremely admirable.
Self-storage has proven that it does well in times of national crisis. It exceeded all expectations in occupancy, and set the record for on-time mortgage payments. Think there might be a bear market ahead for self-storage? Think again.
Why Self-Storage Has Escaped All Legislative Issues
The U.S. is in the middle of the largest political battle of the century. Legislation is being passed or deleted daily, and all of these items have an impact certain business sectors. The repeal of power plant emissions is a boost to the coal energy, while tighter control of CFPB rules has forced many mortgage companies to go out of business. So how has self-storage escaped the carnage, and can it do so going forward?
Professional management has led to few complaints
Many politicians work from the adage “the squeaky wheel gets the grease”. So to stay off the radar screen, you need to have no problems with customers. And the self-storage industry has an unblemished reputation in this regard. By keeping our customers happy, the industry has made the right play regarding bureaucracy.
Not subject to rent control
Since self-storage is considered a luxury and not a necessity by politicians (although they’re wrong, as discussed in the article above), they see no reason to limit rent levels. This is an excellent position to be in, as raising rents is a key source of increasing net income and the value of all storage facilities.
A good source of property tax
Self-storage is any city’s dream source of tax income. Unlike virtually any other form of commercial real estate, self-storage has no residents or even inhabitants, and therefore has no drain on city resources such as public school education or healthcare. Basically, the property tax they receive from storage facilities falls straight to the bottom line. As a result, there is no pushback from city government to the peaceable operation of storage properties, nor to the construction of new ones.
Self-storage has been able to sidestep any major city, state or federal legislation. It seems unlikely for that attractive relationship to ever change. And in an era of dangerous political animosities, that’s a great position to be in.
How To Be Proactive On Security At Your Self-Storage Facility
The origins of self-storage were based on security. The earliest storage centers were in China, in which customers put their valuables in pots and they were then stored in caves with guards at the door. Later, in the 1700s, the British would store valuables in crates inside barns with armed guards. Without implicit security, there can be no self-storage industry – who would want to constantly worry if their stored goods were still there and not stolen? So how can all self-storage owners be proactive on security?
Locks on all units
It goes without saying that all units should always be locked – and that includes those that are vacant. The last thing you need are people storing items in vacant units that have no lock on them, attracting mischief. You also do not want new customers to store things – even for one day – without a lock, as it encourages potential crime. Make sure your manager has locks at the ready that they can sell to those who forgot them.
If you can install gates to your facility, that’s great. But at a minimum, install a fence with only one or two points of entry (based on the fire code, etc.) so that people can’t “sneak in” from any point at the property. This fence should be tall enough to stop people from climbing over, even if that means barbed wire on the top.
Bright lighting is a strong deterrent to crime – studies have shown that people have an aversion to committing crimes in lighted areas. So use that concept to battle such problems. Make every inch of your facility well lighted. Modern LED lights make doing so much less expensive.
With costs so low today, there’s really no reason not to have your storage facility fully monitored by camera. This is a huge asset to your customers and will definitely improve their peace of mind. It also is a winner for the owner, who can view their facility remotely whenever they would like. Be a good shopper, as the difference in cost between vendors can be huge.
Any criminal act against your facility is an attack against your personal finances. You should take any such action personally, and react aggressively. If somebody spray paints graffiti on your building, you must remove it the same day (keep paint that matches your building always on hand). If someone climbs the fence, then increase the barbed wire or other anti-measures immediately.
Self-storage and security go hand-in-hand. And when you secure your customers possessions, you also secure your financial future.