2024 Storage Legal Update | Self Storage Virtual Workshop

Gabfocus Episode 65 | 2024 Storage Legal Update

The self storage legal landscape is always shifting. What has changed so far in 2024? And what should we expect looking forward to 2025? We are digging into the most recent legal changes that could be affecting your business and helping you prepare for the coming year!

Featured Speakers: Scott Zucker
Moderators: Tommy Nguyen & Melissa Huff

Category: Legal
Focus: Owners & Operators
Aired: October 17, 2024
Duration: 1:09:58

Overview

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

At 3:50, our expert discussed legal changes he has seen trending across states, including being able to terminate leases for bad or destructive behavior.
9:00, Scott discussed how neglecting your property or allowing bad behavior can cause judges to put aside your lease in legal cases.
Starting at 11:30, Scott covered how to make sure you're covered from security concerns if your facility is impacted by a natural disaster.
At 15:15, our guest talked about the protections and options you have if your facility is severely damaged by a natural disaster, like a flood.
18:30, our expert shared recent legislation regarding the ease of subscription cancellation that could affect our industry.
Around 23:30, Scott talked about two recent law changes in California and Florida that affect self storage operators.
At 29:00, our guest covered the continuing fight against rent control legislation, and what the industry can do as a whole to help.
38:05, Scott touched on common legal mistakes he often sees operators make, including the accidental selling of units.
41:15, our guest discussed how to handle active-duty military tenants who may be late on payments.
45:30, Scott highlighted how to handle situations where someone claims to be a dependent of an active military member, but you can't confirm it.
At 47:30, our guest talked about the expectations around 1099 contractors and whether or not they should use your equipment or tools.
Starting at 53:00, Scott discussed how to handle tenants who claim they are in bankruptcy but refuse to provide a case number and evidence.
Around 55:10, our guest talked about the term climate control and how and when you should use it.
59:45, Scott answered whether or not he thinks it's a good idea to do regular inspections of tenant units.
1:05:05, Scott answered the question of the week!

Resources

Gabfocus Takeaway

Self storage owners and operators, just like other small business owners, are constantly facing a changing legal landscape, and it can be difficult to keep up with all the changes and challenges! To protect yourself and help mitigate any challenges, make sure that you have a strong rental agreement, and be sure to stay up to date with all the latest issues in your state through your state association or through the national Self Storage Association. Laws are often changed or made in response to specific bad actors in an industry, so be sure that you are always acting responsibly and in good faith when operating your business. And be sure to document any and all communications and the steps you take to resolve issues should any legal challenges arise.

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 is the overall legal climate currently like in our industry?
What changes do you see trending across the states?
What are some of the legal challenges operators are facing at the state level?
Have there been any national changes or laws that affect our industry?
Do you foresee any new changes by the end of this year?
Are there any changes trending in other industries that you think could spill over to ours?
Which legal challenges do owners and operators ask you about the most?
What are some of the toughest legal challenges for owners and operators?
What are the most common legal mistakes you see owners make?
What are the smartest legal decisions you see owners and operators making?
What are extra legal steps owners can take to protect their business further?
Looking forward, what changes do you see on the horizon for 2025?
How should owners and operators prepare for these?
Is there anything coming up in 2025 that owners and operators should be particularly concerned by?
How is the overall legal outlook for 2025 looking for the industry?
What's the most important piece of legal advice you'd give to any 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%.