How much would it cost to buy huge forest of Oak trees? Likely more than you and I have to spend. But they all started with an acorn. An acorn that was free. To many people are wasting more and more good money trying to find the right “paid for marketing” that will make them oversized Self Storage Profits when they should be planting thousands of free acorns.
Take a look at this email I received from my manager last week. 8 Rentals in one day. Seven on the phone (notice the P for phone rental) and 1 walk in. Was this because we have a great manager? No, Kate is great, but this was just her third week on the job.
Was it because the nearby University of Connecticut is about to get out for the summer and all the students picked us because our prices are the lowest. Heck no, the guys right down the street rent a 5 x 10 for the summer for a total of $195 and we are $399 for the same summer rental.
So, what is the secret? We plant thousands of acorns every year. Here are just a few that led up to that one day of fun phone rentals. Which by the way are part of 150 rentals we will do in 45 days.
1 Our new manager of 3 weeks had a detailed manual that included rental scripts that must be followed.
2 Before she was hired Kate reviewed and practiced the scripts with us and agreed to use them word for word.
3 We did the hard work of role playing.
4 Our manual was clear it is our goal to rent over the phone to every caller. And if we do not, we get their number and call them back in 2 days.
5 On every call we promote our facility, “show them a unit on the phone”, confirm the size is the right size for them, provide the price and say “would you like to get one in your name before they are all gone”. Then we take a full month’s payments – we only rent – no reservations. FYI – next to none cancel and around 1 in ten transfers to a larger size.
6 Our manger is accountable daily and emails us every day detailing both the walk in and phone rentals and the walk ins and phone calls who did not rent.
To rent 8 units that day we had to more than be good at helping our clients finding the right unit for them. We had to get them to call or stop in, in the first place.
7 Month after month we add all move out emails and other town and university emails to our mail chimp site for our newsletter.
8 Two week earlier we sent out a mass email via mail chimp letting the UCONN students know we love them and would provide them a free lock if the prepaid for the summer.
9 Earlier in the spring we were the only self-storage to attended the University student fair. We handed out hundreds of cards and simply said have your mom or dad give us a call and we will take care of everything with them over the phone and they will just need to stop in and sign the lease.
10 For the last two weeks we had a table at two banks, one on campus and one in Town that highlighted our self-storage. We bought $200 of candy and other goodies to make sure we attracted everyone in the bank to our table. When my wife GP asked, did we really need to buy 50 lbs. of candy I reminded her each piece of candy is an acorn planted. If we rent just one extra unit because of the candy it will pay for all the candy. And many non-students will see our name one more time so when one day when they need storage they will think of us. And the great part is many students rent from us for 4 years!
11 We had already completed spring cleaning inside and out so both our employees and our renters are impressed.
12 Every morning we put out our Open banner and our sandwich board for thousands of people to see as they drive by. This month one side reads Spring is here! and the other “We love UCONN.
13 Not only do we have a huge candy bowl but we also have a premium candy like York Candy right next to it. Who could resist “Can you stop in this afternoon? I know you will be very impressed with our facility and I have York Peppermint Paddies with your name on them”
Have you been planting acorns day after day or just wasting money?
Why be motel 8 when you could be the Ritz?
By Marc Goodin
President of Storage Authority
Author of Cush Your Competition,
102 weeks of guerilla marketing for oversized profits for your self-storage.
From: Heidi Henderson, Executive Vice President of Engineered Tax Services
Many real estate investors are unware of how the top industry professional utilize the tax code to their benefit. And most think that their tax professional is aware of every aspect of the existing code to advise them of any applicable credits or deductions they are eligible for. In reality, the tax code is complex and expecting your CPA to know every aspect of it, is like expecting your family doctor to be able to perform heart surgery!
“Surrounding yourself with the right people and education on these topics are the keys to your success!
I am a real estate investor myself and through many years in tax and accounting I have learned from the best on how to apply every aspect of the tax code to create the most tax efficient real estate portfolio, leading to continued success.
Recent tax changes under the Tax Cuts & Jobs Act expound on the benefits of real estate investing. Taxpayers can now capture immediate deductions for business related tangible property, your depreciation can be front loaded, and for energy efficient buildings the available credits and deductions were renewed in February of 2018 and assets removed during demolition can be written-off or donated for a charitable contribution on your tax return.
These are just a few of the complex tax code sections which can make the difference between a profitable business, and a losing proposition. Below is an article outlining 11 Frequently Asked Questions about Cost Segregation, which is one of the methods you can apply to your property.
We partner with business owners across the U.S. and have worked on thousands of self-storage properties nationally. Give me a call today for more information and to discuss the some of the tax strategies that might be applicable to your business or property. I can be reached at (801) 689-0325 or via email at firstname.lastname@example.org
11 Frequently Asked Questions about Cost Segregation for Self-Storage Properties
By: Heidi Henderson, Engineered Tax Services
1. What is Cost Segregation?
Cost Segregation is the process of identifying personal property vs. real property, and individual building components for tax purposes, rather than treating a building purchase as one large asset. This determination allows a property owner to depreciate their assets over the useful life of each asset instead of assuming that the entire purchase amount applies to one long-term (39-year) asset.
2. Does my property qualify?
All investment properties, including self-storage properties qualify for cost segregation. When a cost segregation study is applied, you are telling the IRS that you are simply choosing one acceptable method for depreciation (MACRS*) vs. another approved depreciation method (straight-line). Both are acceptable, however MACRS requires an analysis to identify the value of each individual asset you own, rather than looking at your property as one large asset.
3. When does it makes sense to do a Cost Segregation study?
Cost Segregation can be applied to a newly purchased building, a newly constructed building, or a building you have owned for around 15 years or less. If the property is not fully depreciated (39 years is the length of normal depreciation), then there is an opportunity to change the method with cost segregation. Although any property can be depreciated under MACRS, the costs of performing a cost segregation study may outweigh the benefits if the property was acquired for less than approximately $300,000.
4. What items are reclassified via Cost Segregation?
Under straight-line depreciation a property’s total cost (less an allocation for land), is depreciated evenly over 39 years. Under MACRS the assets are identified and reclassified in 5-year, 15-year, and 39-year class lives depending on the IRS determination of its actual useful life. And whether the assets are used for your business use, or the basic function of the buildings use as a structure. Examples of 39-year property include; windows, walls, doors, roof, HVAC systems, plumbing, and electrical. Examples of 15-year property include exterior improvements such as; fencing, exterior signage, asphalt, curbs, landscaping, and exterior lighting. And examples of 5-year property are; carpet, appliances, specialty lighting, woodwork, unit partitions, individual unit locks and security, and business specific heating and ventilation systems.
5. Does the type of property affect the tax savings?
Some property types will have a higher reallocation percentage than others. Interior, climate controlled self-storage properties will see a higher amount than a shed-row or boat and RV storage type. The allocations are based on actual assets and values or each of the components within the property.
6. What information is required to do a Cost Segregation study?
Surprisingly, the information required to perform the study is limited. For a recent purchase, the closing statement or HUD is the only requirement. Blueprints are helpful but not necessary. New Construction projects require cost breakdowns and total costs for construction and development, but individual invoices are not required.
7. How do I choose a Cost Segregation provider?
Choosing a reputable firm is a vital to ensuring that every aspect of the IRS requirements are met, and in the case of an audit the report is upheld without disallowances or associated interest and penalties. The IRS Audit Technique Guidelines dictate that a physical site visit is performed, the analysis is performed by a professional with cost-accounting or engineering expertise, and the method of determining asset value is an approved methodology. Make sure that audit defense is included in your study, and that the final report offers complete detail over every aspect of your property. Choosing a low-cost provide may be tempting, but the ultimate savings, detail and support of a reputable provider will far outweigh any additional costs. And finally, ask for references!
8. Will I get audited if I do a Cost Segregation study?
Cost Segregation is not a “trigger” for audit. The IRS issued automatic consent for deprecation whether applying a change from straight-line to MACRS at the time of purchase or retroactive for a property you bought 10 years ago. This means that taxpayers are allowed to make this change with the approved forms offered by reputable cost segregation firms. However, in the rare case of an IRS review, rest assured that a detail report with the proper IRS approved methods and audit support will affectively defend your tax filing position.
9. How much does a Cost Segregation study cost?
The cost is usually based upon the type and use of the building, size, and location of the property. Beware of cost segregation providers who charge a percentage of the tax savings. The tax savings is relative to the entity type, number of owners, the year of acquisition and other factors, so the actual cash benefit can vary. Most providers will offer a quote along with projected tax savings, so you and your CPA have the information necessary to make an educated decision.
10. How much will a Cost Segregation study save me?
The tax savings realized with a cost segregation can vary depending on the type of building, your total acquisition cost, and length of ownership. Self-storage properties vary in type and size and may see reclassification percentages from 15% to as high as 40%. Request a detailed benefit analysis from a qualified and experienced firm who has a history with self-storage properties.
11. What does the Tax Cuts & Jobs Act (TCJA) passed in December of 2017 mean for my tax return?
The Trump administration passed the TCJA which is the largest tax reform bill passed in over 30 years. There are significant changes that offer tax cuts for real estate investors. The largest change being the adoption of 100% bonus depreciation for tangible personal property acquired after September 27, 2017. Tangible personal property is defined as assets with a useful life of 5, 7 or 15 years. Therefore, when cost segregation is performed to identify the personal property (5, 7 15-year property) apart from real property (39-year assets), it allows the property owner to capture bonus depreciation on those reclassified property and immediately expense the entire value in the year purchased!
*MACRS: Modified Accelerated Class Recovery System
There is an art and a science to presenting auto-pay to the self-storage customer but there is a tremendous value for both the customer and the self-storage facility.
The presentation of auto-pay is everything, how you say it, how you deliver it and the sub-conscious triggers the customer reads all work as a synergy to optimize your auto-pay program. With Storage Authority Franchising we have the system in place for you to maximize your revenue and streamline the process.
We love customers on auto pay because they save us time (for marketing) Typically only the few who put themselves on auto pay get on auto pay. Even if asked if they want to go on auto pay say no because most yes or no questions naturally end up with as a no. This one is a no-brainer. It just takes learning the script and techniques mandatory and one hour of training and the proper lease. Because people stay 2 extra months if they are on auto pay an extra 10 auto pays a month is worth $30,000 a year.
When presenting the hard copy lease, Storage Authority may be the only one who has this option on the front page of a lease making it easy to present and get a yes at just the right time. And no extra paperwork like every other facility. Of course, we had to pay a self-storage attorney to set it up to make sure we met the law, but well worth the investment.
As self-storage evolves, and we make the paperless transition the very wording on how you start the lease presentation will be critical to your success, ” All I need is your ID and the debit card you would like to keep on file.” As you swipe the debit card (debit cards carry less merchant service fees than credit cards) into the software you remind the customer their card will be debited on whichever date their move-in date every month and we will send an email confirmation. You automatically put them on auto-pay by just assuming they want the value of the program. Remember they are also reading your late fee schedule that is on your counter (*See Below example) as your working through the lease presentation. It’s expensive to be late in self-storage there is an immense value to the customer to automate their payment process.
For self-storage owners & operators, auto-pay is, undoubtedly, their best source for obtaining on-time payments. It helps lighten many of the biggest hassles that go along with operating a storage facility—namely delinquent payments, collection calls and lien sales. In addition, too, customers on auto-pay generally don’t think about paying that bill every month or scrutinize the dollar amount they’re paying too closely. Because it becomes just part of their monthly budget many will also stay an additional two months or more as noted earlier. Adding a rental increase also becomes streamlined and more acceptable for tenants enrolled in an automatic-payment system.
Take advantage of the “no late-fee guarantee” program use your tool on the counter to help educate the customer if there is any hesitation. Tell the customer how convenient it is to enroll. Also, be sure to ease their fears about any risks of keeping the card on file by letting them know your software program meets Payment Card Industry Data Security Standards (PCI DSS) and compliance. Customers cards are stored on an encrypted level where managers can only see the last four of the card.
Ultimately, the service should reduce your collection calls and lien sales, as customers on auto-pay will always make their payments on time. Plus, it’s another great service and valuable convenience you can offer your tenants.
Auto Pay Program + Late Fee Schedule
These should be outlined on a single laminated sheet and displayed on the counter or positioned in a plexiglass 8×11 frame very visible on the counter for the customer to read. Many self-storage operators fail to realize how valuable this is. Too often we forget to tell customers about our late fee schedule, or how they are guaranteed no late fees by enrolling in our simple, automatic, debit/credit-card payment plan.
How much of a collections issue would you have if most of your customers were on auto-pay? Quit asking new tenants if they want to sign up for it. Instead, make it part of the lease and sales presentation. For example, you can say, “Our customers love the convenience of our auto-pay program. All I need is your ID and debit card to get started?” More auto-pay customers mean fewer past-due customers and more streamlined revenue for the facility.
Money in the bank following the Storage Authority Franchising system.
who want a solid real estate investment for both income & retirement.
Business Owners & Professionals
who want to build a second reliable six figure Income.
who want a retirement they can count on and a generational business.
who want to have a business where they can work together.
Self Storage Owners
ready to take their business to the next profit level and crush the competition.
Why doesn’t everyone take advantage of the Storage Authority opportunity?
Because 99 percent are waiting for the “right time” to start a business. They are waiting for the perfect business. Don’t believe me? Just tell your neighbor you are going to build a self storage and they will tell you how lucky you are and “I was going to do that but………………..”
So that leaves us with the 1 percent who Declare “now is the time.” They took the time to research self storage and understand self storage is a solid business that can provide both a great income and a great retirement income. And they are ready to work to make it happen for them.
Self Storage development is just hard enough to keep it very profitable. Typically it takes $400,ooo liquid cash equity to get started. And takes time and work to get it built and profitable. Storage Authority Makes Self Storage Easy.
If you are a 1 percenter we would love to talk with you.
Storage Authority President Marc Goodin Shares Self Storage Secretes
By Garrett Byrd
Our Founder Marc Goodin continues to share his secretes and knowledge with the self storage Industry. His latest article entitled Customer-Centric Sales Techniques, Strategies for Creating Value and Trust is in the April 2017 edition of the Inside Self Storage magazine. Here is the link to subscribe nowhttps://goo.gl/EkS1za
Storage Authority Franchising is about owning your own hometown self storage business. And having the professional systems and knowledge to assist and guide you. We like to say You arein business for yourself but not by yourself. If you are thinking about self storage you owe it to yourself to contact Garrett Byrd at 941-928-1354 or Garrett@StorageAuthority.com to learn more about the Storage Authority Franchise opportunity.