Self Storage Investing Newsletter

The Holiday Season is a very important time of year for storage owners as it’s the #1 time in which your current residents visit their storage unit to remove trees and ornaments, as well as one of the key times to attract new customers who bought too many items and need a place to put them. So how can you properly decorate your storage facility on a shoestring budget?

Your entry

There’s a standard playbook for holiday decorations down your fence line fronting the street:

• Big bows that you can buy from the Dollar Store for $1 a piece and reuse every year.
• An inflatable or two of a holiday character such as a snowman that cost around $30 each from Walmart and you can use every year.
• A big banner that says “Happy Holidays” (about $300) and you can unroll it each year.

Your office

Creating a festive office environment is key:

• A nice Christmas Tree that can be purchased – fully lighted – for under $100 at Walmart.
• Ornaments for this tree from Walmart that are unbreakable and cost maybe $20 total.
• Any other holiday decoration that suits your fancy. Walmart, Target – every store – offer a ton of options.

Your attitude

The holidays are the opportunity to put your best foot forward and treat your customers with warmth and enthusiasm. Of course, you want your staff to display these characteristics all year, but the holidays are a great time for a refresher course.

Gifts and cards for customers

Existing customers should receive a “Seasons Greetings” card to thank them for being a part of your business and to let them know you appreciate their business. This costs only about $1.50 per customer (including the card and postage) and a little time to fill them out. New customers should receive a small gift that you keep in a giant holiday box for them to select.

Gifts for staff

Don’t forget to give presents to your staff, as well. Even small gifts – thoughtfully selected – are greatly appreciated and will make your staff work hard to please you and hit your budgets. Don’t be a “scrooge” and pinch pennies on these type of opportunities to bond with your staff.

Conclusion

The Holiday Season is a great opportunity to attract new customers and reinforce your existing ones’ decision to choose your business. It’s also a time to bond with staff and promote better customer relations. Embrace the holidays as a great time for your storage factility.

This is a “trade stimulator” game from the 1940s that proposed to help you decide on your destiny. If you really think that this would really work, then you’ll find it in an antique store near Joplin, Missouri. But hopefully you are going to entrust your future to a different set of priorities.

What’s the difference?

Webster’s defines “luck” as “success or failure apparently brought by chance rather than through one's own actions” while it defines “skill” as “the ability to do something well; expertise”. Effectively, the key difference is having control over your future as opposed to allowing someone else – luck – to be in charge. I think anyone would agree that it is much better to be in control of your destiny than entrusting it to someone else.

Learning how the business works

The first item that let’s you take control over self-storage investing is to understand exactly how the business works. This will allow you to understand what properties are opportunities from those that are not. In real estate, you make most of your money on the front end when you make your selection of what to buy. If you acquire a property that has the wrong location or fundamentals, not even the greatest manager in the world can help you succeed. So an education is paramount to separate luck from skill.

Doing terrific due diligence

Benjamin Franklin once said that “diligence is the mother of good luck”. Here he is referencing using your skill to create good fortune, and that skill is “due diligence” – the checklist of items that you must confirm during property inspection to ensure that the acquisition will be profitable. Due diligence steps include everything from permits to property condition, as well as the economics of the deal.

Making smart choices

Once a storage property is purchased, it’s essential that you continue to make good choices in every area from personnel to marketing. Even a great purchase will fail if you do not properly manage it. And to do so requires making a steady stream of choices. These choices are based on skill and not random guessing.

Tracking performance

Using scientific method is a key step to separating luck and skill. A smart storage owner will engage in constant budgeting and tracking to see if they are hitting their numbers or not. Any action that causes the storage facility to fail to hit its budget should be eliminated and any course that increases net income should be accelerated.

Never being satisfied

One huge trait that separates luck from skill is simply the attitude of refusing to accept what others hand you. Many storage owners started with nothing and built an empire by refusing to accept their position in life. This is the moment in which luck is cast aside and skill is embraced as the new leader. And even if you buy a bad property or encounter an economic recession, you understand that sometimes luck can be bad and you don’t have to accept that but can start all over again to employ your skill this next time.

Conclusion

Skill is superior to luck in all regards. Take control of your future in general and your selection and operation of storage facilities in particular. The choice is completely up to you.

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We are a highly connected world thanks to the internet. And one byproduct of this dependence is the importance of reviews online. A good review can have a huge impact on your storage business just as a bad one can totally turn off many customers. With so much riding on it, how can you take control of your social media reviews to promote your business?

Why it’s important

We live in a different era today, an era in which the internet allows us to cut through the regular public-relations pipeline and get directly to those you can trust: people just like you that have actually experienced the storage owner’s business model. Which do you put greater faith in: what an ad tells you or what a customer tells you? Many sites give you a macro review score, and then all the individual commentary that follows, and it’s punishing if you don’t have happy customers. This lack of control over what the public sees should be terrifying to all smart storage owners.

The types of social media reviews

These are the basic types of review sites. You need to get familiar right now with how you rank on:

• Facebook business page
• Google business page
• Yelp
• Better Business Bureau (BBB)

How to change what you’ve already got

Now that you’ve seen the reviews you already have on your storage facility, how can you erase or mitigate the negative ones?

• Birdeye. This is a company that is devoted to reducing or eradicating negative views using modern technology and tested strategy. You should give them a call and find out your options and their cost.
• Drown out what you’ve got with good reviews. This is a natural response to negative reviews: simply dilute them with really good ones. If you have two negative reviews, you can reduce the impact by drowning those out with ten new good ones.

How to amass more positive reviews

So if positive reviews are the antidote to negative ones, then how can you amass more good ones? Here are some ideas:

• Offer incentives for reviews. Tell customers that if they send in a review they will be put in a drawing for a prize. Even Taco Bell offers this concept. Don’t say it has to be a positive review – just a review. You can’t control the content and that’s implied already.
• Ask for reviews more often. Make asking for a review a part of every conversation with a customer. You need a lot of reviews – the more the better – so keep it top of mind.
• Do a better job of customer satisfaction to begin with. This should be a no-brainer but before you ramp up getting reviews make sure you are producing happy customers. Adding more negative reviews is counter-productive. Read the negative reviews you have now and decide if they are accurate or unfair. If they’re accurate, then you need to fix the problems first and then solicit more reviews.

Conclusion

Social media has become the most important piece to any marketing/advertising effort – yet it’s something that is not fully within your control. However, these tips will help you improve your social media standing and maintain a positive rating.

The storage industry has gone through an incredible period of expansion over the past two years – with about $10 billion spent on new construction in a handful of markets. A recent article called these markets the “poster child markets of oversupply”.

• Austin, Texas
• Dallas, Texas
• Houston, Texas
• Charlotte, North Carolina
• Nashville, Tennessee
• Chicago, Illinois
• Denver, Colorado
• Portland, Oregon
• Boston, Massachusetts

What does that mean? It means that you need to be careful that you are not following the “lemmings” and jumping into markets with a herd mentality. The old axiom of “buy when others are selling and sell when others are buying” is true for self-storage, as well. So be careful around these markets and stay alert to buying opportunities when they burst. As discussed below, one storage investor’s woes are another investor’s blessings.

M.J. Vukovich is a capital consultant for self-storage loans. And he’s one of the best in the business. We’ve been using him for years and are firm believers that having a professional obtain and negotiate your loan is the best way to go in today’s lending environment. Here’s what a capital consultant can do for you:

• Create your loan package.
• Create the list of potential lenders based on current appetite for these type of loans.
• Meet with these lenders and obtain offers.
• Give you an array of offers and point you in the direction of the best one.
• Negotiate the terms for you.
• Shepherd the loan to completion.

All of this costs a small percentage of the loan amount and is only paid upon performance.

Call M.J. for a free consultation and discuss your lending needs and options with him at (720) 758-9227 or email him at [email protected]. You’ll be glad you did.

David beat Goliath. And smaller storage owners are about to be in the same position in many over-built storage markets. With over $10 billion of new construction in some markets over just the past two years, there’s a meltdown that will be occurring in many markets in the years ahead. And smaller operators are in a great position to benefit from this shakeup.

Conrad Hilton summed it up

Following the Great Depression, Conrad Hilton (the founder of the Hilton hotel chain) had all of his newly built hotels foreclosed on by the banks. So he came up with a new plan that better dealt with the cut-throat nature of American business. He vowed that, going forward, he would never build another hotel from scratch, and simply wait for recessions to buy those newly built properties for a penny on the dollar. Does that sound like what’s about to happen to newly built self-storage facilities in over-built market?

And Andrew Carnegie affirmed it

Andrew Carnegie, steel-magnate and founder of what became U.S. Steel corporation, once said “problems are only opportunities in work clothes” and he was also a big fan of buying failed businesses for a penny on the dollar, which is how he built his empire. He looked at such failures by others as opportunities for his growth.

How to prepare for this opportunity

So if we all agree that massive over-building by some large storage portfolio groups will lead to certain collapse in some markets, how can you prepare yourself for such opportunities? Here are some thoughts:

• Know exactly what you want to buy (size, location, etc.) so you can move fast when you see an opportunity.
• Line up capital and lending sources so you know your capabilities in advance of making offers.
• Build a “deal funnel” to obtain massive inflow of deals to evaluate.
• Watch for opportunities as they come through your “deal funnel” just like a gold miner pans for gold.

Why smaller buyers hold an advantage

When you have a collapse in storage values, its those that own the properties that get wrecked the worst – and the over-building was the direct result of many larger storage operators. Effectively, those groups are disabled in the aftermath. In addition, larger groups take too long to make decisions, as everything has to be done by committee. But, perhaps most importantly, smaller operators are willing to sacrifice harder to get their foot in the door, and tackle projects that larger companies avoid. Their lower cost of operation and overhead, coupled with more gritty enthusiasm and work ethic than those that just work for big companies, makes smaller buyers the “power group” in times of economic hardship.

Conclusion

There is a coming collapse in the storage market in some markets, and smaller problems that may pop up in others. Smart investors will watch for these moments and take advantage of these business opportunities.