SBOA Self-Storage Unlocked Magazine NOV2023

TOP 10 REASONS TO START AN INTERNAL AUDIT PROGRAM IN 2024

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2024

SMART

UNITS

ENHANCING CUSTOMER EXPERIENCE AND INCREASING ANCILLARY REVENUE

DESIGNING A SELF-STORAGE

FACILITY

HOW TO SELECT YOUR DESIGN TEAM

FOR ROOKIES!

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2023 Storage Business Owners Alliance

THE FUTURE OF SELF-STORAGE HOW REMOTE MANAGEMENT IS REVOLUTIONIZING THE INDUSTRY

CONTENTS Simply click on an article below to go to it.

4... Note from the Editor 5... What is Storage for Rookies?

6... Designing a Self-Storage Facility: How to Select Your Design Team 9... Where to find the SBOA on social media 10... Internal Audits: 10 Reasons to Start in 2024 12... Ready to Rock Self-Storage Advertising? Get Started for Only $1/Day! 14... The Future of Self-Storage: How Remote Self-Storage Management Is Revolutionizing the Industry 16... Enhancing Customer Experience and Increasing Ancillary Revenue with Smart Units 19... SBOA Mystery Shopping Information 20... And now for the rest of the story…

22... How to Find SBOA Webinars 24... This Issue Magazine Sponsors 2

NOTE FROM THE EDITOR

Dear Valued Readers, Welcome to the inaugural issue of Self-Storage Unlocked Magazine, proudly presented by the Storage Business Owner's Alliance (SBOA).

As the SBOA Marketing Manager and Editor, I am delighted to introduce this dynamic digital platform dedicated to exploring the ins and outs of the self-storage industry.

Our magazine is designed to unlock valuable insights, trends, and innovations that are instrumental in navigating the ever-evolving landscape of self-storage. With a focus on providing storage business owners, operators, and investors with actionable insights and education, we aim to help you unlock the full potential of your endeavors.

In this debut issue, we delve into the latest industry advancements, share insights from seasoned professionals, and present practical strategies for addressing challenges and seizing opportunities in 2024. From cutting-edge technologies to operational best practices and market trends, each page is crafted to enrich your understanding and inspire strategic growth.

As your key to unlocking success in an industry that continues to redefine itself, Self-Storage Unlocked Magazine invites you to immerse yourself in the wealth of information within these digital pages. Join us on this exciting journey, and let's unlock the limitless potential of the self-storage industry together.

Thank you for being part of this venture with us! To kick things off, don't miss the free promo code for our upcoming webinar, Storage for Rookies, on the following page.

Warm regards,

Iris Czygan Iris Czygan SBOA Marketing Manager Editor, Self-Storage Unlocked Magazine Do you have a great idea for our next issue? Feel free to reach out to me by clicking on one of the icons below:

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Designing a Self-Storage Facility: Designing and developing a profitable self-storage facility requires much more than picking the perfect location and unit mix. The vendors you select and the team you work with can impact decision making and impact the bottom line.

Before you build or start down the design planning road, it is imperative that you engage a company to do a market feasibility study. This is a critical first step since most investors and developers want to know if the property will be profitable before going into the design phase.

Once your market feasibility study is complete, the Forge team will provide a complimentary site layout in this preliminary phase of the project. This site layout can then be turned into AutoCAD drawings so the architectural team can make any necessary updates and incorporate these into the architectural set of drawings.

The Design Team So, who are the key players you will need in your design team? Below we outline the major vendors and how they will contribute to the development of the most aesthetically pleasing, profitable, and cost-effective self-storage facility.

The first key player on the design team is the architect. They will take a concept and move it into detailed and actionable plans. The architect may also create elevations, and/or renderings that may be required for the initial design approval by the municipality.

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How to Select Your Design Team Beyond creating the architectural drawings, the architect can take the lead when working through the entitlement process. They will work directly with the municipality to get the approval needed to move forward with the project, as well as, knowing exactly what will be required and be permitted for the project. Although not all jurisdictions require an architectural set of plans, there are some drawings that may be required, such as life safety plans for climate-controlled buildings. The architect is also the individual that would provide any energy analysis that may be required.

The next key team member is the structural engineer. They are imperative to ensure that the building and the foundation are structurally designed and will meet all code requirements that jurisdictions have adopted.

Additionally, a structural engineer will also work on all components of the building individually to determine all the possible forces that could be acting upon your structure – vertical loads; lateral loads; stresses; seismic; snow load; wind load. This will ensure that all materials used and the way they are constructed together are going to be strong enough to withstand all forces applied to the building, as well as their own weight.

Finally, the civil engineer is the team member that works with the Earth itself. They can provide soil reports and topo maps that allows for good analysis of the property’s “current state.” They will design water drainage systems, determine where retainage ponds need to be put, and work the utility locations that may be needed. The civil engineer will also identify if imports/exports of soil will be required for the grades to acceptable for the development.

Choosing the Players Now that you know who the players are, the next question is how do you choose the right companies to provide these services? Just like with many service-oriented businesses you’ll want to choose a business that has a solid reputation. Beyond the basics of choosing a company to work with, there are some key attributes specifically for the architect, structural engineer, and civil engineer that you want to take into consideration.

First, it is critical to select an architect and structural engineer that have experience specifically with self storage. There are aspects to self storage that are very different from building a multi-family or commercial development. The architect and structural engineer don’t have to be local to the area that you are building in, however, they need to be able to effectively obtain information required to communicate with you about your project.

It's a good idea to select a civil engineer that is familiar with the region in which the project is being built. This is because you’ll want the civil engineer to have experience and knowledge specifically with the conditions of the soil within a particular area.

As you are making selections on your design team, it is a good idea to make your selection on a steel building contractor. Forge Building Company offers structural engineering as part of

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Designing a Self-Storage Facility: How to Select Your Design Team Continued from previous page

their services. The benefit of bringing a steel contractor into the design phase is that it allows them to provide insight on best practices, as well as allowing them to show where there may be areas to value engineer the project, ultimately saving you money.

Keys in Selecting a Commercial Steel Building Contractor When selecting a steel frame building contractor, it is key to work with one that has created custom steel buildings of every shape and size. Here are some questions to ask when making your decision on who to work with: How long has your company been building self-storage facilities?

Have you completed any self-storage projects in my area? Can I go see them?

Can you provide a list of references for your self-storage projects?

Do you offer site design and engineering services?

How large is your project management team?

Is your labor subcontracted out to others? If so, who are your subcontractors?

The right steel building contractor should also be able to provide: Site Plan Assistance In-House Design & Custom Engineering Complete site development plans Structural engineered drawings for permitting and inspections Review unit layout and efficiency of the use of space Installation The Forge Difference For the past 16 years, Forge Building Company has partnered with investors and developers on over 500 self storage projects. With our experience in this space, Forge can provide all the necessary vendors and information needed for your project to be a success – from start to finish.

Here is how we can help. Forge offers: Site Layout Design Design-Build Services Custom Structural Engineering Steel Building Contractor Services Construction Management Forge Building Company is ready to partner with you.

Let’s begin the discussion on your next project. Click here to connect!

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Internal Audits: 10 Reasons to Start in 2024

By Dan Cosgrove, Mercantile Systems, Inc. CEO Unlock the potential for improved efficiency, security, and peace of mind with self-storage internal audits: Here are 10 compelling reasons to get started.

1.Risk Management: Internal auditors identify and mitigate potential risks, reducing the chances of financial loss, legal issues, or reputational damage.

2. Control Evaluation: Auditors assess internal controls to ensure efficient operations, safeguarded assets, and accurate financial reporting, preventing fraud and errors.

3. Compliance: Auditors ensure companies adhere to laws, regulations, and industry standards, avoiding legal penalties and reputational harm.

4. Operational Efficiency: Auditors identify and address inefficiencies in business processes, leading to cost savings, streamlined operations, and increased productivity.

5. Financial Reporting: Auditors review financial statements for accuracy and transparency, crucial for maintaining stakeholder trust.

6. Fraud Detection: Internal auditors identify financial irregularities promptly, mitigating losses and safeguarding the company's reputation.

7. Continuous Improvement: Internal auditors offer insights for operational enhancement, fostering the company's commitment to continuous improvement.

8. Management Accountability: Auditors ensure managers adhere to policies, holding them responsible for their performance and departmental responsibilities.

9. Stakeholder Confidence: External stakeholders rely on auditors' findings for assessing the company's health, bolstering overall stakeholder confidence.

10. Board and Management Oversight: Auditors provide independent perspectives to boards and management, aiding informed decision-making on company operations and controls.

In summary, internal auditing helps companies manage risks, ensure compliance, improve operations, and maintain transparency and accountability. It provides an independent and objective assessment of the organization’s processes and controls, contributing to the company’s overall success and sustainability.

Learn more from the experts! Watch this episode of Self-Storage Unlocked: Enhancing Operations with Mystery Shopping and Internal Audits 10

Ready to Rock Self-Storage Advertising?

Adverank isn’t just an ordinary act; it’s the encore that promises booming advertising self storage success.

With our powerful online performances, we’ll crank up the volume on increased occupancy and spectacular customer lifetime value, taking you from lease-up to ultimate stabilization.

At Adverank, we specialize in helping storage operators get the most out of their PPC and Social media advertising with our proprietary PPC management tools and targeted ads on the Google Display Network and social media platforms.

With that in mind, we wanted to show you what all goes into a PPC ad campaign and social boost.

PPC management primarily involves what you spend on Google advertising, which are your ads that show up on the Google Display Network, a group of more than 2 million websites, videos, and apps where your Google Ads can appear. If you choose our Adjuster or Advantage plans, we will design these ads for you and send you a campaign document to review prior to running any of the ads. The ads come in multiple sizes, like you see here, which allows them to show up on any site or app that displays Google ads.

If you decide to add a social media boost, it will include the following: First, we make Covers for your Facebook Page and your Website, so the look of your campaign is uniform across platforms.

Once people have interacted with your website, you want to make sure you continue to target them with ads after they leave, which means ads on Twitter, like you see here, as well as ads on the META network that includes Facebook and Instagram.

People access these platforms on PC’s, Phones, Tablets, and more, meaning there is not just one size ad that fits all devices. Because of this, we create multiple sizes that are specific to the platform and device so you get the most out of each ad. This includes the traditional square ads that were popularized by Instagram, as well as 9x16 ads that fill up the phone screen or even slider ads that you often see on Facebook and Instagram.

It is not only static ads that you get with one of our social boosts. We also make audio ads that can be used on Spotify as well as radio, and when combined with the look of your other ads, we can make eye-catching videos that go out on the Meta network, TikTok, YouTube, and more. Social boosts run for 30 days at a time, so you can always re-evaluate if you want to continue with another boost prior to overspending.

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Get Started for Only $1 a Day! To give you an idea of what kind of effect a social boost can have on your storage business, take a look at these recent case studies of real Adverank customers.

In just 30 days, this location in Fort Walton Beach, Florida, saw a 4.3% increase in occupancy. That is a net of 20 additional tenants with an estimated lifetime value of $115,000.

In only 60 days, this location in Bryan, Texas, saw an 11.3% increase in occupancy, bringing their total vacancies from 119 down to 61, with the new leases having an estimated lifetime value of over $221,000.

This is just a glimpse of what you get when you partner with Adverank. Go to Adverank.com To find out more about our social boosts and PPC tools that give you all the up-to-date information you need, like Move Ins Move Outs, Gross Revenue, and more, as well as our famous daily spend alerts that help you get the most out of your PPC. ADVERANK.COM - PPC MADE EASY

The Future of Self-Storage: How Remote SelfInvesting in self-storage facilities can be a lucrative venture. However, it is also important to pay attention to the challenges and costs that come with managing staff, customer service, bookkeeping, and marketing. The good news is there’s another option — remote self-storage management. Remote self-storage management is revolutionizing the industry, offering a hassle-free solution. Let’s explore the game-changing benefits of self-storage management and why it’s an attractive option for those looking to increase the return on their investment and save time.

Dedicated Remote Management Team One of the most significant advantages of remote self-storage management is eliminating the need for in-person staff. Instead, a dedicated remote management team handles all aspects of staffing, from recruiting and training to scheduling and payroll. This same team works together to support the needs and growth of your facility. This means you no longer have to worry about the complexities of managing employees or dealing with associated costs such as salaries, benefits, and insurance. Remote self-storage management provides ease that allows you to focus on other critical aspects of your investment.

Comprehensive and Personable Customer Service Providing exceptional customer service is crucial in the self-storage industry. With remote management, there is sometimes a fear that the customer experience will feel less personal.

Or that the team might lack information to answer specific industry-related questions.

However, this is far from the truth. With remote self-storage management, you gain access to a professional call center staffed with knowledgeable representatives who handle customer inquiries, payments, and any issues that may arise. These remote experts ensure that every customer receives top-notch service, enhancing their satisfaction and increasing the likelihood of repeat business. Additionally, your customers will be able to get their questions answered quickly in their preferred communication style at the time of day that is most convenient for them.

Streamlined Bookkeeping and Financial Management Remote self-storage management takes the burden of bookkeeping and financial management off your shoulders. The remote team handles day-to-day financial tasks such as rent collection, invoicing, and expense tracking. With automated software and systems, they maintain accurate and up-to-date records, providing you with real-time financial insights. This streamlines your operations, saves you time, and allows you to make data-driven decisions to optimize your investment.

Strategic Marketing Support Marketing is crucial for attracting new customers and maximizing the occupancy rate of your self-storage facility. Remote self-storage management offers strategic marketing support to ensure your facility stands out in the market. The remote team leverages its expertise to develop targeted marketing campaigns, utilize digital

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Storage Management Is Revolutionizing the Industry advertising platforms, and optimize your online presence. By employing effective marketing strategies, remote self-storage management helps drive traffic to your facility, resulting in increased inquiries and higher occupancy rates.

Advanced Technology Integration Remote self-storage management is at the forefront of incorporating advanced technology into facility operations. This includes implementing digital access systems, remote monitoring, and smart security solutions. Customers can conveniently access their stored belongings using digital locks and personalized access codes, enhancing the overall user experience. Remote monitoring systems allow you to keep an eye on the facility’s security and performance remotely, ensuring that everything runs smoothly even when you’re not physically present.

Maximize Returns & Simplify Operations In the ever-evolving world of self-storage investments, remote self-storage management is revolutionary and cost-saving. This innovative approach changes the industry by eliminating the need for in-person staff, providing comprehensive customer service, streamlining bookkeeping and financial management, offering strategic marketing support, and integrating advanced technology. Therefore, remote self-storage management is the way to go if you’re considering investing in self-storage facilities to maximize your returns and simplify your operations.

Enhancing Customer Experience StorageDefender provides Smart Units-as-a-service to the self-storage industry. We partner with self-storage owners and operators to offer their tenants total peace of mind with our 24/7 real-time personal unit monitoring. Whether you have a new build or want to update an existing property, we can instantly transform any unit into a Smart Unit with our completely wireless, retrofittable, and relocatable solution. Our subscription-based service offers an innovative, low-friction, and low-cost solution to smart technology modernization and differentiation.

Smart Units were created as a solution to better address the Top 3 purchase concerns of tenants in the storage industry: price, location, and peace of mind. Tenants seek the assurance that their valuables are protected at the price they want with the convenience of being nearby. Our Smart Units offer an affordable solution to tenants, assuring that their valuables are protected and a differentiation tool for facilities with competitors in the area.

With tenants having several storage options to choose from nearby, facilities need to elevate themselves above their competitors. StorageDefender’s facility partners can say “We are the ONLY facility in the area offering Smart Units,” giving tenants a reason to rent from your facility and not the one down the street.

Today, more than 7 out of 10 people in the United States have smart home products. How many people do you know that don’t have an Amazon Alexa, Google Home, or Ring Doorbell?

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And Increasing Ancillary Revenue with Smart Units Modern consumers, especially the fastest-growing age groups of millennials and Gen-Z, expect constant connectivity in their daily operations. Smart Units can now bring this experience to your facility and tenants with our personal in-unit monitoring. According to the 2023 SSA Demand Study, in-unit monitoring and protection rank as one of the top fastestgrowing features in the storage industry that tenants are willing to pay more for.

StorageDefender is proud to be at the forefront of the storage unit transformation by providing an easy-to-add 24/7 Smart Unit tenant service inside of the unit, giving tenants the peace of mind that their belongings are safe and operators a new revenue stream.

These consumer trends have led us to where we are today. StorageDefender is rapidly expanding across the United States in facilities of all sizes and demographics. Without requiring a mobile app, people of all ages love our service. According to Simform, the average user has 40 mobile apps downloaded on their phone, despite users only using 10-18 of the apps regularly. Smartphone users are becoming fatigued, and sometimes even frustrated, with each new request to download a new mobile app.

In a recent tenant survey, Katrina from Amarillo, Texas shared that “I love having the peace of mind that every time my storage unit opens I get an alert.” Tenants simply receive a text message notifying them about any motion in their unit. Our Smart Units also include an audible beeper deterrent and a flexible facility escalation, meaning that facilities will be notified of unapproved activity on their property and will be able to take action.

Smart Units are not only beneficial to tenants but owners and operators as well. By transforming facilities with smart technology, our partners are earning an average of $12 per month in ancillary revenue per storage unit.

These conversion rates are quickly approaching tenant insurance adoption rates.

Max May, COO of National Storage Solutions-Easy Stop Storage, has expressed how "StorageDefender has elevated our customers' storage experience, resulting in recurring revenue and increased property values. Highly recommended!"

We value our facility partners who embrace the transition to a smart facility, and we are committed to offering them a cost-effective, pay-as-you-grow model that paves the way to success. By offering personalized coaching and turnkey marketing point-of-sale materials, our StorageDefender partners have the resources and support to excel at selling Smart Units.

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Enhancing Customer Experience and Increasing Ancillary Revenue with Smart Units Continued from previous page

As the economy slows and occupancies decline, storage facility operators are intensifying their focus on operational efficiency to maintain profitability. Feedback from our facility partners has shown these 5 operational benefits of our Smart Units: 1. More profit from increased rental rates and new tenant-paid ancillary services.

2. Increased visibility and automation for remotely managed properties when combined with StorageDefender Smart Zone monitoring and Smart Locks.

3. Strengthened inventory management via the use of vacant unit monitoring.

4. Enhanced operator peace of mind through advanced facility peril protection.

5. Energy bill savings due to the monitoring of the HVAC during hot summer days and cold winter nights. By alerting staff of temperature levels, facilities are ensured they are not overpaying in electricity costs.

Businesses embracing Smart Units can gain a local advantage over competing storage facilities, earn more revenue per unit, and enhance the overall customer experience. By leveraging the power of smart technology, self-storage facilities can position themselves with more robust protection and deeper analytics to operate their facilities more efficiently.

Please contact us to learn more about becoming a StorageDefender Partner.

Brook Bland is the Marketing Specialist at StorageDefender.

To reach her, email brook@storage-defender.com or connect with her on LinkedIn.

And now for the rest of the story…

By Jane H. Sauls, CCIM & Luke Sauls The storage industry has been fast and furious for over four years. Owners and investors enjoyed significant annual rental growth in markets nationwide. According to Green Street Commercial Property Price Index, valuations peaked early 2022 with an increase of 66% compared to pre-covid numbers. For perspective, Greenstreet reported all property asset classes increased by an average of 14%. So once again self storage comes through like a knight in shining armor. Secondary and tertiary markets became as popular as the primary markets attracting attention from the largest of operators, as many families returned to more rural settings to live, work remotely, and play. The continuous buzz in the industry was the historically low cap rates, making cap rates the golden child and to some the only child.

A cap rate is the ratio between purchase price and net operating income. In other words, by converting income to value, a cap rate expresses the relationship between one year’s income and value. (CCIM Glossary) In theory, cap rates allow investors to make apple -to- apple comparisons of assets by only considering the twelve months of revenue and expenses that would remain a part of the operating business when the property is sold. For example, depreciation and interest expenses are not deducted in the NOI calculation because that is subject to the new owner. However, the reality is that cap rates do not take into account if the facility is at market rental rates, the current (or future) management platform, new improvements, if there is deferred maintenance or land to expand.

Cap rates are a snapshot of the investment and not a true testament to how hard your money will work or is working.

Cap rates are often times the focus of attention because they are easy back of napkin calculations. They have dangerously become the center of attention to unseasoned investors and owners. Basically, the cap rate is a single page in the book and you need to read the entire book before making an investment decision. The internal rate of return is the entire story from beginning to end. It’s everything that you put into the property and everything that you get out of the property, including the income each year plus the sales proceeds.

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The Internal Rate of Return (IRR) is the percentage rate earned on each dollar that remains in an investment each year. The IRR of an investment is the discount rate at which the sum of the present value of future cash flows equals the initial capital investment. (CCIM Glossary) In today’s changing economic cycle, now more than ever you must underwrite the entire property and its market to best position yourself to achieve your short and long-term goals.

As self storage owners the known monthly cash flow is one of our greatest assets, but you have to have a much longer term approach when you are in the commercial real estate market. By doing so your focus shifts to the internal rate of return.

The IRR considers what you will do with the property, in terms of management style, marketing preferences, rental rate increases, ancillary income and even your exit strategy. IRR calculations empower the investor to compare cash on cash returns with leveraged returns.

As the cost of debt increases, this analysis is more critical than ever. The Cash-on-Cash IRR can be compared to various leverage options to best match your investment needs.

What’s important today is that we strategize well to last long enough to enjoy the happily ever after. In other words, you must be able to pay your bills every month to stay in the game. The bank’s go-to tool is the debt coverage ratio. Most lenders prefer 1.2 or more depending on the financial depth of the investor.

Debt-coverage ratio (DCR) Ratio of net operating income to annual debt service.

Expressed as net operating income divided by annual debt service. (CCIM Glossary) Here’s the ratio in plain terms: The “1” Indicates that you have enough money after expenses to pay your mortgage payments. The numbers following the decimal reflect how much breathing room you have after paying your expenses and debt. The higher the DCR the more comfort the lenders have of your project pulling through changing times.

As you can see buying solely on cap rate is about as smart as marrying someone just for their looks...you better get to know the property before you buy it. Creating a successful plan demands a team of experts working with you to achieve your goals. Be sure to develop relationships with a broker, banker and CPA that align with your investment goals. You must understand the current valuation and what impacts the future value of that property. Be sure to know your numbers and work with a team that understands your return expectations.

Strategize to maximize your cash flows and your valuation will benefit! Have a plan but be ready to Pounce, Pause or Pivot.

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2023 Storage Business Owners Alliance

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