Join us as we explore the essential stages of successfully managing a self-storage facility. From launching your business to efficient operations and growth strategies, Stacy Rossetti provides valuable insights and practical tips. She unveils innovative marketing tactics, revenue optimization techniques, and expansion opportunities that will position your business for long-term success in a competitive market. Whether you’re a newcomer or an industry veteran, this podcast is your go-to resource for maximizing profitability and achieving long-term success in the self-storage industry. Get ready to unlock the potential of your facility and elevate your self-storage management skills.
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Mastering The 4 Essential Stages Of Self-Storage Management
Let’s get into the stages. I teach investing in self-storage in four stages. The webinars, coaching, and everything that I go through are based on these four stages. Let’s get into that so you have this as well. Stage one, get a facility under contract, which is probably where everybody’s at. You all want to get a facility under contract. Does anybody here own a storage facility or have a facility under contract?
You have stage two, which is once you get it under contract, then you have to fund and onboard it. This is stage two. Onboarding is everything that you need to do in order to take payments on the first day or week that you own that facility. The longer that it takes you to be able to take payments, the longer it takes for you to get money. The whole purpose of owning a storage facility is to get that income coming in so that you have enough money to pay your mortgage or whatever you have to do. For instance, we closed on a facility. I got an SBA loan. Our mortgage is coming up and due.
Our mortgage is $18,000 a month. In our minds, the question is, how are we able to make enough money every single month to pay that mortgage on top of everything else that we need to do? You set all that up through the onboarding phase. You don’t want to wait until closing and then be like, “Now, how do I get everything all set up?” We’ll talk about that a little bit because that’s part of management.
Stage three, now you own the facility, and this is where you’ve closed on it. That’s your goal. This is where your goal is to get it under contract. This is like finding them. You’re going to find it and then get it under contract. The goal here is to transfer ownership. Now you own this facility. Now what do you do? What are all the things that you have to do within the first 90 to 120 days of owning a storage facility? This stage right here is chasing tenants unless you buy a facility that’s either abandoned or it’s a new facility that needs to be late leased up or it’s only 20% full. We’re in the process of buying a facility, and it’s 25% full. You’re not going to be chasing a lot of tenants. You’re going to be doing the lease-up phase. That comes into stage four, which is automation systems, “This is how it goes.”
Stage 1: Get A Facility Under Contract
Notice in all four stages, stage one is finding it. Everybody is thinking, “How do I find these things? How do I get them under contract?” That’s one part of the whole equation and the bigger picture. The truth is that when you buy a storage facility, the bulk of what you’re going to be doing is under management. Most people do not even consider management as part of the process of owning a storage facility. The truth is that when you buy a storage facility, you become an asset manager. The better that you can manage that facility, the more money you’re going to make. If you are not good at managing the facility, then you are not going to make as much money as you could because I’m in the process right now of going through liquidations.
I’m selling three of my facilities. My facilities for all three of those are around 80% full. I’m not at the 90% mark. I’m at the 80% mark. What I’m doing is trying to get lenders to fund the deal for my buyers, and when I talk to my lenders, essentially all they care about is occupancy and rental rates. That’s it. They don’t care how much curb appeal you have. They don’t care whether or not it’s gated or not gated. They don’t even care about any of that. All they care about is how much money that facility is making and that’s it.
We’ll get an appraisal to go out because we want to make sure it looks okay, but the herbal pill is not a big factor going into the lenders. It might be a big factor in getting customers to come in a little bit, but it’s not a big factor in lender’s perceptions. You want to be very good at preparing for closing and being ready so that on day one or in that first week, you are ready to take payments. Going further, how long is it going to take you to get a hold of the tenants and get them into your system?
Stage 2: Onboarding
In storage for stages 2, 3, and 4, I’ll break this down so everybody has an idea. We have onboarding. I’m not going to get into funding. Funding is in stage two, but I did funding. We’re only going to talk about onboarding a little bit. Onboarding equals taking payments. How can you take payments? You have to have software. During the onboarding period, you are doing demos of all the different types of property management software out there for storage facilities so that you can make an educated decision on what type of software you want to use in order to manage your facility.
I tell all my students to do as many demos of every software out there. There’s a plethora of software out there, but if you want to get an idea of what everything offers, then you also have to ask yourself with the software, “How in-depth do I want to be for stage four?” Remember, stage four is to automate and systematize. When I think of stage four, the two things that you have to think about when you start looking at software are, “How many storage facilities am I going to be owning overall? Am I going to have one?”
Remember that 50% of all storage facility owners only own one storage facility, and there’s nothing wrong with having one. If you want to own 2, 3, 5, 10, 15 like me, 20, 30, or whatever you want to own, then you have to think ahead because if you choose software and then you decide to move over to another one, and we have 2,000 tenants, could you imagine if we decided to move to another software? It would be like hell. It would be horrible.
50% of all storage facility owners only own one storage facility and there's nothing wrong with that. But if you want to own more, then you have to think ahead. Share on XEven when you have 50 or 100 tenants, it’s horrible to change software and get all the tenants to get them to re-login and give their account information because what happens is when you go from one software to another software, that payment information is not saved because you can’t just transfer it over and stuff or whatever.
You have to get the new contract signed with that new software. That’s the thing with software, the onboarding part which comes in under transfer ownership. Transfer ownership is getting the contract signed, payment information and the tenant account set up. Choosing the one software that’s going to grow with you based on what your self-storage investing goals are is very key to the success of the management of your company, companies, or how many you’re going to have. You want to be very clear about that as you start getting into stage two.
A lot of people go, “He’s already got ESS. Let me do us ESS, and I’ll transfer it over. It’s no big deal.” The thing is ESS doesn’t have a lot of automation and systematizing in it. ESS is for those owners that have 1, 2, or 3 facilities. If you’re having more than a couple of facilities with ESS and you want to automate stuff because ESS does not do a rate increase automation. You have to manually increase your own rates. Every single software has its own nuances. There’s not one perfect software that can do everything that you want.
In fact, my husband is like, “I want to start my own software.” That’s what everybody always says when they have a lot of facilities, “You are not going to go spend $100,000 on the software.” StorEDGE is what we use. Honestly, we’ve never used any other software because we’ve always used storage. One thing I love about storage is that they are always asking the customer what they’re missing, and they’re funneling a lot of money into development.
Every six months, there’s some new thing that’s coming out for them, whereas in ESS, there is no development at all. What it was many years ago, it’s exactly what it is now. The only development ESS has is that they raise their prices every six months. There’s Yardi Breeze. The point is that during your onboarding phase, you want to demo every single software out there and choose the best software that’s going to fit your goals and your need.
Personally, I always had in my mind that I was going to own 30 storage facilities. I don’t know why I had this number 30. I don’t know if we’ll ever get to that number because we’re at 15, and it’s a lot of storage facilities, but I thought 30 is a good number. I did demos of all the software that was out there at the time. We settled on storage because it had a very good user interface, and then also they were adding a lot of stuff to it, and they have a lot of ways that you can automate stuff. For us, making our facilities as passive as possible and being able to automate as much as possible is very important for us.
In fact, if we were using a different software outside of storage, we probably would not have been able to be living in our RV and travel because from August 2020 until October 2021, we lived in an RV and traveled full-time. For a whole year, we were on and off in the RV up until then 50% of the time then we decided to go full-time. At that time, we had twelve storage facilities. StorEDGE automated a lot of that stuff. The only thing we had to do was manage our boots-on-the-ground person and our in-house phone person. At that time, for twelve facilities, we only had 2 or 3 other people working for us, and that’s it.
It was very easy to manage all that. It’s depending on what your lifestyle wants to be and what your goals and dreams are for storage investing. That’s when you do. The software demos, and you try to figure out which one you want to use. You need to be asking good questions like, “What can I automate? What are all of the different features that you have? What are the other owners of facilities maximizing within the software? What are some things that your beta testing or your customers have told you that you’re missing?” You want to ask some good questions when you’re doing these demos for software.
Onboarding equals taking payments. That means the software and doing your demos. You want to be able to take payments. Also, during the onboarding phase, you’re getting ready for closing. If you buy my Deal Analyzer 4.0, which is you go straight to StacyRossetti.com, you can buy. It’s only a couple hundred dollars. I have a whole bunch of training videos that go with it.
Inside that Deal Analyzer you get the onboarding checklist because our Deal Analyzer essentially takes you step by step in analyzing a storage facility. Once you get it under contract, then you also need the onboarding checklist. Our onboarding checklist has 50 things on it. You have to do a lot of stuff, but I’m only going over a handful of the most important things. Remember that if you do want to get more information on onboarding, you could get the deal analyzer and have that list of things that you need to do.
Onboarding also equals, “What do we need to do for closing? What are the things that we need to do for closing?” You have to find an attorney or a title company to close your deal and do all the stuff that they need you to do. On top of that, you also need to find funding, but what you need to do is make sure that you have whatever’s required of your lender to close. The big thing that you’re going to have to do by the closing period is get insurance on the property.
Sometimes getting a quote for insurance takes forever. Onboarding your software and, picking out your software, doing the demos could take weeks to figure that out. On top of that, onboarding your software. Let’s say that you do choose Breeze or ESS. To get that software ready so that on day one, when you close, you’re ready to use that software, that onboarding process for the software company takes weeks. They can’t just flip a switch and have it ready for you.
It takes 3 or 4, sometimes up to 5 or 6 weeks to do that depending on how busy they are and how many people they’re onboarding or whatever they’re doing. You also have to keep that in mind. You can’t wait until the very last week and be like, “I need software. Hurry up and go get something.” What happens with the software company as well is they are going to want to get all of the information for you because what they do in the initial setup is get the software ready for you.
They’ll want to get your contract, put it into the system and get all the fields set up correctly so that you can check it. They’ll want to get your rent roll and your tenant information so that they can’t put all that information into the system that you have it ready for the first week. You have to gather all this information for the software from the seller so you can give it to the software company you can have them set all that up. That takes several weeks to do. You want to make sure that you’re focusing on that. One of the things that you’re also going to need to close is you’re going to have to have insurance on the property by the closing date.
Sometimes even a couple of days before, we close on our SBA loan. To close on an SBA loan isn’t easy. On top of that, they want everything to be done before closing. We had to pay our insurance in full for the entire year. It was almost $10,000 for the insurance, and because they wanted to show that we had coverage for that year, the proof of insurance by closing day, and they went, we had to have all the beneficiaries set up and all that. It took us several weeks to get the quotes. The first time that you’re getting insurance, you’re quoting out a whole bunch of insurance companies. Now we have one insurance company, and they can add it to our policy.
It doesn’t take that long for us. It took like a week, especially in the beginning when you don’t have any storage facilities, and you want to look at a couple of different insurance companies. You’ve all gotten insurance quotes on your houses and stuff. They don’t give that to you immediately, especially for commercial policies.
Insurance is like a commercial policy with hazard insurance. Insurance includes if there’s a tornado, a tree falls on it, or there’s something like that that happens. That’s the insurance I’m talking about. You’re going to quote that out depending on each facility, and how big they are. It’s what it’s going to cost for the insurance company. Insurance has crazy prices. They have the whole thing where you can finance your insurance, but you have to pay 20% interest if you’re going to finance. I’m going to pay 20% interest, so we pay cash.
You want to make sure you have all that cash ready to purchase that facility as well too before the closing date so that you can show proof of insurance. That’s a lot of onboarding stuff. Those are a couple of the main things for onboarding. Once you close on the facility, now we’re moving into transfer ownership. This right here all comes from the software. You’re in the onboarding phase. You’re taking several weeks to set your software up or whatever software that it is.
I recommend the software. If you don’t have the software, then how are you going to make this passive? It has become a job. Even if you have a small facility, you should have software. You’re taking a couple of weeks to get everything set up and depending on what their process is to set everything up. You have to make sure that you get all the information from the owner and then, depending on each of the software, how their process is.
In StorEDGE, the way that they do it is they give you the spreadsheet, and they want you to fill the spreadsheet out. The spreadsheet has 100 columns. It has a ridiculous amount of columns of how much stuff you have to put on there. You have to get all that information from the owner and then input it into the spreadsheet. You give this spreadsheet to them because then they can import it right into the software.
Personally, we have one person dedicated to this spreadsheet because there is a lot of work to put all that in. We closed on two facilities. We had 500 new tenants. Could you imagine you have to manually put all that information into the spreadsheet and then give it to StorEDGE? Then they import it and set everything up. With each of the software companies, you have to meet with them and go over how you want your contracts set up and all your fields set up.
The way the software work is like, “You have to create the template and create the fill.” For instance, in the software, you have, “Let me make a list of this. You guys have this,” but the software, this is where you’re going to set your contract up. If you have your contract and it’s going to say like this and then the name. It’s going to have more words and company, each of these is filled. Also, on your contract, you have your rates. It is, “A 10 by 10 is this.” You put the rate in of what they’re paying.
This is like a field or whatever it is. You have to have all of your rates. You have to already know what the rate is and set it up within the software. You give the software company your rates. Now, later you can go in and change the rate. It changes automatically onto the contract. You give them the initial rate of what they’re paying. If they have a 10 by 10 and they’re paying $85, then it’s going to come on and say, “You’re paying a 10 by 10 and it’s $85. It’s due monthly on the 1st of the month. Here are the late fees.” You have to list out every late fee that you have. We have a ridiculous amount of late fees. We make a lot of money on late, auction, or lock fees. We have a lot of fees. You can figure out whatever fees you want to do, and then you have to list all those out.
“On the first of the month, your rent is due. By the third of the month, if you don’t pay, here’s a late fee. By the eight of the month, if you don’t pay, here’s another late fee. By the tenth, we are going to go out and overlock. That’s another fee. If you don’t pay by the fifteenth, then we’re going to charge you another fee and then we’re going to start the auction process. That’s another fee. We go through the auction process, and that’s another fee.” We have a ridiculous amount of fees. We list those on the contract because you want the tenant to see that if they’re late on their rent, they’re going to have a lot of fees.
This is all set up in the onboarding process. You have to know all this in the onboarding phase so that during your transfer ownership phase, when you’re chasing tenants, this is all chasing tenants, then you’re able to get them to sign the contract and get the payment information. Let’s say you have parking. You have to have an addendum for parking. Are you going to have rental or tenant insurance? We could do tenant and hazard. You have to have your tenant insurance set up so that when you charge tenant insurance. You want to charge tenant insurance because you’ll make a couple of thousand dollars a year on that.
You want to have that all set up and have to have that set up before you send out your contract because, within your contract, you’re going to have your tenant insurance addendum that’s going to be set up. You’re also going to have, in your contract, your parking. If you have new parking set up, it’s going to be all your parking addendum. You have to also have the system set up for taking your license ID because you have to have a picture of the tenant and their ID and with them holding the id, or you have to have some software that manages that. That all has to be set up. This is called proof of a tenant because you have to have all that.
Think, with the software, how much work you have to set up. You got to have your late fees set up, rates of units, and sizes. You have to set your sizes up, and then you set the rates up for your sizes, the late fees up, and all your tenant insurance and parking stuff. File that up inside the software. During that whole process, you’re chasing tenants to get them to sign this contract. The onboarding phase stage two is all the work that you have to do, like getting your software set up so that on day one, you could take payments.
A lot of it is what you’re doing through that whole phase. I always tell my students, “Make sure you get as much time that you can in the closing process,” because during that time is all the things that you have to do to be ready to take payments from tenants in that first week that you own that facility. The longer that it takes you to set this up, then the longer it’s going to take for you to start getting payments.
We’re asking for 90 to 120 days to close just because we need much time in order to set everything up because it does take that much time. One of my students bought a facility and closed in 30 days. I told her she was crazy, but it was a cash deal. She paid $700,000. She was like, “I’m paying cash. I can close in 30 days.” I was like, “You didn’t realize how much work you had ahead of you,” but she was like, “I’ll be fine.”
She was socially running around like a crazy person. She was like, “I should’ve listened to you. I should have pushed this thing out like another month or whatever.” After she closed, she still did not have the software, it took another fifteen days after closing for her software to be onboarded and for her to start getting tenants in and stuff. It took another couple of weeks.
The onboarding phase is such an important part of getting everything up and running. Remember I told you the key is how well are you going to be at managing it? If you are not systematizing these three processes as much as possible, then over the course of your buying your 2nd and 3rd facilities, it’s not going to fall into a good rhythm.
We’re at the point where, every 90 days, we close on a facility. If you can think of stage one, and then we’re moving to stages 2 and 3 every 90 to 120 days, something like that is where we’re at, then we’re bringing in another facility, and it’s moving to stages 2, 3, and 4. We’re bringing those facilities, and it’s this big chain is how it’s working for us.
Stage 3: Transfer Ownership and Stage 4: Automate and Systemize
Onboarding and taking payments software are stage two. We’ve got transfer ownership for stage three. A little bit of setting up, getting everything ready so that you can have that contract ready, then stage four is automating and systematizing. This all falls down into three things. First of all, it’s your software. Cheaper is not always better if you want to systematize and automate things. You want to see which one gives you the bells and whistles that you know you’re going to take advantage of.
Cheaper is not always better if you want to really systematize and automate things. Share on XThe truth of the matter is that most owners of storage facilities, even if they have software or whatever software that it is, are only utilizing 20% of what that software offers. Think about that, of all the software that you have and utilize on a regular basis, are you maximizing that software to its fullest potential? We’re always using what we exactly need and that’s it. After you get into using the software for so long, you don’t even want to learn any of the new things that it offers.
The truth is this software is super powerful. If you can take advantage of all that they have to offer, then you can truly automate as much as you can possibly think of within your business that it’s doing it all on its own depending on what the software offers, obviously. In storage, one of the things that we love is that the software offers dynamic pricing.
Dynamic pricing is something where you set it up so that your prices are changing based on what your vacancy is. There is not a lot of software out there that does that, but if we’re 80% full and we’ve got 10 by 10s available, this much. If we’re 85% full, they’re this much and if they’re 90% full, they’re this much. If we only have one 10 by 10 left, you can better believe that that price is high.
That one person that needs that 10 by 10 is going to pay that extra high price. Our prices on our units are not one price of $80 for a 10 by 10. Our prices are all over the place. When you look at our prices, you have to figure out what the average price per square foot is for a 10 by 10 from our pricing because every single month our prices are changing based on the availability of that unit. That is dynamic pricing that you can automate in some of the software, but not most of them. Another thing that we utilize in our software is auctions. Can you automate your auction process? You do not realize this, but your auction process is a lot of work and that’s why a lot of people don’t even do auctions.
In every facility that I ever buy, owners rarely ever do auctions because it’s a lot of work to do all that. The question is, what can you automate about the auction process? Some of the software have mechanisms where you can automate your auction process as much as possible. Now, we do all of our auctions online. I haven’t even been to any of my facilities in years. Our boots-on-the-ground person takes pictures, and then our office person uploads those pictures to the online auction. Our software has an API that works with that auction website, and then it’s all completely automated within the software. You want to make sure that you can find software that does something like that to automate as much as you possibly can with your auction process.
In self-storage, you want to make sure that you can find software that does something to automate as much as you possibly can with your auction process. Share on XPete and I have not done anything with auctions in years in our business because we handed off to our boots-on-the-ground person to take pictures, to our office persons to upload the pictures into the software and get all that set off then our software automates everything. I love the Mail House. Does your software company mail letters to you? When you buy a storage facility, how much mailing do you have to do?
For your first facility, maybe you buy one that’s $100 doors, and you have 80 tenants or something like this, or you’re doing 80 letters, but you have to manage those 80 letters letting everybody know that you are the new manager. The thing is, some of the software companies also have an in-house mailing company because what we do is we send out a letter from the old owner letting the tenants know that we have bought the property.
As soon as we close on our property, a letter from the owner, the ex-owner, goes out saying, “Letting you guys know I’m retiring. I’ve sold my property to Miss Lillian’s self-storage. Miss Lillian’s self-storage is now the new owner. Their team is going to contact you on what the process is to get into their new system. Please contact them at this number. I am no longer in the equation.” That letter goes at birth as soon as we close through the mail house. That’s a template that we import the list of tenants and say, “Send out the letter to.” That’s all we do.
A couple of days later, a letter from us goes out and says, “I’m just letting you guys know we are the new property managers. Please contact us so that we can get you into the system. If you need help, we’ll help you get into the system, or please go to the website, and you can go on and do it yourself. We need the contract signed and your payment information within the next seven days. If we don’t get it, there’ll be a fee put to your account for not giving us your information.”
That letter goes out right after the other one does. That goes through the mail house. We were doing those in-house for a long time until thank StorEDGE implemented the mail house. It’s the same price. It’s cheaper because we would have to pay per hour and then plus postage to our office personnel to do that. Now all we have to pay is the postage. That worked out there.
There’s so much stuff, honestly. There’s a ridiculous amount of stuff. Another thing that I love about the software is the communication. Do you want to make sure that you get software that has emailing and texting capabilities? For instance, when somebody calls and asks us for the prices of units. It’s like, “I’m interested in getting a 10 by 10. What’s the price?” “Let me put your information in the system so that we have them as a lead, then that way I could tell you the prices.”
We put the information in. We give them the price and say, “It’s 10 by 10s, $80,” or whatever. They’ll say, “Let me call around.” We say, “What we’re going to do is we’re going to text you a 20% off code. If you call around and you find something cheaper than our 10 by 10s, let us know, and we’ll match that price and give you a 20% discount.” We text them that code and that message as well so they know.
That way if they are calling around and they find something that’s cheaper, then they can let us know and we’ll match that price. That’s all done through text messaging and email communication. You want to make sure that your software handles all emails. Think about what type of emails. It’s email reminders for payments due to late fees and auctions, but then there’s also trying to get referrals and ratings like Google Ratings.
You have many ways and things that you need to communicate to your tenants about, and you need to set all those up as an email marketing campaign. You want to make sure that your software offers that as well. You also want to make sure you have texting capabilities so that you can remind people when they’re due on their payments and then also send out codes or whatever you need in communicating with people that are interested in getting information about your unit sizes and stuff and locations.
Communication is very good. When you’re in stage one, you got it under contract. It’s going to take you a couple of months obviously to get out there and get it under contract. It’s going to take you a couple of months to close on this thing and onboard it. It’s going to take you a couple of months to chase those tenants and get your software and everything set up. It’s going to take you a couple of more months to dig deep into that software, utilize everything that software has to offer so that you can automate as much as you possibly can so that during this stage four, you’re thinking to yourself, “I feel like I can get out there and look for another facility.”
The goal is to automate as much as you can so that you can start looking for another facility and then do this cycle again. Those are the four stages and we went over the three main parts of the management stages. I want to remind everybody that all this information that I talked about is in my course. Make sure that you check that out at StacyRossetti.com. Get the deal analyzer so you get the onboarding checklist as well.
Dana is asking, “Do you use a broker?” No, I do not use a broker. I have students that have brought me deals. I’ve bought one facility from a wholesaler and a student that wholesale the facility for me, but all of the other thirteen facilities that we have were all found by me going directly to the owner. I have never hired a broker to find me a facility.
“Do you use a broker for insurance?” We use a broker for insurance. You want to get a broker so they could see where all the prices are there. I have a facility being built on a part owner. After five years, we’re going to sell the facility for $10 million, “Would you recommend selling once the mature period of five years is obtained? Would you recommend keeping the units?” Essentially whatever amount of money it’s going to cost you to build that facility when you’re done building that, I would be right around the double price for selling it, but if you hold onto that and you lease it up, you’ll be selling it at the triple amount.
Let’s say that you’re building a facility for $500,000. You’ll be able to sell it around the $1 million mark, but if you hold onto it or you’ll be at $1.5 million when you lease it up or something like that to give you a perspective. I appreciate you hanging in there and reading. A quick reminder for everybody, you want to check out the three-ad. It is the Super Simple Self-Storage online course, the Deal Analyzer, and then the Wednesday free training.
These three together are a powerhouse for self-storage investing. I also have a Facebook group, Super Simple Self-Storage. Make sure you join that. Any questions that you have, put them in there. My website is StacyRossetti.com. If you want to be a passive investor, it’s StacyRossetti.com/Fund. StorageNerds is my coaching program. I appreciate your time. Take care.
