Self-storage managing from afar!

13 Replies

Hi! While looking for investments, we have found a small mini-storage (self-storage) facility for sale, but it is over 2 hours away. It is not large, and there is no fence.

I hear a lot of talk about managing from a distance, and just having minimal "boots on the ground".  But how exactly does this work? 

Online contracts? 

How do you hire someone far away?  How much are they typically paid?  I'd rather not run a payroll! Can they be paid in a way to avoid that, like maybe commision? (I've owned a business for years, but don't have employees, so this is new to me.) 

 We are close enough, we can go down there if we need to, but definately don't want to drive there for each new renter/vacancy!  

Also, would love any info about your experiences with SBA loans, (I've discussed them with the loan officer, but not known anyone that has gotten one.)

Thanks a million, guys and gals!

@Dawn Young I took a self storage crash course and they recommend to purchase a property that is large enough to employ at least 1 full-time onsite employee. This will allow you to invest out of your local area.. I have a passive mind and always consider the automated systems but the flaw of that is the lack of face to face interaction with customers.. Self storage is a great niche

SBA loans are no dischargeable in BK situations.. use them as last resort..

just brian storming but maybe you find some retired person that will just show the units and open them

I don't think they need a license for that.. its not like a PM job.. and you pay them a spiff.

rent comes to you obviously.. but I would think you will need some interaction.. 

I owned a 44 unit and it was 2 small for an employee and it was across town so it was a hassle to who up to rent one and the person did not show.. once I got it full though it stayed that way.. pretty solid.. I ended up putting a condo plat on it which was really cool.

I own 3 facilities on opposite ends of the country and use a 3 pronged remote management structure that seems to work really well.  The three components are an online portal that customers can use to rent, pay for storage etc., a industry specific cal center and "boots on the ground" (an individual who is local to the property who can perform the needed onsite tasks). You can avoid payroll by ensuring your structure your agreement with them such that they are a 1099 sub contractor NOT an employee (bes ure to get smart and play by all the rules!).  Your really only looking at a couple hours per week.  $15-20 per hour is standard which might be a bit high given the ease of the tasks but you need to take into account the fact that they are driving out and disrupting their life for what is often a 10=30 min task. With this strategy, I spend about 5-10 hours per week "managing" this portfolio and it handily pays our families bills. 

I've also used SBA 7A loans on multiple occasions. They, like any product, have pros and cons. Cons are high LTV (if that;s your aim) and relatively good terms. Upfront costs are a bit expensive but many can be rolled into loan). They do come with a pre-payment penalty. Also can be a bureaucratic mess to get approval but this can be mitigated by working with a bank who is VERY experienced in doing these loans. You DO NOT want to be the person who the bank uses to "learn" how to do an SBA.

Feel free to message me if you have other questions.

Originally posted by @Michael Wagner :

I own 3 facilities on opposite ends of the country and use a 3 pronged remote management structure that seems to work really well.  The three components are an online portal that customers can use to rent, pay for storage etc., a industry specific cal center and "boots on the ground" (an individual who is local to the property who can perform the needed onsite tasks). You can avoid payroll by ensuring your structure your agreement with them such that they are a 1099 sub contractor NOT an employee (bes ure to get smart and play by all the rules!).  Your really only looking at a couple hours per week.  $15-20 per hour is standard which might be a bit high given the ease of the tasks but you need to take into account the fact that they are driving out and disrupting their life for what is often a 10=30 min task. With this strategy, I spend about 5-10 hours per week "managing" this portfolio and it handily pays our families bills. 

I've also used SBA 7A loans on multiple occasions. They, like any product, have pros and cons. Cons are high LTV (if that;s your aim) and relatively good terms. Upfront costs are a bit expensive but many can be rolled into loan). They do come with a pre-payment penalty. Also can be a bureaucratic mess to get approval but this can be mitigated by working with a bank who is VERY experienced in doing these loans. You DO NOT want to be the person who the bank uses to "learn" how to do an SBA.

Feel free to message me if you have other questions.

 Thankyou so much, Michael, that helps a lot!  Do your "boots on the ground" people "show" the units?  Or are pics of the interior on the website?  

Agree with @Michael Wagner .  I have done the same.  Smaller facilities like this will operate just fine with an online portal and a call center.  There are companies that can handle both.  You could try and find out if one of the tenants is interested in being your "part time maintenance" person.  You can pay by the hour or I have actually created a schedule of rates before where they are paid a flat fee for certain activities.  If you do hire one of the tenants, don't trade out for rent.  They pay rent, you pay them as a 1099 sub.  It's much cleaner that way.  You can also try posting an add for part time work on Craigslist, or if it is a more rural community you can call some local churches and see if they know of a retired person that might be interested in helping, do the same with local hardware stores.   

SBA is good for the right situation but does have some drawbacks so it really depends on your plans for the property.  If you decide to go the SBA route, look at Live Oak Bank.  They specialize in SBA storage lending.

Happy to help further, feel free to reach out.

Originally posted by @Dawn Young :
Originally posted by @Michael Wagner:

I own 3 facilities on opposite ends of the country and use a 3 pronged remote management structure that seems to work really well.  The three components are an online portal that customers can use to rent, pay for storage etc., a industry specific cal center and "boots on the ground" (an individual who is local to the property who can perform the needed onsite tasks). You can avoid payroll by ensuring your structure your agreement with them such that they are a 1099 sub contractor NOT an employee (bes ure to get smart and play by all the rules!).  Your really only looking at a couple hours per week.  $15-20 per hour is standard which might be a bit high given the ease of the tasks but you need to take into account the fact that they are driving out and disrupting their life for what is often a 10=30 min task. With this strategy, I spend about 5-10 hours per week "managing" this portfolio and it handily pays our families bills. 

I've also used SBA 7A loans on multiple occasions. They, like any product, have pros and cons. Cons are high LTV (if that;s your aim) and relatively good terms. Upfront costs are a bit expensive but many can be rolled into loan). They do come with a pre-payment penalty. Also can be a bureaucratic mess to get approval but this can be mitigated by working with a bank who is VERY experienced in doing these loans. You DO NOT want to be the person who the bank uses to "learn" how to do an SBA.

Feel free to message me if you have other questions.

 Thankyou so much, Michael, that helps a lot!  Do your "boots on the ground" people "show" the units?  Or are pics of the interior on the website?  

 The Boots on the ground can show units but it is not often required.  I would guess maybe 5-10% of folks want/need to see a unit before renting.  I instruct my call center to try to get them to rent a unit and if its not to their liking for any reason, they can switch or cancel the unit for a full refund.  That saves the boots on the ground from having to make a trip just to show.

@Dawn Young Although I live within 10 minutes of our facility, I’m still transitioning into using combination disc locks and online rent payments. Tenant calls initially, and I tell them to download the lease from the website, review it, ask any questions. Then they need to pay the month’s rent + deposit, after which I assign unit number & they complete the lease and return it to me. After I have lease + rent and deposit, I provide combination to the lock on the unit. The combination can be changed after a tenant vacates. I used to use padlocks, but it‘s expensive up front and also re-keying when keys get lost, and I had to meet with tenants to provide the key. I understand this system isn’t perfect, but it should keep me from wasting time meeting tenants when about 25% of callers never show up to the scheduled meeting anyways. Last, timing is everything in storage. If you get a call and can’t meet right away, a lot of renters will just move to the next facility on their google search. So being able to lease without having to meet gives you the ability to put a renter in a unit at any time, even if you’re out of town.

@Dawn Young That shouldn't impact anything in your analysis. Maybe another facility is wildly overpriced, or both of them are, doesn't really tell you anything about yours in terms of that. You need to find the price that works for you and work to get there.

@Dawn Young You can ask local banks what they've seen for cap rates on self-storage in the area to see if the price that works for you is a realistic offer. Just because one hasn't sold recently doesn't mean there hasn't been a new loan/refi that required an appraisal.

Originally posted by @Michael Wagner :

 The Boots on the ground can show units but it is not often required.  I would guess maybe 5-10% of folks want/need to see a unit before renting.  I instruct my call center to try to get them to rent a unit and if its not to their liking for any reason, they can switch or cancel the unit for a full refund.  That saves the boots on the ground from having to make a trip just to show.

Hey Michael, do you mind sharing what call center you use? Or how you found one for this? Thanks