Now (2015) is a great time to get into the Self Storage Business. For many it is the best route to the “American Dream”. Not only can you build a substantial income now, you automatically build a life style and an annuity income for you and your family.But it is one business where until now, there was not a well defined system to help the newcomer get started or for the independent to get to the next level. This site and my books were developed to help the new comer get started and the one or two facility owner better compete with the larger sophisticated self storage owners. Self storage is the most profitable real estate business but make no mistake about it, self storage is a big business and it it getting more complex every day. After you read this information you have three options to choose from:
1) Decide you are not ready to put in the effort yet
2) Decide to take the information here, learn a ton more information, work full time on self storage, build and market your own self storage by yourself.
3) Decide to take the fast tract by partnering up with Storage Authority where you will be in business for yourself but not alone. You will not have to reinvent the wheel. The Storage Authority experience, knowledge, systems and assistance will help you take care of the basics and more so you can spend your time building your business.
Below You will find following:
HIGH PERFORMANCE TEAM = LARGER PROFITS
GETTING STARTED – SEVEN MOST FREQUENTLY ASKED QUESTIONS:
NINE THINGS YOU CAN DO THIS WEEK TO GET STARTED ON THE FAST TRACK:
SEVEN THINGS NO ONE ELSE IS GOING TO TELL YOU:
SEVEN MARKETING FAQ’S ANSWERED TO HELP YOU FIND THE QUICKEST WAY TO HUGE PROFITS
WHY FRANCHISING? WHY STORAGE AUTHORITY:
HIGH PERFORMANCE TEAM = LARGER PROFITS
High Performance Self Storage Partners a must for a Premier 2015!
Have you seen The Profit on TV (just after Shark Tank)? Then you have heard Markus talk about the three important things you must have for a great business: Product, Process & People. And in reality if you have the right people the other two things will fall in line.
A High Performance Team is the one thing that is going to help you with all three of these things.
Here are some members of my High Performance Team that are more than happy share their insights with you. Remember to let them know Marc sent you. I highly recommend you call everyone of them this week, tell them about your goals and ask if they will be part of your High Performance Self Storage Team and what they can do to help you succeed!
If you want to:
Increase Your Monthly Profits,
Protect Your Investment,
Add Value For Your Customers,
Chose Self Self Storage for the Life Style It Can Provide,
Contact Our Storage Authority’s
High Performance Team Members Today!
Tell them Marc sent you!
The Industry Premier Management Software
This what users of Space Control will tell you: Space Control’s management software is a combination of the newest cloud technology and over 20 years experience in the self-storage industry. The two-part package includes, “Onsite” point-of-sale software with all customer information on one screen for better service at the rental counter. “Insight”, the comprehensive management software that owners can access from anywhere, completes the package. Designed for absentee owners, it offers Yield Management pricing, Automatic Rent Raises, an Employee Incentive Plan, and the best Audit trails in the industry…………………..
But this is what I want to let you know: It’s not just about the tons of great features Space Controlhas. The ease of the system, right benefits and flexibility of the management team is the true value of a management program.
Storage Authority chose Space Control for its Storage Authority Pro Management software not only because they have the best platform for a manager driven system (backed up by an off site owner) but also for their commitment to the future to help insure we have premier (most profitable) self storage facilities.
Management software companies may know a lot about self self storage but they do not know all the critical things important to an owner or how important certain functions can help double your profits. I always preach fast and easy as two of the most important factors in self storage. Space Control has this down when it comes to renting and renting options, taking payments and paying on line, understanding the clients file/history, collections, sales, & marketing, managers and owners reports, bookkeeping and accounting, automatic unit yield pricing for profits and much more.
Unlike with many companies, with Space Control we don’t have to wait several months for the next edition to come out to get new or improved features. Space Control uses feedback from customers to continually improve their software and these improvements are automatically included in your software with no action required on your part.
For new construction you want to make sure you do not wait until last minute to get Space Control. You should call or contact Lois Brown, (firstname.lastname@example.org – 800-455-9055) to get a demo and more details between now and certainly no later than when you submit your plans to the town for zoning approval. Let her know Marc Goodin sent you. Four months prior to completion of construction I recommend you start to get Space Control up and running, prior to the last minute open rush. This will allow you to make actual rentals as soon as construction is visible to the public. Tip: Make sure you have your phone rental script down. Rent when they call or they could shop around and you could loose them. We consistently rent between half and the majority of or rentals on the phone at our facilities! If you become a Storage Authority Franchisee we provided you with your Space Control Management Software as part of our package.
And most of you are telling me, while you are starting with one facility, your goal is more than one facility. Space Control had been developed for multiple facilities so will have everything you need when you build additional facilities!
“Because Space Control will help you make more profits and let you understand whats happing at your facility while you are not there, it is a huge part of making self storage fun and sexy! Come Join us! Marc Goodin
Diane Vizzo and company – http://www.hillcrestagency.com/self-storage/ is on my High Performance Team. She understands the self storage business, especially self storage insurance. You can count on her to help you understand your insurance options and be there when you need her. If you are just starting out or simple want someone on your side for a change give Diane a call now. 860-767-9190 Don’t forget to tell her I sent you. 🙂
‘Self storage franchising combines the best of what can make self storage such a fantastic business: the independence that the successful entrepreneur loves and the proven systems and resources used by the ‘big guys’ that improve revenues, profits and values. The smartest people in our business surround themselves with smart people and this new concept combines the true independent spirit with some of the most experienced professionals in our industry to provide affordable and effective policies, programs and procedures. Taking advantage of these combined resources is smart and forward thinking.’
Bob Copper President Self Storage 101
Bob Copper and company – http://www.SelfStorage101.com is on my High Performance Team. He has incredible knowledge on how to improve your operations from getting started to getting to the next level of profit. Maybe you or your staff just need a good how to self storage book or internet training seminar pick me up or maybe you need an on site consultation?
If your tying to determine if a site is suitable for self storage Bob is the your guy for site feasibility studies. He has several options depending on your needs. He tells it like it is. (He does not sugar coat it because he wants to sell you a building). Give Bob a call and introduce yourself and hear first hand what he does, even if you do not need his services today. I dare you and don’t forget to tell him I put you up to it.
Trachte is on my High Performance team. Trachte has mastered the art of developing self storage buildings that are designed, engineered and customized to to meet your needs. After you checkout the extensive information on their web site including their “investment & Development” section call your regional Trachte rep. I have experienced and enjoyed the Trachte difference many time and I recommend you call them early in the process. 1-800-356-5824 www.Trachte.com
“Trachte has long a standing relationship with Marc Goodin and looks forward to providing Storage Authority franchises top quality buildings. Storage Authority offers a one of a kind opportunity for developers.”
Steve Hajewski, Trachte Building Systems
There are many financial processes critical to a self storage business from categorizing construction components for the best tax advantages year after year to setting up your quick books/ financial reports. If you do not have a clear and concise day to day financial record keeping system in place or are not preparing for year end income taxes month by month you need help. If you do not have a qualified CPA, who is an expert in self storage accounting to help you with your financial processes, I recommend you call (775-828-0767) Jerry Jones the Self Storage CPA and tax specialist and add him to your High Performance Team. http://www.TheSelfStorageCPA.com
Do you hate calling around and getting your competitors rates? Do you know how your rates compare in your area? What do you say when a customer says “can you match the rate of xyz” at your competitors?
The answers to your pricing questions are at your fingertips with StorTrack. StorTrack provides you with your competitors’ rates, unit types offered and pricing trends, making reporting and pricing management less cumbersome. Pricing is the most important leverage in business for increasing your bottom line, don’t ignore it!
Try it for free for seven days – no credit card required. I know you will like what you see! Enter the code Pricing20 to save 20% off the cost! www.StorTrack.com
Pricing matters! I have had several clients who have increased their bottom line by $6,000 to $8,000 a month in just one year simple by learning the basic pricing principals!
www.OnTheMoveTrucks.com Are you looking for a competitive edge? Almost everyone has thought about having a Truck distributorship at their facility at one point or another. Many of us even gave it a try, only to learn it took a full time employee and we did not make a net profit because we were taking needed employee resources away from our Storage business.
Well now there is a very impressive alternative. A single rental truck you own or lease from On The Move. It gives you the best of all worlds. A single On The Go Truck allows you to attract new customers with limited effort and beat the competition for a net profit! CJ is on my high performance team is ready to help you. (800-645-9949) for more info and tell her I said hi.
Moving, Packing and More Products for More Rentals and Profit
“Supply Side USA is very excited about working with Storage Authority and its Franchisees, including providing a full line of Storage Authority Branded products.”
Rob Kaminski, Supply Side USA
Did you know a nice showroom full of Supply Side USA Products puts your customers at ease and thus creates a better chance of renting? We are selling value to our customers and a fully stocked office automatically lets the customer get that “just right feeling” that is required for them to choose you over the competition. The ladies rent the majority of self storage units and we all know they love “retail.”
As a Storage Authority Franchisee you will have your own Supply Side USA portal where you will find your branded products ready to go are great Storage Authority prices. You won’t have to figure out where to get your branded signs for your site – they will all be there ready when ever you need them! If you need help laying our your retail office for maximum sales they show you how for free.
If your building a new facility make sure it includes a large showroom. If you only have a small product area call Supply Side USA now and they will help you design the perfect display for the area you have. Everyone is always promoting self storage ancillary products and services. I can tell you without a doubt the number ancillary product are locks, boxes, moving and packing supplies. If you are not selling at least a couple of thousand dollars a month in these products you’re missing one of the easiest profits centers.
Make sure you have a huge wall rack of branded locks and learn how to make your customers happy by selling them a lock. Every year you can plan a nice winter vacation with the $3,000 plus from lock profits alone! Supply Side USA is on my High Performance team.
Self Storage Access Control and Security Solutions.
First question. Do you know what you are selling at your self storage? We do not sell material items (except locks of course as note above). We sell value to customers. We provide a service: A safe place to keep their stuff. Did you notice the two key words value & safe? Don’t go second rate on the most important thing to your customers. PTI has what you need. Don’t forget this is a new era of apps. I love the PTI app that allows the customers to open the gate with their cell phone from the comfort of car. Always think how can you stand out from your competition. Often it is a little thing like a cool app and great service.
One of the biggest construction mistakes I see is owners leaving the specific products up to the contractors and then they often end up with the inferior cheap products that have to be replaced down the line. Don’t let this happen to you call PTI Security Systems early in the design process so you can tap into their knowledge and experience. Make Sure PTI is on your High Performance team, they are on mine.
Personalized Promotional Items To Grow Your Business.
People often ask me what is the best marketing. They are looking for the marketing secret. Sorry to tell you that it does not exist. I have said it before and I will say it again. The best marketing is marketing! Familiarity makes sales. Often a potential customer will have to hear or see your name 10 or more times before your name automatically pops in their head when they need your services. One of the best ways to get your name in front of prospects is with logo products.
Every year I hand out over 3000 plus logo products from each of my facilities for huge returns:
Magnetic fridge calendars: wow – they (and their friends) see our facility name everyday.
Ice Scrapers: They see our name every winter storm.
Sunflower seeds: they think of us when they get them – again when they share with their spouse, again when they plant and every time a friend comes over and admires their sunflowers all summer long.
Rulers – pens – key chains – clips – and so much more!
You get the idea – the possibilities are endless. The best way to make them work is to hand them out all over town, not sitting in the office. Logo products are great conversation ice breakers and will lead to conversations about you and your business.
Remember people like to do business with friends and every time you hand out a logo product you will be making a friend. After you hand them out a couple of times you will realize people are waiting for your next visit and surprise.
Get Quality Logo Products on your High Performance Team and place an order today and every quarter for a record breaking 2015!
Magen Smith, CPA, Monthly Book Keeping, Budgets & Marketing Tracking.
What is one of the main reasons we all go into this business? Right Lifestyle and freedom. And that takes profits! Not only can Magen keep you books in order every month but also she can do so much more. She is an ex self storage manager turned CPA. So she gets it. Magen is on my High performance team.
Magen can pay your bills. And she makes it simple – you approve in her/your bill portal and they are paid.
Magen can help you track your operational assessments to make sure you spend your dollars wisely. You need to know where your marketing dollars are going and if they are paying off.
She will help you set both budgets and goals. You don’t get that with any other CPA I know of. Call her now to get ready for 2015 and get the time back you deserve. Tell her Storage Authority sent you.
Bellhops, www.getBellhops.com , is the new option in between begging friends for help and booking a ‘moving company’. Through our apps and online platform, we connect athletic students with people and businesses needing moving help and lifting labor. From our founding in 2013, to our launches in 125+ cities, Bellhops continues to bring trustworthy, hands-free moving experiences to individuals who have never before had a reasonable option. One more reason for your renters to love you!
Storage Authority has partnered with OpenEdge and Space Control to bring you an integrated payment processing solution loaded with time and money-saving benefits for you!
Get integrated payment processing with OpenEdge and receive:
- One-step payment processing.
- No payment gateway software costs.
- Online payment acceptance.
- FREE OpenEdge Support – provided by OpenEdge’ expert staff 24/7/365.
- PCI compliant OpenEdge Innovo platform.
For more information Contact:
Jared Kernodle | Partner Acquisition Representative Jared.Kernode@openedgepay.com
Toll Free: 800-774-6462 ext. 6615 or 919-463-7615 office | 919-909-7919 cell | 877-768-4991 fax
Optimize Your Auction Process with Locker Fox! www.Lockerfox.com
We combine leading-edge web technologies, a clean and simple user interface, powerful location-aware features, the industry’s first mobile apps, and even integrated Facebook and Twitter sharing to bring storage facilities and auction buyers together like never before.
No crowds on auction days
No batching for your auctioneer
A more efficient online process
Motivate tenants to pay & cure their lien
Engineered Tax Services www.EngineeredTaxServices.com
Tax Tools Every Self Storage Owner Must Know!
Did you know without proper cost segregation the average self storage owner is missing out on $40,000 to $60,000 in cash and that is just in the first year! Cost Segregation is the method of accelerating the depreciation of specified items within your property.
Self-storage owners are missing the boat when it comes to cash flow opportunities they can derive from IRS approved tax strategies. Recent regulations passed by the IRS, coined the Repair Regulations (or Tangible Property Regulations), have created a difficult and complex environment for U.S. businesses. These regulations, along with increased tax rates, have created a greater need for engineering based Cost Segregation analyses, which also aids in maximizing cash flow.
Jeffrey Greenberger, of Katz, Greenberger & Norton states, “I am often concerned that my self-storage clients do not take advantage of the potential for significant tax savings by properly cost segregating their self-storage facility assets. While there is an upfront cost, the savings can be immediate and dramatic, not just in 39 years, as some people seem to believe. I have no idea of the percentage of facilities that cost segregate, but I’m guessing it is extremely low.”
For your free consultation call Heidi Henderson directly at (801) 564-4464 or email her at email@example.com Today
Continue building your High Performance Team today and give my friends a call today for a free consultation. If I can help in any way let me know.
To Your Success!
SEVEN MOST FREQUENTLY ASKED QUESTIONS:
1. I do not have any self storage background. Can I build a successful self storage business?
Yes you can. In fact the vast majority of the 50,000 self storage business in the USA are owned by individuals who only own one self storage facility. They started out just like you and I with no self storage background. The great thing about self storage is that it is not complicated compared to most businesses. With research and some help along the way you can build a self storage business that cost less than most real estate businesses and other businesses. And best of all it produces one the most important things that many business never produce: a residual positive cash flow that can last a life time or even for generations. And its fun!
2. How much money (equity) do I have to have to build a self storage? (& How much will the bank loan me?)
Typically you will need 25- 40% of the development costs and the bank will provide a loan for the balance. There can be exceptions to both the low end and high end depending on the market and economy in your area, your business experience & credit rating, individual banks and other factors. It is important to meet with your banker early in the process. You do not even need a piece of property or facility picked out to meet with a banker (or two) to get some preliminary banking input.
Extensive self storage experience combined with the good project, along with the right bank can often reduce the required equity required. A preferred SBA lender can also help reduce the required equity. Storage Authority Franchising is considered experience and can guide you in finding the right lending source for you. www.StorageAuthorityFranchise.com
3. How much does it cost to build a self storage?
There are three main areas of cost that should be considered.
The first is the pre construction costs (or pre loan costs). These include engineering costs for site plans and regulatory approvals; bank fees for the loan application (loan application fee or points, appraisal fees etc.); and land option fees. While these fees are often considered part of your equity in the project you typically have to pay these fees out of pocket because a bank will not give you a loan without a Town approved project or bank loan fees paid up front. This is money at risk because there is no guarantee that the town will approve you project. So it is very important you do your due diligence regarding the “quality” (wetlands – easements -zoning – other restrictions) of the land and with the Town before you spend large sums for final engineer site plans. Often paying a local civil engineer to review the property and zoning regulations and provide you with a conceptual plan to review with the Town is money well spent. Typically this first group of fees can be in the range of $20,000 to $40,000 if no major problems are incured.
The second area of costs are the land and construction cost. These costs can vary greatly depending on the price of the land, individual land improvements and size and type of self storage facility. Land can vary from $50,000 to several hundred thousand. Individual land improvements vary greatly between sites. I own 3 self storages and each had distinct special land improvement cost. One site was relatively level with sand and gravel which had low site improvement cost. A second self storage was on on a sloped parcel which required an extra 3-4 feet of fill for most of the site. One property required $20,000 worth of soil testing for pollution and much more for soil remediation. Prior to reviewing and individual parcel and proposed development I would use a number of $35 per square foot of single story building. This is for your basic metal self storage buildings and does not include the cost of the land, special land improvements or other unusual cost that may be encountered. Two story building are typically at least double the cost of single story buildings.
This cost can be refined after you have a chosen a property and your local civil engineer has done a conceptual site plan. And once a final detailed site plan is completed you can have a contractor(s) provide you a construction estimate for a more realistic cost. It is typical to add 15% to contractors estimates for unforeseen extras that typically occur. Early on in the process, as soon as you find a piece of property I recommend you contact a building manufacturer to get input on the building design. They can also give you a proposal to supply and erecting the building. I use www.Trachte.com
because they make the process simple, and have a great product at a great price. You should go to their web site now and order their free developers :”How to get started” packet.
The third area of construction are the start up costs. If you did not include the office and maintenance equipment & supplies don’t forget to include them here. You are going to open your new self storage business with your typical operational costs (loan – employee – utilities – taxes ect) and limited rental income. Every month you may have put money into your business until you have enough rentals to pay for your bills. This can take several months to two or three years depending on a lot of factors. If you have done your due diligence and determined there is a need for the new storage facility, have a good location with suitable drive by traffic and are prepared to market the facility well you can significantly reduce the time to break even and make a profit.
I can tell you for the three facilities I built and own each have a different rent up time to break even – less than 1 year, 1.5 years, (and hopeful less than one year for the facility I just opened) I had a full time employee at each facility. Many experts in the field recomend you budget for a 2 year period to break even. Your two biggest operational cost after your loan payments are going to be your employees and property taxes. Early on you should meet with your local tax assessor or check what other self storage facilities in your town are paying for taxes so you are not surprised. An off the wall for monthly expenses for an unknown phase 1 self storage of 25,000 +-sf could be around $15,000 +/- 5k. So assuming You have a premiere facility with an average rental rate of $100 per unit means you would have to 150 units rented to break even. The average income per unit in the US is around $80.
Typically second phases cost much less to build because you have already paid for the engineering, the property, staff and the break even point comes faster.
4. How do I get started?
Start looking for land! Read my book Your Self Storage: Planning, Design, Construction. Or if your want to buy and existing self storage call a national broker. Either way you have to become educated in self storage and the best way is on the job. If you are serious about making it happen soon you will have to find several hours a week to build your new business. It takes at least two out of three things to build a self storage empire:
5. How many square feet should I build? (& How much land do I need?)
There are some business theories that should be observed when deciding how much storage to build. One is having an exit stagey. Typically the highest prices for self storage sales go to facilities that are purchased by reits or other large self storage opperators. Typically they want facilities of 50,000 sf and larger.
You don’t want to have a facility that is so small that only proves self storage is a good fit for the area and attracts a larger self storage operator to make the majority of the profits, after you did the hard work. The exception to this is if you are considering your self storage business as side businesss that you built on land your already own and run out of your existing business office.
Self storage rent up is so much faster (and rents for more per sf) when you have an office with regular office hours. To pay for a manager and make a good profit and pay for all your efforts and risk you can use a preliminary estimate of 40,000 sf ( for all phases) until you have done all the due diligence for your specific project.
You do not have to buildout the entire project in one phase and in fact phasing is highly recommended. It will save you the added expenses of having a large supply of unrented units. A 50,000 Sf project could be build in two or maybe 3 phases depending on the storage needs of a specific area.
Of course the key is calculating the square footage needed for your area and subtracting the existing square footage and already proposed (but not constructed). For most areas where there are numerous self storage facilities to choose from. The draw area is typically a 3 to 5 mile radius and the demand is typically 4 to 6 sf per person. These factors do vary significantly from place to place. You can call a local self storage appraiser (make sure they have a background in self storage appraisal) and ask what numbers they use in your area. Your bank will typically require an appraisal of your project by their approved appraiser and your bank may give you the names of their appraisers to contact for this local information.
The amount of land you need is highly dependent on the local zoning regulations and and specific land features. Both should be checked out early on with attention. Often you may need the assistance of a local civil engineer. A single zoning regulation or band of wetlands can make a property unfeasible for self storage. If you have no zoning constraints, no utility constraints and great land (not odd shape, no wetlands or water bodies, no easements, no steep slopes over 3%), you can use an initial estimate of 10,000 -15,000 sf of single story ground access self storage per acre of land. Please beware there is no such perfect piece of land – at least I have not found it yet.
6. What are some of the site plan desing flaws you have seen?
- No office.
- No sales area in office or sales area too small.
- No easy access to customer bathroom.
- Customer has to go through the security gate to get to the office.
- No 4 foot man gate to access the storage area without opening the main gate.
- Access key pad not aligned up with gate.
- Located in industrial park or out of the way locations.
- Space between buildings less than 24 feet.
- Larger units (especially car storage units) not located to the outside of the project where wider access drives can be provided.
- Not enough landscaping provided. A lot of landscaping is a great marketing feature.
- No windows or small windows in office.
- N0 or not enough site lighting. A light at the site entrance is a nice touch.
- Storage units not visible from the road.
- No security measures.
- To many dead ends.
- Loss of units due to poor layout.
- No small units and or not enough variety in unit sizes.
- No locker ( 5′ x 5′ x 4′) units provided.
- To meet town approval building some architectural features actually make a metal building more noticeable and unattractive.
- Phasing not provided on the approved plans requiring applicant to return to the commission for approval.
- Site signage not on the plans requiring the applicant to return to the commission for approval.
- Driveway width and or radius at the Town road to small. Minimum radius of 25 foot and a preferred entrance radius of 45 foot should be provided.
- Access for RV’s not large enough.
7. What are some important things I need to know when we open the doors.
- It takes time for people to realize you are open for business and marketing done now will pay off more than any other time. Marketing should start when no later than when you start construction.
- It is normal for the first and often the only question for prospects to ask is “what is the price”. This does not mean anything – it is simply the only question they know to ask. Price is not the major reason most people rent.
- You need to write down your facilitys uniques selling features and benefits today so you can let your clients know.
- Hopefully you have a web site before you open – if not make it a priority.
- You need to “show the unit” to rent it.
- You need to be the expert and help the prospect come to their own conclusions – you can not just simple tell them.
- You need to ask prospect for the rental or the reservation.
- You need to learn people objections and solutions to these objections.
NINE THINGS YOU CAN DO THIS WEEK TO GET STARTED ON THE FAST TRACK
1. Do a personal review to make sure you have the knowledge, sufficient time, energy and money to get off to a great start.
2. Join your local State Self Storage Association and attend meetings.
3. Subscribe to the Magazine Inside Self Storage and read everything you can about self storage.”
4. Read the Zoning and Wetland regulations from the Town(s) you
may purchase land in. Meet with the Town Engineer and Planner
to discuss the permitting process for a self storage facility.
5. Find a commercial realtor to help you with your search for land.
6. Meet with your banker and ask about self storage loans.
7. Meet with a local engineer to get rough time frames for site design and approvals.
8. Stop at every self storage you pass by and talk to the owners. Let them you are thinking about starting your own self storage. Some owners will be reluctant to say much but many will be happy to give you tons of useful information.
9. Check out the premier self storage building manufacture www.Trachte.com
You will be amazed how quickly you start learning invaluable information.
For the three self storage facilities that I built and presently own it has averaged 1.5 to 2 years from when I initially decided to build a facility until we opened. While this may seem slow it is quite fast. First you have to decide for real to build, than find a piece of land that fits your needs, and negotiate an option to buy. Then, your engineer has to design the project and get approval from the local municipal boards. After the regulatory approvals you have to do more detailed designs. Next, you have to choose a contractor(s) and, of course, you than have to build the facility. The more realistic you are about your time schedule the better prepared you will be, and certainly it will be a lot less stressful.
EIGHT THINGS NO ONE ELSE IS GOING TO TELL YOU ABOUT:
Banks often have two very restrictive loan covenants that can be very detrimental for a new self storage business.
One is a debt service coverage ratio (DSCR) that is required before they will convert the construction loan to a permanent loan. Typically a DSCR of 1 means you can pay all your bills and loan payment without putting any additional money into your business. You can look up the definition of DSCR but each bank may have a slightly different calculation. Often banks require a DSCR of 1.25 or even 1.3 before they convert your construction loan to a permanent loan. This might be possible for some commercial real estate developments where they have clients signed to rent the majority of the space prior construction. Typically a self storage will not meet a DSCR of 1.25 until you are over 60% or more rented. If you do not meet this ratio they can and will ask for you to repay the loan immediately or provide significant additional money to reduce the amount borrowed so you meet the required DSCR.
In your initial negotioations with the bank you need to either make sure there is either no DSCR requirements or it is low ( 1.1) and you have a significant time period ( 1-2 years) to reach it.
The second restrictive loan clause is the prepayment clause. Some banks will require you to pay them for all the bank profits losed due to the early termination of the loan. This can easily be in the tens of thousands. Other banks will have a prepayment clause that requires a penalty paid ( up to 5% of the loan) if the loan is payed off in the first 5 years (5% the first year…….1% the fifth year). This is typically more acceptable since it is only for 5 years and goes down for each year of the loan.
There are many reasons you may need to pay off the loan including, selling the property, refinancing due to better rates or personal reasons. Or maybe you want to build phase 2 and your bank will not loan you the money because they have to much self storage loans on the books.
Ask your bank the DSCR requirements and repayment penalties early on, even before you determine interest rates.
If you do not meet the typical 30% equity requirements a properly structured SBA loan may be right for you.
The less detailed the construction specifications, documents and plans are the more extras there will be. If it is not specifically in the contract it is an extra. If it is not specifically detailed what materils or brand, the contractor will use the lowest quality products. If a construction time frame is not provided in the contract it will take much longer than the verbal time frame the contractor gave you.
If any quantities are estimated such as gravel, a unit price installed for extra quantities should be provided. A unit price should be included for possible unknown items such as ledge or dewatering footings.
It should be clear if design or permit fees are included. Detailed soil testing and analysis should be done as part of the design process to prepare a better design and to reduce surprises.
All contracts should clearly state no extra work will be done unless a change order has been signed by both the contractor and owner. This will not prevent extras but at least you will know what they are before the work is done and look at options.
TOWN OFFICIALS/REGULATORY APPROVALS:
Some town employees, elected officials, planners, engineers may give your project the nod one way or another before it is in front of the regulatory commission for approval. But beware the vote that counts is the regulatory commissions vote. Sure it is best to have the Town staff on your side BUT always be over prepared for every regulatory meeting. Have all your guns ready! I’ve designed hundreds of commercial site plans (as a civil engineer) and brought them before the various commissions for approvals. I have seen many crazy things you would not believe. Be prepared. I always strongly recommend the four following things for your commission meetings, as a minimum:
1) Bring your engineer to present the project.
2) You (the owner) should always go to the meetings and be prepared to tell them a little about yourself and your self storage dream; what a good job the design team has done to answer any concerns and to tell them you are excited to be part of the business community. Sometimes agreeing to a condition right at the meeting (by the owner) can make an approval happen vs. a denial. A second round at commissions after a denial can take a very long time and be very expensive.
3) Bring colored plans, details, photos, samples, your lease, reports ect – be the professional.
4) Bring as many people from town to speak in favor of the project and have them speak before the opposition!
REAL ESTATE AGENTS:
They are not engineers, zoning experts or development experts and they can be miss leading. They will not be held accountable in any way if the property is not suitable for your needs. You need to do your own due dillagence.
You do not have to meet any minimum offer price they suggest.
Hire for people skills and energy first and self storage knowledge last. You can teach self storage skills but it is very hard to teach people skills and positive thinking.
Your manager is your number one asset and a good job description and Company manual/policy is important part of the interview process.
It is human nature to be upset when the deal is changed. You have to be very very specific about the managers job responsibilities, duties, and your companies policies at the interview stage and it should be in writing. Too often interviews are done off the cuff and informally. While a good prospective manager may have never worked in a self storage before they have to be a business person, a people person and be self motivated. And just because they say they are, does not make it true.
Any job changes or even clarifications after a manager is hired will be disruptive. Even common sense things like not using the computer for personal social sites during the day should in the company manual. The self storage manager has to be the jack of many trades from face to face offsite marketing, cleaning, calling for late payments, accounting, maintenance etc. The more an employee understand the responsibilities of position before they are hired the better the chances of success.
I even recommend you have a prospective manager read my book Crush Your Competition between the first and second interview. It will help them better understand the marketing and customer service aspect of being a manager. Getting their thoughts on the book will help you determine if they are right for the position.
SELF STORAGE BUILDING MANUFACTURES (FREE CONCEPTUAL SITE PLAN):
Their conceptual site plans often do not take into consideration all the land features and zoning regulations. A trust worthy manufacture will tell you their plans are a starting point and you typically need a detailed site plan by a local engineer that is familiar with the local Zoning regulations and has more details about the land.
It is your job to educate and teach your employees. It is your job to get the phone to ring and get prospects to stop by your self storage facility and your managers job to rent units to them.
One of the most overlooked basic site plan issues is the requirement for a proposed driveway sight lines. Typically a suitable sight line has to be provided for any commercial development. Since this is a safety issue it is hard to get a variance or approval if not met. Required sight lines are based upon the speed of the existing traffic (not the speed limit) and start in the 250 foot to 350 foot range and surpass 1000 feet for greater traffic speeds. I have seen plans well underway before it was realized that the required sight lines could not be provided. I know boring stuff – but the civil engineer in me could not help it.
SEVEN MARKETING FAQ’S ANSWERED FOR THE NEW SELF STORAGE OWNER:
1 Do I need a Website?
Yes good web site designed and maintained with SEO in mind is critical. Your website should be designed so you can easily make changes. Your web site needs to be mobile as well. Make sure potential renters can rent on line and make payments on line.
2 When should I start marketing in the development process?
Your marketing starts with finding a good viable location with lots of traffic. Once you have a property chosen and approvals from the Planning & Zoning Boards it will be time to start your marketing full blast. It is going to take you a few months to get up & running but now is the time to prepare for your grand opening marketing blitz.
3 What should be my very first marketing steps?
Choose your company name and purchase a web domain name at the same time to make sure both are available.
Build a Simple one page site website early on while you are working on the details of your real web site. At www.godaddy.com you get a free one page web site you can build yourself when you buy your domain name.
You should get a phone number & make sure your phone number will be in the next printing of the phone book.
Put up a coming soon sign on the property as soon as construction starts. Don’t forget: Now Taking Reservations,your phone number and web site.
Start “your Company facebook site & keep everyone updated on your progress with construction pictures.
When your business opens your initial marketing should include:
– Post card mailings. Normally I would not recommend post card mailings but brand new facilities are the exception to the rule. For new facilities it is important to get the word out you are now open for business and you are different.
– Website up & running.
– Facebook site – postings every day or two.
– One on one visits to the business community & community involvement.
– “Site noise” – signs – gardens – banners – flags- sandwich boards.
– Referral cards & joint promotions with local business.
-Method for renting storage units after hours. Renting on line a must. www.syrasoft.com Can help you out with this.
4 How do can I learn more about self storage marketing?
Crush Your Competition provides over 230 pages and 101 weeks of marketing ideas you can use now to rent more units and make more profits.
Do research and see what others are doing. Read self storage magazines. Visit the on line edition: Mini Messenger or Inside Self Storage magazine. Read marketing books. Take notice of how the rest of the business world is marketing every time you read the paper and every where you go.
5 How far in advance should I prepare my marketing?
Your marketing should start in ernest as soon as you get you local regulatory approvals.
A new facility should prepare specific marketing plan for prior to opening and one for two a month marketing blitz after you open. Then prepare a 12 month marketing plan. My Book “Crush The Competition” will give you over 100 weeks of great marketing tips to get you off to a fast start including the various simple components of a good marketing plan.
Marketing is an on going process. In addition to your marketing plan and you will be constantly be adding to your marketing month by month and week by week.
Don’t forget to make a month by month marketing calender for some of your basic and seasonal marketing!
6 How much money should I spend on my marketing?
The key to a good marketing budget is not always how much money will be spent but how much time will be devoted to marketing. For marketing to be successful it has do be constant and be a part of everyone’s job description.
Excluding the development of initial web site I would recommend a first year budget of around $5,000 to $7,000. I want to point out this assumes little to no money is spent on old traditional marketing such as yellow pages or adds in the news paper that have minimal returns. After the first year many experts suggest a marketing budget typically around 2% of the gross income.
I do no necessarily adhere exactly to the marketing budget being a percentage of the gross income. Simple put if the money does not produce renters it should not be spent for the sake of spending the budget. And If I spend money on a marketing project that provides clients at the rate of $50/renter I will do it over and over and over again.
Again simple low cost guerilla marketing works better in our business than the typical traditional marketing. People don’t respond to one more 25% off sale.
7 Whats your best marketing insights?
People will pay for an experience as much as for the product itself. People will pay for what they love, including outstanding service and for an environment that is pleasing. People do not come to self storage because they want storage. Learn what people need and want and you will be successful.
The Money is in the relationship. No body raves about average. Find ways to wow and surprise your customers everyday and the sky is the limit.
Why Franchising? Why Storage Authority?
“Self-Storage” a large and growing market place that has attracted major investments from Wall Street to private equity, yet independent operators still owns the majority of locations nationally. Those operators and ones considering developing new facilities are becoming increasingly aware of the complexity of the market, with the dominance of big box REITS entering their markets and capturing market share. This is the reason we developed “Storage Authority”, the first and only self-storage franchise system in the nation. The Company has developed a platform designed to enable the individual/ independent self-storage owner to leverage the influence, branding, purchasing power and backing of a national corporation while still maintaining independence.
“Franchising means being in business for yourself but not by yourself.”
The founders of “Storage Authority” are experts in both the self-storage industry and corporate franchising and know firsthand the challenges that companies and individual like you face every day in this evolving market. There is a gap that exists in the management and technology between the independent operators and the major public corporations “REITs,” which explains why the latter are gaining market share. Under the “Storage Authority” banner, the existing small operators and new investors will benefit from the brand’s proprietary Systems to provide the support and knowledge they are missing. This is an industry-first franchise system for self-storage owners that will provide state-of-the-art proprietary systems that will allow the independent operators not only to compete but also win over their larger competitors, with High Performance:
- Sale and Marketing
- Revenue Enhancement
- Quality Assurance
- Employee Training
- Operational Support and Manuals
- Local and National Branding
- Development and Construction Assistance
- Purchasing Power
Scott House and Marc Goodin founded “Storage Authority”. Mr. House is a recognized expert in hotel franchising and development, serving in an executive position with several nationally recognized brands. Mr. Goodin, a nationally recognized expert in self-storage, is a civil engineer by trade, self-storage developer and consultant with more than 25 years’ experience in the design, management and ownership of self-storage facilities as well as a noted author of several books related to self-storage and contributing writer for the industry’s largest self-storage magazines and websites.
Together we will revolutionize the self storage industry with the extraordinary power of Franchising. In the United States alone, 41 cents of every retail dollar is spent at a franchise operation. This is quite astounding when you consider that fewer than 5 percent of small businesses are franchised! Studies claim that franchised businesses enjoy a success rate up to three times greater than that of independent businesses. Why not be a part of the American Dream and be a part of history in the making!
There is no need to reinvent the wheel. The Storage Authority will provide the system support so you will be free to build your business faster. Typical franchise benefits Storage Authority is passionate about:
- Best of both worlds – on your own but not alone.
- Easier entry into the business.
- Easier to acquire financing.
- Better site locations.
- Immediate professional image.
- Learn the business faster and more effectively
- Start with a proven business plan.
- Save time and money by avoiding costly mistakes.
- Pave money through group purchasing power.
- Profit from experience and knowledge of the franchise network.
- Build more customers through brand awareness.
- Build more customers through group advertising.
- New business opportunities through ongoing research and development.
- Increase equity and resale value.
- Higher success rate than independent businesses.
To get more info on how “Storage Authority” can benefit you, please visit www.StorageAuthorityFrachise.com or contact Marc Goodin, 860-830-76764 direct line or marc@storageAuthority.com or Scott House, scott@storageauthority or toll free at 1-844-33-STORE.