2023 Storage Legal Update | Self Storage Virtual Workshop

Gabfocus Episode 53 | 2023 Storage Legal Update

There's a lot to keep up with in storage, but the legal side can be the scariest. Lien laws, auctions, problem tenants? There's a lot you have to keep in mind. In this session, we reviewed the latest state legal updates and discussed the trickiest legal sticking points of storage.

Featured Speakers: Joe Doherty
Moderators: Tommy Nguyen & Melissa Huff

Category: Legal
Focus: Owners & Operators
Aired: October 26, 2023
Duration: 1:12:31

Overview

If you don't have time to watch the whole session, here are some of our favorite parts:

At 4:14, our expert discusses how you can access the Self Storage Association's Legal Reviews.
5:30, Joe discussed changes and trends going across states and regions like certified mail, online auctions, and newspaper advertising.
Starting at 7:15, Joe discussed legal challenges that operators face, like lien laws, property taxes, and banning late fees.
At 13:50, our guest talked about lobbying efforts they are focused on, including finally eliminating newspaper ads and fighting property tax increases.
19:50, our expert started discussing which states have laws that are most friendly to self storage and also those that are least friendly.
Around 23:45, Joe talks about tough legal challenges facing the industry like rent control legislation.
At 31:10, our guest covers the most common legal pitfalls that operators encounter, like wrongful sales.
35:30, Joe touches on common legal mistakes he sees operators making, like going cheap on their rental agreements.
38:40, our guest gives his opinion on the smartest legal decisions he sees operators making and how industry associations help.
41:20, Joe highlights some changes to look for in 2024, like two different bills they are fighting in Georgia and Florida.
At 43:50, our guest talks about the overall legal outlook for 2024 and what they are expecting.
Starting at 47:30, Joe discusses the importance of association membership (national and state), along with the legal benefits you receive.
At 50:40, we started a live Q&A session with questions from the audience! Joe answered questions on building codes, auctions, deceased tenants, and more.
1:07:40, Joe answers the question of the week!

Resources

Gabfocus Takeaway

The legal side of self storage can be scary, especially when things are constantly changing. Luckily, our industry has many resources that you can utilize to help prepare your business for any legal challenges or pitfalls. Join your national and state associations, utilize the resources they offer, and attend their events to keep up to date on the latest legal changes and challenges. These associations have talented individuals who are working every day to help lift the legal burdens off the shoulders of owners and operators. Then take all this information and put it into practical action to protect your business!

What are Gabfocus Sessions?

Gabfocus Sessions are virtual workshops for self storage owners, managers, and operators. Brought to you by the team behind Gabfest: StoragePug and Lighthouse Storage Solutions.

Each session features hand-picked industry pros who will dive deep into relevant topics surrounding our industry, share best practices, and explore trends in the market. It's our hope that these sessions help you navigate your self storage business better during these uncertain times.

Want to learn more about self storage? Join us on select Thursdays for Gabfocus.

Questions Answered in this Session

What overall changes do you see trending at the state level?
Are there any trending through an entire region?
What are some of the legal challenges operators are facing at the state level?
Which do you see gaining the most traction?
Which are you most concerned about?
What about rent control legislation?
What lobbying efforts are you focused on?
And in which states?
Which states have laws that are most supportive of self storage?
Which states are the least supportive?
Do you foresee any new changes by the end of this year?
What are some of the toughest legal challenges for owners and operatos?
How do you recommend they tackle these?
What are the most common storage legal pitfalls?
How do you recommend we avoid these?
What are the most common legal mistakes you see owners and operators making?
What are the smartest legal decisions you see owners and operators making?
Looking forward, what changes do you see on the horizon for 2024?
How should owners and operators start preparing for these?
Is there anything coming up in 2024 that owners and operators should be concerned by?
How is the overall legal outlook for 2024 looking for the industry?
What is the most important piece of legal advice you'd offer to a storage business?

Resources from this session

Awesome Quotes

“Once your operation is in place, you can become more dynamic with your pricing, but that requires data. You need some method of being able to record the data that you need to know whether your price is in the right place - whether you need to move it up or start giving some concessions.” - Warren Lieberman

“I never want to downplay to what someone else is doing. I'm better than they are, then I'm going to be worth a higher price. That's what value is. If you go out to a restaurant and get really good service, would you go back? Yes! What if it was pricier? You'd still go back because you got better service and a better product.” - Jim Mooney

"It's good to be informed on your competition. I don't want to ignore them, but I don't want to respond too strongly to them either." - Warren Lieberman

"We did a survey of 10,000 facilities on their pricing. We found out that two-thirds of those operators didn't change the price of a single unit of the course of a month." - Warren Lieberman

“Rate increases and value pricing are the number one ways to grow your revenue.” - Jim Mooney

"Tenants in more convenient units tend to be less price sensitive." - Warren Lieberman

"The size of the unit is only one aspect of what people are willing to pay for." - Warren Lieberman

Highlights

Foundational marketing strategies to have in place - whether leasing up or stabilized:

Website
Set up listings (Yelp, Google My Business, Apple Maps)
Social Media
Establish Local Partnerships

Lease up marketing strategies:

Lead Generating Strategies (like digital ads)
Aggregators (Sparefoot, Storagefront, etc.)
Awareness Campaigns (like billboards, flyers, and sponsorships)

Your average customer value
Find the average stay length of all tenants. Next take your economic occupancy and divide by how many units you have. That will tell you what the average customer pays.

Multiply the average length of stay by what the average customer pays, and that's the average value of a customer.

For example, if a customer stays for 12 months and pays $100 per month, then their value is $1,200.

Your average lead value

Figure out your closing rate (or conversion rate) i.e. how many leads do you turn into tenants? Multiply that by your average customer lifetime value to figure out what your leads are worth.

Pro Tip: see which lead sources are converting the best. It may be that certain sources have a higher conversion rate, so those leads are worth more to you than a source that barely converts.

Typical Lease-up timeline

According to our panelists, it's typical to see a 3-4% increase each month, putting your facility at 36% after the first year, and 72% after the second.

Alternately, you can look at your lease up goals through the lens of your units, aiming for 20 units rented per month.

For Nick and StorageMax, they pro forma their economic occupancy at 85% with their sweet spot at 92%.