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Interview with Storage Authority Franchise 0wner, March 2018

StorageAuthority_Horz_logo

 

Marc Goodin, President of Storage Authority LLC, 

Ed, you must be excited to have started construction on your self-storage facility?

Ed: Absolutely. We have put substantial time and research into this project and the team is excited to open Storage Authority Houston-Walters Rd.

Marc: First I want to congratulate you and your wife Jenny.  It was not that long ago we met as strangers in a Houston hotel lobby and you shared your goals with GP & I.  Now we are friends and you are well on your way to making your self-storage dreams come true.

Can you provide us a short background on yourself?

Ed: I do remember that meeting with you and GP and it has been a pleasure working with you all on this project. I have been in the transportation industry working in an executive role for many years and I have also been involved in a few technology startups, but I always have had a passion for real estate.

Marc:  I know you are all ready to starting your marketing for your grand Opening.  What is your projected construction time?

Ed: Approximately 6 months

Marc: How helpful was the Storage Authority preferred Houston Area real estate broker Richard Anderson?

Ed: Richard was both a resource and an advisor through the entire process. He has an extensive commercial real estate and development background, so his experience was invaluable.

Marc: How many acres did you buy? And How many square feet of self-storage did you get approved?

Ed: We bought four acres of land and will be building a 60,000 sq ft facility in two phases.

Marc: You and I did some conceptual early on and then once your offer was accepted we worked together with your architect & engineer to come up with the final layout for both the buildings and the individual units.  It’s a tradition civil engineers (like myself) get a little tough on Architects but other that did you feel the Storage authority process helped you understand the options and choose the right layout for you?

Ed: Yes indeed. You were involved in all reviews of the design process and we made many updates to the plans that gave us a much better final layout that I am confident is positioning us for a strong opening.

Marc: You actually had a very smooth design and approval process but what surprised you the most about the design or approval process?

Ed: Although the internal side of the design/approval was manageable, like any real estate deal I believe staying creative and alert to the details of the transaction is critical. We encountered several hurdles finalizing the deal that brought us to the close.

Marc: What advice would you offer a new franchise owner starting the design process?

Ed: Tap into Storage Authority’s experience and knowledge, while being sure to be mindful of local storage development trends. Bounce ideas off of Marc and collaborate to develop the best solution.

Marc: Obviously getting a loan is one of the very important steps of self-storage development.  How does it feel to have your first multimillion-dollar loan?

Ed: Exciting and challenging. I believe the due diligence that we performed, feasibility studies and local research were all keys to forming a solid working partnership with my lender.

Marc: Many people don’t realize there is a lot of work between the site plan design and having the final construction bid & permits the bank requires.  Sometimes inexperienced developers wait until after final site plan approval to start, the building design by the Architect and getting complete bids.  You had your Architect and Contractor on board during the site design process.  Do you agree this was critical for your project?

Ed: It was essential. I believe the site design process is essential to understanding the full scope of a deal’s feasibility. 

Marc:  What did you find the most challenging so far and why.

Ed: Keeping a detailed checklist, timeline and prioritizing all of the items was a challenge as we neared the final stages of the project. Large companies have teams that manage this process, and, in our case, it was me and the Storage Authority team.

Marc: Did Storage Authority meet your expectations? And what can Storage Authority do better to assist the next Storage Authority Owner?

Ed: Storage Authority exceeded my expectations. As for what can be improved, you all are already doing it. From enhancing your web platform to providing new operating guidelines your team is innovating to help me the other Owners be successful. 

Marc:  Thanks for share your experience and thoughts. One last question for now.  Are you excited to start your self-storage marketing and renting up your facility?

Ed: Marc, we are ready to get this one leased up, so we can get back to work with you and the team on our next project.

New Sign SA


Houston Rendering

 

The Storage Authority Marketing & Sales Advantage for Higher Profits!

Why don’t most self storage implement a marketing plans?  Simple it takes a lot of self storage marketing experience, time and money just to develop a marketing and even harder to get your staff to implement.  This is great news for Storage Authority Franchise owners because not only do we know what works, you will have your  sales and marketing plan ready day one but even more important is we have the secret sauce of how to implement a successful marketing plan.

The Storage Authority Marketing & Sales Advantage for Higher Profits!

 We Bring the Ritz Carlton Experience to the Self-Storage Industry!

Simply put Storage Authority Platforms & Systems makes for happy customers and allows Storage Authority Franchise owners to charge premium rates for higher profits.  Storage Authority Franchises are the market price leaders, often renting up much faster at rental rates higher than their competition.

Overview

Sales and Marketing is 50% the environment and 50% people driven. Storage Authority Franchise owners start with the next generation facilities designs and the platforms, systems, tools, training, manuals and a detailed facility-specific marketing plan.  The Storage Authority Manager driven system is backed up by both the franchise owner and Storage Authority experts available 24/7. Storage Authority has replaced the losing one-month free marketing strategy (which costs a facility over $50,000/yr. in profits) with “it just feels right” feeling, sales and marketing.

The Storage Authority over the top sales, marketing and customer service philosophy is shared in detail with every potential franchise to confirm they believe in our marketing strategies and plans and are ready to embrace them before they are approved.

Manager Training & Marketing:

 Managers are hired for their friendly personality, and sales and marketing abilities and are taught the Storage Authority sales and marketing.  Some examples items managers learn starting day one:

  • The Storage Authority standards and systems must be followed. Storage Authority is available to help and will do regular inspections and checks to help each manager and owner succeed.
  • Individual facility Unique Selling Features.
  • What makes us different.
  • With every feature a benefit must be provided and often an action. Never “we have 10 sizes” but rather “we have over 10 sizes so you only pay for the space you need.  Let’s go take a look at a couple of units and find the right size for you.”
  • We are not in the self-storage business but rather in the business of being remarkable, wowing our customers and providing over the top customer service. Storage Authority managers are trained how to be exceptional without giving discounts.
  • Customers are looking to solve a specific need or problem. Storage Authority managers learn how to determine their needs, so we can rent more units.
  • Renting units at a premium price is about building trust.
  • We are the experts: We quickly assess the unit size range a customer needs and show them a unit.
  • People enjoy doing business with people they like and trust. Storage Authority takes every opportunity to provide the “it just feels right” feeling for more premium rentals.
  • Self-storage typically has a three-mile radius customer base. Storage Authority uses state of the art Geo Centric Target Marketing for 3 Mile Domination. (And maximum results for the least amount of time & money).

Storage Authority managers have detailed scripts they must learn and adhere to including the following scripts:

  • Walk in Script: Introduction: shake hands – name – show a unit – confirm a unit -ask for sale (one extra rental per week = $93,600 in profits a year)
  • Overcoming concerns & asking for the rental again script
  • Phone rental script.
  • Completing the rental agreement script.
  • May I have your number (to follow up) script.
  • Follow up script
  • Autopay script – for an easy extra $30,000 a year profits and more time.
  • Insurance script
  • Disc Lock script for a safer facility and more profits
  • Box & product script
  • Thank you, script
  • Rate Script ($15/month average higher rent for 500 units = $90,000 in profits a year.)
  • Before & after hours kiosk & website have their own scripts as well (one extra kiosk/website rental per week = $93,600 in profits a year)

Storage Authority managers have a list of daily, weekly & monthly marketing duties they must adhere to that is completed because they are completed regular they become a habit. Examples:

Daily

  • Walk site twice daily for security and ensure the facility is super clean.
  • Contact at least five customers a day.
  • Call at least one business a day to introduce Storage
  • Follow up daily with past prospects.
  • Walk the site daily – check units & facility super clean.
  • Social network posting.
  • Ask for referrals.
  • Ask for online reviews.
  • Sandwich board & banners out at street side daily.
  • Constantly remind the customer on every contact they are special by providing the little things that count –Example: free soda or bottled water carried out to them at their unit on a hot day.
  • Carry customer products to their car.
  • Visit renters on site.
  • Provide over the top remarkable service.
  • Candy bowl overflowing.
  • Offer free use of our “commercial car wash” vacuum.
  • Surprise their customers.

Weekly

  • Visit local business 2 hours every week (10 businesses a week)
  • Weekly marketing project – often co-marketing projects with local businesses.
  • 101 weekly marketing projects are provided in Storage Authority Founders Marc Goodin best-selling self-storage book CRUSH your Competition
  • Facebook Friday special.

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Monthly

  • Improve drive-by impressions
  • Visit top 40 business monthly
  • Volunteer 4 hours a month on company time.
  • Each month meet, email, mail a different major customer resources such as real estate agents, funeral homes, town hall, police dept., car dealers, universities, attorneys ect. and teach them how and why to refer to Storage Authority self-storage.
  • Monthly Marketing project.
  • Monthly marketing calendar used for month specific marketing for example:
    • Visit, email, and mail in October for winter vehicle storage
    • Pumpkin giveaway in October
    • College Campus marketing in March
    • High School car was in May
    • Free hot dog & Hamburg lunch cookout 3 times a year
    • Plant flowers in spring
    • Holiday marketing

Quarterly

Special Marketing projects and new marketing projects.

Storage Authority New Generation Facilities

  • Minimal lighting replaced with brilliant LED lighting.
  • Keypad entry replaced with cell phone app entry with geo-fence.
  • Multiple ways to rent & pay including high-tech kiosk at every facility.
  • Management program, security, gates & cameras all are cloud-based to detect problems & resolve immediately, even from off-site.
  • Over the top landscaping provided to provide the “just feels right feeling” as a customer drives in.
  • Free use of exterior “commercial Vehicle vacuum for clients.
  • Large professionally design monument & building signs. Rent 24/7 Here kiosk signs.
  • Customer Coffee bar. Free coffee, bottles of water and soda.
  • A Remarkable oversized retail office that provides that “just feels right” feeling.
  • Remarkable landscaping.
  • Free Wi-Fi for our customers.
  • Additional or specialty services such as wine cellar, power for car storage or pharmaceutical reps, extra secure fire rated rooms, handicap rooms.

STORAGEFINAL2 Storage Authority Mulbury FL

Storage Authority New Generation Service:

  • Our motto: shake hands, call them by name 3 times and ask for the rental 3 times.
  • Great customer service replaced with over the top remarkable service.
  • The best guarantee in the business.
  • Clean, replaced with spotless and beautiful.
  • Staff empowered with solutions to solve problems immediately.
  • Staff provided the resources, so they can do a better job and get more done in a day.
  • Staff regularly secrete shopped to confirm Storage Authority Standards are met.
  • The Staff has uniforms and dress codes for a professional appearance every day.
  • The Site is walked two times a day to keep spotless and lock checks. (renters sometimes lock unit open)
  • Every customer is treated like a Million dollars on every touch.
  • Bringing the Ritz Carlton experience to the self-storage industry.
  • We understand customers are looking to rent and we make it easy for them to do so on the first visit or phone call. And if they do not we will call them back in 1-3 days.

Storage Authority provides:

  • Geo centric market.
  • 24/7 Marketing & Sales hotline to assist franchisees.
  • Systems and platforms to be professional starting day one.
  • Marketing materials and sample marketing letters for different groups.
  • Marketing & Sales start-up training and ongoing training.
  • State of the art website and SEO.
  • Operations & marketing manuals.
  • Storage Authority has multiple vendors on board to provide the best customer service including movers, valet service, tenant insurance providers, merchant providers and more.
  • Storage Authority is constantly reviewing options from the self-storage industry, other industries, and our franchisees to provide more options and systems to gain additional renters at premium pricing and to better serve our customers.
  • National brand marketing.

Storage Authority New Generation Marketing

  • Both High Touch & High-Tech Marketing.
  • Social marketing daily on Facebook and other social networks.
  • PPC marketing-lease up accelerated.
  • Online rentals and reservations.
  • Rent here 24/7 Kiosks.
  • Every renter given the opportunity to make $30 and give $30 to a friend with our referral marketing.
  • $17.95 locks on sale for $12.99 means every customer buys a lock.
  • Autopay with 90% penetration.
  • Paperless contracts/receipts for customers who want email copies
  • Phone rental calls automatically recorded to management software for swift follow up.
  • Text marketing & payment collections directly from management software.
  • Employees empowered to help drive business.
  • Employees are educated on networking for profits.
  • Free Rental truck for new renters.
  • Seasonal marketing: festivals, holidays, winter car storage, campgrounds, college students, etc.
  • Special marketing promotions with local realtors since they represent the highest proportion of self-storage tenants, someone moving.
  • Phones answered by on-site manager 1st (most knowledgeable) then rolled over to call center.
  • Manager is the highest common denominator (vs the lowest for the REITs) for the closing the rental. Starts with the on-site manager answering the phone vs an out of town call center.
  • Storage Authority employees are kept active and engaged with a purpose to help them drive better results.
  • Owners are part of the local community and a large part of the sales and marketing team
  • Home-town self-storage creating a value to the community & local businesses
  • Cross marketing and promoting fellow businesses in three-mile radius
  • Storage Authority Value coupon envelope for every customer who takes site tour. Envelope is filled with local businesses discounts to promote community relationships & compound referrals.
  • Welcome cards and emails with referral bonus on move in’s and thank cards and emails with future discounts when our service is needed again on move out’s.

Storage Authority -Target Marketing Partners:

  • Moving Companies, Truck Rentals (that don’t provide self-storage) & Senior Move Managers –

Co-operative marketing and referral partnerships opportunities

  • Real Estate – Realtors / tittle companies / mortgage/ Home Inspectors / Staging / Designers

Great for cross-marketing

  • Apartments / Condo HOA’s –

For their move-in Packages – Self Storage Rack Cards with a coupon for move in packets, helps         leasing consultants overcome an objection of downsizing to an apartment.

  • Senior Communities – 55+ Mobile Homes / Assisted Living & Independent Living

Do they do move in Packages?  Resource Center?

  • Senior Care Providers – like home health care services. Cluttered homes are a safety hazard and they can recommend storage is they don’t want to part with the items.
  • Child Centers – Daycare /After School/ Recreational like ballet, karate, sports: – Families need storage
  • Restoration Companies/Disaster/Construction Companies – Emergency cleanup and store items able to salvage while the home is being restored.
  • Pharmaceutical Reps—They will target climate control units that are central to their distribution location, that will receive packages for them and store their sample drug inventory, marketing materials, and literature.
  • Insurance Companies –

Auto/Boat/RV – (their clients may need a place to store these) Homeowners – Buying/Selling –      they call their insurance provider – may need temp storage or downsizing.

  • Bankers and Attorneys—They are a perfect source for referrals and often need your self-storage services for time-sensitive record keeping complying with their industry regulations.
  • Schools – Public & Private / Elementary – High – Families & Faculty need storage

What marketing opportunities with local school to participate in.

  • Teachers – Teacher Lockers to store supplies during the summer and keep home clutter free.
  • Colleges – Focus April & August – Student Flyer – Students use storage between summer semesters. Lockers during the school year to keep personal items locked up.
  • Funeral Homes/ Crematoriums

Families need quick storage to clear out the house for sale, time to grieve and then go through stuff and decide to keep or give away.

  • Local Businesses / Restaurants / Dr. Offices / Retail / Thrift Stores – store extra inventory, business records, catering supplies
  • Laundromat, pizza places, etc. Look to see if they have community boards, place to put our display – Get lots of traffic.
  • Home-based businesses – HVAC/Sales/Accountants/etc. – We accept package and deliveries, store inventory, equipment, business records.

Self Storage State of the Union-Tips you can use Today!

February 2018 Newsletter

2018 Self Storage State Of The Union

New Construction is the Story of 2017 & 2018!

Self-storage records were broken in 2017 and looks like even more will be broken in 2018.  52 Million square feet of new self-storage may sound like a lot, but unless you are in one of the top 10 metropolitan cities it will have little effect or even a positive effect on your Storage Authority Facility. 40% of these new facilities were built in just 5  cities.  And take one of those cities, Miami for example, they still need new construction to meet the demand. But the immediate concern is when you build 2 – 200,000 sf facilities on the same side of town it is going to increase the rent up time from 24 months to 48 months. The 1000 new facilities equate to a 2-3% increase in the number of facilities but if you look at the average over the last 10 years it is well under 1% growth leaving unmet demand in many locations throughout the US.

In 2017 many operators exceeded their 12 – 14 month projected rent up timetables. And vacancies remain at or near historic lows with increased rental rates.

Taxes:

Whether you like or hate Trump the good news is the new tax codes provides immediate tax savings for savvy self-storage owners. Now if you do component depreciation the previous 5yr – 7 yr and 15 yr component depreciation items can be depreciated in the first year!

Future Development

So what does this all mean?  For the REITs and large developers who want to add 5 or 10 or more facilities to their portfolio, it means it will not be easy or cheap in 2018.  The self-storage facility inventory for sale continues to be very low and continues to be priced high. The large players like to be in metropolitan areas where they can have multiple large facilities and these are the areas where the bulk of new facilities were built in 2016, 2017 and will be built in 2018 and 2019.

For the individual investor and Storage Authority Franchisee all the new construction and associated abundant news is good news in many respects as it is bringing in new technology and new renters using for the next generation self-storage facility.  As long as you are looking to build a single facility outside of the major metropolitan areas, you have the opportunity and luxury to take your time and typically find a location where there are no new facilities in your 3-mile radius.

The new growth has spurred a lot of self-storage technology growth that will make your facility more renter friendly.  This allows you to rent for more and allows you do more with fewer employees.  As the new self-storage quality and security standards are increasing so are the number of people who want to rent at a new generation facility vs an older facility.

Also, the new technology allows us to do a mini demand review in 15 minutes which only a year ago would take two days. Check out https://www.unionrealtime.com/radius.html it will cut your research time by 90%. Let James know Marc from Storage Authority sent you.

Future Profits

Many self-storage will not Cater to the Modern Consumer!
The self-storage world is in the middle of going cloud-based and customer base. In a few short years, we have a two-tier self-storage world. Motel 6 vs the Hampton INN or a $1.99 coffee at Dunkin donuts vs the $4.99 coffee at Star Bucks.  The world needs both but you have to decide which one you want to be a part of and the profits from.  The High Tech – High Touch model may take a little more work but you will make substantially more profits

Timing

For most new developers it will take longer to develop a new self-storage from the ground up if you are not multi-tasking all the time.  The Vendor capacity has not caught up with the new development demand so 60-day building designs are taking 120 days.  Building delivery times for many manufacturers is 6 months.

Even bidding has gone form 30 days to 90 days.  In some cases, the bidders have so much work they are not doing the proper work to keep the bids low but rather making a quick estimate and adding 20 or even 30% to the price.  Or they bid the plans your provide which often means they are bidding 75% of the job leaving 25% as extras.   In the past, they would have contacted you to make the bids complete.

Tips You Can Use Today:

  1. Even with great demographics and self-storage demand, a new large nearby competitor can double you rent up times.
  2. In 2018 it is going to be much easier to find good locations for single story facilities than multi-story facilities without
  3. If you are looking for land the new internet-based tools that provide the existing self storage rates, locations, square footage, climate control sf vs non climate control square feet, populations, mile radius maps and the existing self storage square footage per person on a single page will turn two days or research into 15 minute review so you can quickly look at more sites. See Radius for more details on internet research.

SA DE Ease logo smaller 1

As part of our Dynamic Ease Self Storage Development Series, we help our franchisees around the development landmines, including finding land, designing, financing and building a premier self-storage facility and to understand the options and prepare accordingly.
_______________________________________________________________
If you want to learn more about Storage Authority Franchise there is a wealth of information on our website www.StorageAuhorityFranchise.com  Don’t forget to check out “Why Storage Authority” and our blog/newsroom. Then the next step is to apply on our website or email or call Garrett Byrd (Garrett@StorageAuthority.comor Direct 941-928-1354)

Vendor Highlight

Select Merchant Solutions is the approved preferred Credit Card Merchant provider for Storage Authority.  After a lot of research and firsthand experience, the choice was easy for many reasons. First, we have unbelievable pre-negotiated rates for all our franchisees which will save you $$ thousands per year compared to the other options and the rates are guaranteed.

Everyone touts customer service but few ever provide.  The entire team at Select Merchants Solutions is ready to help us 24/7.  And even better than that we have our own customer Storage Authority National agent John Berry that understands the Storage Authority platforms.  I have tried the others and their guaranteed rate disappeared in the first year and our promised agent turned out to be a random person after waiting on the line for several minutes.

It may sound corny but Select Merchant Solutions really is a small group of professionals with the long-term goal to help us succeed. I am sure their service is why they have been voted best of the best year after year. When compared to the international conglomerate’s alternatives, the difference is huge.

Don’t forget to read the Tips you can use today below to learn if your merchant provider is ripping you off.

$$ Saving tips you can use today

 

  • Take a look at your current and last several Merchant bills to see if it has something to the effect “there may be new fees and new rates to better serve you” and if you object your option is to provide the 30-day notice you are leaving them.
  • Simple take you merchant Account bill from a year ago and compare it to last months bill.  Chances are very high for the same amount of money processed the bill is significantly higher now due to new rates & fees. Time to change?
  • Exchange fees are much lower for debit cards.  So it is important to let your managers know this so they can get used renters debit cards when possible.  A change in your rental script may be required.  ” our clients love the convenience and no late fee savings of our Automatic payment plan.  If you have a debit card I can get you started now”

Industry News & Tips You Can Use Today

Tips

  1. Marc Goodin’s Self Storage Development Book has been updated for 2018 with over 200 development tips.  Available on Amazon or email Garrett@StorageAuthority.com before the end of February for you your free copy.
  2. There are incredible new software programs that can provide the 3-mile competition and the existing square footages, rental rates. population, existing square footage of self-storage per person and much more.  Want to know more email Marc@StorageAuthority.com & Check out Radius.
  3. The SBA standard operating procedures have been updated for 2018 which require owners to manage their own facility, which means most owners who use a 3rd party management company will not be able to get a SBA loan.  Storage Authority franchise has been approved by the SBA.
  4. Two pieces of equipment I find most facilities missing that would help them save time and keep the facility cleaner for higher rents are a cordless DeWalt vacuum to clean units and a $200 rubber maid clean cart available on Amazon.
  5. 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.  As you start lease presentation “All I need is your ID and the debit card you would like to keep on file.” As you swipe the debit card remind the customer their card will be debited on whichever date their move-in date is every month and we will send an email confirmation. 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. 
Self Storage News
2018 will be the first time self-storage security becomes cloud-based.  This means several things such as automatic updates and gives us the ability to access our keypads, cameras & our gate systems from off-site to assist our clients after hours and keep an eye on our facilities 24/7.

Self Storage Articles

New self-storage facility in Broward, FL sells for $15.7M

The seller paid $2.9 million for the 3-acre property in 2016. Records show it scored $8.2 million in construction financing from Stonegate Bank in October. The 84,000-square-foot, climate-controlled facility was completed earlier this year and is made up of two buildings – one two-story building and one three-story building.

All in Build price $11.1M at $132.14 dollars per square ft.

Sale price $15.7M at $186.90 dollars per square ft.

Assuming all numbers are factual seller will net $4.6M in 15 months of developing and this is before one unit is rented.  If the developer would have taken the time to lease the facility up he could have doubled his profits!

The death of the shopping mall meets self-storage development

Goodbye Macy’s, hello self-storage.

Long considered anchors of the shopping mall, many department stores are undergoing a long, painful death. That has left mall owners scrambling to find suitable tenants to fill the large empty footprints left behind. Enter self-storage.

Department stores are slowly withering, as the internet and other apparel retailers suck the life out of them.
*Sparefoot Storage Beat


While conversions are a great option it is not easy to find the empty big boxes as they are often offered to a list or preferred developers before they are offered to the public for sale.

With Storage Authority on your team, we will help you every single step of the way, from finding land to operations, to driving your revenue year on year.  If you have a question we have the answer, we will help get you developed and lease up faster than if you were to go it alone. Team up with the experts to maximize your profits.

ARE YOU READY?

Click here to Get Pre-Qualified to Begin your Journey to Financial Freedom with Storage Authority Franchising!

“You cannot change your destination overnight, but you can change your direction overnight.” ~ Jim Rohn

Recent Storage Authority Blogs You Will Enjoy!

Complete Storage Authority News Room 

Self Storage the Art of the Auto-pay

More big box retailers closing – Think Self Storage Conversions!

Recent Storage Authority News Letters

Storage Authority -Jan. 2018 Newsletter- SBA Lending Updates

December 2017 Newsletter. Let the experts help you find Land. Storage Authority & Morrow Hill

November 2017 Newsletter: When should you start your self-storage construction financing plan?

 

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Storage Authority
677 N Washington Blvd.
Sarasota FL 34236

www.StorageAuthorityFranchise.com         Garrett@StorageAuthority.com
1-941-928-1354

Chapter 8 – 10 things to consider to find an A+ Site

Screen Shot 2018-02-10 at 3.05.19 PM

 

  1. Location, Location, Location. This is the single most crucial factor in the success of a self storage business. The majority of your rentals will come from drive-by traffic. Out of the way locations typically struggle to get customers compared to main street locations. The best properties are on a main road with an average daily traffic volume of at least 10,000 vehicles per day with a preferred average daily traffic volume of 20,000 plus vehicles per day or greater. These are often State roads. Of course, due consideration must be given to surrounding population and how much of the potential renters should be proportioned to existing or other planned self storage facilities nearby. Often you can get roadway traffic counts from The Department of Transportation.

Think retail. Would you put retail on a back road or behind another development? No and the same goes for new self-storage developments.

  1. Unmet Self-Storage Demand is just as important as location! For a quick first total demand review, you can use 8 square feet of self storage demand per person, in a 3-mile radius. To get the unmet demand the square footage of the existing and planned self storage facilities in the 3-mile radius will need to be deducted from the total demand. For rural areas with little competition you may draw from a larger area. For large metropolitan areas of high population, the demand area may be smaller. Higher population density is often better because it is easier to have better service and out market the competition and get more of your share of renters than find renters that do not exist.

Too many people tell me they are about to build self-storage on land they own or located because self storage is needed in the area.  And they are right about half the time. Not a good enough percentage to move forward with a multimillion dollar investment. In the end, new developers are going to need help to make the final decision. But you can rule out some properties with a bit of effort and determine which property in an area would be the best one to choose for a feasibility study.

First you need to determine the existing population.  The population can be provided by many realtors or is often provided with many property listings. There are also several on line programs that can provide the population.

The unknown is the demand of square foot of self-storage per person.  And there is not one size fits all locations correct answer since demand can and does vary from state to state and even area to area within a state. Demand in the end is not a square foot per person but rather a square foot/person where facilities reach equilibrium (90% -+ full) at acceptable rates.  In other words, demand cannot be determined in a vacuum and must be used in conjunction with a review of the existing market occupancy rates and prices.  Be careful not to assume full means there is a need for more facilities.  Full with a regular 10 x 10-unit renting for $70 is not a good sign while 10 x 10’ renting for $160 is a great sign.

For many urban areas where there are numerous self storage facilities to choose from the draw/competition area of 3-mile radius is commonly used.   And the demand of 8+_ sf per person can be used as a temporary starting point.

So, if the 3-mile population is 30,000 the total self-storage demand would be:

30,000 people x 8 sf/person = 240,000 sf of self-storage needed.

Next you need to determine the location, number and size of the existing self-storage in the 3-mile radius.  Most novices underestimate the number of nearby facilities.  You can use google earth pro or “google nearby” to help you find the 3-mile facilities. On google earth pro you can draw a 3-mile radius and visual search for the self storages.  For a given address on a google map you can enter self-storage in the nearby tab and it will show the nearby self storages. But it does not go over town lines, so it is tricky to get all the facilities. This is considerable work to make sure you get it right but can often give you a quick count.  You may be able get the existing square footages from the land records or scale from google earth pro, again a lot of work.  Or you could use a real rough estimate of 50,000 sf of self-storage for each facility with a square footage check as part two of your demand study.

So, if you had 3 existing self storages in the three-mile radius you could temporarily assume that: 3 facilities x 50,000 sf/each = 150,000 sf of the existing demand has been met.

The needed demand for this case would be:

The total demand of 240,000 sf – 150,000 sf existing = + 90,000 sf. demand needed.

You would also need to subtract the demand for any facilities under construction or in the approval process.

You can see a sample mini demand study at the Storage Authority News Room

The good news is there are programs that can quickly determine the population and the existing self storages and even the square footage of the facilities, so the existing and unmet self storage demand can be determined quickly as part of a preliminary study.

One developer who recently contacted me did his own demand calculations.  When I emailed him back our check of his findings with an online demand review he said “ Wow what you did in 10 minutes took me over 2 day to do by hand.”

Below is a screen shot of the Radius program we use to determine the existing self-storage demand & population.  It also does a ton more, from providing the existing self storage square footage, the names of your competition and the rates of your competition.

The program is available at : https://www.unionrealtime.com/radius.html

I suggest you set up a demo with James de Gorter the co founder of Union Real time. Here is a link to set up an appointment on his calendar  https://calendly.com/radiusteam/radiusdemo

Screen Shot 2018-02-10 at 3.04.43 PM

 

This location is a 3-mile radius review for one of the FL Kmart locations closing this year.  While it shows the existing self-storage is 7.36 sf per capitol (see bottom left hand side) the key is the fact that there is only 0.69 sf/person of climate control.  So, this is a great location to investigate further for a big box conversion to climate control self-storage.  If you want to learn more about this program or even conversions email me at marc@storageauthority.com

Of course, Storage Authority and our national brokers will help find and review your potential sites, saving you mega hours.  Better yet we will even help you determine the best areas to look for land in your neighborhood.

The occupancy of the existing facilities (and their rates) can tell you a good deal about the local market demand.  You should stop by a couple and call a couple to get their rates and see if they will tell you their occupancy even before you start looking for land.

In the end, there are many important factors in addition to demand so a feasibility study is highly recommended. For your planning purposes, each can cost $6,000 to $7,000.  If you need preliminary assistance with your initial investigations or need a recommendation for a feasibility expert email me at marc@storageAuthority.com and I would be happy to help.

  1. Dry flat usable land with no restrictions can typically support 10,000 to 15,000 square feet of 1 story self storage buildings per acre. I recommend you use 10,000 sf per acre before you have done your due diligence. I have not found many parcels without restrictions of one kind or another, so it is prudent to do significant due diligence to determine if a parcel of land is suitable for your needs and to determine a fair purchase price of the land.

The shape of the land, topography, wetlands, drainage, flood limits, neighbors, building design, and zoning requirements can have a significant impact on the final building square footage. Some towns, for example, only permit 50% impervious lot coverage for the buildings and pavement, other towns do not permit a new self storage within 3 miles of an existing facility. Regulated wetlands setbacks or wetland buffers often vary from 50 feet to 150 feet from the wetlands in many locations. On site storm drainage detention, if required can require a half acre or more land. High parking requirements in some towns can also limit the amount of buildings.  In other words, the regulations can significantly reduce the amount self storage permitted. Often self storage is not even permitted in residential zones and other zones.

  1. Typically, you will be looking for 4 to 5 acre or larger parcel of land with few constraints or unusual zoning restrictions for a 50,000 sf one story facility. Don’t overlook the importance of walking the entire property before you make an offer. Water, wetlands, watercourses, steep slopes, easements (overhead wires), abutting uses can sometimes be observed on a site walk.  If you have a civil engineer you are working with, ask him to walk the site with you. It will be well worth his fee, especially if you do not have experience with land development.
  1. Many self storage building manufacturers will provide a conceptual layout plan. This is a good preliminary start, but remember they often do not take into consideration all the land feature restrictions or zoning restrictions.
  1. Early on in the due diligence process you should have the wetlands delineated on the site. Of special concern are vernal pools, special breeding areas, that often require very large buffer areas. Endangered or threatened species should also be reviewed early on.
  1. Consider the limitations and cost of steep sloping land before making an offer. Because single story buildings are often long and because they are only 24 to 30 feet apart they require a relatively flat finish grade. Buildings can be stepped down, but only so much and this also adds to the cost. Filling or excavation on steep slopes can cost tens of thousands of dollars, sometimes more.
  1. Once you find a parcel that appears to meets your qualifications, I highly recommend you have a local engineer do a conceptual plan for you. Ask them specifically about all the utilities, including water, sewer, drainage, and storm water detention. Make sure they tell you about any zoning regulations that may be of concern.  Easy access and street views are two important items to attract more renters.

If you don’t have city sewer you will need extra land for a septic system.  If you do not have city water, you will need room for a well and significant building fire walls will be required that will add substantially to the project cost.

  1. Remember to review the local design and approval process in detail before determining the purchase option time frame. I recommend at least a 6 to 8-month option period to get your approvals, if possible. I also recommend that you include a 6-month extension clause, even if you have to pay to execute an extension.  To get the extension clause approved by the land owner you might have to agree to submit site plan application to the Town by a certain date to show you are moving swiftly forward with the project.
  1. The best sites do not always have a for sale sign on them. We are having great success finding off line parcels.  Fallen down signs, friend of a friend, word of mouth, or land record research have led to best parcels.  I knocked on doors. I called them and told them I was interested in buying their land and asked if we could meet.  If they ask the price you are willing to pay, ask if you can walk the property to help you determine the price.  It often takes two or three meetings of no’s to get to the yes. In all three cases, no one had to pay a realtor’s fee. And even better, they were purchased below market rates.

Screen Shot 2018-02-10 at 3.04.56 PM

5 acres were used on this 9-acre site.  The rest of the land was not usable.

Self Storage the Art of the Auto-pay

StorageAuthority_Horz_logo

 

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.

 

SA Auto Pay

Storage Authority -Jan. 2018 Newsletter- SBA Lending Updates

January 2018 Newsletter

SBA Lending Updates

The Small Business Administration has issued new Standard Operating Procedures (SOP) for 2018. While there are several changes the major one is the requirement that employees be hired and paid by the owners and owners must have oversight of the employees.  Essentially this means that if you decide to go with a management company you can NOT get an SBA Loan.

The difference between the required capital for an SBA loan and a traditional loan can be huge.  For new self-storage construction a SBA loan typically requires 10 – 15% down and a traditional bank typically requires 30-40% down,  So for a phase one $3,500,000 loan, it means an equity requirement of $400,000 for a SBA loan vs $1,200,000+_ for a traditional loan.

A message from our President

I could list all our vast accomplishments in 2017 and outline our many goals for 2018.  It would be impressive but it is not what is going to motivate you to take a leap of faith and start your own business.  Instead, I am going to get right to the point, you can make it happen in 2018 but you have to be ready for the journey.  As I learned a long time ago:  If it is to be it is up to me  (and a bunch of smarter people on my team.)

While you are compiling the facts I encourage you to always be learning from the insights and encouragement of others.  One of the daily blogs I read is by Seth Godin.  Below is a portion of two recent blogs by Seth that may encourage you to make your dreams come true in 2018.

Enjoy the Passage of Time!
Marc

How much is ‘smarter’ worth?

No new costs, no new machines, no new resources.
Just smarter.
Smarter about the process, about the effects, about planning. Smarter about leadership, about management, about measurement.
How much is smarter worth?
In my experience, smarter is almost always a bargain, something you can buy for a lot less than it’s worth.

The power of the possible

Next year is almost here.

And doing what you did this year probably isn’t going to be sufficient.

That’s because you have more to contribute than you did this year. You have important work worth sharing.

To reach your goals, you’ll probably need more effective and powerful ways to tell your story, get clients, gain market share and serve your audience.

As part of our Dynamic Ease Self Storage Development Series, we help our franchisees around the landmines, including finding land, designing, financing and building a premier self-storage facility and to understand the options and prepare accordingly.
_______________________________________________________________
If you want to learn more about Storage Authority Franchise there is a wealth of information on our website www.StorageAuhorityFranchise.com  Don’t forget to check out “Why Storage Authority” and our blog/newsroom. Then the next step is to apply on our website or email or call Garrett Byrd (Garrett@StorageAuthority.com or Direct 941-928-1354)
 

Vendor Highlight

INSOMNIAC Self Service Kiosks are Storage Authority’s approved kiosks.

To be competitive you need to rent and take payments night and day and having a kiosk is not a choice.
There are several Insomniac models to choose from to meet your needs and price point. Storage Authority’s National rep, Sheri, is always available to make sure Storage Authority Franchisees get the best pricing and the right model.

Shari Klein
Business Development Manager
OpenTech Alliance, Inc. | 2501 W. Dunlap Ave., Suite 255 | Phoenix, AZ 85021
Main: 602.749.9370 | Direct: 602.324.8678 | Mobile: 561.777.5099
Email: sklein@opentechalliance.com

If you are not planning on a kiosk you simply do not understand the value and the math.  Literally, it will pay for itself in the first year. And then renting just 1- 2 units a year, will pay for the kiosk maintenance and program and the rest is pure profit for you!.  No more worries when you have one manager and two clients in the office because the kiosks can take payments and rent!



The INSOMNIAC 900 Kiosk is my favorite.  Marc 

Self Storage Industry News

Our Co-Founder Marc Goodin’s best-selling book Your Self Storage Planning, Design, Build has been updated for 2018. It shares what it takes to get started including updated development cost, example proforma, how to find land, how to do a mini demand study and more.  For your free copy email Marc. Marc@StorageAuthority.com

Self Storage Articles

Two Nashville self-storage facilities fetch $38 million

One of the facilities, at 7102 Bakers Bridge Ave. in Brentwood, TN, sold for $21,485,000, or $301 per square foot, according to Ashley Compton of Nashville, national director of the self-storage group at Colliers International. The other facility, at 6346 Nolensville Road in Nolensville, TN, sold for $16,485,000, or $216 per square foot. Compton brokered the two-facility deal.
*Spare foot

2018 Debt Forecast: The Lending Climate Remains Clear for Self-Storage Borrowers

After many years of historically low and stable interest rates, borrowers should realistically expect that rates will begin to tick up as the economy continues to improve. Nonetheless, self-storage borrowers have an abundance of options. Barring unforeseen events that would dramatically alter the financing landscape, the window of opportunity should remain open to lock in on low rates with aggressive lenders looking to put money to work.
*Inside Self Storage

With Storage Authority on your team, we will help you every single step of the way, from finding land to operations, to driving your revenue year on year.  If you have a question we have the answer, we will help get you developed and leased up faster than if you were to go it alone. Team up with the experts to maximize your profits.

ARE YOU READY?

Click here to Get Pre-Qualified to Begin your Journey to Financial Freedom with Storage Authority Franchising!

Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” —Pablo Picasso

Recent Storage Authority Blogs You Will Enjoy!

Complete Storage Authority News Room 

Sample Self Storage Development Budget & Proforma

Chapter 6 The Five Most FAQ’s

Recent Storage Authority News Letters

December 2017 Newsletter. Let the experts help you find Land. Storage Authority & Morrow Hill

November 2017 Newsletter: When should you start your self-storage construction financing plan?

 October 2017Why own a “Storage Authority” Franchise?

 

 

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Storage Authority
677 N Washington Blvd.
Sarasota FL 34236

www.StorageAuthorityFranchise.com         Garrett@StorageAuthority.com
1-941-928-1354

More big box retailers closing – Think Self Storage Conversions!

Yesterday Kmart/Sears/Macy’s announced another round of store closings.

http://abc13.com/shopping/sears-store-in-houston-to-close/2863066/
If you type in kmart & sears closings into google search you will see round after round of store closings. Maybe there is one near you. In the past 5 years Sears has gone from over 2000 stores down to 12oo stores.

Here is a map of the latest round closings. The article above will give the Towns.

Screen Shot 2018-01-05 at 8.46.34 AM

While this is a sign that Amazon is killing the big box stores it is also a sign it time to consider conversions for self storage. I recent talked to one self storage developer and he only does conversions. He has done 4 and has each is doing very well. The big boxes are typically in areas of suitable, even high populations so it is a matter of confirming the available demand taking into consideration of the existing self storage.

Screen Shot 2018-01-05 at 8.48.42 AM

Conversions typically save you time because they are much easier to get approvals and takes less time to build. Grocery stores are a great conversion as well and they don’t have to be oversized. Often a 30,000 square foot self storage will have a large parking lot you can convert into another 30,000 sf of self storage.

Here is a quick web demand study on one site I randomly choose.  This is a great program everyone looking for self storage because what used to take a couple of days is provided in seconds.  send me an email at Marc@storageauthority.com to learn more about conversions or this web demand study

Kmart FL

If you look to the left you can see the existing self storage demand information. What is real interesting and what makes this site worth checking out is almost all the existing self storage is non climate control!

To More Success in 2018!

You can do it!

Marc

860-830-6764

Marc@storageauthority.com

Sample Self Storage Development Budget & Proforma

Chapter 7

Sample Development Budget & Proforma.

 You will do multiple budgets proformas for yourself along the way to a final one for your bank.  The first is one based on several assumptions and estimates so you can have some initial discussions with your banker.  The second, one after you have a site plan, so you can provide a proforma based upon your actual design plans, including the exact number and size of units to be rented to get an updated pre-approval.  And the final application with real construction cost from contractor bids and expenses from your feasibility report and other investigations, for the final loan approval.  Your loan request will include several items in addition to the proforma.  This information will help your banker make a positive decision on your application.  It will provide valuable information about yourself, your business plan and your expertise and an executive summary which help your banker quickly understand your project and find the major data they need without looking everywhere for it. It is one more item to let the bank know you are a professional day one.  Self storage is loan friendly because self storage loans have one of the lowest failure rates for real estate development. But part of loan decisions are based directly on you and how you present yourself, your project and your team.

There are no one size fits all standard construction cost, expenses or profits for self storage.  Typically, the first semi accurate development and operational cost and profits come after you have found land, obtained a conceptual plan and obtained a feasibility study by a self storage expert.  But it is important to understand the basic general magnitude of construction, operating expenses, rental rates and various financial information to determine if self-storage makes sense for you. The concept budget below is based upon assumed costs & expenses that may vary greatly.  Be cautious as it would be easy to tweak one or several factors to eliminate the profits or double them.  Many items and details are not included in this example such as carrying cost to get from empty to break even.

This is an example for educational purposes only and should not be used to make any final self-storage investments or development decisions.

 CONCEPT BUDGET & PERFORMA*

50,000 Square Foot New Single Story Construction   

TYPICAL LAND REQUIREMENTS*

Single Story Self Storage: Typically, 5 +_ usable acres when storm water detention is required and or subject to certain zoning restrictions.  Land requirements can vary on local zoning requirements and land quality.

Typical Construction Cost vary on many factors from design, amenities, locations, land quality and more and must be determined by actual construction bids.  Cost below have been assumed and will vary.

 PRELIMINARY DEVELOPMENT COST* – 50,000 SF Single Story

Land                                       $800,000 + –

Construction:                        $3,250,000 +_    $65/sf x 50,000 sf

Unusual land etc.**.                $0 if none

Unusual City regs. **              $0 if none

Soft cost                                  $400,000+_

Carrying costs                         $300,000+_

 Total                                        $4,750,000+_ Single story 1 phase

 

Phase 1 -25,000 sf                  $3,300,000+_  Note land/office/soft                                                                                                    carrying costs in phase 1

35% Bank

Loan  Equity                        $1,155,000 Phase 1 owners’ equity                                                                                              required

12.5%  SBA

Loan Equity                            $412,500 Phase 1 owners’ equity                                                                                              required

As you can see there is a vast difference in equity required between a traditional bank loan and a SBA loan.

Typically, when phase one occupancy reaches 70% it is time to get started on phase 2.  Most of the time you will use the same bank for both phases so you do not have to pay a prepayment penalty.  Often your equity in phase one will be enough for most if not all of the loan equity required for phase 2.  You should have these discussion with your bank when you apply for the phase one loan as this is not the case for every lender.

PRELIMINARY PERFORMA*

STORAGE RENTAL INCOME* FOR A 50,000 NET RENTABLE SPACE

Rental income varies upon many factors and are very dependent on location, unit mix, managers experience, marketing and several other factors.  The SSA reported the 2015 national average rental rate for Q4 2014 was $1.18/sf for a 10’ x 10’ non climate control unit and $1.51/sf for a 10’ x 10” climate control unit.  It is important to get data from your local area.

Typically, we consider 90% rented at premium rental rates full.  For this example, 90% Rented at an assumed average rate of $1.35/sf is used.

50,000 sf x .9 x $1.35/sf = $60,750 monthly income = $729,000 Annual income

 PRELIMINARY OPERATION COST*

Operation cost vary on many factors. Often, they range between $5 to $6 a sf.

Use $5.75/sf for this example.

Assume $5.75/sf x 50,000 sf = $287,500/ year or $23,958/month (Before Debt Service)

NET OPERATING INCOME* (Before Debt Service)

 $60,759 – $23,958 = $36,729/month = $441,504/Year (Before Debt Service)

 VALUE*

 Assume 5 Cap rate – $8,830,080

Assume 6% Cap Rate = $7,358,400

 DEBT SERVICE*

 Assume/use a 4,000,000 loan at 5.5%, 25-year amt. = $24,563 month (P & I)

CASH FLOW AFTER DEBT SERVICE*

 $36,729 – $24,563 = $12,166 per month = $145,992 Per year cash flow before taxes.

 Will this be your cash flow?  Of course not.  There are too many variables.  Your land could cost more or less.  You could put in more or less equity.  Your rental rates may be higher or lower. Your expenses could be more or less.  You could do more or less marketing and sales then the typical self storage.

The goal is to build a self storage that provides a six-figure income while you can still continue your career if you want to and down the road to have a retirement nest egg that many people could never even dream of.  Once you have found a property that meets your initial review and requirements you will get a 3rd party feasibility study that will not only provide you with a demand review but also all the above financial information above based upon data to your specific location and facility size.

Disclaimers:  This informational and example is for preliminary education and overview purposes only and should not be used for investment purposes.   This is an over simplified financial review.  Once a property is located a detailed feasibility study, site investigation, site designs, construction costs and regulatory investigation are required in order to determine the feasibility of a project and projected profits.

*Development cost can vary widely based upon location, zoning, standards, your experience and a variety of factors. You should consult with a local self storage expert for development cost in your area. This is an example and there is no representation these numbers will represent your development costs.  Industry rental rates, income & expense can and do vary upon many factors including, competition, local property taxes, location and owners experience.  Typical rent up periods for the industry are between 18 months and 3 years and can be longer.

 ** Unusual construction requirements such as ledge, significant cuts or fills, retaining walls, unusual zoning requirements, off-site improvements, local pricing etc. are not included and can significantly increase construction cost.

Multi story facility cost more and typically can’t be phased, so they require significantly more capitol and initial equity. This is why first time self storages developers typically build one story facilities.  Many multi story self storages will even have a higher price tag because they are often in areas of higher populations and are larger to offset the development cost per unit, to get better returns.

A word of caution, never develop a parcel of land simple because you own it or the purchase price is low.  It must have several important features including significant drive by traffic and enough unmet demand for self storage.

Now based upon your liquid assets you can start determine the best options for your needs and investigate land, design, regulatory and banking requirements in more detail.  At this point you are either ready to charge forward or realize you don’t have the capital required.  If you don’t have the capitol don’t give up.  Finding a more aggressive lender and or finding a partner with either the land equity or cash equity may be a great option.

Working with an experienced self storage development expert can also help reduce the construction cost, operational expenses and increases profits. You can look at building a smaller facility but they tend to be significantly less profitable and more of a hobby than a business.

 

If you want to learn more about how you can start your own Storage Authority self storage Franchise send me an email.  Marc@StorageAuthority.com

December 2017 Newsletter. Let the experts help you find Land. Storage Authority & Morrow Hill

 

 

December 2017 Newsletter

Franchisee Updates:

 

Welcome & Congratulations to our newest Franchisees. Keith & Lisa and George and Andrea.

They are already off to a fast start.  Before the ink was dry on the franchise agreement our national land brokers Morrow Hill were already looking for land for their first self-storage! When we met with Keith & company, Keith had done extensive research on Self Storage, Storage Authority and even myself (Marc Goodin).  When we were done with our meeting I asked if they needed anything else to make a decision and Keith surprised me with:   “I just need to do more research to see if I could find any reason not to get on board”.

 

I think research is important, but you could look forever for a reason not to do something and never find it. In the end, starting a new self-storage business or any business is partially a leap of faith.  But if you believe in yourself, and have done your research on self-storage and Storage Authority it is an easy choice in the end.

 

Scott House our co-Founder has received his site plan approvals and just finished up Architectural and construction is slated to Start Jan 2018 on his Mulberry Florida Storage Authority Facility. He has decided to build 70,000 sf in phase 1.   Scott Found his land this summer so he has been going at a sizzling pace.

 

Ed & Jenny site plans have been approved and are slated to start construction this January on their Houston facility.  They are building in 2 phases with phase 1 being 30,000 sf.


As part of our Dynamic Ease Self Storage Development Series, we help our franchise understand the options and prepare accordingly.

———————————————————————————

If you want to learn more about Storage Authority Franchise there is a wealth of information on our website www.StorageAuhorityFranchise.com  Don’t forget to check out “Why Storage Authority” and our blog/newsroom. Then the next step is to apply on our website or email or call Garrett Byrd (Garrett@StorageAuthority.comor Direct 941-928-1354)

Vendor Highlights

Let the experts help you find Land.  Storage Authority & Morrow HillOur goal is to have you looking at land choices within 30 days of becoming a Franchisee. It takes most people longer than 30 days to find a broker and another 30 days for us to educate them on self-storage land requirements.  And then they are often just passing along LoopNet sites.

To make sure this is not your plan we are excited to introduce our national land brokers Morrow Hill.

Screen Shot 2017-11-12 at 12.44.03 PM

We start by understanding you, your goals and your finances.  Unfortunately, most people and brokers start by looking on Loopnet.  Big mistake, as LoopNet is where we find about 10% of our self-storage sites. If that’s your plan or your brokers plan it could take you several months if not longer to find the right parcel of land for you.

Next, we provided 30 minute driving maps from your home or from the center of where you want your facility.  This map will also show the existing self-storage facilities and the area road network. An areal view will also help you understand the population density.   From this, you can start to understand the existing self-storage density along with changes to the population density.

srq fl

We then typically choose the center of the area you want to find land in and draw a 1 & 3-mile radius.  This, in turn, allows you to understand the general size of the competition impact area.

As a side note, many people look at the above map of Sarasota FL Area or their hometown and think all the good places are gone.  I have to laugh because many great successful self-storage will be built this Sarasota FL area in the next couple of years.  Until you compare the population density to the existing square footage of self-storage you can not generalize.  Here is the same 30 minute driving time map for Houston TX.  See a much higher density of self-storage?   And we have a new Storage Authority Franchisee just about to start construction in Houston Jan 2018.  And Expect we will have many new facilities in Houston in the next five years

houston

The next step is choosing a broker and educating them on self-storage. This can take time. The Storage Authority Dynamic Ease Development Series has multiple sections to help you and your brokers find land.  And of course, we are there every step of the way as well.   I hate to say it but many of our franchisees have told us they often do not even get callbacks from agents for days.

To reduce the time to find land we have added Morrow Hill as our preferred national brokers.  They understand Franchisees, Storage Authority and know how to find land.

99-ESYu-Morrow Hill-Blue

If you have a great commercial land broker that’s great just make sure they have the Storage Authority land requirements and worksheets from our Dynamic Ease Development Series and have the expertise to use all the tools required to find land fast.  One of the many questions I would ask is, excluding LoopNet how would you help us land?

The second pitfall in finding land is understanding if you need 5 acres of land, that any 5-acre parcel may not meet your needs for so many reasons and takes substantial investigation.  This is because there are so many things that can reduce the usable area including wetlands, flood planes, easements, deed restrictions, utilities, zoning, stormwater detention, endangered species, topography, and even neighbors.  And of course, the 3-mile population density and amount of existing self-storage in 3 miles, traffic counts, visibility, access, pricing are critical to the decision making process.  As a civil engineer and site plan designer for 30 years, I learned site development in the trenches and I am ready to share them with you and your team.  Of course in many respects, I am a part of the Morrow Hill team because we are always sharing our ideas on land and we will continue to learn together.

If you have questions about Storage Authority Franchising or finding land for your next self-storage project give us a call.

Marc Goodin  860-830-6764

…….

Self Storage Industry News

So why develop a self-storage facility with Storage Authority to add to your portfolio?

For one, it’s recession-proof. This was proven by Forbes 400-member B. Wayne Hughes when he built a $2.4 billion fortune on self-storage. He was clearly doing something right. You can’t argue with that.

In a bad economy, people start trading in luxury goods for, well, fewer luxury goods. Apparently, storage units, are – ding ding! – not luxury! Which turns out to be their appeal.

In fact, during the 2008 economic downturn, self-storage was the only REIT sector that posted a positive return of five percent including dividends. We think that’s kind of big deal.

Storage facilities need little capital outlay or upkeep, their property taxes are modest, and net acquisitions in that sector have surged. *Forbes  (I may have to differ with Forbes a bit as self storage does seem to pay a hefty tax. Marc Goodin)Even in the cities with the newest construction, developers can still find opportunities to build new projects. “Self-storage is a three-mile business,” Most Customers are not likely to use a self-storage facility more than three miles from their home. That means that developers don’t need to worry as much about competing properties that are four or five miles away.

“Self-storage properties compete in such micro markets that it all depends,” says Ryan Burke, an analyst with Green Street Advisors, a real estate research, and analysis firm.

Self Storage Articles

Not Sexy, But Investors Should Consider The Simplicity Of Self-Storage

Developers can still find opportunities to build new projects.

Q&A Spotlight: Self-Storage Construction Loan Team  by Live Oak Bank

ARE YOU READY?

Click here to Get Pre-Qualified to Begin your Journey to Financial Freedom with Storage Authority Franchising!

It’s only a dream until you write it down then it becomes a goal.  Write down you will have a goal to begin construction of your self-storage facility in 2018.  Put it on the mirror where you can see your goal and visualize it daily.  Start today, take the leap of faith and never look back!

Recent Storage Authority Blogs You Will Enjoy!

Complete Storage Authority News Room 

Storage Authority proprietary “Dynamic Ease Development Series” Finding Land Through Pre-Opening Tasks.

Why not you? Why not now?

Recent Storage Authority News Letters

November 2017
When should you start your self-storage construction financing plan?

 October 2017

September 2017

 

 

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Storage Authority
677 N Washington Blvd.
Sarasota FL 34236

www.StorageAuthorityFranchise.com         Garrett@StorageAuthority.com
1-941-928-1354

Chapter 6 The Five Most FAQ’s

Chapter 6

The Five Most Frequently Asked Questions

1 I don’t have any self storage experience; can I build a successful self storage business?

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Yes, you can.  In fact, the vast majority of the 50,000 self storage businesses in the USA are owned by individuals who only own one self storage facility.  They started out just like you with no self storage background.  With research and help along the way you can build a successful self storage business that will be more profitable than most other real estate businesses.

Many of the existing self storage were built when “build it and they will come” infancy period of self storage.  Now with all the competition and smart money you must be better prepared from day one.  You need 3 out 4 of the four things to develop a very successful self storage:

1 Time

2 Money

3 Self Storage Experience

4 Marketing & Sales Experience

Storage Authority obviously provides items 3 & 4 but you will be surprised how Storage Authority helps you with items 1 & 2 as well.

The three most common problems I have noticed for new developers is 1) to under estimate the costs (often by over looking some items), 2) under estimating the development and rent up time frames and 3) underestimate the importance of sales and marketing platforms online and off line,

  1. Why build a self storage vs. other business?

Self storage consistently has provided better returns on investment then the other types of real estate investments.  It requires fewer employees and significantly less maintenance, which means less headaches and work for you. (better lifestyle)

And best of all self storage produces one the most important things that many businesses never produce: a residual positive cash flow that can last a lifetime or even for generations.  And its fun!

  1.  How much money (equity) do I need to build a self storage? (How much will the bank loan me?)

I hate do give a dollar amount because there are so many factors not to mention size.  But I know that is what you are looking for.  So to start a self storage business (not a self storage hobby or side line) it is typically approx. $400,000 for an SBA bank loan and more for a conventional loan.

Typically, you will need 25% to 35% equity for a conventional bank loan.  There can be exceptions to both the low end and high end depending on the market, economy in your area, your business experience & credit rating, individual banks and other factors.  It is important to meet with your banker(s) 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.

SBA loans are available for self storage and they typically require significantly lower equity often 15% of the total cost.

There are several specifics that must be considered to determine the best option.  And it is very important to realize not all loans are equal by a long shot.  Yes, interest rates and required equity are important there are several other equally import items and that is why you need a self storage expert help you with your loan package.

  1. 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 feasibility study cost, land surveying engineering costs for site plans and regulatory approvals; bank fees for the loan application (loan application fee or points, appraisal fees etc.), soil testing fees and land option fees, architectural fees etc.

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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.  This is money at risk because there is no guarantee that the town or bank will approve your project.  So it is very important you do your due diligence regarding the “quality” of the land (wetlands – easements -zoning – other restrictions) and with the chances of approval with the Town before you spend large sums for final engineered 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 are typically range from $75,000 to $200,000 if no major problems are incurred.

The second group of costs is the land and construction costs.  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 and acre to several hundred thousand per acre depending on the location and amount of land.  Individual land improvements can 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 a sloped parcel which required an extra 3-4 feet of fill for half of the site. One property required $20,000 worth of soil testing for pollution and more for soil remediation required.

It is hard to give a specific cost for construction.  Recently many feasibility studies are using $60 per square foot for construction for typical single story metal self storage buildings, plus soft costs and the land. This preliminary construction cost by square foot estimates do not include the special land improvements or other unusual cost that may be encountered.  Multi buildings are typically higher than the cost of single story buildings.

The costs 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

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 construct building.  I use Trachte www.trachte.com because they make the process simple, and have a better product at a great price.

The third group of expenses is the costs during the rent up period before you break even.  Some banks will loan you some of the rent up cost but many (even most) do not.   If you did not include the office, maintenance equipment & supplies in your construction cost (which I recommend) don’t forget to include them here. You are going to open your new self storage business with your typical operational costs (loan – employees – utilities – taxes etc. outlined in your business plan) and limited rental income.  Every month you will have to put money into your business until you have enough rentals to pay all 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. Hopefully you have worked with your bank to cover at least some of your start up costs in your loan package.

Typically, the second phase cost much less to build because you have already paid for the engineering, the property and don’t need new staff so the break even point comes faster.

Financing is one of the major issues for many businesses.  Banks typically require 30% down and SBA loans require 15% down.  So in many regions you can get started with $350K to $400K cash equity.  One option is to join forces with a local land owner as I did for my second facility.  The land and design cost may be enough to meet your equity investment in the project.  A good written partnership agreement is important.

A good feasibility study is a msut and should provide some preliminary cost until you have more detailed plans and actual bids.  If you need initial prices before than I recommend you contact a self storage feasibility consultant to review your circumstances and what size facility you plan to build.

  1.  How many square feet should I build?  (& How much land do I need)

First you need to determine how much self storage the existing population can support and how much self storage already exist.  You can do some preliminary calculations on your own.  The key is accurately calculating the square footage needed in your area and subtracting the existing square footage and any storage proposed or under construction. For many areas where there are numerous self storage facilities to choose from the draw area is typically a 3-mile radius and the demand is typically 5 to 8.3 sf per person.You can see a sample mini demand study at the Storage Authority News Room

srq fl

These factors do vary significantly from place to place. For rural areas and areas where there are no self storage facilities the draw area may be larger.  You can call a local self storage appraiser (make sure they have a background in self storage feasibility) and ask what numbers they use in your area. Your bank will typically require an appraisal of your project by their approved appraiser. Your bank may give you the names of their appraisers to contact for this local information.

If you are not confident of your calculations or simple want confirmation and some guidance you should get a feasibility study done by an expert.  Please understand a feasibility study is not the same as the appraisal required by your bank.  For your planning purposes each can cost $6,000 to $7,000.  If you want a feasibility study or preliminary assistance with preliminary development cost I recommend you contact Bob Cooper, 866-269-1311 http://www.selfstorage101.com

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 operators.  Typically, they want facilities that are 40,000 to 50,000 sf and larger.

Also you don’t want to have a facility that is so small that it 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 a side business 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 risks 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 build out 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 built in two or maybe three phases depending on the storage needs of a specific area.

The amount of land you need is highly dependent on the local zoning regulations and specific land features.  Typically, you will need 4-5 acres for 50,000 square feet of single story buildings, less for multi story buildings. See Site Selection for more information regarding property requirements.

  1. What are some of the site plan design flaws you have seen?
  • No office.
  • No curb appeal.
  • Outdated technology.
  • No bollards at building corners
  • Led lights not used.
  • No product 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 pads not aligned up with gate.
  • Located in industrial park or other 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 there is not a second building to constraint the access drive for better access to the units.
  • Not enough landscaping provided. A lot of landscaping is a great marketing feature.
  • No windows or small windows in office.
  • None 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.
  • Too many dead ends.
  • Loss of units due to poor layout.
  • No small units or no large units or not enough variety in unit sizes.
  • No locker (5’x 5’ x 4′) units provided.

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  • To meet town approval building some architectural features actually make 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 widths and or radius at the Town road are too small.  Minimum driveway entrance radius of 25 foot should be provided and a 45 feet radius is preferred.
  • Access for RV’s or large moving trucks not suitable, especially at the ends of the buildings.
  • Rental kiosk not provided in new construction.
  • Climate control not properly designed.