Rental Property Investor · White Plains, NY · Member since 2018 · 348 posts · 86 votes
We're moving into Self Storage. We just took over a around 300 unit self storage unit outside of New Haven, CT. Keeping the same team, but installing a general manager to oversee the operation. Brings in around 30k a month, but the one problem I have is that about half of that is in cash. I do not like handling cash, and the banks do not like cash either. However, I am concerned that if I push the clients who are paying in cash to credit, they will leave. There are two other self storage businesses within two miles of ours; and one of them is already modernized.
Any tips on the best way to manage this business? I am also looking for ideas and suggestions on the best ways to modernize it as well. It was an old 1900's warehouse that was converted back in the 90s into a self storage building.
Move to credit gradually. We run our properties 100% cashless. I don't think you will get appreciable push back but to be safe, just do it slowly. Start with the 20% of the clients that have the highest discounts relative to current street rates and raise their rates by X percent but offer to only raise it by .5x percent if they go to autopay...then repeat until you moved everybody over. Doing so will allow you to absorb Any "move outs" and you'll replace them with people at higher rates anyways!
Move to credit gradually. We run our properties 100% cashless. I don't think you will get appreciable push back but to be safe, just do it slowly. Start with the 20% of the clients that have the highest discounts relative to current street rates and raise their rates by X percent but offer to only raise it by .5x percent if they go to autopay...then repeat until you moved everybody over. Doing so will allow you to absorb Any "move outs" and you'll replace them with people at higher rates anyways!
@Mike A. We have taken over several and have put out notifications to all our customers that we are moving to cashless and have received minimal pushback. We push the credit card system that our software provider (Easy Storage Solutions) provides, and we tell them we take checks or money orders as well.
We always use security as our main reason and that we do not want an employee having to sit on large sums of cash, and are no longer taking cash payments to provide a safe environment for our employees. If they say they cannot do credit or check, we explain that most convenient stores and post offices sell money orders.
We've never lost a customer due to it and most likely the places down the street will have the same/similar policies.
Agree with all of the responses here. We have always notified existing tenants with a "new owner intro letter" that contains a little bit of info about us and the new updates coming to the facility which will provide a better experience for them.
I’m also interested in knowing what everyone uses for collections. Do you just send out emails or go the next step by making calls and text messages? Are there any good vendors to use for these services?
Currently, I send out invoices on the 15th for the next month's rent and then a late payment reminder after the grace period.
OUr collection process is fully automated (with rare exceptions a couple times per year for auctions). We use ESS and customers get automated mail, email and text messages on a schedule. And 3-4 times per year I manually process auction notifications. I will call/text with people and try to work with them to avoid auction if possible. Typically our accounts receivables (greater than 30 days) 1.5-2% of gross revenue....it creeps a bit higher than that right before auctions and falls to below 1% right after auctions.
@Mike A. What is occupancy right now? I would be hesitant to offer any sort of discounts. Just because your facility is smaller doesn’t mean it’s worth ‘less’ on a unit basis.
If you are next to like a CubeSmart or something then drifting right below their rates is probably not a bad idea.
@Jason Black I would again say ditto to @Michael Wagner on this. Put work in up front to get as many as possible setup on recurring billing and it makes like much simpler down the road.
@Mike A. Stay really focused on revenue, (charging more) more than occupancy. Common trap operators fall into (I’m not immune of doing the same sometimes) is just trying to be ‘full’.
You're getting a lot of great advice, and the good news is this: as the "new owner" you have some flexibility. Since you're focusing on improving the facility. you're also focusing on the customer's experience. Recurring billing, automation and these types of tools are all a part of keeping a self storage facility relevant in your location, and while some customers might question your shift to cashless, in our experience, very few will pack up a unit as a result of new ownership tweaking the payment options. It is 2019, most, if not all, of our potential clients have credit and debit options open to them.