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Put-In Cups for Fence Marketing

Supply Source One, a provider of boxes, locks, tape and packaging materials to the self-storage industry, now offers Put-In Cups, an innovative way to create colorful, eye-catching marketing messages using a facility's chainlink fence. The easy-to-install plastic “cups” can be used to create almost any artwork, lettering or logo. They will withstand strong winds yet are easy to rearrange and remove by hand.

 

SmartClient Enterprise Edition

Quikstor Security & Software has released its new SmartClient Enterprise Edition, which allows users to view more than 125 reports that provide real-time information on a self-storage site. With SmartClient consolidated reporting, facility operators can see reports on collections, occupancy evaluation, receivables and more. They can run a report on all of their facilities or view reports by region, state or other designated area. Reports can be e-mailed to partners, investors and area managers.

Hiring a Third-Party Management Company for Self-Storage

Third-party management companies provide self-storage owners with a tremendous resource. Not only do they have the expertise and experience necessary to be competitive with the large, well-financed regional and national companies, they can provide certain economies of scale that might not be possible otherwise.

By hiring a professional management company, an owner gets the best of all worlds. He still owns the property—and gets a monthly check—without having to handle day-to-day operation. He has an expert with the tools and experience to help increase occupancy, decrease operating expenses, and oversee capital improvements and repairs. This leaves the owner with time to pursue other interests while knowing his property is being well-managed.

The Benefits

The decision to use a third-party management company is a big one. Most companies will require complete control over every aspect of day-to-day operation. Their contracts generally provide significant latitude in running the business, including making financial, personnel and policy decisions.

The management company is hired for its experience and expertise. Day-to-day operational burdens are removed from the owner's plate, but so is day-to-day control. If letting someone else run your business makes you uncomfortable, a management company is probably not for you. However, if you're open to letting a professional help you achieve your property’s maximum success, consider using one.

Finding the Right Company

There are many third-party management companies in self-storage today. They run the gamut from great to awful. Doing your due diligence before signing up with a particular firm is important to your ongoing peace of mind. When evaluating potential companies, consider how they answer the following questions:

How long has the company been in business and what is its experience in operating self-storage ? What is its track record? Does it have the proven ability to meet your goals, whether to increase occupancy, decrease expenses, etc.?

Is the company licensed to perform property-management services in your state? All states require that property-management companies have some type of licensing, generally the same type and level as a real estate sales professional.

What fees will you be charged and how are they calculated? While most management companies charge 6 percent of a project’s gross revenue, many increase or decrease this percentage based on faciilty size. Are there any other fees such as setup or additional maintenance?

How does the company maintain control over each site? How often do its representatives visit each property? What are the company’s audit procedures? Does it have contingency plans in case of an emergency? Does it have relief managers who can substitute in case a manager quits or goes on vacation?

If the company does not plan to keep your current managers, how are applicants screened? What type and level of training is offered for new employees? What kind of continuing education is provided for seasoned staff? Are the managers your employees, or are they the employees of the management company? What benefits are offered? What happens to the employee if the management contract is terminated?

Is the company’s operation computerized? Does it require onsite computers as a condition of management? If your store is not computerized, will the company introduce technology? If it is, will the company use your current software or does it require use of another package? If it requires a change, how much will it cost for conversion and annually?

Will the company prepare an annual marketing plan and budget? Will it create and maintain a website for your store? Does it use an optimization company to make sure your website comes up in the first few responses to a potential tenant’s Internet browser search?

What kind of reporting can you expect? When will you receive financial reports and how extensive are they?

What You Should Expect

One of the most important issues to address with a potential management company is its decision-making process and how you will be involved. This is an area that can be negotiated but needs to be established up front. Also, setting clear financial-approval standards is important so both parties understand the management company’s authority.

Once you've decided to take the plunge and hire a management company, there's a great deal you should expect for the monthly fee you pay. However, it's important to realize that you must give the company time to implement the plans on which you agreed. Change will not occur overnight. When working with a management company, keep the following in mind to get the most out of your investment:

Turnkey operations. Your responsibility should be limited to ensuring the management company performs to your expectations and to the terms to which you both agreed. Day-to-day operation is left to the management company.

Expertly trained managers and assistant managers. Your employees should not be caretakers. They should be “self-storage specialists” who have been trained to determine and satisfy customers’ storage needs in addition to marketing your facility.

Employee/vendor selection. The hiring, firing and supervising of everyone from your managers to your maintenance personnel and outside contractors should be handled by your management company. Make sure you fully understand your financial and legal responsibilities for the actions of the company and its employees. Competitive bidding should always be used to keep expenses down.

Operating guidelines. The management company should provide a policies and procedures manual that details how your store should be run. It should standardize your operation so your store will run at peak efficiency.

Tough collections policies and procedures. Though you might consider collections policies and procedures to be a part of the operating guidelines, this is an area that should be addressed separately and in considerable detail. It's easy to have a store that has 90 percent physical occupancy but only 70 percent economic occupancy. The difference is often the quality of collections.

Specialized marketing programs. Each facility has unique attributes and a unique market. Marketing materials and programs must emphasize the features of a site in a way that effectively reaches the local demographic. Something that works on one side of town may not work on the other.

Constant supervision. Frequent facility visits and audits are a must to maintain a professional appearance as well as to ensure a smooth, honest operation.

Repair/remodeling recommendation and supervision. The management company should offer suggestions for capital improvements, along with ensuring that routine maintenance is done properly and in a timely manner.

Annual budget preparation. You should receive a reasonable budget you can use as a guideline for financial expectations and as a monthly check of operational efficiency.

Regular contacts with management company personnel. You should have regular contact with management-company personnel from to keep you apprised of what is happening, good and bad, at your facility. Keep in mind that you are the client and paying for services. If you have questions or are unhappy with anything, contact with the company so it can work with you to resolve issues.

No management company can be expected to totally compensate for a poorly designed facility in a poor location or a saturated market. It should, however, be expected to provide you with services that justify its fees. The company should do everything possible to run your store in a professional manner that will not only increase occupancy and decrease delinquencies but, most important, improve the site's profitability, resulting in a more valuable asset.

Maurice Pogoda is president and Tom Berlin is vice president of operations for Pogoda Management Co. in Farmington Hills, Mich. Pogoda has approximately 3 million square feet of self-storage space under management in 38 stores in Michigan and Ohio. For more information, call 800.326.3199; visit www.pogodaco.com.

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Being the Best We Can Be: Self-Storage Management

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Pogoda Cos. Hires Regional Managers

Pogoda Cos., a Farmington Hills, Mich., self-storage operator and broker, appointed two regional managers to its team. Mike Cohen, former group vice president of supplier sales for a financial services company, will be responsible for overseeing the day-to-day operations of the Washtenaw and southern Wayne County areas of the self-storage management company’s portfolio.

Michelle McDowell was named regional manager for the northern Wayne County, Genesee and Macomb County regions. McDowell had managed commercial properties for nearly 15 years and holds a Michigan Real Estate License.

 
Mike Cohen (left) and Michelle McDowell (right)

 

 

 

 

 

 

 

 

 

 

 

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Abandoned Records in Self-Storage: Whose Responsibility Are They?

It’s no secret that the economy is in poor shape, particularly the finance market. As a result, self-storage operators find themselves faced with more commercial tenants who go out of business or default on their units, leaving behind sensitive records that contain personal information about members of the public.

For example, a defunct mortgage broker might leave behind hundreds of mortgage applications, tax returns, pay stubs, etc., in a self-storage unit. Even some medical professionals are ceasing operation and leaving records that contain health information, Social Security numbers and other documents for the self-storage operator to handle.

I have long been a proponent of excluding from a lien sale any personal items or those that have no resale value to the buyer, such as diplomas, photographs and documents. When people ask me how to enforce this, my general answer is “the honor system.” The sale rules signed by the bidder should exclude these items, and buyers should be required to return these items when found to the facility owner or manager for safekeeping or proper disposal. But what if an entire unit is full of what appears to be business records?

Facing the Issue in Maine

This issue has recently been brought to light in Maine. A mortgage company had records in self-storage and was going out of business. The self-storage operator notified the Maine Bureau of Consumer Credit Protection that it had a storage unit full of files containing clients’ personal information. The mortgage broker had defaulted, and the unit was scheduled for sale.

The bureau’s superintendent tried to obtain the records to prevent them from being lost or falling into the wrong hands. But the facility owner refused to release them, contending he had a lien against the unit’s contents and the right to sell them for a price. The bureau then served the self-storage owner with a subpoena and took the records out box by box.

This scenario contemporaneously played out in the court of public opinion, outraging Maine legislators who then introduced Bill LD 366 in attempt to “over correct” the issue. I won’t describe the bill in detail here because it’s sure to change. (Already the bill has been tabled for at least a year, thanks to the efforts of the state and national self-storage associations.) However, the intent of the bill is to impose legal liability on the self-storage owner for any piece of personal data or record released into the hands of anyone, aside from its rightful owner.

Liability Woes

When I first learned about what happened in Maine, I knew it would only be a matter of time before someone proposed a bill that would go way over the top and make storage operators legally responsible for the items sold. It appears our nightmare scenario is potentially coming true.

The problems with the Maine bill are several. First, it imposes a different kind of liability on self-storage owners than it does on any other real estate owner who might evict a tenant. For example, under the bill as written, if a mortgage company is evicted from its office, the building owner would not have the same responsibility as a self-storage owner to control and dispose of the records. The same holds true for an apartment owner.

Thus, the Maine bill is potentially unconstitutional because of its prejudicial treatment of the self-storage industry. The facility owner, who is simply trying to reclaim his space, is punished under this bill, which makes storage the best go-to dumping ground for business records. In essence, if business owners cannot shred their records, they can put them in self-storage, where the operator retains all the liability.

As a self-storage operator, you generally do not have any control or knowledge of what is stored in a unit. Even if you wanted to prohibit records from being stored and created a lease provision to do so, there’s no real way for you to enforce it. 

What Should You Do?

Self-storage operators in all states should learn a lesson from Maine. If you find a unit that appears to be full of records, do not sell them. If you find a unit containing records and other items, sell the other items and exclude the records. You may be able to work with a state agency that will be willing to take the records into custody.

In Ohio, we have an agreement with the local Academy of Medicine stating it will take any medical records stored in a unit that is in default rather than allow the records to be sold, lost or otherwise destroyed because patients may need them. It appears in Maine that the Consumer Credit Protection Agency would have been willing to take the records if the owner would have released them.

What do you do with records if no one else will take them? First, determine if your state statute discusses the right to “dispose” of property. In many states, in the small print, the statute says you may sell or dispose of property. While I do not know what your individual state means by “dispose,” I imagine the language was written for situations in which a sale is not possible, not simply a shortcut to clear out a unit.

If you have the right to dispose, there should be no problem with giving a notice of intent to dispose rather than sell, and then dispose of the contents properly by shredding or destruction. If you do not have the right to dispose, you may have to take the extra step of evicting the unit to get the right to dispose of the contents. In either case, the court of public opinion will never tolerate a large release of records containing a bunch of personal information into a dumpster.

Shred It!

Some of you have argued that the expense of shredding or other destruction is prohibitive and would ruin your business. Records disposal is not something you want to take on, especially if you believe there is no precedent to justify it. You do not control what goes into the unit, but suddenly you will have a duty to patrol what goes out.

I say there is precedent because there are other types of goods you would never sell. For example, if you opened a unit and found illegal property, drug-making paraphernalia, weapons, liquor or other items you know you cannot sell, you wouldn’t attempt it. You would arrange for proper disposal. In this day and age, records containing personal information are the “new” illegals, and you must make provisions to deal with them properly. If this means raising your rent on commercial units, so be it.

I’ve found that if you arrange for a regular shredding service, the price is pretty much the same whether you shred a little or a lot, and can be manageable. It’s time to factor a shredding service into your operating budget.

You can argue all you want that it should not be your responsibility to dispose of these records—and I will agree with you. But once the records are on your property and the unit goes into default, if you have no agency to take them, you cannot simply put them in the dumpster. First, you risk damage to your reputation in the community and the court of public opinion. Second, you risk causing your state legislature to escalate your current level of responsibility to an affirmative duty to find and properly dispose of records left in units.

The Maine bill comes with some extra neat “benefits” that will hopefully go away. For example, it requires storage operators to register with a bureau to regulate the industry, along with a potential registration fee. It also includes a records-disposal policy that must be approved by the bureau before you can continue your sales. Believe me ... it’s cheaper to shred or properly destroy these documents than it is to bring this kind of bad law into your state.

This article is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney. 

Jeffrey J. Greenberger is a partner with the law firm of Katz Greenberger & Norton LLP in Cincinnati and is licensed to practice in Kentucky and Ohio. Mr. Greenberger primarily represents the owners and operators of commercial real estate, including self-storage owners and operators. To reach him, call 513.721.5151; visit www.selfstoragelegal.com.

New Home Sales Drop 0.6% in March

New home sales fell slightly in March, but still beat expectations, the Commerce Department said Friday.

Sales fell 0.6 percent in March to a seasonally adjusted annual rate of 356,000 from an upwardly revised February rate of 358,000. February's results were adjusted upward by more than 6 percent.

Even though news home sales dropped, a recent dip in the inventory has encouraged builders. There were 311,000 new homes for sale at the end of March, down 5.2 percent from 328,000 in February. The government said it would take almost 11 months to exhaust the supply of new homes on the market at the current market price.

Source:  YahooNews.com,  March New Home Sales Down 0.6%

Five-Story StorQuest Self-Storage Facility Planned for San Fernando Valley

Joint partnership BTE Investment Group and William Warren Group received $6.3 million in financing for a five-story, class-A self-storage facility in San Fernando Valley, Calif. 

The 80,000-square-foot facility will have 800 climate-controlled storage units, and be branded under Warren Group's StorQuest Self Storage trademark.

The company operates a portfolio of more than 30 StorQuest properties in Arizona, California, Colorado and Hawaii.

Source:  GlobeSt.com,  80,000-SF Facility Gets Construction Loan

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Auction Buyers Show Kindness

Gina Six Kudo is the general manager for Cochrane Self Storage in Morgan Hill, Calif. She is one of four recipients of the Inside Self-Storage 2009 Humanitarian Service Award.
 
Divorce and self-storage is not always the greatest match up. There always seems to be drama when one spouse rents self-storage during this difficult life transition.

Case in point, we had a customer we’ll call Robert. Robert rented a unit and, for a few months, paid fairly timely. We'll call his soon-to-be-ex Lisa. Turns out Robert signed our contract legally, stating the contents in the unit were his. However, he was storing things belonging to Lisa too.

Time passes and Robert’s rent goes delinquent. Meanwhile, Lisa learns where her personal items are stored via the attorneys. Robert claims he is paying the storage unit rent, all the while we are mailing and phoning to collect the past-due balance.

One day the phone rings. It's Lisa. While explaining there is not much we can do, we try to assist in generalities.  Then things really start to go south. Robert promises he will be right down to make a payment. He asks if we can we stay open for him? We do, but he’s a no-show. We try again and again. Still, he's a no-show. I wait a week and phone him again. This time Mr. Suave is a monster, accusing us of not being patient, refusing to work with him, and got downright nasty. You’re all more than familiar with this type of behavior as auction time nears.  

So we offer Lisa a solution. Through the attorneys she asks Robert to sign a release on the unit and the contents. Of course, nothing happens, and along comes auction day. Lisa comes to the auction, hoping she will not be outbid on her possessions.

As per procedure, all 40-plus auction buyers are informed of her presence at the auction. One bidder asks a question. Lisa gives them a brief synopsis. As the crowd approaches her unit, you can see Lisa stiffen; this is her lifetime of memories on the auction block and she has no control on the outcome. The inspection drags on until the bidding commences. The bids climb and keep climbing.

Then something happens. From my distant vantage point, I notice one bidder subtly nudging another bidder, then it happens again and again. The bidding finally stops and Lisa now has the winning bid!  

A rousing round of cheers and applause arose from the auction bidders. Lisa expressed her gratitude and relief, shedding tears of joy. Hugs ensued, but the goodness and kindness of our auction bidders did not stop there.   

After hearing of her plight, one by one, the bidders slipped her cash. We’re not talking about $5 bills either; they were very generous. Another bidder offered his services to move her items to a new unit, a task that encompassed several hours of his time.

We have always appreciated our auction buyers for the services they provide to us as a facility. We shower them with donuts and coffee and a welcoming attitude at each auction. This time, they reciprocated in such a wonderful show of humanity and kindness to a someone so down on her luck. We are proud to know them all.

We gained a loyal customer, we had a great auction and the facility prospered all in one fell swoop. With all the stories in the media about the negative side of storage auctions, this was one feel-good ending I thought needed to be shared.

Have any wonderful auction stories to share? Post a comment below.

Self-Storage Units Burglarized in Riverdale, GA

At least 20 units at Neighborhood Self Storage in Riverdale, Ga., were burglarized this week, resulting in the loss of several thousands of dollars in customer goods. According to police, the thieves cut holes in fences and broke the locks off of nearly two dozen units. They also covered the surveillance cameras with t-shirts, so there is no footage of the incident.
 
Source: MyFox Atlanta, Riverdale Self-storage Units Burglarized

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On the Move Offers 'Green' Rental Trucks

On The Move Inc., a provider of truck-rental programs and related insurance for self-storage and other industries, now leases and sells environmentally friendly trucks. The company’s signature vehicle, the 14-foot Aerocell box truck, is aerodynamically designed to reduce wind resistance, allowing 15 percent to 20 percent better fuel efficiency. In addition, its 2009 Ford E-350 models feature flex fuel, which allows the vehicle to run on gasoline, alcohol (ethanol) or any combination of the two. Ethanol, a domestic, renewable energy source, burns cleaner than gas, helping to minimize pollution and global warming.

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