Self Storage News You Can Use May 2020
Do you know the top 7 Self Storage Profit Centers?
Developers, owners, and managers often ask about profit center opportunities like truck rentals, postal service, propane, etc and we tell them all the same thing. Most so-called profit centers do not make money because they either require an additional employee or distract the manager from their primary duty of renting units at premium prices so, in the end, you lose money.
There are 6 profit centers we know are the low hanging fruit that literally can make your facility tens of thousands in profits a year. But unfortunately, most managers and owners do not treat them as profit centers. They are: 1) Tenant Insurance 2) Locks, boxes, and moving supplies 3) Administration fee 4) Late Fees 5) Auto payments 6) Auctions at 35 days late.
And of course, the number one profit center is charging premium rates for being the Ritz of self-storage!
We will review Tenant Insurance in this newsletter but you should review your manual to confirm you are on target for all of the above items. If you understand all the above are mandatory then you are on the right track.
First and foremost Tenant Insurance must be Mandatory for each and every renter!
We decided to do Tenant Insurance first because there are several issues managers are not always aware of. So let’s take a look at several key points.
1) Tenant insurance is mandatory. It is not optional, it is required. The tenant has to either provide proof of insurance on their belongings and a copy of the proof of insurance is in their file or they must purchase insurance. There are no other options. Given the above fact, you should sell insurance to approximately 80 to 90 percent of the renters with the others providing proof of insurance. After reviewing the tenant insurance we have noted over half the locations are not requiring insurance when proof of insurance is not provided. Starting immediately you must require insurance.
2) Sooner or later every facility will have a tenant or several that have losses and they will be coming after you with disbelief that you will not pay them for their loss. Once this happens to you once or twice you will wish the tenant had insurance. And if they had insurance they would have settled for the insurance but since they do not and have an attorney involved $2,500 turns into $15,000 or more.
3) And just as important to potential monetary losses is the social reputation damage. You can bet your bottom dollar the first place an unhappy customer (and even their friends) are going to go is to Google to leave you an incredible bad review that you could cost you thousands of lost rental income.
4) Very rarely has a person decided not to rent because insurance is required, as long as it was presented properly. I know your concern is they would not rent if they have to buy insurance because I have heard it before. I used to think I could tell who would not rent because of insurance. Of course, this meant I was ready to jump in to save the day if they brought up a concern about the insurance. So at best I was renting insurance 50% of the time. It was not until Insurance was mandatory did I realize everyone would purchase insurance or provide proof of insurance. And if one of your renters just walked out because of insurance requirements you can always contact your owner after the potential renter has left with the renter’s contact information. I am sure the owner will get them to rent one way or another. In any event, as soon as you realize you can not give them an option and memorize the rental script you will see your insurance sales skyrocket.
5) The facility is losing money every time you violate the insurance requirement. Insurance profit is often between $4 – $8 a month. If the average insurance profit is $5 and the client stays 14 months that is a loss of $70 per renter. If your facility has 500 units and is 90% rented and 90% of the clients have insurance that is a profit of over $2,000 a month or $24,000 of extra profits a year. A great profit center.
6) You have to use the tenant insurance script, it works! “Our lease required everyone to have insurance on their stuff. Most of our clients choose $2,000 worth of coverage for $9/month. Is that good for you or would you like a higher coverage? You nod they nod! If they may have insurance or are hesitant: “What we can do is include the insurance now. When you bring in proof of insurance we can remove the insurance. If you bring in proof of insurance within the next 30 days we will refund/credit the $9. If they ask why they need insurance or simply do not want to buy it: “Our lease like most leases requires tenants to have insurance because we do not have insurance on your belongings. For us to provide insurance on your belongings our insurance company would have to assume a value of everyone’s goods and that would increase everyone’s rental rates substantially” Please note for a renter to get off insurance once they have insurance there is a form they must sign before they are taken off insurance.
7) Moving forward daily you must report to your owner any rentals that do not include insurance. Since you are not permitted to rent without insurance this should be virtual zero unless they renter provided proof of insurance.
If you have not been able to read it yet check out this recent article on Radius+ on the 2020 forecast for self-storage.
As part of our Dynamic Ease Self Storage Development Series, we help our franchisees around the development landmines, including finding land, designing, obtaining approvals, financing and building a premier self-storage facility.
Learn more at www.StorageAuhorityFranchise.com
Or email or call Garrett Byrd
Garrett@StorageAuthority.com or Direct 941-928-1354
When you own your own business maybe you will go to work in flip flops?
Keith and company are getting excited and preparing to open in August!
Their Pre-opening marketing checklist is a mile long but here are a few main items done or in progress:
Coming soon sign
Facebook & other social marketing
Meeting the neighborhood & collecting names & emails
Marketing plan and budget
Ready to take reservations
Top 10 Marking ideas in progress
Sales and Marketing Manual
Operational ManualsWe said it before and will say it again. In order for your manager to have the time to do the required marketing to be a premier self-storage facility your facility has to be a well oiled efficient system.
At Storage Authority we start with 9 Modules to keep our facilities efficient and make self-storage easy for our Managers and renters. They include:Module A Storage Authority Operations Manual
Module B Approved Vendors Module C Dynamic Ease Development Series Land, Design, Approvals, Construction, Pre- Opening Preparations Module D Storage Authority Dynamic Ease Operations Series Module F Storage Authority Dynamic Ease Sales & Marketing Series Module G Sitelink Module H Facility Street & Building Signs & Logo Module I Auctions, Late2Lein & Storage Treasures Module J Open Tech: Kiosk, Call Center & Access SecurityAnd to give you an idea of the detail and scope of each module, Module D has 40 sections! And just as important each section comes with a Franchise Director who is an expert on the subject and ready to assist.
What’s holding you back? You can do it! You deserve it!
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Click Here if you want us to email you information on self-storage development basics and the steps to becoming a Storage Authority Franchise.Why Storage Authority Franchise?
Because together we can make it happen!
My Motivation – Time to do things I enjoy – often small & big hands-on construction projects. And more fishing when I want to relax.
The rewards are endless when you have the time and money but they always include fishing for me!
Storage Authority 677 N Washington Blvd. Sarasota FL 34236
Garrett Byrd Storage Authority Vice President of Franchise Development
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