In the amount of time it takes to read this article, a number of things are in motion. As you contemplate that first sentence, you quickly notice that your computer just made a noise, “Oh look, a new email”. If you have focus you will ignore that email, but a majority of people will run to that email. The email is just a vendor asking you for a conference call to discuss a new product, “Great, now I can get back to that article I was reading”. You scroll your mouse, or finger for you tablet/smart phone users, and try to figure out where in this article you stopped reading. While you are doing that a text comes through, then a Facebook message, someone mentioned you on Twitter, your LinkedIn app just made a noise, oh my another phone call, then 5 more emails. This of course doesn’t count the items on your desk including a stack of papers, 2 month end reports you forgot to read, 3 trade magazines, some random mail, a Diet Coke from yesterday, and a book you may have purchased from Amazon. By the way, you need to pick up milk on your way home tonight. This represents a five minute sub section in the life of today’s self storage managers, investors, and owners.
I just want to start this blog by saying that the details matter in the operation of a self storage facility. They matter so much; your self-storage business depends on them to run smoothly on a day to day basis. Often in our insanely busy lives, a smart phone is beeping, the phone is ringing, or while a family member is talking in the back ground we just miss things. Unfortunately in the extremely litigious society we live in, these distractions can easily come back to haunt us. It’s very easy, while working on 10 things at once, to accidently over lock the wrong unit, miss something on a rental agreement, or send a lien notice to the wrong address. It’s easy to misplace a file, throw out an important paper, or forget to call back a customer. This is just the result of working within a distracting environment.
Back in the late 1970’s to the mid-1980’s Van Halen was one of the most popular rock bands in the world. Over their career they have sold over 86 million records worldwide and have had the most #1 hits in the history of Billboard’s Mainstream Rock Chart. Being a Van Halen fan for many years, I consistently heard of a stipulation they always placed in their concert agreements. The stipulation stated that there was to be a bowl of M&M’s in the dressing room of the concert venue. This bowl of M&M’s was to be free of any brown colored M&M’s. If any brown colored M&M’s were found in this bowl then the band did not have to play and, in addition, they would receive full compensation for the show. Most people, including myself, found this to be a laughable requirement. Everyone assumed that this was just another hilarious stipulation from a band didn’t really want to work. Actually the real reason this stipulation existed was genius.
Below is a recent infographic from Sparefoot, one of the self storage industries largest aggregators. One of the more interesting items on this infographic is the section discussing REIT owned facilities vs. Mom & Pop owned facilities. Out of a total of 50,050 facilities, the five largest self storage companies only comprised about 1% of the total market. Our industry resembles the Pizza industry in many ways. Yes, Pizza Hut, Domino's, and Papa John's are huge companies with extensive marketing budgets, but they still have less market share then independent restaurants.
In addition the section on industry returns is great. Compared to other industries self storage had higher returns, in 2011, then the health care, retail, and even timber industries. It's fairly obvious why the self storage industry has received a flood of institutional money.
(To view the infographic click the READ MORE button)
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Are you an asset manager for a financial institution or investment group? Are you in the process of filing a receivership or have you just completed a foreclosure on a self-storage facility? Do you have FDIC filings and FDIC reimbursement requirements? We can help you. Cutting Edge Self Storage Management has extensive experience working with financial institutions and investors for the purpose of Receiverships and ORE Foreclosures, our company principals have worked with Citi Bank, First Union (Wells Fargo), T. D. Bank, and the RTC.
Remember, the self storage industry is an industry unto itself. The self storage industry is not the hospitality industry, office space industry, medical supply industry, or the restaurant industry. The self storage industry has its own laws, verbiage, nuances, and operational standards. The importance of hiring a management company that specializes in the self storage industry cannot be overstated. Do not try to “go at it alone” or “learn on the fly”. We are here to help you. Contact us at 801.273.1267 for a free consultation. Download our Corporate Resume/Statement of Qualifications.
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The benefits of working with a management company, in the state in which your self-storage facility is located, are numerous. Why work with someone that has to learn your Florida specific market? Cutting Edge Self Storage has extensive experience working within the State of Florida. WE WILL COME TO YOU. Contact us today for a free consultation and schedule an onsite visit with one of our self-storage management professionals.
As I was sitting down to watch the Miami Dolphins game a few weeks ago I received a phone call from a very good friend of mine. This friend of mine rented a unit at a local self-storage facility. This particular friend, who knows I work in the self-storage industry, wanted to ask a question in reference to access hours of a particular local facility. Now to preface this story, I live in a small town on the East coast of Florida, with an abundance of self-storage facilities. Like most areas of Florida, competition in the self-storage industry is fierce in my area. We all know that access areas vary greatly in our industry from office hours, to 6AM-10PM, to 24 hour access. Each self-storage facility has their own policy and procedures in regards to this. Even though this is true, I would like to highlight his story. His story goes something like this:
Around 5:50PM, he entered the facility to access his storage unit. While he was entering the facility the manager of the property came out and told him he only had 10 minutes to unload his items. According to the policy of this self storage facility access hours are reserved to office hours only. My friend stated that he only had a few items but it would take a little longer than 10 minutes to unload the items into his unit. The manager proceeded to tell him that the gate would close at 6PM and there was nothing she could do. He proceeded to leave, with his items, and return home. He then called me to vent on the situation and stated he would be looking for a new self-storage facility to utilize.
Now, to make things clear, I started my career in self-storage as a facility manager. I understand the demands, time constraints, and mental exhaustion that can occur from managing a self-storage facility. As a self-storage manager you are typically a bartender without alcohol. You hear about every issue, problem, domestic dispute, jailed family member, etc. In addition, contrary to popular belief, the customer is typically wrong. They either did not read their rental agreement or tuned you out as the facility policies were explained. Now in this particular situation my very good friend is very wrong. He obviously didn’t read the policies of the facility and that is his fault. Although it’s his fault let’s look at this from a business prospective:
When it comes to customer service, I allow all of my facility managers to stay late if the situation involves customer service. In a time when every rental counts, when there are 4 more competitors in your market than there were 3 years ago, and when revenue is being pushed down, customer service is the one area where you can make a difference. Sometimes it only takes 15 minutes.
Over the last 10 years the self storage industry has grown to new heights. No longer are self storage facilities just two buildings on an unpaved road. Today’s self storage facilities are built better; they have new technological advancements available, and cater to a customer’s every need. With reasonable interest rates and quality returns, the self storage industry has become an intriguing real estate investment. The lure of these returns has spawned a new generation of self storage owners. With the emergence of this remodeled industry the question becomes “what is the best way to manage this new self storage asset?” Often people forget that the self storage industry is a business unto itself. Success in other business ventures, such as apartment complexes, restaurants, or construction, does not guarantee you success in the self storage industry. Allowing your facility to succeed in the current environment takes skilled and knowledgeable professionals. What is the best time to bring in a Management Company to handle your asset and help the facility reach its true potential? Often times owners look to an established management company when they are new to the self storage industry, would like to take a break from the self storage industry, when the storage facility is outside of the owner’s other business interests, or the facility’s business environment has changed in which an outside perspective would help.
One reason an individual would seek advice from an established management company is if they are new to the self storage industry. Again, the self storage industry is a business unto itself and as in any business venture experienced consultation is helpful and often necessary. An established management company can help a new owner review current operations including budgets, software, managers, marketing techniques, competition, unit mix, and other important areas vital to the success of a new or existing facility. An established management company can also help set policy and procedures along with providing the necessary forms for the self storage facility’s day to day operations. In addition, and one of the most important factors, a management company can help a new self storage owner keep a facility stable while keeping high standards of customer service during an existing self storage facility acquisition or a grand opening. Along with helping with operations, an established management company will give you the peace of mind knowing that your self storage investment is being guided in the right direction by people who have years of experience in the self storage industry.
Another reason a self storage owner would consider contracting an established management company is if the self storage owner would like to step away from the day to day operations of the storage investment. Often many self storage owners have other personal and business interests or are not in a position to extensively monitor their self storage investment’s day to day operations. Many owners live long distances away from their self storage investment’s and, along with the travel time spent to visit their investment and the consistent monitoring of the self storage facility, too much time is taken away from other preferred activities. An established management company will allow the owner to be as involved or uninvolved as the owner wishes. An established management company will keep the owner informed on any major changes to the status of the facility while keeping the non essential items away from the owner, freeing the owner to pursue other endeavors. Contracting an established management company can take the day to day worries away from a self storage owner while allowing the self storage investment to continue to reach operational targets under the guidance of the management company.
Most self storage owners did not start out in the self storage industry. Self Storage owners come from many different walks of life. They may come from the banking industry, real estate industry, construction industry, health care industry, or a combination of many industries. Typically self storage owners have business investments in industries other than self storage. Often a self storage facility was acquired or built as an additional investment vehicle, not as the owner’s day to day business. As stated before, the self storage industry is an industry unto itself. It is different from every other industry. Regardless whether you have managed apartment complexes, warehouses, or parking garages, the self storage industry is different. The self storage industry is regulated by the laws of the state that the facility resides. Along with the number of different state laws a self storage facility must follow a self storage facility has its own budgetary items, marketing plans, and industry jargon. An established management company will help facilitate an owner into the world of the self storage industry. Most people would not let a cashier at a local super market to perform surgery on them, or ask their CPA for a haircut, yet many owners and potential owners will attempt to run or purchase a self storage facility without any professional advice. An established management company will help the self storage owner develop the facility into the investment vehicle they desire.
Over time a self storage facility’s management style sometimes becomes stale. Operational strategies that worked previously are not producing the returns a self storage owner expects or needs in order to continue to operate the self storage investment. In this situation a different perspective on facility operations could have a positive effect on the facility’s income. At this point contacting an established management company could have a profound impact on the competitiveness and overall success of a self storage investment. Established management companies typically stay well informed with the changes of a dynamic self storage market. Established management companies read trade magazines, attend seminars, speak with other self storage professionals, and constantly check and track which operational items are consistently providing rentals to the sites they are contracted to manage. Established management companies also continually reevaluate marketing budgets and continually monitor the marketing they have actively placed in the local self storage market in order to keep from funding items that no longer have a positive effect on the self storage facility and are a drag on the self storage facility’s bottom line. If a self storage owner feels that an operational change may need to take place or would like to be updated on the status of the current self storage market an established management company could be the right move. Every established management company is staffed with people who would be glad to help a facility owner reach their investment goals in the timeliest manner possible.
Overall the decision to work with an established management company will be different for each self storage owner. When looking for a self storage management company, attempt to find a company that fits your style of business. These are just a few of the questions you should ask yourself when looking for a management company to handle your investment. Is the management company experienced? Does the management company have references from other self storage owners or industry professionals? Does the management company handle items in a timely manager? Does the management company communicate well? Do you feel comfortable with the staff of the management company? The answers to these questions should help guide you to a team of professionals that can help guide your self storage investment. Whether a self storage owner is new to the industry, experienced in the industry, needs a break, or just needs an operational tune up, an established management company can help you reach your facility’s true potential.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self-storage industry. For more information, contact Stephan Ross or Tammy Ross at 801.273.1267 or visit our website at www.cuttingedgeselfstorage.com
As we leave the dynamic storage market of 2009, it’s time to review the items that we can successfully change in 2010. It may be time to review and update your facility’s curb appeal, marketing plan, or payroll. It may be time to approve that capitol repair you did not complete last year or institute that new policy or procedure that was left for another day. You might even be in a position to refinance or sell your facility. Regardless of your facility’s situation, an experienced self storage management company can help you navigate these waters. Choosing a self storage management company is one of the most important decisions that you can make for the overall success of your investment. An experienced self storage management company will handle all of the day to day operations of your facility, including marketing, manager acquisition and training, book keeping, curb appeal, lien sales, software and computer installation, internet management, vendor negotiations, and auditing. This allows a self storage investor to focus on other interests rather than managing the day to day operations of the facility, but still allowing the investor input on these operational decisions. When selecting a management company for your facility start by researching multiple companies. What are the management company’s budget requirements? How much of a marketing investment will the facility have to make? Then, at the end, how comfortable do you feel with the management company and are the costs compatible with your financial situation. A storage customer will typically rent where they feel the most comfortable, choosing a management company is no different. If you do not feel comfortable handing over your investment to a particular management company, then the relationship between investor and the management company will deteriorate quickly.
Once you have made the decision to work with a management company start by conducting some research on each of the companies that interest you. There are a number of highly rated and experienced self storage management companies throughout the United States. As an investor, you will have to decide what are the most important factors in your decision? Ask questions such as, how long has the management company been in business? What is the experience of the management company’s staff? Do you want the management company to be located within the same state as your facility? How often will this management company visit your facility? What kind of progress reports will you receive from the management company? Does the management company handle the book keeping of the facility? Does the management company have references? Does the management company prefer certain management software? What are the costs associated with hiring a management company? A typical self storage management company will charge a monthly fee of $2000.00 to $4000.00 or 4%-6% of the facility’s monthly gross. These fees will vary depending on the management company, but they will usually fall within this range. Once you have identified the management companies that interest you, start by making contacts to each one and begin the interview process.
The expectations, once a management company is hired, is that the facility will continue to perform at a high level after the transition is complete. Once you have completed research and visited with the management companies that fit your requirements, request the management companies review your facility’s economic situation and create a preliminary budget. The management company will require some financial data such as a profit and loss report to construct a preliminary budget. As an investor, you will want to know how the economics of the facility may change. What kind of rental activity and income does the management company expect? How much payroll will be requested? What costs will be associated with marketing? How much in maintenance and repairs will be requested? What are the expectations for utility costs? What is the expectation for Net Operating Income? All of these items are needed to make a realistic projection of the facility’s future performance. Review each of the budgets and make notes on the line items that concern you. Remember if a line item seems too good to be true, ask questions about that particular line item. The prospective management company should be able to give you a satisfactory answer on all of your questions.
One of the most important aspects of managing a facility is the marketing plan. As an investor, you should carefully review all aspects of a potential management company’s marketing budget. How does this management company plan on marketing your facility? What is the amount budgeted for yellow pages, if any? What is the amount budgeted for a facility website? Will the website be optimized for search engines such as Google, Yahoo, or Bing? Does the website have the ability to take online reservations or payments? Does the management company have the ability to track the number of visitors to the website? Will the facility be listed in any online directories such as US Storage Search.com? What is the amount budgeted for items such as door hangers, referral cards, flyers, and postage? Will the management company hold any events on the property such as a charity event, chamber of commerce meeting, or customer appreciation event? Does the management company work to form partnerships with realtors, apartment complexes, and local businesses? Review each of these items and ask questions to determine how your potential management company plans on marketing your facility.
Regardless of whether your facility is in Seattle, Washington or Miami, Florida, there are a number of great self storage management companies available to help. As a self storage investor you need to determine which management company fits you the best. Just like a potential storage customer rents with storage facility that they fell comfortable with, the same is true with hiring a management company. Does the potential management company give you a reasonable budget? Will they market your facility cost effectively and with enthusiasm? Are the management fees acceptable to your unique economic situation? Remember, research, ask questions, look for experience, and check references. In addition take into account the communication factor. As an investor how often will you want to speak with the management company? Will the management company speak with you daily, weekly, or conduct a monthly or quarterly conference call? This is important if you are an investor that would like more one on one time. Make this part of the interview process. A self storage management company will provide experience and exciting new ideas for your facility. Take your time, review each self storage management company of interest, and you will find the company that fits your facility.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self storage industry. For more information, contact our main office at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com. Follow us on Twitter at Cuttingedgemgt.
As a self storage facility manager or owner, you are consistently evaluating your strengths and weaknesses in a given market. Over the last few years self storage markets have become more competitive than ever before. Conditions such as weak real estate market, an excessive supply of self storage in many areas, and a less than predictable economy have left many managers and owners scratching their heads. With these conditions hanging over the head of a number of self storage facilities, the efficient management of your facility has never been more important. Most facility managers and owners have already taken the steps to cut back on unnecessary items that weigh on expenses. As a manager or owner you may make one less trip to the office supply store, maybe you are taking your employees out to lunch less, and maybe you are even cutting your facility’s lawn yourself. Once you have trimmed down most of the items you deem to be an excess, what’s left? Now is the time to creatively manage your facility. In order to become more creative in managing and selling your facility consider focusing on the following items: Have I hired the right staff for my facility? Have I created a marketing plan that is not only creative but economically feasible? What if I have multiple facilities in a given area?
In order to creatively manage your facility you must have a staff willing and able to do this. One of the most important aspects of running any business, but storage in particular is hiring the right manager to manage your facility. When you start the search for someone to handle your facility, start by doing some investigative work. Visit the competition in your market and make notes of the things you liked and disliked about the managers operating these stores. Once you have some candidates review their resumes and invite them for an interview. Does the candidate give off a good feeling? Are they pleasant? Do they have a sense of humor? Do they know the market area? Would you personally rent a unit from this person? All of these are intangibles that raise a consumer’s comfort level, and if the consumer is comfortable, they will be more likely to rent from your facility. Along with intangibles, does the candidate have any skills? As the storage industry evolves, technology becomes a greater part of day-to-day operations. Does the candidate understand how to use a computer? Do they have any problems answering the phone or making delinquency calls? Are they able to handle minor accounting? All of these items are part of the makings of a successful manager and can affect the potential of your investment. You can train someone how to run a computer or clean a vacant unit, what you cannot train is intangibles such as personality, sense of humor, and attitude. Remember you are hiring this person to SELL your facility, not just to sit back and collect payments.
Once you have hired the manager for your facility you can now focus on putting marketing dollars to good use. Creative management is not putting a circus in the front of your facility or always “thinking outside of the box”. The idea is to create and implement creative marketing ideas that not only differentiate you from your competition but which are economically feasible as well. One of the most important marketing tools you have is the people that already rent from you. Now most mangers or owners will say “Well we already have a referral program”. That may be true but how well are you cultivating it. Explaining to your customers about a referral program won’t necessarily have them running into the streets to tell their friends or family. Referrals come down to how well you take care of your customers. Consider handing out bottles of water during the summer months and offering coffee and hot chocolate during the winter months to your customers. This accomplishes two distinct goals. One, it allows you to help keep customers hydrated during the summer or warm during the winter, something they won’t soon forget. Second, it gives you an idea of what the tenant may be storing. Consider sending out welcome and thank you letters to your tenants. How often can you remember getting a welcome or thank you letter from anyone you have done business with? During the holidays consider using a special for people who need to store Christmas gifts. Along with the holiday special designate one storage unit as a “Santa’s Helper Unit”, complete with a table, wrapping paper, scissor’s, and tape. Another idea is to print $5.00 coupons to hand out to your customers during times you deem necessary. If you are on the phone with a potential customer and a current customer walks in to make a payment, instead of putting on hold a potential customer, just hand your current customer a $5.00 coupon. The current customer will be happy you didn’t let them slip into oblivion and hopefully your facility gained a new customer from the time on the phone. In addition, if your facility does not already have a web presence, get one. There are a number of internet companies that will reserve a domain name and give you access to a website builder for under $200.00 per year. Also, consider using a web based self storage lead generator. With a little research you can have your facility listed on a number of different self storage lead websites with a minimal cost to your facility.
A number of self storage facility owners have more than one location in a given area. One way to creatively manage these facilities would be to use smaller facilities as satellite locations. If you have a smaller facility in a given area which is within an acceptable distance to a larger, better staffed facility, consider using the smaller facility as a satellite location. The managers of the larger location should be able to integrate the operations of the smaller location into the operations of the larger location. While the integration of two facilities sounds difficult, most self storage management software has options to run multiple facility databases. If you have more than one large location, cross train your assistant managers so that they can manage multiple facilities. This handles two distinct issues, one it is usually easier to higher people for more hours and your assistants are already trained in the company’s policy and procedures.
Creative management is about being efficient and effective with a facility’s resources. Often trying a few new ideas may be more useful then waiving an administration fee or giving away a free lock to a new customer. Consider focusing on items which can make a direct impact on your facility’s profitability such as hiring, marketing, and logistics. Remember it only takes one good idea to make a campaign successful. Don’t be afraid to try different things and to make adjustments along the way. Sometimes focusing on a few items can make the difference between an average year and a blatantly successful one.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self storage industry. For more information, contact Stephan Ross or Tammy Ross at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com
With the volatility of 2009 and 2010 behind us;self-storage operatorsnow take a brave leap through 2011. As we move into the second quarter of the 2011, you should be making some assessments on your facility’s progress to this point. What do you expect for the rest of 2011? What do you consider a successful year for your facility? Is it a 5%-7% increase in revenue? Is it a 3% decrease in expenses or a 5% increase in NOI? Are you swinging for the fences and expect double digit increases and decreases across the board? Are you anywhere close to meeting any of your internal targets? Are your customers satisfied? Are the facility managers content and trained properly? Is your facility’s curb appeal at an acceptable level? These are just a few of the questions you may ask when assessing your management company. Beyond the standard questions just mentioned, how is your management company handling the intangibles? Are you happy with the level of communication from your management company? Does your management company actually provide you with the items they claimed they would in a timely manner? Do you actually enjoy speaking with your management company’s representative?So how do you evaluate your management company?
The basics of evaluating your management company are simple and very straight forward. Evaluating the intangibles of your management company is not always as simple and relies on the judgment of the self-storage owner or investor. The main question is always: Is your self-storage investment better off since you hired a self-storage management company or has the performance of your facility been lackluster since that hiring?Now, taking into account that the country and the self-storage industry have just experienced one of the worst recessions in history, along with crippling job losses and a devastated real estate market, is your investment better off than last year? In general your management company should be performing in the following six categories: financial targets, facility marketing, training and manager evaluations, maintenance and curb appeal, onsite visits and ground work, and technology.
Financial targets are extremely easy to review. Is your facility’s revenue, expense, and NOI numbers in line with your expectations? Does your facility’s Profit and Loss report have any resemblance to this year’s projections? Did your management company give you any projections for 2011? If not, why?You cannot hold someone accountable for something if there is nothing on which to base their performance. Second, is your management company marketing your facility effectively? Do you have an effective internet campaign complete with an SEO website? Are you making strategic alliances with businesses in the area? Do you have a strong referral program? Are you tracking your results in order to allocate funds for the most effective marketing campaigns? Third, are your facility managers content and trained effectively. Does your management company have an effective training program? Are the lines of communication open between the management company and your facility’s managers? Fourth, is your facility’s maintenance and curb appeal up to your standards? Have maintenance projects and curb appeal projects been contracted or completed? Did these projects come in at the projected cost? Fifth, does your management company visit your facility? I recently consulted with a facility manager who had not seen or spoken to his district manager in three months. The only communication in this situation was through text messaging. This is not an effective way to manage a self-storage facility.Last, does your management company understand technology? There are so many effective and efficient ways to manage certain self-storage operations over the internet that is imperative that your management company be familiar with technology.
Matthew Van Horn is Vice President of Cutting Edge Self Storage Management and well known for finding hidden profit centers in self storage operations. For a complimentary “Hidden Profit Discovery Session” please send an email to email@example.com. Cutting Edge Self Storage Management is a full service management company specializing in Management, Feasibility Studies, Consulting, and Joint Ventures within the self storage industry. For more information, contact our main office at 866.970.EDGE or visit our website at www.cuttingedgeselfstorage.com. Follow us on Twitter at Cuttingedgemgt and on Facebook at Cutting Edge Self Storage Management.