Self Storage Developers: Equity Partnerships to Launch Projects

Entering the self-storage industry can be an exciting prospect. The chance to develop and build your own facility can lead to a financial windfall but getting started can also bring with it many newfound risks. Getting the most out of your self-storage facility requires the right amount of capital, good locations and industry expertise. All of these things can be difficult for one person to obtain which is why building an equity team can help you mitigate risk by allowing you to team up with expert business partners who can assure the projects optimal success.

Here are a few things to consider when building your equity team.

Why build an equity team?

You usually want to build an equity team when you have a self-storage project but you are lacking the key ingredients to get that project off the ground. For example, you might have a good plot of land, but may lack the capital needed to develop the property or vice versa. Perhaps, you have both the land and the capital to develop the project but you lack the expertise in dealing with municipal building codes.

An equity team adds an infusion of management, financing and expertise to a project you are unable to complete on your own in exchange for split ownership on the project. However, the formation of an equity team should not be taken lightly because working with bad business partners can only hurt your project. Here are a few things you need to think about.

Draft a summary of the property location

If you are looking to build an equity team for your self-storage project, then it is important for everyone on your team to have all the necessary information regarding the location. Bring a summary of the location that tells potential members of your equity team the size of the land, the zoning and the history of the site. The land history should tell team members what the land was originally used for in the past and if there is proper access to utilities. Be honest about the condition of the land and tell reveal and issues that could be prohibitive.

What is the entitlement status?

What do your local municipalities think of your project? Has your project been zoned for self-storage and do you have all the necessary permits to build a self-storage facility? The biggest thing you need to avoid when it comes to entitlements is resistance to your project. If a city or its citizens are against your project it can be almost impossible to get your facility properly zoned.   

Figure out if it is feasible

Make sure you have a feasible project before you and your team begin investing in a self-storage project. Know how much competition is in your area. What is the demand for a self-storage facility and how many self-storage facilities are in your area? Do a feasibility study and learn how much your competition pays in rent, how occupied they are and what it costs to build their facility. Knowing these things will give you a greater sense of the market and allow you to correctly assess your own project.

Create accurate projections and a budget

Make sure you have projections of how you think the project will do month by month by creating a proper profit and loss statement. Create accurate traffic reports so you know how many people come through your area at a given time. Report on each phase of construction so we can accurately asses the cost of the project and when it is projected to be completed.

Most importantly make sure you have good character references for every member of your equity team. You always want to work with people of high integrity. Character references should be with people and organizations your team members have worked with in the past. They should have a good credit history and consistently pay their loans on time. A past lawsuit does not need to be a deal-breaker but a history of lawsuits is a bad sign. Doing your due diligence with the people you are working with is so important in preventing unwanted risk.

Starting a self-storage facility can be a difficult but rewarding process. Building the right equity team around you can ease some of the burdens and mitigate your risk in a hot market. Follow the steps and cover all your bases and you should be on your way to a strong partnership.

Dave Kotter is the Principal of Integrity Capital LLC, a commercial mortgage brokerage in Scottsdale Arizona. Integrity Capital has obtained self-storage financing for clients across the nation. They are an expert in the industry.

5 Small Businesses You Want Operating at Your Facility

Although allowing a legit business to operate from a storage unit might seem like a bad idea, many self-storage facility owners are rethinking this option. It’s unconventional, sure, and there’s a slew of reasons why you’d question this approach. However, according to Frugal Entrepreneur, using a self-storage unit as an operational base is trending advice to new founders. That said, here are five businesses that you want to use your facility as a home base.  

1. Contractors or Landscapers

Slinging tools is an art in itself, and it can make for a profitable small business. That said, many professional contractors or landscapers depend on a slew of bulky equipment to get the job done. A self-storage unit can be an ideal home base for this type of business because it’s more of a grab-and-go scenario in terms of these professionals and their “office.”

2. Indie Artists

Independent artists have been entertaining society for decades on end. Only now is it easier for them to extend their artistic reach—and subsequently, they’re business. From painters to sculptures to sketchers, artists tend to have mounds of supplies and material to store. Using a self-storage unit for a base works well for indie artists because of space and temperature control, too.

3. Book Publishers

Much like indie artists and contractors, book publishers often have mass amounts of physical products on hand. The same goes for book dealers or distributors. Consider items such as books, brochures, and magazines. Before distribution, a self-storage unit serves as an excellent inventory hub, per se. 

4. Sales Professionals

Sales professionals function a lot like book dealers in that they’ll have vast amounts of hand-outs and distributional products. Finding a place to store all of the sales material can be tricky, which is why a self-storage unit can save the day. Not only are sales professionals easy keepers, but they tend to need units in multiple locations, as well.

5. Ecommerce Store

It’s safe to say that online retailers aren’t going anywhere soon, especially specialty shops like Etsy and eBay. What’s more, is that people who craft for a living need a place to stock up on supplies and a place to store items before shipping. A self-storage fulfills both of these needs flawlessly. 

With the rise of entrepreneurship, self-storage facility owners have more to consider when it comes to their tenants. And small businesses aren’t on the shortlist anymore, making the self-storage industry even more profitable.

How to Prevent Hazardous Material at a Self-Storage Facility

Hazardous material storage is a valid concern in many places, including a self-storage facility. Not only are stored items vulnerable, but the surrounding community could be at stake, too. According to Cape Cod Times, Monument Beach residents feared a particular grocery store turned self-storage facility would “get blown up” because tenants would freely store dangerous material. Although the owners came up with a few solutions, here are more ways to prevent hazardous material at your self-storage facility.

1. Tighten the Lease Agreement

If written well, a lease agreement can serve many purposes. One commonly overlooked intent is merely to manage risk by educating the leasees. For example, include in the lease a list of hazardous materials that are not allowed on the property. Plenty of tenants blame ignorance or “I didn’t know!” when an accident happens. 

Also, establish a reinforcement policy for tenants who break the lease agreement. Some self-storage operators charge a fine while others penalize in more strict ways, such as lease termination. Whatever you choose, remember to stick with it.

Lastly, require positive identification from the start by verifying phone numbers, addresses, names, etc. Having the correct information on hand is often enough to dissuade any potential rulebreakers. 

2. Improve Security

Although a self-storage facility doesn’t typically have crowds of people like an airport or a supermarket would, unique exposure still exists. People expect their thousands of dollars worth of personal items to be safe—even from the threat of a hazardous material incident, for example. 

That said, following are a few recommendations to enhance safety measures:

  • Install security cameras
  • Build fences surrounding the property
  • Protect the facility with locks, gates, keypads, etc. 

From a marketing viewpoint, promoting a robust security system drums up more business than most other strategies, after all. 

3. Enforce Search Policy

To preface this point, operators can’t typically search units unless a specific set of extreme circumstances exists. However, people tend to behave better when they know they’re being monitored. So, the “watchful operator strategy” goes a long way. 

Notice the types of vehicles arriving at your facility. Pay attention to how they park, and if they have an unloading pattern. The same large van backing up to a unit twice a week is an enormous red flag, for example. 

Talk with the tenants to learn more about what’s genuinely going on. And if all else fails, reference your lease agreement and enforce the search policy. 

Preventing hazardous material at your self-storage facility is more than a shot in the dark. By taking a strategic approach, you can keep your facility and the surrounding community safer. 

How to Prevent Tenant Injuries at Self-Storage Facilities

The adage that all accidents are preventable might be correct—but avoiding some injuries takes more deliberation than others. When tenant injuries do happen, the situation can be challenging for self-storage facility owners to navigate.

Just ask the attorneys handling the Hyrcak v. Public Storage, Inc case. To keep your tenants safe and your insurance loss history at a minimum, here are a few significant take-aways from Public Storage’s experience. 

Know Your Risks 

On May 31, 2016, Ruth Hyrcak slipped and fell while accessing the self-storage unit she rented from Public Storage, Inc. She sustained costly injuries and pointed a finger (and lawsuit) at Public Storage’s dimly lit and water covered area. 

Slip-and-fall claims are some of the most widespread, but others exist as well, such as:

  • Overextension; lift, push, pull, hold heavy items excessively
  • Blows from falling objects
  • Repetitive motion; straining back and joints
  • Body reaction; slow physical response

Maintain the Property 

Identifying your self-storage facility’s exposures is an excellent first step to safeguarding your tenants. Plus, when you know these risks, you can keep up to date on property maintenance, including:

  • Check lighting and emergency lighting
  • Repair old pipes or exposed electrical wires
  • Fix cracks in cement
  • Keep fire extinguishers throughout the building
  • Use signs to alert tenants of slippery areas
  • Ensure bay doors open and close properly
  • Clean up garbage and make trash cans readily available

Attending adequate maintenance will help to prevent tenant injuries and, subsequently, massive lawsuits.

Handle Injuries Effectively 

When an accident does occur, make the right actions—quickly! Assess medical needs and call local authorities for help, if needed. Also, be sure to document the incident shortly after it happens, so you have a more accurate recollection. 

One primary concern for self-storage facility owners is claiming financial responsibility for your tenant’s injury. It’s good to file an insurance claim but avoid issues of liability, such as blindly accepting the blame. 

Adjust Precautionary Efforts

Lastly, as mentioned, some accidents seem unavoidable. However, it’s never a bad idea to take a second look at what caused it. Try to pinpoint why the accident happened. Perhaps you can make changes to prevent a similar accident in the future. 

Prevent tenant injuries at self-storage facilities by taking a step back to survey the environment. Do what you can to avoid accidents, handle situations swiftly, and prevent them in the future. Not only will your tenants thank you, but so will your wallet.

How Self Storage Facilities Can Increase Drug Testing Efficiency

by Sarah Hope

Not every self-storage facility requires their prospective employees and potential property managers to conduct pre-employment drug screenings, but every self-storage property owner should consider implementing this practice.

Property managers and other employees are given a lot of responsibility. They are asked to drive company vehicles, protect customers’ property from theft and uphold the good reputation of your company, so it is important that your employees go about their business in a safe and drug-free way.

Implementing pre-employment drug screenings is an important process and it is imperative that you create an efficient drug screening process that creates quick and accurate results. A drug testing process that makes potential employees wait too long for results can put your company at risk of losing good talent. No one is willing to wait on a job forever so here are a few tips that will ensure you implement a quick and accurate drug testing policy.

Implement A Policy

Before you start pre-employment drug screenings it is important to create a drug testing policy.  A good policy is essential to ensuring that screenings are efficient and fair.

When creating a drug testing policy, consistency is key. Drug testing policies should be conducted the same way every time for every current and prospective employee. This means if you using five-panel drug testing than you must continue to use five-panel drug testing for every employee. If you wish to conduct hair testing than you should stick with this type of testing throughout the hiring process.

If your drug testing policy states that every employee must undergo a drug test, then every employee must undergo a drug test. Consistently following your drug testing policy will ensure that everyone is being treated equally and will your company maintain accurate testing results.

Hire an Expert

Implementing a drug testing policy is not a simple task and you should consult with an expert on how to create the best testing policy. consultants will ensure that your policy clearly states the type of testing you do and when you conduct drug testing. A consultant will also teach you the foundations of every drug test so you understand the type of test prospective employees are taking.

The fact of the matter is that drug testing is important. It minimizes risk by helping self storage companies ensure their employees are the right people to uphold your company’s reputation.

Create an In-House Program

Drug testing does not need to require prospective employees to drive to your local lab and wait to be tested. Employees can conduct same-day on-site drug testing with the proper training. Your local drug testing companies will train HR managers to conduct drug tests onsite at the time the prospective employee is applying for the position at your company. Your HR managers will be trained to conduct saliva or hair based drug testing meaning prospective employees can get accurate testing results on the same day they applied.

Training your HR department to conduct drug tests is a great way to increase the efficiency of your pre-employment process; however, not every self-storage facility has or needs an HR department that can conduct drug screenings so other options are available. If you do not have the resources to train your staff on drug testing, you can hire a local lab to do in house testing. Drug testing companies will gladly come to you and conduct drug testing with same-day results.

Don’t keep your prospective employees waiting on test results. In-house drug testing will ensure you are getting accurate results so you can quickly bring on the newest member of your team.

Sarah Hope is the CEO of 911 Drug Testing in Tempe and Glendale Arizona. 911 Drug Testing is a one-stop-shop for background checks, drug testing, fingerprinting and immunization.