Below is the list of Answers to the Questions asked during the January 17, 2018 Industry Webinar by Paul Darden from Storage Income Pros. If you missed the webinar you may watch it on-demand from the SiteLink website.
Q. How can I find money that’s being “left on the table” at my facility?
There are several places you can look, and this software is designed to analyze these specific things. A good place to start is with discounts, concessions and giveaways by managers such as waiving late fees and/or rent. Then you may want to look at your receivables– make sure you’re collecting all the money that’s due to you by making phone calls, automating notices, etc. as necessary to collect that rent. Employee theft is another place to look.
Q. How do you recover from giving away too many discounts?
When you know what your customer can afford, you will then know how much you can raise the rent. You can recover from giving too many discounts when you have this information by raising rental rates in a calculated fashion.
Q. When you use the zip code to determine the rate to charge, does the software take into account the number of competitors around your site?
If you know what your customer can afford, you have a little power over your competitors and you usually can get more rent simply by having this information. You can look at what your competitors are doing from a marketing point of view, and you may have to match that, however knowing what they can afford is more likely to increase your revenue.
Q. Where do you get this information?
All of this information used in the Storage Income Pros software is public information available through census data.
Q. Does this software work in Canada?
It works in places where accurate census data is kept, and we are currently testing the software in Canada to see how effective it is. Feel free to contact Storage Income Pros for updates in this region!
Q. Does the initial Suggested Rate screen transfer into SiteLink Lead to Lease?
No, the suggested rate screen does not go directly into Lead to Lease at this time, however the rate in our software automatically changes the tenant rate in SiteLink and prepares the rate of increase letter.
Q. Can I raise rental income even if there’s no new leasing or you’re worried about a drop in occupancy?
Yes, you can if you know that your customers have the ability to pay. For example, we have lost occupancy during various downturns but were able to increase income during those time frames by increasing rent in a smart, scientific way. This can offset a losing year.
The software is written to automatically take scenarios such as these into account. Remember, you cannot equate occupancy with actual money in the bank.
Q. How do you find out what your customer can afford?
All you need is the customer’s address and zip code. You may be able to get that information by offering to send the person helpful information or a coupon. Once you enter the address and zip code, the Storage Income Pros software makes a calculation and instantly gives you a rate.
Q. We are currently 23 - 25% vacant. If we raise the rates to standard rates on the occupied units, won't the vacancy rate go higher?
Not necessarily. If you’re looking at what the tenant can afford, you can raise rates on current tenants to be closer to standard rates and it doesn’t necessarily force more vacancies. The key is looking at the vacancy of particular unit types, not overall occupancy. If a unit type only has a couple of vacant units then those are the tenants you could bring to standard rate.
If you look at vacancies as an expense, you’ll see that you can make more money by filling up vacancies than by increasing rates on occupancies. When you increase rates, it’s important to keep in mind how many vacancies you have because you don’t want to increase those.
Q. Once you give a discount, such as the first month free, and this customer needs another unit, should you give them the same discount? Shouldn’t you be concerned they will move out and go to another store who is offering a discount?
Typically we rarely have tenants move out to go to another store because people don’t want to go through the hassle of moving. A discount should be based on the number of vacancies you have on that particular size unit, not based on whether they are already getting a discount or not. They are already a tenant, so the odds of having to give a discount or concession on an additional unit to retain them is low.
Q. What if your storage business is in a very high-value, mostly tourist area like Key West, most people rent homes or parts of homes. Does the formula take that into account?
It’s a question of supply and demand no matter where you are. The software uses census information that’s based on customer’s permanent residence, because that’s typically what’s listed on the lease and where the bills go.
In addition, our algorithms actually look at weather conditions. If you’re snowed in or it’s really hot, it’s a great time to look at your rental rates cause you couldn’t move unit if you wanted to!
Q. If a customer is at standard rate and has been for over a year, and you have several units of the same size available, would you raise the rent above standard rate?
Yes, but maybe only 3%-6% to match at least inflation.
Q. When the economy is going downhill and people with higher incomes are losing their homes, how can we determine that they can afford the higher rate?
We have lost occupancy during some of the economic downturns in the past. But we have been able to increase our income during those time frames by doing those increases anyway.
Q. How often should stores call tenants who are late in paying their rent? Every 2 days, every 4 days–what do you suggest?
I don’t think you should make a nuisance of yourself. We use a combination of things–first we call them, and then start with an automated system to send an email, and finally if necessary we expect the managers to place a follow up call.
One rule of thumb you may want to follow is during that initial month a delinquent tenant should be called at a minimum 3 times if necessary, one during the day, one on the weekend, and then one at night before 8:00 pm if necessary. We want to ensure that our tenants know they are delinquent and they have a chance of being auctioned off.
Q. What do you think about a policy of accepting only ACH or credit cards?
We have a “No Cash” policy at potentially dangerous locations. We accept cash when they first move in and when they move out, but we require them to get a money order for the rest of the time. Some stores will accept checks when people refuse ACH because they do not want you to have a link to their checking account. One way to help with this is to call ACH an “e-check” because people are more likely to accept that terminology.