Storage Solutions Blog

Twitter Essentials: Best Practices for Self Storage I have found this to be one of the best articles in regards to how Twitter can be used in our business. I must admit, I am still having a hard time forcing myself to use Twitter on a regular basis. But go ahead and follow us at @AMSMC

Storage Solutions web page has been completely re-done. To celebrate, the sites are offering some killer deals.

Check them out today at Storage Solutions.

Thanks again for all your support!!!

We would like to congratulate Tom and Melinda Swanson for earning the 2011 Arizona Self Storage Association’s Pioneer Award.

Tom and Millie met in Palo Alto, CA in 1960 when Tom first started in Real Estate. They moved to Minneapolis in 1967 where they built Single Family Homes, apartments and townhouses. In 1974, they moved to Scottsdale where they continued their residential construction business until 1977 when they built their first Self-Storage Facility. They decided to get into the self-storage business because they recognized the need as they needed a place to store their own possessions. From 1978 on, all of Tom’s business efforts were in the Self-Storage field developing properties for their partnerships while Millie continued to build custom homes until 1982.

Out of frustration with the bookkeeping end of the business, in 1982, they developed computer software to manage their sites. They realized early on that converting from a manual system increased income 8% to 10%. In 1983 they started Mini Storage Technology Corporation (MSTC) which became one of the largest management software vendors in the industry before they sold it to the employees in 1995. In 1982, the only software programs available to accomplish the task were in the $20,000 range. Tom’s goal was to create an affordable and workable system to benefit self-storage operators large or small. The early sales included the software loaded on an Apple computer. Most old timers in our industry fondly remember Millie as she was their primary contact for the MSTC dos management software. The list of clients included customers coast to coast and internationally in Canada, Brazil and France. MSTC was a leader and innovator and developed many firsts, such as the first computer to run both a management and gate-access system and later a wireless alarm system which is common place today.

In 1989 they started Arizona Mini Storage Management Company (AMSMC – Storage Solutions) when the company expanded through the purchase of Resolution Trust Corporation properties in addition to managing properties for others. Tom was particularly generous in inviting others into these partnerships that otherwise would not have gotten into our industry. In 1993 they entered the record storage business using some of the first projects they developed in the late 70’s. They had a similar bookkeeping and management experience and so developed management software for that business too. Tom had the reputation of mentoring many potential owners in the self-storage business which was just an extension of his personality. He was an avid reader and generously shared his knowledge of business, politics, live and golf with all. Tom helped with the formation of the Arizona State Association. Millie served on the Western Self Storage Association Board of Directors in the late 80’s and on the National Board in the 90’s. She also served on the SSA conference and education committees and co-chaired the 25th annual Trade Show in 2000 held in Denver. In 1998 they sold the management business and pursued their passion for golf while spending six months a year at their condo in Hawaii. Tom passed on in August of 2004, but Millie and her grandson, Justin, are still active as owner/investors in our industry.

US Storage News

Check out this site that has a ton of Self Storage related content!

Thanks again…

Working with Management Companies

The self storage industry has really come into its own as a real estate investment. The investor’s appetite for this product type has never been bigger. Many investors looking to get started in the self storage business have been involved in other asset classes such as office, retail, industrial, etc. other investors have never been involved with development. Those that have been involved with development in the past either believe developing and operating a self storage facility is no different than anything else they have been involved with before or they realize that self storage is far from the other development projects they have been associated with. In this article we will focus on the investor/developer that realizes they need help getting started and seeing their project through to success.

Understanding What you are Signing up for

Self storage is a retail business that has an underlying real estate component. It is this fact that sets self storage apart from most other real estate type investments. The business component of self storage is very similar to the hotel/motel operation. A self storage operation may chase 600 checks per month combined with a revolving door of new tenants moving in while replacing vacating tenants, similar to the hotel/motel operation on a daily basis. The strip shopping center, for example, has a long term tenant base that may consist of one or two dozen tenants that each have a lease from one to five years or longer.

Self storage users do some planning ahead but if you are looking to invest in self storage it is very important to understand that life events are the primary driver behind the reason why people use self storage i.e. moving, job situation, divorce, death, boomerang kids, lifestyle change, and the list goes on and on. The bottom line is self storage users need storage when they need it. You can give it away for free but if they do not need it you could have a very long, hard wait until your new self storage project is considered full (reaching stabilized occupancy).

The cost to carry a self storage project to lease up and the thought of tying up capital, for a longer than desired period, is not very appealing; especially when you combine that with the fact that you are running a retail business, 7 days a week, with employees, customer service issues, and public relations. One begins to realize the unappetizing side of self storage development. This is the reason why many well seasoned, savvy investors seek help when considering the development of a self storage facility.

A Full Service Self Storage Property Management Company can Help

A full service property management company specializing in self storage should be able to help you in the following areas:

Site and Market Analysis/Feasibility

Site Design and Layout

Entitlement Issues (Dealing with Municipalities, Planning/Zoning, Site plan Approval)

Coordinate/Recommend Lender/Financing Sources

Prepare Construction/Operating Budget/Proforma

Recommend Contractors/Metal Building Suppliers/Security & Software Systems/Other Necessary Vendors

Assist in Negotiating with Suppliers

Handle Construction Bid Process

Assist in Overseeing Construction

Maintain Detailed Accounting of Construction Costs/Funded Draws

Set up Office/Showroom/Operating Software/Computer Hardware

Oversee Operations once the Project is Open for Business

Many property management companies develop on behalf of their own account as well as for the account of others. By working with a self storage property management company that develops and operates self storage facilities for themselves, allows a new self storage developer the opportunity to leverage past experience to their advantage. This can save the new investor from potential costly mistakes that the property management company has faced in the past.

Do not wait until it is too Late

Waiting too long to bring in experienced help can be a costly mistake. Some new to self storage development start the process on their own only to bring in help after spending thousands of dollars in entitlement fees, architectural/engineering fees, attorney fees, etc. If this sounds familiar to you it is strongly advised that you sit down with a professional in the self storage business to review what you have done and where you are on your path to developing your self storage project.

There are many cases of projects being built or are proposed to be built that are not efficient in land coverage (F.A.R.) resulting in huge losses of potential income. Others have designs that are neither user or management friendly, creating an incurable functional obsolesce, which can only be remedied by spending a small fortune. If you have a design already penciled, let a self storage professional review it. This could be the best money you have ever spent. There are many instances where a self storage specialist has redesigned a poor initial design for a self storage layout, resulting in a substantial increase of the developer’s equity. The optimum time to seek help is during the site selection phase of your venture.

Selecting a Self Storage Property Management Company to help you with Development

Once you have made the decision to hire a professional self storage property management company make arrangements to interview several companies before hastily making a decision. Your candidates should be able to supply with at least the following minimum information:

Company History and the Background of the Officers/Key Employees

List of Properties Owned and Managed by their Company

List of Client References

Copies of Pertinent Agreements such as Development Services Agreements/Management Agreements

Accompany you on a Tour of their Latest Development Projects

A Break Down of the Scope of Services they Provide

You will also want to know the answer to the following questions:

Can you effectively service the area we are planning to build our project? What kind of services can you provide us in this area?

Joint Ventures

Would you consider a joint venture with me on this project? If so, what is you typical joint venture structure?

Site Layout and Design

Can you provide a site layout in C.A.D.?

Cradle to Grave

Can you deliver a turn key product? What areas do you not help us coordinate?

Enhanced Equity

How can I expect my equity to be affected by taking advantage of your services and economies of scale?

Competition

How do I know you will not help someone build across the street from me? How will this be handled if you are approached by a competitor? Would you be willing to grant some kind of trade area protection?

Fees and Associated Costs

What is your development fee structure? What is your property management fee structure? Are there other costs I should be concerned with?

Operations/Management

Who will be the signers on the trust accounts? How many days after the close of month end can I expect my financial statements? What information will you include with my financial statement? Do you meet all necessary state licensing requirements for property management companies?

There are many other questions that you will want to ask so do not be shy. You want to make sure you choose the best fit for your particular situation. You should contact any references that were provided to you and ask them any questions you have concerns with. You will want to also utilize other sources such as government entities that may regulate property management companies or trade sources such as ISS Magazine or the Self Storage Association to verify information provided to you.

Closing the Deal

When you have decided on the property management company you would like to have on your team, meet to discuss the following:

Timeline- this should outline a realistic time table to take the project through planning and zoning, site plan approval, and other entitlement issues. Outline key events and when they will occur such as timing and funding of a construction loan, when construction documents will be completed, when the bidding process will begin, expected permit dates, start of construction, completion of construction, etc.

Goals- it is imperative that you discuss you goals and the role you wish to play during the development process.

Negotiate- There may be certain elements that you have expertise, for example entitlements/site plan approval, if this is the case you may want to consider taking the lead in this area and negotiate to exclude this from the management companies scope of work for a reduced fee.

Communication Chain- You will want to establish who will be the point of contact for your investment group and who will be the contact for the property management company. This way there is a central point of contact on each side to receive and disseminate information to the appropriate parties. Establish how you will communicate with each other and how often.

Any key points or promises arising out of this meeting should be put in writing and signed by both parties.

Get it Built and Leased

Once you have inked the deal with the property management company you have selected be prepared to hit the ground running. Time is of the essence and your goal should be to stay on budget and to keep the project on your timeline. Every delay can cost the project a bundle of money and potentially cut into any interest reserves you have built into your loan. Selecting the right self storage property management company for your self storage development will create a lot more value for your project and increase your equity far beyond the fees and costs associated with employing them. After all you are making a multi-million dollar decision!

There is a new show on Spike TV in the USA about a few guys who go around to Storage foreclosure auctions and turn their purchases around into profit. Here is what Spike TV has to say about their show: “Every day in America, there are over ten thousand abandoned storage units that are put up for public auction. Each unit has the potential to be a goldmine or a bust for those who make their living hunting unclaimed property. This eight half-hour episode series follows two of the best prospectors in the business, Clinton “Ton” Jones and Allen Haff, in their quest to win auctions, acquire treasure and sell it for profit.”

It is definitely worth a watch.
Auction Hunters

Regardless if you’re an avid Tweeter or FarmVille devotee—or think social media is for teens and people with too much time on their hands—it’s here to stay, says social media experts.

At this month’s AdweekMedia’s Social Media Strategies conference, the consensus was that not only will social media continue to grow—but at an exponential rate and will soon permeate all forms of marketing and advertising.

What does that mean to you, the self-storage operator? First, it suggests if you’re not embracing social media at all, you probably should be. While it may seem daunting, there’s plenty of info on the Web and in the ISS article archives on how to use these social media sites for more than just letting your friends know where you were last night.

Many self-storage operators are already using Twitter, LinkedIn and Facebook as a means to communicate with a potential broader customer base. Logging into Twitter, you’ll find a number of operators, consultants, brokers and other industry professionals with followers.

Some are publicizing facility specials, while others promote industry shows or products. And while it seems it’s all self-promotional, it doesn’t have to be. Or, at least, it can be done in a subtle way.

In Kenny Pratt’s article, Four Ways to Make Twitter Work for You, he outlines simple ways self-storage operators can get the most business benefit from the time they invest on Twitter. Hint: It’s not about posting this week’s special.

Facebook, arguably one of the most popular social-media outlets, leaves many business owners confused about how to best use it as a marketing train. Like Twitter, blatant advertising turns Facebook fans off. Instead, businesses need to approach it as they would any marketing strategy—by building their brand. Learn how from this article from the ISS archives.

There are also several threads on Self-Storage Talk about the different ways self-storage professionals are using social media. Just plug social media, Twitter or Facebook into the search engine to find them, or start a new thread. If you’re not a registered SST member, it only takes minutes and it’s free.

Like all things technological, you can embrace them or get left behind. No one says you have to spend oodles of time on social-media websites, but as a business owner, you do need to be aware of what your competition’s doing, and determine the right online marketing strategies for your business.

Written by Amy Cooper, Insideselfstorage.com