Lockouts, Lien Sales and Compensation

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This is the first column I've written since I spoke at the Inside Self-Storage Expo in Las Vegas, and I'd like to take the opportunity to thank the individuals who made my participation possible. Thank-you to the folks at Inside Self-Storage for continuing to help us in our quest for information regarding the industry. I always come away from the expo seminars having learned something that lets me do my job more efficiently and effectively.

Thanks also to Jim Chiswell of Chiswell & Associates, who continues not only to educate, but to entertain and delight us with his years of industry knowledge. His "war stories" of things he has personally experienced or witnessed in our industry help us learn through the mistakes of others.

Gratitude also goes to Richard Hamister, my boss, for his continued support, for helping me grow personally and professionally, and for understanding our company can only benefit from participating in industry events.

Last, but certainly not least, I want to thank everyone who attended the show, contributing to its record turnout-- especially those who attended my seminar on "Successful Facility Management." I was pleasantly surprised by the overwhelmingly positive response. I hope those who attended learned as much from me as I did from speaking to owners and other managers--which brings me to the topic of this month's column. I'd like to comment on some recurring themes I heard discussed at the show.

Lockouts

It is impossible to talk about delinquencies and collections without talking in terms of aged receivables. Statistically speaking, the longer a customer remains delinquent, the less of a chance we will collect. In our industry, time is not on our side when it comes to collections.

Each state has a law that determines when a customer can be considered delinquent. Most of the self-storage lien laws allow operators to deny customers access to their units if they don't pay. This should also be a clause in your rental agreement. This is where the (sometimes heated) discussion begins. Do I lock my customers out the first day they are late? No. I lock them out the first day they are delinquent, which is when they are 11 days late.

The majority of managers I met at the show argued they do not want to upset their customers, and I fully understand. However, if you let them continue to access their storage space, where is the incentive to pay? Or to pay on time? You are not doing them any favors by letting them get 30 days or more in debt, either. Most people are on a budget; if they weren't able to find the money to pay you last month, what makes you think that they will find twice as much money this month plus fees? There are a few exceptions, but you know as well as I do, the majority of people on your collections list are the same every month. Safeguarding against delinquent tenants is legal and your lease should provide for it. If you're not taking advantage of this, you are giving up your best line of defense in the collections process.

Lien Sales

The same people who want to debate the lockout issue generally follow up with questions regarding lien sales. Go figure. If you take my advice on the first, you will have less of the second. But if you are forced to hold a lien sale, do so legally.

I was astounded when one gentleman who didn't want to upset his customers by locking them out or incur liability for selling their stuff confided to me he would wait the required amount of time, then "dispose" of the contents of the delinquent units. I tried to explain he was opening himself to 10 times the liability by doing so--unless his state law provides for such a remedy.

The fact is lien sales are a necessary evil in our industry. That's why 47 out of 50 states have lien laws specifically for self-storage. No one wants to go to auction on a customer's unit, but if you find yourself in the unfortunate position of having to "dispose" of tenant's goods, please do so legally. You can find a copy of your state's lien law through the Internet, a law library, county courthouse, state storage association, national storage association, industry expert, etc. Do not be afraid to hold a lien sale--just don't do it illegally.

Manager Compensation

This is a subject dear to my heart. Every manager wants to know what he could be making, while every owner wants to know what he should be paying. In the classic struggle of the haves vs. the have-nots, I would like to go on record as saying that wages in this industry are notoriously low. The reasoning behind this, when it comes to resident managers, is they don't have any living expenses. Owners consider that compensation, even though it's not taxable. Therefore, resident managers are paid less than nonresidents. So let me get this straight: The whole concept behind resident managers is they are available to customers even during off hours. So they get paid less money to do more work? No wonder owners love it.

Since my opinion is obviously biased, I gathered some data on what self-storage managers are making on average. My calculations indicate approximately 30 percent of all managers make less than $10,000 a year. Another 30 percent make between $10,000 and $20,000. Another 27 percent fall into the $20,000 to $30,000 range. Only 9 percent make between $30,000 and $40,000, and only 4 percent make more than $40,000 a year. These are only averages and don't necessarily constitute justification to demand more money. It is interesting to see, however, what our owners think we're worth.

David Fleming and his wife, Tina, are an award-winning management team with Premier Self Storage Inc. of Western New York. Mr. Fleming has more than 10 years of experience in the self-storage industry, having managed facilities in three states. He is currently a corporate trainer and senior site manager overseeing five locations. He and Tina work as full-time resident managers of Premier Self Storage in Amherst, N.Y. To contact the Flemings, call 716.688.8000; fax 716.688.6459; e-mail premierofamherst@aol.com.

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