As managers, were always focused on drawing customers to our business to rent units. We obsess about marketing strategies to lure potential customers to pick up the phone and call; we practice our phone skills to sound personable and trustworthy; and we go to great lengths to make visitors feel comfortable and safe at our site during their initial tour.
We work so hard to get the customer to sign a monthly agreement that too often we dont see beyond the sale to provide ongoing care for tenants. Once theyve signed on the dotted line, it doesnt mean you can sign off on providing professional services. In fact, youve only just begun.
Your goals should be to provide customers with the resources to make their stay with you as enjoyable as possible, giving them peace-of-mind that their belongings are safe and you are ready to care for their needs. You must also set the record straight that they are responsible for understanding laws regarding insurance and policies dealing with delinquencies. These discussions should be thoughtful, yet professional. Lets talk about them in detail.
Assurance and Insurance
The first step is to talk to tenants frankly about insuring their goods. In most states, we have what are called care, custody and control terms. This verbiage basically informs renters that operators are not charged with the care, custody and control of their possessions. In a simple sense, once they have placed their valuable belongings in your facility, they still have the responsibility of ensuring they are protected from possible damage or theft. Your part is to provide security at the building level. You can offer to sell a lock and provide video surveillance, but none of this promises complete safety.
Perhaps an analogy will help customers with this line of thinking. You can tell them that when a person moves into a new home or apartment, the furniture, clothes, tools, appliances, etc., are the owners responsibility, and it is his prerogative to insure them against potential damage. Thus, they buy homeowners or renters insurance to compensate them in the event of a loss. This is the same when renting space at a self-storage facility.
Many customers assume incorrectly that since they have put their possessions in a self-storage unit, the facility owner is responsible for protecting them. To some extent, this is true: You have an obligation to provide some security and a building that is constructed well enough to provide a safe environment, but you are not responsible for the contents of the unit. Convey this to your renters while offering them choices for acquiring insurance.
Many states have now passed regulations that allow self-storage operators to sell insurance to customers and actually receive some type of compensation for doing so without having a special license. Check state laws about what is and is not allowed. In either case, make the point to your customers that they are responsible for obtaining insurance on the contents of their units, not the facility.
Several companies offer specialized insurance. Just look through this magazine and youll find many of them, or visit the insurance section of the Inside Self-Storage Buyers Guide (found at www.insideselfstorage.com). Contact companies directly and learn how you can offer insurance directly to your customers. Potentially, you can also earn some type of commission should your customers buy the insurance.
For homeowners with adequate insurance, its possible their policy covers goods while in temporary storage. Encourage tenants to review their coverage or consult their insurance agent. You may lose a commission on selling insurance yourself, but youll gain consumer trust. It pays well in the long run.
Finally, some customers may wish to self insure their goods, which is fine; but you should request written assurance that they are willing to take this chance and you are not responsible for their units contents. Most self-storage leases or agreements address this important issue. Consult with your attorney and ensure you are on safe ground. It can save you a lot of aggravation and potentially keep you out of a major lawsuit.
Even though the topic of delinquency has negative connotations, its best to inform tenants beforehand of procedures so they wont plead ignorance or harbor resentment. Discuss upfront what may happen if they fail to pay rent on the obligated date. For example, many states allow the operator of a self-storage facility to charge late fees, to deny access to the goods until the rent payments are made current, to collect the overdue rent payments through an auction process, or other remedies should they become delinquent or late in their payments.
I like to inform renters in a subtle but firm way about our late policies. For example, a conversation like this can be simple but effective: Mr. Jones, please be aware that your next payment will be due on the first of the month, and although we have a grace period of five days, after that date, should you not make your appropriate payment, we are required to deny you access to your unit and you may be subject to the following penalties (late fees, etc). I am sure this will not happen but, in the event that it should, I just want to remind you that our policies are made by our corporate office and I am obligated to follow them as outlined.
Dont portray yourself as a bad guy, just a good person trying to help them steer clear of future difficulties. Its not your policy; its corporate. Should tenants not pay on time, you are obligated, regretfully, to assess the penalties. I always like to blame the corporate structure; no one ever gets to see them so they cannot identify them.
We are no different than any other business; if you do not make payments on time, you will be subject to a late fee. No one ever questions the utility companies, the credit card companies, the mortgage companies, etc., so why should self-storage be segregated? Bottom line, if our customers do not pay us on time, we may not have the cash flow to pay our bills (including your payroll), so its important to convey this professionally and courteously to customers.
Before you enact any late fees or penalties, contact your attorney or state association to make sure you are in compliance with state and city laws. This applies to the sale of insurance as well.
Although discussions of insurance and late fees are not the most pleasant things we managers have to deal with, a little common sense, a good smile while you are going over these things with the customer, and a clear understanding of the laws will make the discussions much easier.
In the future, dont let your focus on tenants end with their signed rental agreement. Inform them of resources and rules, and youll gain their respect along with a monthly rental check.
Mel Holsinger is the president of Tucson, Ariz.-based Professional Self Storage Management, which offers self-storage facility management, consulting and development services. He is also a frequent speaker at industry conferences and a regular contributor to Inside Self-Storage. For more information, call 520.319.2164; visit www.proselfstorage.com.