Are you going to make self-storage your sweetheart this Valentine’s Day? It might qualify. It’s got great looks as an investment. And the customers are always loyal. The revenues are dependable. And it’s very low maintenance. Indeed, a self-storage facility might just make a great life partner. So how do you find a self-storage facility that can match your goals and dreams? The answer is three-fold: 1) learn everything about how a self-storage facility works 2) figure out how much you can spend and, therefore, how big a facility you can buy and 3) look at as many facilities as you can so that you get sufficient volume of deals to run numbers on, as finding a good deal is 80% volume. Only one month of 2016 has passed so far – are you putting into action your plans for the New Year?
Memo From Frank & Dave
Creating Sex Appeal For Your Property
Have you ever noticed that some self-storage facilities turn heads? They have a magnetism that boosts occupancy and guarantees financial success. How do you create sex appeal for your self-storage facility?
Let’s start with the first thing that most customers notice: your sign out front. Everyone knows that signs are important, but many refuse to spend the money necessary to make the sign a winner. While LED signs are probably beyond the budget of many facility owners, your sign should have, at a minimum:
- Large enough to be seen by folks from the road (think 5’ x 10’ or larger)
- Plenty high to rise above all obstructions (think 20’ and taller)
- On one single, metal pole, nicely painted
- Back-lit, so it shines bright at night and looks professional during the day
- Use colors that are attention-getting and do not blend into nature (think yellow, red, black, orange – look at Public Storage for some ideas)
And professional-grade signs do not stop there. All of your signs should be consistent and should include everything from speed limit to office to even the numbers on the buildings or doors. It costs only a small amount more to have custom signs over stock, trashy looking ones.
Professional-grade exterior lighting offers a huge bang for the buck. Up-lights, security lights, they’re all important and make you look far superior. In addition, since many people utilize their storage unit at night, giving a greater feeling of security is important to customer attraction and retention. Some of the exterior lighting kits can be purchased at Lowe’s or Home Depot and installed by you, if price dictates (assuming that you have the available plug to power it up). But even if you have to spend $10,000 to put in a professional lighting package, it’s probably worth it. And the cost of operating lights is not that high, as long as you use LED bulbs.
Having your manager wear a polo shirt with your logo on it is a $40 solution that gives you huge bang for the buck. Think of your own reaction to having a uniformed salesperson wait on you vs. someone in street clothes. And you can throw in a jacket with your logo for the winter for another $100. It’s a huge return on the investment as far as sex appeal.
Website and SEO
This is 2016 and you have GOT to have a great website. If you don’t, you are making a huge mistake. 90% of buying decisions are made on-line today, so you can no longer put this off. There are a huge number of groups that can build you a website that looks professional. Do not use your neighbor unless he’s a computer professional. And make sure that you come up on Google when someone searches “self-storage in [name of your city or town]”. Again, hire someone to accomplish this for you, unless you can do it yourself. You cannot fail in this endeavor and flourish as a facility owner.
Speaking of marketing, make sure that everything you do is consistent. Come up with a design and colors and logo that you are 100% confident in. And then use that over and over. This is called marketing “build” and it’s vital to attain true sex appeal. You want the customer to spot the ad as being yours before they even see your name, because they spot the design and colors before they can even read the copy.
Show your self-storage manager and other employees how to properly approach a customer, how to close a sale, and how to handle customer service, including collections. Anyone who calls in should hear a cheery “[name of your facility], how can I help you today?” and not “hello” or “what do you want?”
Your staff is the “face” that your property offers to the public. You must hire folks that you have confidence in and that share your values and the desired level of professionalism. You cannot hire hillbilly Bob and expect him to suddenly become a polished professional when the customer walks in. Don’t hire the first warm body that applies. Be selective. A great manager can take a self-storage facility to full occupancy, and a bad one can destroy your business within six months. Only hire the great ones.
You must never, ever, have trash or debris on the ground, or un-mowed grass, or chipped or rusted paint. If you want sex appeal you must have exemplary grooming. This is not rocket science, and there is not excuse to not be perfect, as it costs nearly nothing to do. When you have maintenance issues, it’s typically a function of sheer laziness. And that goes back to staff selection and supervision.
What’s the most noticeable feature of the typical self-storage facility? The roads. A single pothole is not only jarring, but suggests that the maintenance is not good. You roads should be flat and solid. If you can afford it, a nice, black seal coating is great, and so are freshly painted stripes.
Sex appeal is not accidental. Look at Marilyn Monroe without makeup. You have to put out the effort to stand out from the pack of self-storage competitors. The cost is low, so there’s no excuse not to have great sex appeal with your facility.
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Why You Always Need A “Walk Away” Price
When you’re negotiating for the purchase of a self-storage center, it’s important to have a “walk away” price: the price at which you will absolutely not go forward with the deal. You have to mentally draw a line in the sand and say “I will not go over this line, no matter what”. You cannot be a good negotiator until you learn this skill.
It’s too easy to “creep”
Many people look at the price on a self-storage facility as being sort of a loose guideline. So what happens is that they tend to creep up until the final price is higher than they can afford or justify. You see this happen all the time at property auctions. The buyer has price in mind of $500,000, so they bid that, only to have the auctioneer say “come on, what’s $10,000 more when you’re already at $500,000? You don’t want to lose the property over $10,000 do you?” so the buyer raises their bid to $500,010. And they just keep using this same rationale until the price is $650,000 or so. And then you’re screwed.
You send the signal that you’re at your limit
When you establish a firm price, you will exude that limit through your body language, speech – every inch of your anatomy. Most sellers will sense that they have reached your price limit and will stop trying to get it higher. Without this limit, however, you do not send the seller this subconscious signal and, as a result, the seller thinks “I’m going to ask for even more, why not, I’ve clearly not his their limit yet”.
Good deals often begin when you walk away
How many times have to said to someone “I’m sorry, but that’s just too much for me” and then received a call a day later saying “are you still a buyer at that price you said was your limit?” Good things often happen when you walk away. But you HAVE to walk away to trigger this event. There’s nothing wrong with saying “this is my limit, take it or leave it” – it’s not embarrassing or immoral. It’s just good negotiating skills.
Having a firm “walk away” price is a key item to any negotiation. It’s often the grain of sand that creates the pearl.
Wall Street Looks Favorably On Sector
Bank of America has given a “buy” rating on shares of Sovran Self Storage Inc. (NYSE:SSS) in a recent research note. Bank of America currently has a $118.00 price target on the real estate investment trust’s stock. Other hedge funds and institutional investors have added to their stakes in the company. KBC Group increased its position in Sovran Self Storage by 15.6% in the third quarter. KBC Group now owns 8,546 shares of the real estate investment trust’s stock valued at $806,000 after buying an additional 1,154 shares during the last quarter. EQIS Capital Management acquired a new position in Sovran Self Storage during the fourth quarter valued at $333,000. BB&T Securities increased its position in Sovran Self Storage by 8.6% in the fourth quarter. BB&T Securities now owns 4,958 shares of the real estate investment trust’s stock valued at $532,000 after buying an additional 394 shares during the last quarter. Boston Advisors acquired a new position in Sovran Self Storage during the fourth quarter valued at $812,000. Finally, Sigma Planning acquired a new position in Sovran Self Storage during the fourth quarter valued at $562,000.
SSS has been the topic of a number of other research reports. BMO Capital Markets upgraded shares of Sovran Self Storage from a market perform rating to an outperform rating and boosted their price target for the stock from $103.00 to $107.00 in a research report on October 21st. Cantor Fitzgerald restated a buy rating and issued a $116.00 price target. BB&T Corp. issued a buy rating and a $122.50 price target on the stock. And Jefferies Group boosted their price target on shares of Sovran Self Storage from $110.00 to $115.00. So far, two equities research analysts have rated the stock with a hold rating and eight have given a buy rating to the stock.
Sovran Self Storage, Inc. (NYSE:SSS) is a self-administered and self-managed real estate investment trust (REIT). The Company acquires, owns and manages self-storage properties. As of December 31, 2014, it held ownership interests in, leased, and/or managed 518 properties consisting of approximately 35.5 million net rentable square feet, situated in 25 states.